Shopify Inc. (TSX:SHOP)(NASDAQ:SHOP) recently released its fourth-quarter and full-year 2025 results, revealing a business that's firing on all cylinders despite a complex macroeconomic conditions. The e-commerce giant reported Q4 revenue of $3.67 billion, a 31% year-over-year increase that comfortably cleared analyst estimates of $3.59 billion.
Despite the solid quarterly numbers, there just wasn't enough of a reason for investors to get excited about the top Canadian e-commerce stock.
The big problem may be that concerns are still rising about a possible recession in the Canadian economy, and the potential that conditions get worse in the future. As good as Shopify has been doing of late, there's always the worry that it may experience a slowdown. And with the stock trading at a high valuation, at more than 100 times its trailing earnings, there is effectively no room for error, as the stock is priced for perfection.
While there isn't anything wrong with Shopify's business, it's an example of where the valuation simply is being too big of a problem for the stock. It's highly expensive, and there isn't much margin for safety for investors. And with concerns out there about the economy, the stock may continue to struggle.
Thus far in 2026, shares of Shopify are down 30%, and yet, its valuation remains high. For now, this is a stock I'd avoid simply because it depends so much on how strong economic conditions are in not only Canada but the world as a whole. There are better growth stocks to consider instead, ones that are trading at much more reasonable valuations.
