Shopify Shares Sink Despite Strong AI-Powered Growth. Should Investors Buy the Stock on the Dip?

Core Viewpoint - Shopify is experiencing a decline in stock price despite strong Q4 results and a positive outlook, primarily due to the broader sell-off in the SaaS sector [1] Financial Performance - Q4 revenue increased by 31% to $3.67 billion, exceeding analyst expectations of $3.58 billion [3] - Gross merchandise volume (GMV) rose by 31% to $123.84 billion, with Europe showing a 45% increase in GMV [3] - Merchant solution revenue grew by 35% to $2.9 billion, while subscription revenue increased by 17% to $777 million [4] - Monthly recurring revenue (MRR) rose by 15% to $205 million [4] - Shopify Payments processed $84 billion, or 68% of GMV, representing a 38% increase in processed GMV [5] Future Outlook - Shopify forecasts Q1 revenue growth in the low 30s percentage range, surpassing analyst expectations of 25.1% [6] - The company has initiated a $2 billion stock buyback program [6] Valuation and Investment Considerations - Shopify currently trades at a forward price-to-sales (P/S) ratio of 11 based on 2026 estimates, which is considered fair given its growth potential [8] - Despite strong performance, investor concerns about AI disrupting the business persist [8] - It is suggested that investors may consider taking a starter position in Shopify stock, with the potential to add more on further price dips [9]