The Shopify roller-coaster ride
Enjoying the big swings in its stock?
Since my last post, the big event was Shopify’s Q1 financial report, released on May 5. Today’s post focuses on the Q1 report plus covers more sniping at the Shopify poppy by The Logic and Sezzle Inc.’s lawsuit. But first, let’s check in on some details concerning the extent of the Shopify roller-coaster ride.
The roller-coaster ride in Shopify’s stock
Welcome to the Shopify roller-coaster ride! As of May 15, the share price has careened down the tracks by:
-20.70% since the Q1 financial report on May 5
-37.70% since the start of 2026
-52.40% since the end of October 2025 (and the all-time high)
In 2022, Shopify’s stock tumbled by -75% and then went on to gain more than 550%, reaching a new all-time high in 2025. As for the long-term, the gains are sterling:
+3,365.6% over the last 10 years
+4,017.6% over the last 20 years
Highlights from the Q1 report
Revenue leaped 34% from the same quarter last year, surpassing analyst and company expectations to reach US$3.17 billion. This is a faster increase than the e-commerce market is growing, so Shopify is still gaining market share and widening its moat.
Contributing now to revenue growth is Shopify’s position on the cutting edge of agentic commerce. As President Harley Finkelstein said during the Q1 presentation: “AI-driven traffic to Shopify stores has grown 8x year over year, while orders from AI-powered searches have increased nearly 13x.”
Those increases in agentic commerce are off a smallish base, so may be discounted by some. It could nevertheless be argued that the opportunity is significant given market research firm McKinsey sees agentic commerce “reaching three to five trillion dollars by 2030,” as the Digital Journal noted.
Shopify’s operating income in Q1 rose 88% to US$382 million — ahead of analysts’ US$340 million estimate. Net income, excluding changes in Shopify’s equity investments, came in at US$360 million, up 59%.
Operating margins expanded from 8.6% to 12.1%, thanks to operating expenses only growing by 20%. The margin for free cash flow was 15% as expected; analysts are anticipating free cash flow to grow 31% to US$552 million in Q2. The company has a fortress-like balance sheet: no debt and nearly US$6 billion in cash and equivalents.
So what triggered the price crumble?
Commentary mostly blamed the price drop on the company’s revision of forward guidance for revenue growth down to the high 20% range. As this brings the guidance down to what analysts are expecting, it may seem that the drop was an overreaction. But then again, if agentic commerce sales are going to be really big, why lower projections on revenue growth?
Maybe agentic commerce will not immediately cover some short-term slippage in revenues as they shift over from non-agentic sources? But Shopify management also has a history of providing conservative guidance. Indeed, it has beat consensus earnings by an average of 2% over the last six quarters. Brian Stoffel, who operates one of the best investing channels on YouTube, is one of the analysts who doesn’t believe Shopify’s forecast. Revenue growth in Q2 will more likely be 30%, in his opinion.
Bottom fishers making appearances
Shopify’s fundamentals (revenues, profitability, margins, etc.) have long been stellar, and they kept putting on a performance during the decline in its stock since October of 2025. The problem is not the fundamentals but the sky-high valuation of its stock. The slightest bit of bad or good news has a magnified effect on the stock price, producing huge moves up or down as was witnessed when the Q1 report came in.
Yet, with the recent sell-off in Shopify’s stock, much of the overvaluation has been erased. It is still on the high side but now a lot cheaper and some bottom fishing is emerging among professional money managers.
After the Q1 report came out, Cathie Wood’s ARK Investment Management bought US$32.6M of Shopify shares. Joshua Kushner’s Thrive Capital invested approximately US$100M. In a possible sign of what lies ahead in terms of investment flows, both fund managers indicated that they are de-emphasizing positions in AI chipmakers in favour of companies integrating AI directly into their business operations.
Another snipe from The Logic
In my last post, I drew attention to Shopify hiring 1,000 junior engineers for AI jobs. A few days afterwards, The Logic ran another long piece making a fuss out of 30 or so Shopify employees who recently got laid off , with blame assigned in places to AI and a greedy profit motive.
No mention was made in the article about the 1,000 to be hired. So I emailed the columnist and editor, asking why the new hires were ignored when discussing employment levels at Shopify. No response.
The Logic bills itself as a business journal but the editor, who previously was with the Toronto Star, still seems to have his former employer’s blinders on. Look, the reality is that tech companies operate in a disruptive and competitive world; they are not a government department and it’s crucial to their survival that they allocate their resources carefully.
In fact, Shopify is only one of the hundreds of tech companies in North America laying off staff in 2026. According to the Tech Layoffs Tracker, more than 137,000 tech workers have been let go so far this year.
Sezzle’s lawsuit against Shopify cleared to proceed in part
A U.S. District Court in Minnesota denied in part Shopify’s motion to dismiss Sezzle Inc.’s antitrust lawsuit filed last June, reports Dow Jones newswires. Sezzle offers a buy-now-pay later service (like Affirm does on Shopify); its lawsuit alleges Shopify stifles competition for its BNPL offering and it seeks an injunction to prevent anticompetitive conduct.