What Happened?
Shares of e-commerce platform Shopify (NYSE: SHOP) fell 13.1% in the afternoon session after the company reported strong fourth quarter results, with the stock's reaction suggesting expectations were high ahead of the announcement.
The quarter was impressive as Shopify beat analysts' GMV and revenue expectations, putting up impressive 30+% year-on-year growth for both metrics. Profit also came in better than expected. Q1 guidance calls for continued topline growth in the "low-thirties percentage rate", better than Wall Street's estimates. On the negative side, though, Q1 guidance for operating and free cash flow margins came in a bit below expectations, showing that the company is investing in key initiatives such as AI. Overall, we think this was still a great quarter, but the market remained skeptical of software stocks. We're saw that it took a blemish-free quarter to attract the incremental buyer.
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What Is The Market Telling Us
Shopify’s shares are extremely volatile and have had 34 moves greater than 5% over the last year. But moves this big are rare even for Shopify and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 8.7% on the news that an upgrade from MoffettNathanson and positive sentiment from investors ahead of its scheduled quarterly earnings announcement. The analyst firm upgraded Shopify's stock from a "Neutral" to a "Buy" rating and set a new price target of $150.00. This favorable assessment contributed to investor optimism just before the company was set to report its results. The positive mood was also in line with the broader market, which saw gains during the session. Overall analyst sentiment on the stock remained favorable, with a consensus "Buy" rating from multiple research firms.
Shopify is down 28.3% since the beginning of the year, and at $112.68 per share, it is trading 37.1% below its 52-week high of $179.01 from October 2025. Investors who bought $1,000 worth of Shopify’s shares 5 years ago would now be looking at an investment worth $770.06.
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