Is Shopify Inc (SHOP) overvalued?
On Equity Rank's model estimate, SHOP trades 116% above its fair value. Shopify Inc (SHOP) last closed at $148.91; the multi-method model fair value is $68.85.
| Price | Model fair value | Price vs model |
|---|---|---|
| $148.91 | $68.85 | 116% above |
What the answer rests on
- 0 of 9 valuation methods put SHOP's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, SHOP's free cash flow would need to grow about 32.8% a year for ten years (a reverse discounted cash flow).
- SHOP trades at 93.9 times its last year's earnings, against a median of 32.5 for 10 profitable E-Commerce companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 53% above to 247% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind SHOP's fair value · What prices assume · Other companies