To The Moon

Recurring revenue? Check. But are we paying too much for it?

Shopify’s growth is impressive—$9.38 billion in annual revenue, up 26.8% year over year, and $1.7 billion in free cash flow.

Building the invisible engine behind the world’s digital shelves

Yet with a forward P/E of 81.97 and EV/EBITDA of 117.57, the price tag isn’t for the faint-hearted.

While these multiples may raise eyebrows, Shopify’s model does warrant a premium—thanks to its sticky SaaS revenue, growing merchant services, and improving profitability. The company is now solidly in free cash flow territory, and historically its P/E has ranged from 60 to over 400. That said, any sustained drop in revenue growth below 15% or contraction in merchant services’ share of total revenue under 60% would likely break the thesis. At that point, these multiples would look more like a trap than a premium.

Shopify’s valuation might raise eyebrows, but its performance raises expectations..

Shopify pulls ahead, outpacing Amazon, Adobe, and Block convincingly.

Amazon isn’t just a shadow—it’s a multi-headed beast

Amazon’s Buy with Prime is Shopify’s most obvious threat, offering smaller brands access to world-class fulfilment and a Prime-hungry customer base. But that’s just one front. Amazon’s ad engine, AWS infrastructure, and vertical integration create a layered offensive.

Then there’s Stripe attacking on payments, Square bundling in-store and online retail, and TikTok Shop redefining discovery-to-checkout in a single swipe. Shopify’s strength is its neutrality—powering merchants rather than competing with them—but it must defend that position with speed, integrations, and superior UX.

The deeper numbers show a maturing tech platform

Shopify’s 17.17% profit margin and 16.14% ROE suggest this isn’t just a growth story—it’s a quality one. With $5.5 billion in cash and only $1.1 billion in debt, it has firepower without fragility. Its R&D spend hovers around 20% of revenue, showing real commitment to product development.

Still, key metrics must stay strong to support this valuation. GMV needs to grow at 20%+ annually, international revenue should climb to 35%+ of total sales within two years, and operating margins must hold above 10%. Any erosion below 8% could flag cost inefficiencies or platform fatigue.

On customer economics, $Shopify(SHOP)$ doesn’t disclose CAC directly, but marketing spend is steady at ~17% of revenue, while retention among mid-sized and enterprise merchants remains high. Churn is low. That implies rising lifetime value and improving customer efficiency, which justifies ongoing investment in growth.

Shopify’s not building warehouses anymore—and that’s a good thing

Shopify’s decision to offload its logistics network to Flexport might have looked like a step back, but in reality, it’s a capital-light pivot. Logistics is expensive, operationally messy, and margin-diluting. By focusing on integration rather than ownership, Shopify can be the control centre for fulfilment without becoming Amazon 2.0.

Instead of trucking packages, it’s building APIs, checkout flows, and payment rails. Shop Pay is one of the highest-converting checkout experiences online. Shop Cash adds loyalty and stickiness. It’s not about delivering boxes—it’s about owning the transaction.

iOS changes clipped the wings of e-commerce—but Shopify adapted

Apple’s iOS privacy changes made digital marketing far more expensive. Shopify responded by leaning into owned channels and first-party data—think direct email, loyalty tools, and content-commerce integration through platforms like YouTube and TikTok.

That’s where Shopify’s merchant trust really counts. Unlike $Amazon.com(AMZN)$ or $Meta Platforms, Inc.(META)$, Shopify doesn’t profit off its users’ data. Instead, it gives merchants the tools to control their own customer relationships—and that’s becoming a major advantage as the post-cookie world takes shape.

Can data become a moat—or is that wishful thinking?

Shopify’s access to transaction data across millions of stores could eventually underpin smarter product recommendations, inventory tools, and even financial services. But let’s be honest—Amazon and Meta still have deeper, more granular consumer profiles.

And with GDPR and CCPA restrictions tightening, Shopify’s ability to monetise that data will depend more on product innovation than on targeting. This is an emerging moat—not yet a defensible fortress. It’s one to watch, but not one to bank on just yet.

When do we get paid?

This is not a quick flip. It’s a 3–5 year story. I expect the real upside to emerge as Shopify’s international business scales, as high-margin services expand, and as social commerce integrations mature. In the meantime, margin discipline and strong free cash flow provide support while investors wait.

Momentum may wobble, but Shopify keeps pressing near its upper range.

Keltner squeeze hints at breakout conditions holding steady mid-year.

The key is execution. If $Shopify(SHOP)$ delivers consistent 20%+ GMV growth, defends its take rate, and deepens merchant stickiness, the current multiple starts to look more like a long-term bargain than a short-term gamble.

Powering commerce—without ever stepping into the spotlight

Expensive, yes—but potentially indispensable

Shopify doesn’t just sell software—it enables independence. As retail decentralises and brands look to own their customer experience, Shopify is positioning itself as the non-interfering enabler in a world of walled gardens.

Yes, the valuation is demanding. But so is the business model. If Shopify can continue to grow globally, protect margins, and reinforce its ecosystem, I believe it could emerge as the AWS of commerce—quietly indispensable, immensely scalable, and wildly profitable over time.

You’ll need patience. You’ll need conviction. But if the thesis holds, I think the payoff will be worth the premium.

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