Shopify (TSX:SHOP) stock has slipped 12% since the third-quarter earnings release, and it has nothing to do with earnings numbers. The third quarter was business as usual for Shopify, with gross merchandise volume (GMV) and revenue up 32% and free cash flow up 20% year-over-year. What comes as a shock is that Shopify’s revenue and earnings were unaffected by Trump tariffs.
Why did Shopify’s stock fall?
Despite strong earnings, the company’s stock price fell 11% as the overall market was bearish. The US government came out of the record 43-day shutdown. This shutdown has left decision makers in the government without inflation and jobs reports. The White House even warned that some of this data may never be released, creating a blind spot.
When such blind spots occur, it is almost impossible to forecast the next step. It is like driving a car with a blindfold, leaving things to intuition.
It will take some time for the administration to return to normal operations. Until then, the bear momentum is undoubtedly due to investors being cautious about uncertainty and hence holding onto cash.
In the meantime, Shopify has entered its seasonally strong quarter and is ready to cater to higher volumes on Black Friday and Cyber Monday. With business as usual for Shopify and cash flow growing steadily, the stock price dip presents an opportunity to buy into the holiday season rally.
Three reasons Shopify stock could set a new all-time high in 2026
Shopify stock has recovered from its 2022 tech meltdown. The surge in online traffic during the pandemic drove the stock to an all-time high in November 2021 as it witnessed 10-year growth in a single year and also turned profitable. Once shareholders got the taste of profits, they could settle for nothing below positive earnings.
After four years, Shopify stock breached its 2021 peak and made a new high of $253.10 near the end of October 2025 before falling in November. There is a good reason to believe that Shopify could make a new all-time high in February or November 2026.
Sustainable profits
After four years of restructuring and new growth initiatives, Shopify started delivering profits and showed consistency, reporting positive operating income for the ninth quarter in a row. Although the profit and free cash flow growth are uneven, the ability to sustain profits in weak seasons has shown resilience.
The company is now set for its next leg of stable growth in earnings. It has been expanding its global operations, which has pushed the seasonal peak from December to early February.
The 50% seasonal rally between October and January could push the stock to a new all-time high, despite inflated valuations.
Shopify’s AI adoption
Shopify has also been quick in adopting artificial intelligence (AI) into its e-commerce model. The initial performance of AI tools has been impressive, with AI-driven traffic to Shopify stores increasing sevenfold since January, and AI-based orders rising 11 times.
Adding to its AI efforts, Shopify has partnered with OpenAI to enable merchants to sell items on ChatGPT. The impact of this will be visible in 2026 GMV and revenue numbers.
Shopify’s new brand wins
Gradually, Shopify is becoming a sticky platform, offering end-to-end solutions to merchants. It is attracting big brands. Last quarter’s major brand win was Estée Lauder. Big brands boost GMV and look for a complete suite of Shopify’s products, thereby enhancing the e-commerce company’s revenue.
But the high valuation
There is no denying that Shopify has several catalysts, but one caveat is its high valuation of an 83 times forward price-to-earnings ratio and 19 times price-to-sales ratio. Although the fourth quarter is seasonally strong, a reasonable revenue growth expectation is of 25–30%.
Such a high valuation is what pulls down the share price after the seasonal rally fades in February. While this seasonality will continue, the stock will keep growing annually until there is a major disruption in the e-commerce industry.
