Key Takeaways
- Shopify stock fell 14% in the past week, mostly on a third-quarter report whose merchandise volume and subscription revenue missed estimates.
- Revenue grew 32%, but gross profit grew 28%, and fourth-quarter guidance keeps that gap.
- Lower operating costs have covered the gap so far, so analysts’ earnings estimates look safe.
- For a patient investor, the drop looks like a chance to buy, as long as GMV gets back on track in February.
Shopify (SHOP) stock is down 14% in the past week. Shares slid with tech on Oct. 30, after results from Amazon and Intel, and the Nov. 3 third-quarter report did most of the damage.
Jefferies called the quarter “robust, but shy of lofty expectations” and told clients to take advantage of the weakness.
A tiny miss, a big reaction
Revenue grew 32% to $3.74 billion, operating income jumped 66% to $568 million, and free cash flow of $816 million made for a 22% margin, up from 18% a year earlier. Adjusted EPS of $0.49 beat the $0.46 LSEG estimate.
But gross merchandise volume (GMV) and subscription revenue both missed. GMV of $119.1 billion came in just under $1 billion short, less than 1%. And revenue landed inside Shopify’s low-thirties guide after beating the top of it in each of the three quarters before.
Going into the report, analysts expected normalized EPS to more than double from 2025 to 2028:
Little in this quarter points to big cuts: free cash flow beat, and expenses came in below Shopify’s guide.
TIKR tracks 54 analysts on Shopify. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Shopify, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Shopify’s Analyst Ratings
Gross profit is falling behind
The bigger issue is gross profit. It grew 28% to $1.78 billion, so gross margin slipped to 47.6% from 48.9% a year earlier. That’s been going on for a while as lower-margin payments grow faster. Gross margin fell to 48.1% in 2025 from 50.4% in 2024:
The fourth-quarter guide doesn’t close the gap: it calls for low-thirties revenue growth against high-twenties gross profit growth. So earnings growth leans on costs, and so far that’s worked. Operating expenses fell to 32% of revenue from 37%, below Shopify’s own 33%-34% guide, and it expects 29%-30% in the fourth quarter.
Analysts saw this coming: over the past year, their 2027 revenue estimate rose 15%, while their 2027 EPS estimate rose only 2%.
Patient buyers get a better price
Shopify closed Nov. 2 at 74x forward earnings, right around its three-year average. At the Nov. 3 close, it’s in the high 60s, and about 58x 2027 estimates.
That’s still expensive, but it’s a lower price on estimates this quarter gave little reason to cut. For a patient investor, the drop looks like a chance to buy.
The fourth-quarter report, expected in February, is the next test: GMV has to get back on track. A second miss would likely bring the estimate cuts this quarter didn’t, and at about 58x 2027 earnings, Shopify can’t absorb many.
So what is Shopify stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
