• The price of Shopify (SHOP) has been cut in half since November
• It still sells at nearly 20 times revenue
• Are growth catalysts sufficient to keep the stock price high?

Shopify (NASDAQ:SHOP) stock cost $1,690/share in November. It opens March 24 at $710.

That’s a bargain, right? Not necessarily. Even at that price you’re paying almost 20 times revenue to own Shopify shares. Last year’s extraordinary earnings mean the trailing price to earnings ratio is just under 31. But is that earnings figure sustainable?

With a market capitalization of $88 billion, the value of SHOP stock is no longer entirely in Shopify’s hands. War and inflation are creating bargains elsewhere in the market. The Cloud Czars are closing in.

There remain good arguments to own Shopify today. But there are also good reasons not to.

The Buy Side

Tech whisperer Cathie Wood and her ARK Innovation (NYSEARCA:ARKK) fund has been buying SHOP stock lately, even while selling Amazon.Com (NASDAQ:AMZN). As Shopify’s stock price has become volatile, Wood has been buying each dip. Shopify shares are up 12% in the last month.

Shopify’s 2021 acquisition of Primer will bring augmented reality to Shopify merchants. Over the next year, small merchants will be able to show prospects how an outfit will fit them, or how a piece of furniture will look in their homes. This should encourage them to stock bigger ticket items and cut returns.

Shopify is bringing its small shops to global markets, integrating with TikTok, and has delivered Buy Now, Pay Later features. A feature that links to purchases directly from someone’s biographical sketch is also drawing interest.

By expanding from website design into payments, fulfillment, and customer acquisition, Shopify has become a hub for small business e-commerce. While its software is closed source, it has the same effect as open source on merchants, leveling the playing field against Walmart (NYSE:WMT) and Amazon.

The Sell Side

Big traders have been betting on Shopify’s fall lately.

Alphabet (NASDAQ:GOOGL, NADSAQ:GOOG) is bringing tools to market that could make it a more effective Shopify competitor. The fight between Apple (NASDAQ:AAPL) and Meta Platforms (NASDAQ:FB) over privacy is rocking Shopify, which collects user data through Meta.  The fall of Shopify stock tracks well with that of Meta.

Shopify CEO Tobias Lutke recently joined the board at Coinbase (NASDAQ:COIN) and is more than crypto-curious. For Shopify it means merchants may start creating non-fungible tokens (NFTs).  It also means they could be taking on all the risks of the Web3 world.

Analysts at Tipranks now call Shopify only a moderate buy. There are 27 of them, with more now in the hold camp than on the side of buying.

Shopify is next due to report numbers on May 18. The first quarter is always hard on retailers, and the “whisper number” is for a loss of 39 cents/share, although revenue should approach the Christmas quarter figure at $1.28 billion. Last year, Shopify booked its biggest profit of the year in the March quarter.

The Bottom Line

Shopify is now playing in the e-commerce major leagues. That’s good for its merchants but may be bad for the stock.

Shopify stock can now be impacted by global events, and all the Cloud Czars are accounting for it in their strategies.

My best analog to Shopify today is Alibaba Group Holding (NASDAQ:BABA). Shopify can now deliver most of the services a small merchant needs to reach western markets, as Alibaba does for Chinese suppliers.  But buying Alibaba stock today carries enormous risk. Not all that risk is within the control of Alibaba.

Shopify looks to be in a similar boat. Just remember that I’ve been wrong about Shopify before, and I still have shares in Alibaba. If there’s a buy side and a sell side to this story, I’ve been on the blind side.

On the date of publication, Dana Blankenhorn held long positions in GOOGL, BABA, AMZN, and AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.