Shopify Stock Falls After Earnings. Why Good Wasn’t Good Enough.

Shopify stock has risen nearly 63% in 2025. (David Kawai/Bloomberg)

Key Points

• Shopify’s third-quarter revenue increased 32% to $2.84 billion, and gross merchandise volume rose 32% to $92 billion.
• Operating income grew 53% to $434 million, missing estimates, and transaction and loan losses more than doubled to $148 million.
• Shopify’s stock declined 4.1% in early trading. It is valued at almost 98 times forward earnings compared with about 23 times for the S&P 500.

Shopify stock was slumping Tueday after third-quarter earnings failed to satisfy Wall Street as investors looked beyond better-than-expected revenue and gross merchandise volume.

Revenue surged 32% to $2.84 billion in the quarter, topping the consensus call for $2.76 billion among analysts polled by FactSet. Gross merchandise volume from merchant customers rose 32% to $92 billion, topping the 28% gain to $89.12 billion Wall Street had projected.

While operating income increased 53% to $434 million in the quarter from a year earlier, this missed estimates for $435 million. Shopify stock declined 3.5% following the report Tuesday morning. The benchmark S&P 500 index was down 0.8%.

On the positive side, Shopify said it expects revenue to grow “at a mid-to-high-twenties percentage rate.” This compares to the consensus call for 23% among analysts tracked by FactSet. Jefferies analyst Samad Samana wrote ahead of the report that he expected “constructive” financial guidance for the fourth quarter, which includes the holiday shopping season.

The analyst also indicated that he also expected a sizable outperformance on gross merchandise volume, or the total value of all goods sold through Shopify’s platform. He described the Street’s forecast for 28% growth as a “low hurdle” that “likely reflects lingering uncertainty on the tariff impact and consumer health.”

While Samana said analysts aren’t appreciating Shopify’s steady performance in terms of gross merchandise volume and “relatively muted exposure to direct tariff fallout,” the stock move could also reflect concerns about a pullback in consumer spending.

J.P. Morgan analysts noted that Shopify reported “a meaningful increase in transaction and loan losses,” which more than doubled to $148 million from $58 million last year. The increase stemmed from higher losses within Shopify Payments, the analysts said, adding that it was “unclear if this is fraud or credit related.”

And then there is the matter of Shopify’s lofty valuation. As of Monday, shares were trading at 97.89 times the earnings expected for the coming year. This compares to 23.06 times for the S&P 500.

Coming into Tuesday, the stock was up nearly 63% this year. Recent gains have propelled it past its pandemic-era highs, when lockdowns sent consumers flocking to online shopping.

The stock plunged in 2022 as sales growth slowed and the company conducted mass layoffs, briefly dipping below $30 at the end of the year. However, it has rallied since then, lifted by a string of strong earnings reports and continued growth in gross merchandise volume.

Shares popped in September after Shopify unveiled a partnership with OpenAI, saying it would allow merchants such as Glossier and Steve Madden to sell directly through ChatGPT.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com