We typically have the stance of letting winners run, but forward P/E can be a good gauge of when things may be getting too inflated and determining if it makes sense to take some off the table. SHOP's trades at 75x forward earnings while AMZN is at 34x. There are other factors at play here though, where SHOP is earlier in its growth stages, being less profitable, but with the potenital for significant bottom line expansion and thus valuation declining. We think looking at other valuation metrics like forward P/S and EV/EBITDA can also be useful to get the full picture on why a company trades a certain way. We are comfortable holding SHOP right now.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in AMZN.