Shopify (TSX:SHOP)(NASDAQ:SHOP) is one of the leading e-commerce and tech stocks in Canada. Although it's been a hot buy over the years, it's been sliding to start 2026. In fact, the once high-flying stock is already down around 30% for the year.
While the business has historically performed well, the current macroeconomic landscape presents significant hurdles. Trade uncertainty between the U.S. and other countries is still likely a huge factor going forward. Furthermore, sticky inflation is potentially still problematic, squeezing consumer wallets and leaving less disposable income for online shopping.
Because of these looming economic headwinds, the company's growth rate may not be as strong as expected. To make matters worse, the Canadian economy could be in the midst of a slowdown. This combination of international trade tensions and domestic weakness is a serious challenge for a growth-dependent business.
While the business has been doing well, the challenge is that its valuation is extremely high. Currently, the stock trades at more than 60 times its future earnings. Meanwhile, economic conditions aren't ideal, and that can be worrying for a stock like Shopify that's been trading at such a high premium. It's a steep valuation that comes with big expectations, and it falls short of them, that can result in even more downside risk later this year.
Unless you're willing to buy and hold the e-commerce stock for years, amid all this uncertainty, you may want to wait for more of a decline in value before adding it to your portfolio. While it remains a good long-term investment, there could be significant adversity still ahead.
