Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St’s investing ideas for FREE.
-
If you are wondering whether Shopify stock at around US$114 still offers value or is priced for perfection, this article breaks down what the current market price might be implying.
-
Shopify has recently risen 5.6% over the last week and 10.8% over the last month, although the stock is still down 27.4% year to date and has returned 0.2% over the last year.
-
These mixed returns come as investors continue to weigh Shopify’s positioning in e commerce and its ability to sustain its role as an infrastructure provider for online merchants. Broader sentiment around software and growth stocks has also influenced how the market is reacting to Shopify’s share price.
-
On Simply Wall St’s valuation checks, Shopify scores 1 out of 6 for being undervalued, as shown in its valuation score. The next sections will walk through what different valuation approaches say about the stock today and point to a different way to think about valuation that will be covered at the end of the article.
Shopify scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Shopify Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model takes projected future cash flows and discounts them back to today to estimate what a company like Shopify might be worth right now. It focuses on cash generated for shareholders rather than reported earnings.
For Shopify, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow is about $2.1b, and analysts plus Simply Wall St projections extend this forward, with one reference point showing projected Free Cash Flow of $7.1b in 2030. The ten year path includes specific analyst estimates out to 2029, then further extrapolated figures through 2035, all expressed in dollars and discounted back to today.
Putting these cash flows together, the DCF model arrives at an estimated intrinsic value of about $119.05 per share. Compared with a current share price around $114, the model implies Shopify stock is about 4.1% undervalued. This is a relatively small gap that could easily move either way as assumptions change.
Shopify is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
