Shopify (NYSE: SHOP) mystified investors for much of the year. Even at the depth of the bear market in March, this tech stock appeared expensive. Today, it trades at more than triple that price. Shares recently rose to record levels as its e-commerce partner Walmart introduced Walmart+. Shopify will likely benefit from this offering as some of its merchants now list products on Walmart.com.
However, since hitting an all-time high in early September, the stock has lost close to 20% of its value as of the time of this writing. Still, it trades at levels first seen in late June. Now, investors have to decide whether the upside has paused temporarily or if the stock is set up for a massive drop?
Shopify's forward price-to-earnings (P/E) ratio of about 476 speaks to how expensive the stock has become. Moreover, the fact that Shopify stock sells for almost 61 times sales confirms this sky-high valuation. The average price-to-sales (P/S) ratio for the last five years stands at about 21.
Source Fool.com