Trading down more than 30% from its highs, Shopify (NASDAQ: SHOP) has been caught up in investors’ worries about software and consumer stocks. However, this is a fast-growing company that has shown no signs of slowing down, making this downturn a great opportunity to add the stock.
For those unfamiliar with Shopify, the company’s platform is a one-stop shop for helping merchants set up and run their businesses, from creating an online storefront to managing inventory to payment processing. It’s not only for e-commerce retailers; it’s also moved into the brick-and-mortar, wholesale, and business-to-business (B2B) channels. It makes money through subscription fees for its software platform and payment processing fees. It also has a capital arm that lends money to its customers to buy inventory, which is repaid from future sales.
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Meanwhile, the software-as-a-service (SaaS) company is looking to be at the forefront of agentic artificial intelligence (AI) commerce. It co-developed a universal commerce protocol (UCP) with Alphabet that lets AI agents transact with any merchant. It has also developed AI tools, such as Sidekick and Sidekick Pulse, that can help its customers build apps, generate content, and analyze data to provide helpful insights.
Shopify has seen strong revenue growth, as demonstrated by its Q4 results. It saw its revenue soar 31% last quarter to $3.67 billion, driven by a 31% increase in gross merchandise volume (GMV) on its platform to $123.84 billion. Europe has been a big growth driver, with the company seeing a 45% increase in GMV. Meanwhile, newer areas have also been strong, with B2B GMV soaring 84% and offline GMV up 29%.
Shopify sees no slowdown in its growth, projecting that its Q1 revenue would grow at a similar pace to Q4. It sees 2026 as a “landmark year” for the company, during which it will prove that AI-driven commerce will be a big growth driver. It is investing heavily in AI and commerce infrastructure and is looking to use its massive data to help power the success of the merchants on its platform.
Time to buy the stock?
Trading at a forward price-to-sales (P/S) ratio of 11x, Shopify’s stock isn’t in the bargain bin, but it’s at a fair price for its current growth and is toward the low end of its valuation in recent years. It looks well-positioned to be a leader in agentic commerce and should continue to see strong growth in the years ahead, making it a solid option to buy at current levels.