Shopify (SHOP -0.28%) has been one of the biggest successes in the e-commerce landscape in the last decade. It empowers businesses of all sizes with leading tools to thrive in the digital world.

As the platform continues to evolve and expand its reach, investors are questioning whether Shopify stock remains a buy in 2025. Let's examine Shopify's recent performance, long-term growth opportunities, and valuation to determine whether it is still a good pick for 2025.

Image source: Getty Images.

Shopify is back in growth mode.

Founded in 2006, Shopify aims to help merchants sell their products easily online. Using Shopify's software-as-a-service and payments, shipping, and point-of-sale (POS) services, anyone can start selling online with little technical knowledge.

Merchants love the service, which explains Shopify's remarkable rise over the past two decades. In particular, the COVID-19 pandemic in 2020 further demonstrated the importance of Shopify's offerings to merchants, as it helped existing and new merchants operate during lockdowns. As a result, Shopify's revenue rose 86% in 2020 and another 57% in 2021.

Still, like most digital companies, Shopify faced enormous challenges as the economy reopened gradually in 2022. For instance, gross merchandise value (GMV) growth reached a low of 11% in the third quarter of 2022, down from a more than 96% growth rate in 2020. The massive decline in growth spooked investors, causing many to sell the stock.

Fortunately, Shopify proved to investors that the slowdown was temporary, as key metrics improved significantly after hitting the lows in 2022. Revenue increased by 26% in 2023 and remained strong in 2024. In the third quarter of 2024, revenue rose 26% to $2.2 billion, and operating income more than doubled from $122 million to $283 million. Shopify also guided that fourth-quarter revenue would grow at a mid- to high-20s percentage.

In short, Shopify is back on its historical growth trajectory!

The sky is the limit for Shopify

While investors breathe a sigh of relief at Shopify's recent solid performance, they are still concerned about the sustainability of the tech company's growth momentum for the next few years.

The good news is that Shopify has strategically positioned itself for growth for many years to come. The company has moved beyond its initial focus on online sales to omnichannel sales, enabling merchants to sell almost anywhere to anyone globally. For instance, by innovating its POS system, Shopify can now serve brick-and-mortar merchants and help existing online merchants build their offline stores.

Moreover, Shopify is investing heavily in growing its global business. On one level, it helps local merchants sell their products globally, enabling them with all the tools -- shipping, payments, translation, tax management, and more -- needed to manage a global online sales business. Shopify partners with Global-E Online to help facilitate this process.

Beyond that, Shopify's globalization strategy brings best-of-breed software and digital tools to foreign markets, helping merchants from overseas build successful businesses. For example , Shopify POS recently brought its tap-to-pay service to countries like Australia, Germany, and the U.K., making it easier for merchants to receive payments from customers.

In the third quarter of 2024, Shopify enabled $70 billion in GMV sales via its platform, or an annualized rate of $280 billion. Compared to an estimated global retail market size of $31 trillion in 2024, Shopify's market share is not even 1% of this opportunity. 

Investors are highly optimistic about the company

By now, readers might think it's time to load up the truck with Shopify's stock. Unfortunately, that's not the end of the story. Buying Shopify stock now is also extremely risky despite its many likable attributes.

As the old Warren Buffett saying goes, be greedy when others are fearful, and be fearful when others are greedy. It will be tough to be greedy with Shopify's stock today. To put it into perspective, Shopify has a price-to-sales (P/S) ratio of 16 and a price-to-earnings (P/E) ratio of 97. Amazon, on the other hand, has a P/S of 4 and a P/E of 48.

These ratios suggest that investors are being greedy with Shopify's stock, so you should think twice before joining them.

What it means for investors

It doesn't take much to see that Shopify is well-positioned to continue growing its market share in the global e-commerce industry. With its omnichannel strategy and focus on going global, the tech company can continue to grow for years before hitting the ceiling.

The downside is that buying the stock today doesn't come at a reasonable price since investors have bid up the price of this quality company.

So, buying the stock today is overly risky for conservative investors. Even those willing to take the risk must have a long-term investing horizon of more than five years since the stock price can be highly volatile in the short term.