On July 29, Shopify (SHOP -2.37%) shares began trading on a 10-for-1 split basis -- dropping the company's stock price by 90% (to around $35 per share) while keeping its $47 billion market cap the same. While this change doesn't affect Shopify's valuation relative to revenue and earnings, it makes the stock more accessible for smaller investors who don't have much money to put in the market.

That said, is it time to bet on Shopify?

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What is Shopify?

Shopify is a global e-commerce platform that allows small business owners to build and customize online stores that can sell through multiple mediums, including online, in-person, and brick-and-mortar. Unlike rivals such as Amazon or eBay, which primarily operate third-party marketplaces, Shopify focuses on the business side of the equation -- making it a unique, well-differentiated way to bet on the industry. 

Like most technology-related companies, Shopify has faced significant macroeconomic challenges in 2022. With an inflation rate of 8.6%, the U.S. Federal Reserve is expected to continue shrinking its balance sheet and hiking interest rates to cool the economy. These moves increase the cost of capital for companies while making investors less willing to buy pricey stocks with future expectations built into their valuations. 

Shopify's shares are down by a staggering 74% year to date -- at least partially because of these headwinds. But the company also faces some company-specific challenges that shouldn't be overlooked. 

A victim of its own success 

First-quarter revenue grew 22% year over year to $1.2 billion, a massive deceleration from the prior-year quarter, when sales jumped 110% over the prior-year period. Management also expects revenue to be "lower" in the first half of 2022 but didn't give any exact numbers. While slowing growth is the last thing investors want to see in a growth stock like Shopify, the trend should be seen in the proper context. 

The pandemic years of 2020 and 2021 saw an unprecedented surge in online shopping, which is giving companies like Shopify challenging comps in the near term. But the company's long-term thesis as a way to bet on independent e-commerce businesses remains intact. Management is also working on new growth drivers to keep the ball rolling. 

In May, Shopify completed its $2.1 billion acquisition of shipping logistics start-up Deliverr. This deal will help it create an end-to-end logistics platform, better enabling its merchants (which are usually small businesses) to compete with giants through features like two-day and next-day delivery. The company's focus on creating a strong economic moat will help it continue to expand in the post-pandemic world.

Should you buy Shopify?

Bear markets are a great time to shop for quality companies at a discount. And with a strong economic moat, combined with healthy growth prospects, Shopify is definitely a company to watch. The recent stock split may also make it more psychologically appealing to small investors. 

That said, with a price-to-earnings (P/E) multiple of almost 600, the stock isn't as cheap as it now looks. And with the Fed expecting to continue raising interest rates, modestly profitable growth stocks like Shopify are likely to remain under pressure in the near term. Investors may want to wait until some of these issues are resolved before taking a position in the company.