Valued at a market cap of US$145 billion, Shopify (TSX:SHOP) is among the largest companies in Canada. Shopify is a commerce technology entity that provides a comprehensive platform enabling merchants of all sizes to manage their entire business operations. Its portfolio of solutions ranges from inventory management and order processing to payments, shipping, marketing, and analytics.
Shopify provides these services across multiple sales channels, including online stores, physical locations, and social media marketplaces globally.
The TSX tech stock went public in May 2015 and has since returned 3,970% to shareholders. It means a $1,000 investment in SHOP stock 10 years ago would be worth over $40,000 today. Since past returns don’t matter much to current or future investors, let’s examine whether you should invest in Shopify stock today, which is trading 34% below its all-time highs.
Shopify continues to grow at a steady pace
In Q1 of 2025, Shopify grew its sales by 27% year over year amid an uncertain trade environment marked by new tariff policies. The company’s year-over-year revenue growth exceeded 25% for the eighth consecutive quarter. Unlike several other growth stocks, Shopify reported a consistent profit, ending Q1 with a free cash flow margin of 15%.
Shopify’s robust platform enables it to serve a diverse merchant base across various industries and geographies. This diversification allowed it to increase gross merchandise volume (GMV) by 23% year-over-year to US$74.8 billion in Q1. Shopify attributed the increase in its GMV to strong same-store sales growth and continued international expansion, particularly in Europe, where it surged 36%.
President Harley Finkelstein emphasized the company’s agility advantage, highlighting how Shopify rapidly deployed tools to help merchants navigate trade challenges. For instance, the platform introduced enhanced cross-border trade features, local buying filters, and duty calculation tools within days of policy announcements. It also launched an AI-powered tool called tariffguide.ai to help merchants optimize sourcing decisions.
Shopify Payments continued its impressive expansion, achieving a 64% penetration rate and launching in 16 new markets during the quarter. It nearly doubled its geographic footprint from 23 to 39 supported countries. Shop Pay processed over US$22 billion in GMV, representing 57% year-over-year growth.
The platform’s enterprise momentum accelerated with major brand acquisitions, including VF Corp, as well as luxury conglomerate Kering Beauté, bringing eight brands to Shopify. These wins demonstrate how legacy systems struggle to keep pace with the rapid pace of change, creating opportunities for Shopify’s modern, flexible platform.
Is Shopify stock undervalued?
Looking ahead, CFO Jeff Hoffmeister projected mid-20s revenue growth for the second quarter despite ongoing trade uncertainties. Its merchant-first approach, operational discipline, and ability to rapidly adapt positions Shopify well to capitalize on market disruptions while helping businesses of all sizes thrive in an evolving commerce landscape.
Wall Street expects Shopify to increase revenue from US$8.9 billion in 2024 to US$23.2 billion in 2029. In this period, its free cash flow is forecast to grow from US$1.6 billion to US$5.2 billion.
Today, SHOP stock is priced at 72 times forward free cash flow (FCF). If it is priced at 50 times forward FCF, the TSX stock should trade around $200 per share in early 2029, above the current price of $111.
