Shopify Shares Fall 7% After Q3 Sales Miss Forecasts

Shopify shares dropped 7 percent on Tuesday, trading lower after the company released third-quarter financial results that missed key market expectations. The sell-off followed the announcement that subscription gross profit and gross merchandise volume did not meet analyst forecasts, even though the e-commerce platform reported higher-than-expected adjusted earnings.

The company generated total quarterly revenue of $3.74 billion, slightly below the LSEG projection of $3.75 billion. Adjusted earnings came in at 49 cents per share, surpassing the LSEG consensus estimate of 46 cents per share. Gross merchandise volume reached $119.15 billion, missing the StreetAccount estimate of $120.03 billion. Subscription gross profit totaled $661 million, falling short of the $680.3 million predicted by StreetAccount by nearly $20 million.

Harley Finkelstein, president of Shopify, defended the quarter's performance during an interview on CNBC's Squawk on the Street. He described the gross merchandise volume results as consistent and durable, noting that this marked the thirteenth consecutive quarter with more than 20 percent growth in that metric. Finkelstein stated that the company is proud of its results and intends to focus on long-term building while ignoring daily market noise.

Merchant gross profit exceeded expectations, though subscription revenue of $836 million missed the FactSet estimate of $848.1 million. Looking ahead to the fourth quarter, Shopify expects year-over-year revenue growth in the low thirties percentage range. This guidance is slightly above the 32.1 percent growth rate projected by LSEG analysts.

The quarter featured the launch of Meta's consumer-facing artificial intelligence agent, Muse, with Shopify serving as an early partner. The collaboration allows users to browse and purchase items on Shopify directly within the Muse app and complete transactions using Shopify's payment service, Shop Pay. Finkelstein said the company has not observed a general lowering of prices due to AI comparison shopping. He argued that these agents generate new traffic and help consumers discover new brands and products.

Citing the Tin Can phone, a screenless device for children, Finkelstein noted that the brand has seen success due to agentic-based commerce. He explained that merit-based results and specific queries via AI agents present high-quality products from the Shopify catalog. As the holiday season approaches, Finkelstein acknowledged economic pressure on consumers but expressed optimism that this will be the first holiday season where AI-assisted shopping capabilities become mainstream.

Shopify plans to continue integrating personal agents into its platform, aiming to leverage the rise of agentic commerce. The company will monitor merchant activity and consumer behavior closely throughout the fourth quarter to assess the impact of these new digital channels on overall sales volume.