TLDR
- Shopify experiences a 6.7% drop, with an earnings shortfall overshadowing a revenue beat and AI growth
- Robust holiday sales and AI momentum are unable to halt the decline of Shopify stock
- Shopify’s revenue exceeds expectations, yet a profit shortfall sparks a sharp sell-off
- AI commerce growth speeds up even as Shopify’s shares decline
- A $2 billion share buyback plan is announced as Shopify’s stock tumbles following results
Shopify (SHOP) shares closed in the red after a late sharp drop wiped out earlier gains, indicating pressure across software names. The stock concluded at $118.71, down 6.70%, as markets responded to its outlook and sector weakness. However, the company reported robust fourth-quarter results and projected strong momentum for early 2026.
Solid revenue beat lifts outlook but fails to support shares
Shopify posted higher quarterly revenue and exceeded expectations despite a weaker adjusted earnings figure. The company reported $3.67 billion in revenue, which surpassed analyst estimates and marked strong year-end growth. Its adjusted earnings stood at 48 cents per share, missing consensus expectations and curbing upside sentiment.
The firm guided for revenue growth in the low thirties percentage for the first quarter, exceeding market forecasts. This projection indicated continued expansion across merchant activity and platform spending despite broader market uncertainty. However, the company noted that its free-cash-flow margin would diminish due to increasing investment in new tools.
The board approved a $2 billion share repurchase plan, in line with capital return priorities. This initiative aimed to enhance share metrics and support long-term financial ratios. The news did not alter the stock’s downward trading trend during the session.
AI commerce activity accelerates across platform and partner tools
Shopify noted rapid growth in AI-driven shopping activity across its network and partner channels. Orders generated via AI searches surged compared to the previous year, expanding merchant exposure to new buyers. This shift bolstered platform engagement and supported wider adoption of automated shopping features.
The company highlighted new partnerships with several AI platforms to broaden merchant reach and simplify product discovery. These connections allowed shoppers to receive customized suggestions and complete purchases across multiple digital channels. They increased traffic for smaller merchants and supported higher conversion rates.
Shopify continued upgrading its internal AI assistant, which assisted merchants in analyzing performance and adjusting store strategies. The tool generated custom apps, automations, and task lists that supported operational flexibility. Usage increased rapidly after its latest release, reinforcing the company’s focus on practical automation.
Holiday momentum boosts revenue base and strengthens platform metrics
The peak holiday period boosted merchant activity and drove retail volumes higher across the platform. Spending from November to December increased across major categories, surpassing industry expectations. This surge supported revenue gains and aligned with broader e-commerce resilience.
Shopify reported gross merchandise volume of $123.8 billion, surpassing analyst expectations. This figure represented 29% growth and reflected increasing adoption among new and existing sellers. Thus, the year-end environment helped strengthen core transaction performance.
The company posted a quarterly profit of $743 million, compared to a higher figure in the previous year. Revenue streams from merchant and subscription solutions continued to expand, supporting overall results. The company emphasized sustained growth while maintaining profitability as it entered 2026.
