Shopify (TSX:SHOP) inventory has slipped 12% for the reason that third-quarter earnings launch, and it has nothing to do with earnings numbers. The third quarter was enterprise as normal for Shopify, with gross merchandise quantity (GMV) and income up 32% and free money circulation up 20% year-over-year. What comes as a shock is that Shopify’s income and earnings had been unaffected by Trump tariffs.

Why did Shopify’s inventory fall?

Regardless of robust earnings, the corporate’s inventory worth fell 11% as the general market was bearish. The US authorities got here out of the document 43-day shutdown. This shutdown has left choice makers within the authorities with out inflation and jobs studies. The White Home even warned that a few of this information could by no means be launched, making a blind spot.

When such blind spots happen, it’s nearly unattainable to forecast the following step. It’s like driving a automotive with a blindfold, leaving issues to instinct.

It’s going to take a while for the administration to return to regular operations. Till then, the bear momentum is undoubtedly attributable to traders being cautious about uncertainty and therefore holding onto money.

Within the meantime, Shopify has entered its seasonally robust quarter and is able to cater to greater volumes on Black Friday and Cyber Monday. With enterprise as normal for Shopify and money circulation rising steadily, the inventory worth dip presents a chance to purchase into the vacation season rally.

Three causes Shopify inventory may set a brand new all-time excessive in 2026 

Shopify inventory has recovered from its 2022 tech meltdown. The surge in on-line site visitors in the course of the pandemic drove the inventory to an all-time excessive in November 2021 because it witnessed 10-year progress in a single yr and likewise turned worthwhile. As soon as shareholders bought the style of income, they might accept nothing beneath optimistic earnings.

After 4 years, Shopify inventory breached its 2021 peak and made a brand new excessive of $253.10 close to the tip of October 2025 earlier than falling in November. There’s a good purpose to imagine that Shopify may make a brand new all-time excessive in February or November 2026.

Sustainable income

After 4 years of restructuring and new progress initiatives, Shopify began delivering income and confirmed consistency, reporting optimistic working revenue for the ninth quarter in a row. Though the revenue and free money circulation progress are uneven, the flexibility to maintain income in weak seasons has proven resilience.

The corporate is now set for its subsequent leg of steady progress in earnings. It has been increasing its world operations, which has pushed the seasonal peak from December to early February.

The 50% seasonal rally between October and January may push the inventory to a brand new all-time excessive, regardless of inflated valuations.

Shopify’s AI adoption

Shopify has additionally been fast in adopting synthetic intelligence (AI) into its e-commerce mannequin. The preliminary efficiency of AI instruments has been spectacular, with AI-driven site visitors to Shopify shops rising sevenfold since January, and AI-based orders rising 11 instances.

Including to its AI efforts, Shopify has partnered with OpenAI to allow retailers to promote gadgets on ChatGPT. The affect of this shall be seen in 2026 GMV and income numbers.

Shopify’s new model wins

Step by step, Shopify is changing into a sticky platform, providing end-to-end options to retailers. It’s attracting massive manufacturers. Final quarter’s main model win was Estée Lauder. Huge manufacturers increase GMV and look for an entire suite of Shopify’s merchandise, thereby enhancing the e-commerce firm’s income.

However the excessive valuation

There isn’t any denying that Shopify has a number of catalysts, however one caveat is its excessive valuation of an 83 instances ahead price-to-earnings ratio and 19 instances price-to-sales ratio. Though the fourth quarter is seasonally robust, an affordable income progress expectation is of 25–30%.

Such a excessive valuation is what pulls down the share worth after the seasonal rally fades in February. Whereas this seasonality will proceed, the inventory will continue to grow yearly till there’s a main disruption within the e-commerce trade.