What happened

Shares of Shopify (NYSE:SHOP) climbed on Wednesday, following positive analyst commentary. By the close of trading, the e-commerce star's stock was up 5% to $1,089 after hitting a record high of $1,115.99 earlier in the day. 

So what

Atlantic Equities analyst Kunaal Malde placed an overweight rating and a $1,150 target price on Shopify's stock this morning. Malde says Shopify is strengthening its competitive position as it scales its operations. In turn, the analyst sees it taking share in the rapidly expanding e-commerce market. 

A person is pointing to an upwardly sloping chart.

Shopify's stock hit a new high on Wednesday. Image source: Getty Images.

Moreover, while acknowledging that Shopify's stock is trading at an extremely rich valuation at roughly 60 times sales, Malde argues that the company has yet to fully monetize key areas of its business, with fulfillment representing a particularly large growth opportunity.

Now what 

Malde is right; with worldwide e-commerce sales set to increase from $3.5 trillion in 2019 to $6.5 trillion by 2023, according to Statista, Shopify's addressable market is enormous. As a key software partner for more than 1 million online businesses, Shopify is well positioned to benefit from the industry's growth. And as more entrepreneurs flock to its platform as retail sales shift online, Shopify's market share should continue to increase.

What does this all mean for investors? Well, a rising share of a massive and quickly expanding market is a powerful formula for growth -- and shareholder profits. So, despite its hefty price tag, Shopify appears set to continue to reward its investors in the years ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.