Is It Time to Buy Shopify on the Dip?

Core Viewpoint - Shopify's stock experienced a decline despite reporting strong revenue growth, primarily due to increased loan losses impacting earnings. However, the stock has seen significant appreciation year-to-date and over the past year [1]. Group 1: Financial Performance - Shopify's Q3 revenue increased by 32% to $2.84 billion, surpassing analyst expectations of $2.76 billion [5]. - The company's gross merchandise volume (GMV) rose by 32% to $92 billion, with international GMV increasing by 41% [6]. - Merchant solution revenue jumped 38% to $2.15 billion, while subscription revenue grew by 15% to $699 million [7]. - Adjusted EPS slightly decreased from $0.36 to $0.34 due to higher loan losses, which accounted for 5% of revenue [8]. - Monthly recurring revenue (MRR) was reported at $193 million, below the expected $195 million [9]. Group 2: Growth Drivers - Shopify attributed its robust growth to advancements in artificial intelligence (AI), with over 750,000 shops using its Sidekick AI assistant [2]. - AI-driven traffic to Shopify stores increased seven-fold since January, and orders from AI searches rose 11-fold [3]. - The company continues to attract large brands, recently adding notable names such as Estée Lauder and e.l.f. [7]. - Strong growth in Europe was highlighted, with GMV surging 49%, contributing to 21% of total revenue [6]. Group 3: Future Outlook - Shopify forecasts fourth-quarter revenue growth in the mid-to-high 20s percentage range, aligning with previous guidance [9]. - The company is well-positioned for future growth, particularly in agentic commerce and B2B sectors [11]. - Despite a high forward price-to-sales ratio of over 15 based on 2026 estimates, the company remains attractive for potential investment [12].