Down 40% from all-time highs, Shopify is a TSX tech stock that trades at a discount to consensus price targets in May 2025. Shopify (TSX:SHOP) went public in May 2015 and has since returned over 4,000% to shareholders in the past decade. It means that an investment of $2,500 in the TSX tech stock soon after it went public would be worth nearly $105,000 today. Despite these market-thumping gains, Shopify stock trades almost 40% below all-time highs and is currently valued at a market cap of US$123 billion. Let’s see if Shopify can stage a rebound over the next two years and reclaim its record highs. Is Shopify a good stock to own? Shopify is one of the largest e-commerce companies globally and reported revenue of US$8.9 billion in 2024, a 26% year-over-year increase. It has two primary business segments: subscription solutions and merchant solutions. Subscription solutions revenue grew by 28% to US$2.4 billion in 2024, accounting for 26% of total revenue. This growth is driven by diverse pricing plans that scale with merchant needs, from basic plans for entrepreneurs to Shopify Plus for enterprise-level operations. Shopify’s Monthly Recurring Revenue (MRR) reached US$178 million in December 2024, up 24% year over year, indicating strong merchant retention and platform adoption. Merchant solutions continued to be the key revenue contributor, accounting for 74% of total sales, and grew by 25% to US$6.5 billion in 2024. This segment generates revenue through Shopify Payments, the company’s integrated payment processing service, as well as other offerings like Shopify Capital, which provides financing to eligible merchants in the U.S., U.K., Canada, and Australia. Shopify’s platform facilitated US$292.3 billion in Gross Merchandise Volume (GMV) in 2024, a 24% increase from 2023. Shopify serves a diverse merchant base across various retail verticals and geographies, with no single merchant representing more than 5% of total revenue. Looking forward, Shopify is investing in several strategic areas to drive future growth. These include expanding its merchant base globally, localizing features for specific markets, developing new solutions that extend platform functionality, leveraging emerging technologies like artificial intelligence (through offerings like Shopify Magic and Sidekick), and enhancing its ecosystem of over 16,000 apps. Shopify explains that building a “100-year company” requires balancing growth with profitability and continues to make strategic investments across multiple time horizons. With notable merchants, including BarkBox, Vuori, SKIMS, and Supreme, choosing Shopify for their commerce needs, the platform continues to demonstrate its appeal to businesses of all sizes seeking reliable, cost-effective, and scalable commerce solutions. Is SHOP stock undervalued? Shopify’s growth story is far from over, given its forecast to increase sales from US$8.9 billion in 2024 to US$16 billion in 2027. While its revenue is forecast to grow by 21.6% annually in the next two years, estimated growth for adjusted earnings and free cash flow growth is much higher at 28% and 26%, respectively. In the last 12 months, Shopify stock has traded at a forward price-to-earnings multiple of 67 times. If the tech stock is priced at 50 times forward earnings, it will trade around US$131 in early 2027, indicating an upside potential of 35% from current levels. Meanwhile, analysts remain bullish on the TSX stock and expect it to gain 27% over the next 12 months.