Shopify (TSX:SHOP)(NASDAQ:SHOP) is one of the leading e-commerce and tech stocks in Canada. Although it's been a hot buy over the years, it's been sliding to start 2026. On Friday, the markets went into a tailspin as did Shopify's stock. While it's nowhere near its 52-week low of $99.32, it has dipped to levels it hasn't been at since last August.
While the business has been doing well, the challenge is that its valuation is extremely high. The stock trades at more than 100 times its trailing earnings and its forward price-to-earnings multiple is 75. It's a steep premium that comes with big expectations.
To make matters worse, the Canadian economy could be in the midst of a slowdown. According to a recent report from Statistics Canada, the economy didn't show any growth in November, and there is a possibility that for the last quarter of the year there will be a decline in real gross domestic product.
Economic conditions aren't as strong as the stock market might have you believe, and that can be a worrying sign for a stock like Shopify that's been trading at such a high premium. Even though the business has been growing and its growth rate was impressive at 32% in Q3, if there's a slowdown from that in Q4, the stock could be due for an even greater sell-off in the days and weeks after.
At the very least, you may want to wait until later this month when Shopify reports its Q4 earnings numbers before making a decision on the stock.
Tech Insider
