Buffett Brain · Research note
Score updated 5 Oct 2026 · analysis from 20 Sept 2026
SHOP· Technology
Shopify
Shopify's high P/E of 159.8 and weak sector-relative margins make it a speculative bet rather than a Buffett-style investment.
Buffett fit
Weak fit
Owner
30
Durability
29
Management
88
Price
0
Score updated 5 Oct 2026 · analysis from 20 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned Shopify entirely, we'd be concerned about the high valuation metrics, such as a of 159.8 and EV/ of 103.6, which imply significant growth expectations.
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Shopify faces threats from larger competitors and potential technological disruptions in the e-commerce space.
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Shopify has not engaged in share , and its share count has slightly increased by 0.98% annually over five years.
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The current yield of 1.02% and a of 159.8 suggest that Shopify is priced for perfection, with little .
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Revenue CAGR of 27.31% over five years shows strong top-line growth.
- 2 grew 25.67% year-over-year, indicating cash generation capability.
- 3Net debt/EBITDA of -0.70 reflects a solid cash position with minimal .
- 4Current ratio of 5.96 suggests strong liquidity and short-term financial health.
Concerns
6- 1 ratio of 159.8 is extremely high, suggesting speculative pricing.
- 2 of 11.18% is below the sector's top-quintile cutoff of 13.4%.
- 3 of 48.1% is below the sector's top-quintile cutoff of 60.6%.
- 4EPS has declined by 20.01% annually over five years, indicating profitability issues.
Price history
$151+9.9%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Shopify provides a commerce platform that enables merchants to manage products, process orders, and build customer relationships across various sales channels. The company generates revenue through subscription fees and merchant solutions, including payment processing. With a 5-year revenue CAGR of 27.31%, Shopify has shown strong top-line growth. However, its of 48.1% is below the sector's top-quintile cutoff of 60.6%, indicating competitive pressure.
How this analysis has moved
The call has held across 3 reviews.
Sep 27, 2026 → Oct 5, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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