1 Growth Stock Down 16% in 2026 to Buy and Hold

Core Viewpoint - Shopify's stock has experienced a significant decline of 16% early in 2026, despite strong underlying business performance and potential for long-term investment [1]. Group 1: Financial Performance - Shopify's revenue in Q3 2025 increased by 32% year over year, reaching $2.8 billion, driven by a 32% growth in gross merchandise volume, totaling $92 billion [2]. - The company has made progress toward profitability, with net income declining year over year in Q3 due to an equity investment impact, but it remains profitable over the trailing 12 months [3]. Group 2: Valuation Concerns - Shopify's shares are currently trading at a forward price-to-earnings ratio of 75.7, which is considered high compared to the sector average of 26.3 [3]. - The price/earnings-to-growth (PEG) ratio for Shopify is 1.1, indicating a more reasonable valuation compared to other metrics, with the undervalued range starting at 1 and below [6]. Group 3: Market Position and Future Outlook - Shopify is a leader in the e-commerce market, providing services that simplify online business operations, and is expected to benefit from ongoing retail growth [4]. - Despite potential short-term volatility, Shopify is well-positioned to deliver above-average returns due to the rapid growth of the e-commerce industry [7].