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Shopify (SHOP) is reversing sharply lower following its 4Q25 earnings report, as profit-taking and valuation concerns overshadowed an otherwise strong quarter and upbeat 1Q26 outlook. After initially rallying on clear top-line beats and guidance calling for low-thirties percent revenue growth in Q1, shares turned decisively negative, likely pressured by a modest adjusted EPS miss and elevated operating expenses. The pullback comes after the stock had surged roughly 13% this week ahead of the print and reflects its lofty 68x forward P/E, which leaves little room for imperfection. Notably, management’s tone on the call remained confident, suggesting the selloff appears more valuation and positioning driven than fundamentally based.

• GMV jumped 31% yr/yr to $123.8 bln (first quarter above $100 bln), fueled by a record holiday season and strength across apparel, beauty, home, and food verticals.
• Revenue climbed 31% to a record quarterly high (first quarter above $3 bln), capping full-year 2025 revenue growth of 30% to $11.6 bln, accelerating from 2024 levels.
• Adjusted EPS of $0.48 appeared to miss expectations, as operating expenses rose to $1.0 bln (29% of revenue), reflecting continued investments in R&D, AI initiatives (Sidekick, UCP), and international marketing.
• Merchant Solutions revenue grew 35%, with Shopify Payments penetration rising to 68% of GMV, underscoring deeper ecosystem monetization.
• International momentum remained robust, with European GMV up 45% (35% constant currency) and nearly half of incremental GMV coming from outside North America.
• B2B GMV surged 84% in Q4 and 96% for the full year, while offline GMV increased 29%, highlighting multi-channel expansion.
• 1Q26 guidance calls for revenue growth in the low 30% range and gross profit dollar growth in the high 20s, comfortably ahead of expectations, although free cash flow margin is expected in the low-to-mid teens due to seasonality and a higher effective tax rate.
• The Board authorized a new $2 bln share repurchase program, reinforcing confidence in long-term cash generation.

Briefing.com Analyst Insight

SHOP’s Q4 results reinforce its positioning as a durable, globally scaled commerce platform entering the AI era with momentum. GMV acceleration to 31% growth, rising payments penetration, explosive B2B expansion, and early traction in AI-driven commerce tools such as Sidekick, Catalog, and the Universal Commerce Protocol illustrate a company broadening both its merchant base and monetization levers. Importantly, management pushed back on concerns that AI agents could bypass SHOP’s checkout, emphasizing that monetization economics remain intact as transactions continue to flow through Shopify Payments infrastructure That said, the combination of a slight EPS shortfall, elevated operating investment, seasonal free cash flow guidance, and a premium valuation likely triggered profit-taking after a strong pre-earnings run. Longer term, however, SHOP appears firmly positioned to compound GMV and revenue at scale, particularly as international, B2B, and AI-powered commerce initiatives gain further traction.