Shopify’s Whiplash Day
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What caused Shopify's stock to drop after a promising earnings report?
Spotify's earnings and conference call had two very different reactions. This is Motley Fool Money.
Tyler Crowe Welcome to Motley Fool Money! I'm Tyler Crowe. Today, I'm joined by longtime Fool contributors, Matt Frankel and John Quast. We've got a pretty good show today. We're going to talk about Moderna's recent challenges with the FDA approval on some of its flu vaccines. We'll do our normal Thursday thing where we do stocks on our radar. But we wanted to open today's show with Shopify's up and down day yesterday with its fourth quarter earnings report. I think Shopify investors probably have their necks treated for whiplash yesterday. Before the market opened and the company reported fourth quarter earnings, it was poised for a great day. The stock was up 13% in pre-market trading. Then as management basically started to discuss results and get questions in the conference call, the stock started plummeting
Actually, by the end of the day, it was down 6% from the prior day close.
What is agentic commerce and how does it impact e-commerce?
I have hosting duties here, so I will admit I'm not the most ardent follower of Shopify, so I'm going to lean on you guys a little bit more here. But at the first glance of the results that I looked at, I was like, they're pretty good, right? Matt, what did they say?
First of all, Tyler, in the past couple of weeks, we've seen a few earnings reports where it's up in pre-market trading or after hours the night before, then management opens their mouth and it changes. This is definitely not the only case we've seen this quarter. But yeah, the numbers looked extremely strong, at least on the surface to me. 31% year-over-year revenue growth, which is exactly the same as a year ago, so it's not even decelerating as the business scales. Solid growth in free cash flow, operating profit, pretty much every other metric. Merchandise volume through the platform grew by 29% for the full year of 2025. There's now three times as much merchandise flowing through Shopify's platform than just five years ago.
International growth was a really strong point. The ShopPay checkout platform Volume through that grew 62% year over year. It's looking really good. The company authorized a new $2 billion buyback.
What challenges is Moderna facing with the FDA regarding its flu vaccine?
Even the first quarter guidance was well ahead of what analysts were looking for, which has not been the case with a lot of other software companies. It wasn't a perfect report. The big headline is they missed earnings. They missed EPS estimates by a few cents. Free cash flow margin contracted a bit. As I just mentioned, net income declined year over year. But there really wasn't much to dislike in the report other than that EPS miss. which the market will usually forgive for a company that is growing at a faster-than-expected pace. It looked really solid on the surface.
The one thing I did notice on that EPS miss was it looked like it retired some, I can't remember if it was preferred shares or convertible debt, which on a GAAP basis doesn't look good. But overall, when you're doing those things, it's a good idea. Again, I'm not 100% plugged into the expectation games for Shopify, but I thought the numbers looked fine. John, what was said on the conference call that made the market go, hey, wait a minute, what's this?
I'm going to share a little trick with investors. If you ever see a stock drop after the conference call and you wonder what was said, tune into the first question asked from analysts, and that'll probably be what the culprit is.
How does the FDA's refusal to review Moderna's vaccine affect its future?
In this case, the first three questions from analysts to Shopify was tackling the same issue. That's the thing that was on everyone's mind. It's a trend that they're calling agentic commerce. Tyler, investing is all about the future, right? The numbers were fine looking back, but investors have questions about what agentic commerce means for Shopify going forward. It appears that there is a big change coming, an important restructuring, if you will, coming to e-commerce. Just to take a step back, how is AI used in commerce right now? Well, generally speaking, consumers are using AI to research what to buy.
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Chapters
8 chapters
1
What caused Shopify's stock to drop after a promising earnings report?
0:05–1:10
2
What is agentic commerce and how does it impact e-commerce?
1:10–2:20
3
What challenges is Moderna facing with the FDA regarding its flu vaccine?
2:20–3:32
4
How does the FDA's refusal to review Moderna's vaccine affect its future?
3:32–4:56
5
What are the implications of AI on consumer purchasing behavior?
4:56–6:09
6
How is Shopify adapting to changes in the e-commerce landscape?
6:09–7:14
7
What stocks are currently on the radar of the hosts?
7:14–8:24
8
What investment opportunities do the hosts see in the current market?
8:24–23:10