Why Shopify Stock Dove Today

Shares of Shopify (SHOP -4.76%) were sharply lower on Tuesday, falling as much as 13.2%. As of 12:41 p.m. ET, the stock was still down 5.4%.

The catalyst that sent the e-commerce platform and tools provider lower was its financial results, which failed to instill investors with confidence.

Image source: The Motley Fool.

Robust results

Before the market open, Shopify reported its third-quarter results, but shareholders simply weren’t inspired. The company reported revenue of $3.74 billion, up 32% year over year, which resulted in adjusted earnings per share (EPS) of $0.49, up 44%.

To give the results context, analysts’ consensus estimates called for revenue of $3.73 billion and adjusted EPS of $0.46 — so Shopify cleared both hurdles with room to spare.

The strong top-line growth was fueled by a 29% increase in gross merchandise volume (GMV), or the total value of products sold on its platform. At the same time, monthly recurring revenue (MRR) of $230 million climbed 19%.

President Harley Finkelstein highlighted the company’s strengths, saying, “Shopify is uncommonly good at operating in two realities at the same time: the world our merchants exist in today, and the one they are moving toward. Q3 is the perfect example. We powered $119 billion in GMV, while continuing to build commerce into every surface, every agent, and increasingly, everywhere.”

SHOP – Shopify

$148.78-$7.44 (-4.76%)

NASDAQ · As of 1:04 PM ET 11/03/26

For the upcoming fourth quarter, Shopify is guiding for revenue growth in the low-thirties percentage rate year over year, accompanied by gross profit in the high twenties and free cash flow margin similar to last year’s rate of about 19%.

That all seems like positive news, so why is Shopify stock falling? Investors found nits to pick with some of the company’s operating metrics. GMV of $119.2 billion fell short of the $120.1 billion analysts had predicted, while subscription revenue of $836 million was below the $850 million some expected.

At 99 times earnings, Shopify stock isn’t cheap, so investors are more likely to nitpick its results. That said, the stock is valued at a significant discount to its three-year average multiple of 169.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.