Shopify Inc. Class A Subordinate Voting Shares (SHOP)

FairStock Score: 40/100 — MIXED

Key Financials

Strengths

• Generates $1.3 billion in annual free cash flow (0.8% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.01, providing financial flexibility
• Altman Z-Score of 57.4 confirms minimal bankruptcy risk and strong solvency
• Revenue growth of 30.6% demonstrates strong top-line momentum

Concerns

• Trades significantly above Graham Number ($15) with negative 735% margin of safety—limited downside protection

AI Analysis

Shopify Inc. Class A Subordinate Voting Shares is a large-cap technology company valued at $160.6 billion. The business generates $11.6 billion in annual revenue with a 6.4% net margin and $1.3 billion in free cash flow. From a quality standpoint, Shopify shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 57.4 confirms fortress-level solvency. On valuation, the stock is commanding a steep 132.2x multiple, with trades far above its Graham Number ($15) with no margin of safety. Growth dynamics show revenue growing at 30.6% and profit growth of -42.5%. Our composite FairStock Score of 40/100 reflects below-average fundamentals overall. The premium valuation demands continued execution and leaves limited room for disappointment.

Bull Case

Shopify's 31% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $1.3 billion in annual free cash flow (0.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 132x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer