Shopify (SHOP 1.89%) stock had a strong year that briefly included a new all-time high. Growth rates remain impressive and can power the stock to new highs in 2026 if consumer spending remains resilient.
The company has a digital ecosystem that gives it an edge over other e-commerce platforms. These are some of the catalysts that could propel Shopify's stock in 2026.
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Merchant sales are a significant tailwind
If you're not familiar with Shopify's business model, it's very similar to what turned Costco Wholesale (COST +0.38%) into a retail giant. Shopify customers must pay annual subscriptions, just as Costco members pay the annual membership fee.
Paying for that plan gives Shopify customers access to various Shopify apps, logistics capabilities, loans, and other resources. All of those offers are bundled under the merchant solutions revenue stream. It's similar to how Costco members have the right to shop at Costco, but you must show your membership card to enter the store. Not an apples-to-apples copy, but you get my drift.
NASDAQ: SHOP
Key Data Points
However, Shopify customers aren't everyday shoppers. They range from small businesses to large enterprises. They have deeper budgets, and while subscriptions are still growing, Shopify's merchant solutions are more important. This segment once again delivered solid growth in Q3 2025, up by 38% year over year.
Switching costs are significant, so it's easy for Shopify to retain customers. Merchant sales growth depends on high consumer spending and businesses making more investments. Lower interest rates bode well for higher merchant sales growth rates and attracting new businesses to the Shopify ecosystem.
International expansion could lead to more growth
Shopify has achieved most of its growth in the U.S., and the country remains a meaningful source of future gains. However, the e-commerce platform still has plenty of untapped potential in international markets.
The company reported a 42% increase in European gross merchandise volume in Q2. Shopify has two ways to boost international revenue. The first route is to attract more international businesses that pay monthly subscriptions. The second option is that companies on Shopify's platform boost international sales, which translates into more revenue for Shopify.
Even if U.S. sales slow down, Shopify can boost sales from international markets.
Shopify's valuation leaves little room for error
Shopify has a tremendous business model that attracts new businesses and increases the average value per user over time. While high revenue growth remains the norm, Shopify's valuation doesn't leave any room for a slowdown.
The stock currently trades at almost 20 times sales and has a forward P/E ratio above 80. That's higher than the average P/S ratio of a software app, which sits at roughly 11 times sales.
If Shopify can maintain high growth rates, its valuation is fine. Any slowdown in consumer spending or interest rate hikes could dampen the stock's outlook and result in a correction. Shopify doesn't have much of a margin of safety, but its excellent business model may turn the stock into a long-term winner.
