The rapid growth rates Shopify (SHOP +3.09%) has displayed since 2020 could continue through 2030, at least according to Morgan Stanley analyst Keith Weiss.
Since mid-2020, the leading e-commerce platform has reported annual revenue gains above 20% quarter after quarter. Weiss is confident enough about future growth at a similar pace to upgrade the stock to overweight from hold and raise its price target to $85 per share.
NASDAQ: SHOP
Key Data Points
Why Wall Street's expecting more growth from Shopify
Shopify is responsible for around 11% of total e-commerce in America. That means there's a great deal of room to continue growing. New onramps could allow for continued gains even if overstretched consumers let their AllBirds, a Shopify client, wear down a little further before replacing them.
Several years ago, nearly all the clients Shopify onboarded were small businesses. These days it's onboarding established clients like Mattel and On Running. It even signed up the industrial heating and cooling specialist Carrier, which will use its platform for B2B and consumer sales.
Is Shopify a good stock to buy now?
Enterprise retail and a huge B2B opportunity give Shopify a realistic runway for growth that justifies an $85 price target. That said, reporting 20% annual revenue growth for about 10 straight years is an enormous expectation for any business.
At its recent price, Shopify already has heaps of growth baked into its valuation. The stock has been trading for about 69 times forward earnings expectations. If any unforeseen challenges prevent Shopify from growing by leaps and bounds over the next several years, investors could suffer severe losse. It's still a good stock to buy, but only for investors who can tolerate significant risk.
