Shopify Plunges 13% in a Month: Buy, Sell or Hold the Stock?
Shopify SHOP shares have declined 12.6% in a month in contrast to the broader Zacks Computer and Technology sector’s decline of 1.1%. The underperformance can be attributed to slowing forward growth expectations and concerns about the cost of sustaining its AI-led expansion. However, Shopify’s prospects are expected to benefit from AI-driven commerce, strong merchant engagement, rising payments penetration, an expanding enterprise clientele and an international footprint. So, does the pullback offer a buying opportunity for investors? Let’s find out.
SHOP’s Q3 Guidance Implies Deceleration
Shopify’s second-quarter 2026 revenues increased 34% year over year to $3.58 billion and Gross Merchandise Volume (GMV) increased 32% to $115.6 billion. However, the company expects third-quarter 2026 revenue growth in the low-30% range, implying some moderation from the second quarter. Gross profit growth is expected to be slower at a mid-to-high-20% rate.
Merchant Solutions is growing substantially faster than Subscription Solutions. In the second quarter of 2026, Merchant Solutions revenues increased 37%, compared with 22% growth in Subscription Solutions. Shopify Payments, the largest component of Merchant Solutions, carries lower gross margins because of third-party processing costs. Shopify acknowledges that a continued revenue mix shift toward Merchant Solutions could reduce its overall gross-margin percentage.
Shopify is investing aggressively in agentic commerce and Sidekick, but AI commerce remains small relative to overall GMV. The company is currently monetizing agentic transactions through its existing economics rather than charging separate AI-related fees. Therefore, investors expecting faster direct monetization from Shopify’s AI investments may need to wait for higher AI-driven GMV to materially influence revenues.
Shopify is suffering from stiff competition from the likes of Amazon AMZN, Wix.com WIX and Commerce.com CMRC. Amazon’s services, such as Buy with Prime, Amazon Multi-Channel Fulfillment (MCF) and Amazon Pay, enable merchants to sell both on and off Amazon while leveraging its fulfillment network and checkout technology. Wix competes with Shopify by providing an all-in-one platform that combines website creation, online stores, payments, booking, marketing and AI-powered business tools. Commerce.com offers cloud-based software for building online stores, managing product catalogs, processing payments, supporting omnichannel selling and serving both B2C and B2B merchants.
In terms of share price performance, Commerce.com and Wix.com have returned 73.8% and 12.1%, respectively, while Amazon has dropped 4.9%.
