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Shopify (NASDAQ:SHOP) closed at a record $179.22 on Oct. 12. Under three weeks later, the e-commerce software company’s stock trades at roughly $157 as I write — about 12% below that record, including a fall of about 6% on Friday.
The slide comes right before a big test. Shopify releases its third-quarter results before the market opens on Tuesday, Nov. 3. And management already told investors what to expect back in August: revenue growth at a low-thirties percentage rate, gross profit growth in the mid-to-high 20s, and a free cash flow margin in the high teens to low 20s.
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The last time I checked on the stock, in mid-October, it traded near $170, and I figured buyers were paying for years of growth in advance. The stock is cheaper now, and management has set a clear bar for the quarter. But I don’t think the drop changes as much as it may seem.
Shopify has cleared this bar before
For the first quarter of 2026, Shopify gave investors the same low-thirties revenue forecast. Revenue grew 34% year over year. Management guided for gross profit to rise at a high-twenties rate, and it climbed 32%. The free cash flow margin reached 15%, at the top end of a low-to-mid-teens range. The second quarter had an even bigger gap. Management guided for revenue growth in the high 20s and got 34%, while gross profit rose 31% versus a mid-twenties forecast.
Plus, the second-quarter free cash flow margin hit 18%, up from 16% the year before.
Put another way, Shopify’s guidance has arguably been on the cautious side all year.
That said, the third quarter brings a tougher comparison. Shopify’s revenue rose 32% year over year in the third quarter of 2025, a pickup from 27% growth at the start of that year and 31% in the second quarter. The year-ago results have gotten harder to lap every quarter in 2026, and Shopify has still kept growth at 34%. Hitting that again would put revenue at around $3.8 billion, up from about $2.8 billion a year ago.
Gross profit is set to rise more slowly. Management’s mid-to-high-twenties forecast is below the 31% growth Shopify had in the second quarter.
One big reason is mix (the share of sales from each business line). Merchant solutions revenue, which is mainly payment processing, climbed 37% year over year in the second quarter, while subscription solutions revenue grew 22%. But merchant solutions kept only about 38% of its revenue as gross profit, versus about 80% for subscriptions.
