Following the run-up of Shopify (NYSE:SHOP) stock, the shares have set a new all-time high today. The recovery of the tech sector, the company’s large, addressable market, and its runaway growth have helped to propel Shopify stock higher.

Given its strong position in the e-commerce market, SHOP stock should continue to perform well. However, in light of the elevated valuation of Shopify stock,  prospective buyers of the shares should stay on the sidelines for now.

Shopify Has Only Begun to Tap Its Potential

Shopify still has a great deal of room to grow, since many small businesses that haven’t yet become the  customers of SHOP or its open-source peers want to conduct e-commerce outside the established online marketplaces.

SHOP currently serves over 600,000 businesses that sell more than $55 billion of merchandise. In 2015, just 165,000 firms sold their products on Shopify.

The company estimates about 47 million merchants operate small or medium-sized businesses, so SHOP’s growth can continue for some time.

E-Commerce Is Growing Nearly as Quickly as the Cloud

Shopify does face direct competition. In theory, any developer can build a platform like Shopify’s, and they have done so. Sites such as WooCommerce, Magento {which is now owned by Adobe (NASDAQ:ADBE)}, and others also operate in that space. Naturally, investors wonder whether SHOP can stave off the competition.

To address that issue, we should consider the similarities between the cloud-computing and e-commerce sectors. Both industries are growing rapidly. Also, most companies in both spaces have benefited from that growth despite the fact that anyone with computer expertise could enter the sectors. And just as a handful of companies dominate the cloud, only a small number of firms hold the upper hand in the e-commerce-platform space. Shopify is poised to become one of the latter firms.

Along with its first-mover status, Shopify also offers more simplicity and scalability than most of its peers. That’s important because the majority of small businesses are one-man shops. Most of the owners of those businesses cannot afford to spend time on website issues. As a result, most of them will turn to the sector leader and pay Shopify’s somewhat higher costs so they can fully outsource the website-related work.

So far, investors don’t seem to be too concerned about the strength of the company’s moat, as Shopify stock has had an impressive run since it and many of its tech peers hit a near-term low on Christmas Eve. In the last month and a half, SHOP stock has risen by about 45%. Earlier today, SHOP stock price set a new all-time high of $176.85.

Do Not Buy Shopify Stock Yet

After the rally of Shopify stock, investors should be cautious about the name. Over the summer, Shopify stock crossed the $170 per share level twice only to pull back both times. With the stock again at that level, investors need assurance that it’s not near a price ceiling before buying SHOP stock.

Also, SHOP investors need to be cautious about its price-earnings ratio. As of this morning  SHOP stock traded at about 250 times analysts’ consensus forward earning estimate for the company. Its other multiples are high as well; Shopify stock trades at over 20 times its sales and more than 11 times its book value.

On some levels, the elevated multiples of SHOP stock are justified. Shopify will likely greatly exceed its current market cap of around $19.4 billion. Moreover, analysts’ consensus estimate calls for its top line to grow by an average of almost 81.9% per year over the next five years, and on average they expect its revenue to surge 125.8% this year. In light of those expected growth rates, the price -earnings ratio of SHOP stock should be well above the S&P 500’s average PE ratio.

Still, even Shopify stock is only worth so much. With a forward PE of around 244 and the stock trading near its all-time highs, prospective buyers of SHOP might want to hold off for now.

The Bottom Line on Shopify Stock

Shopify stock has an undeniable value proposition. SHOP has enjoyed a massive move higher in recent weeks as tech stocks recover from a slump that began in October. As a result, its valuation has reached excessive levels. Even though other firms competing for its customers, Shopify holds the first-mover advantage when it comes to providing an independent platform for merchant sales. Put simply, Shopify has become the AWS or the Azure of e-commerce.

Moreover, the company has only begun to scratch the surface of its full potential.

However, investors need to stay cautious about the valuation of SHOP stock, and they should realize that it may have reached a price ceiling. With the metrics of Shopify stock screaming “overvalued” on many fronts, investors should think twice before buying the shares.

Thanks to Shopify, small merchants can benefit without having to pay Amazon (NASDAQ:AMZN) or  eBay (NASDAQ:EBAY). Investors who wait for a pullback of Shopify stock before buying the shares will probably benefit as well

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.