Shopify's stock reverses lower as earnings miss overshadows AI opportunity

By Hannah Pedone

Shopify executives say AI advancements are helping them attract and retain merchants

Shopify reported adjusted earnings per share of 48 cents in the fourth quarter.

Shopify's earnings report came with a lot of moving parts, and now investors seem focused on the company's bottom-line miss.

The e-commerce company just posted adjusted earnings per share of 48 cents for its fourth quarter, below the FactSet consensus of 50 cents.

And as Shopify (SHOP) invests to drive growth, it noted that its free-cash-flow margin could be slightly lower in the first quarter than it was a year before.

While Shopify shares opened higher in Wednesday's action, they reversed lower and are now down 9%. Wall Street seems to be looking past the more upbeat elements of Shopify's report, including a better-than-expected top-line growth outlook.

For the first quarter, Shopify expects revenue to grow at a low-30% rate relative to a year before. The FactSet consensus was for $3.01 billion in revenue, meaning analysts had been projecting 27.5% growth.

The company saw revenue rise 31% in the fourth quarter, to reach $3.67 billion.

CFO Jeff Hoffmeister said in a press release that AI is "reshaping" how users discover products and make purchases.

Harley Finkelstein, the company's president, added that the company is "laying the rails for the new era of AI commerce."

A MoffettNathanson analyst recently took a bullish view of Shopify's potential to monetize artificial intelligence, as shoppers can now discover products using chatbots like ChatGPT, Gemini and Microsoft Copilot.

Finkelstein said on Shopify's earnings call that the company has been successful in retaining existing merchants and bringing on new ones thanks to AI integrations.

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AI promises to be a major new source of traffic growth for the company, he said.

"Simply put, we believe we have a more diverse commerce data set than almost anyone else on the internet," he said. "And of course, data is what AI is fueled by."

Shopify also announced that its board of directors had approved a share-buyback program of up to $2 billion. Hoffmeister said in the release that the program reflects Shopify's "position of financial and operating strength."

-Hannah Pedone

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02-11-26 1030ET