Shopify (NYSE:SHOP), like so many high-profile growth/tech names, has experienced a big stock price recovery. SHOP stock has rallied by nearly 79% since January.

Yet even as it appears that a comeback is in full swing, many analysts and commentators are ringing the warning bells about a possible pullback/correction.

Many times, bearishness about a popular stock can be merely contrarianism for contrarianism’s sake, but I’ll admit that there’s substance to the argument laid out by this stock’s skeptics.

Even I have conceded in prior coverage that this company is still a “show me” story, suggesting the market has gone overboard with its sentiment shift.

That said, don’t assume that the best and only move with this stock is to stay away completely. To determine the best course of action, let’s break down this bear case.

Continued Bullishness, but Growing Bearishness

Although Shopify shares have not gone on a tear since they spiked higher during May, the stock has continued to trade at elevated prices. The market at-large remains very bullish on this stock.

However, the same can’t be said about the sell-side community. Per MarketBeat, most analysts rate SHOP stock a “hold,” with just 13 out of 37 analysts rating it a buy.

Of greater concern, though, may be the steadily increasing bearishness among analysts and commentators alike for SHOP. Yes, only two out of the 37 sell-siders rating Shopify give it a “sell” rating.

Yet one of these analysts (Atlantic Equities’ Kunaal Malde) raises a very valid concern. After last month’s rise, fueled by both a solid quarterly earnings report, plus news of Shopify’s sale of its logistics business to Flexport, this stock has gone up too far, too soon, pushing it to too rich of a valuation (194.3 times forward earnings).

Besides valuation worries, stock market commentators across the internet have pointed out other factors that suggest lower prices ahead for SHOP, such as rising competitive risks. Again, the bears are making a strong argument, but whether it is the correct argument is another question entirely.

Deconstructing the Bear Case

There may be strong points to the SHOP stock bear case, yet there are also strong counters to these arguments. First, the valuation worries.

While I’ll agree it is wise to be cautious when a stock trades at a triple-digit price-to-earnings ratio, this factor alone doesn’t mean that a big drop for SHOP is just around the corner.

Shares in this fast-growing company have historically traded at a high valuatioin the expectation this growth will lead to profitability. If the company continues to exceed expectations with earnings, like it did last quarter, this may continue.

Even as the company’s profitability took a turn for the worse during the 2022 e-commerce slowdown, analyst forecasts call for a massive jump in earnings per share (or EPS) between now and 2025.

With the divestiture of its lower-margin logistics business, meeting, or even beating, current forecasts may now be more likely.

When it comes to competition worries, by which I mean concerns that Amazon’s (NASDAQ:AMZN) newly launched “Buy with Prime” platform for e-commerce merchants will severely hurt future growth, only time will tell whether it leaves the first-mover in this space (Shopify) in the dust.

The Takeaway

While it is possible that investors take on a view about Shopify similar to that of the bears, the aforementioned counter-arguments signal that this will not happen.

Instead, those bullish on SHOP will view those raising these concerns as merely making a mountain out of a molehill.

Other positive factors, such as easing inflation, the increasing chances of a Federal Reserve “pivot” on interest rates, plus Shopify’s potential AI-related catalysts, may help keep the stock elevated. It may perhaps enable shares to keep climbing (albeit gradually) to higher prices.

If richly priced growth stocks make you uneasy, continue sitting on the sidelines. However, if you are bullish on SHOP stock, because of the many promising company and macro-related factors listed above? Feel free to initiate or add to a position.

SHOP stock earns a B rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.