To The Moon

$Shopify(SHOP)$ is set to report its fiscal Q4 2025 earnings on Wednesday, February 11, 2026, before the market opens. After a sharp recent sell-off (down ~30% in the last month), expectations are high for a "clearing event" where the company either validates its premium valuation or continues to face pressure from decelerating growth.

Earnings Expectations (Q4 2025)

Wall Street's consensus is looking for a strong holiday-quarter performance, though management has signaled a slight cooling in growth rates compared to the explosive momentum seen earlier in 2025.

Shopify’s fiscal Q3 2025 results (reported November 4, 2025) were a masterclass in "the market is never satisfied." Despite delivering an "across-the-board" beat on revenue, GMV, and free cash flow, the stock sold off significantly—dropping nearly 7-9% in the days following the report.

Q3 2025 Earnings Summary

The headline numbers suggested a company operating at peak performance:

• Revenue: $2.84 billion, up 32% YoY, surpassing the $2.76 billion estimate.

• GMV (Gross Merchandise Volume): $92 billion, up 32% YoY. This was the 9th consecutive quarter of 20%+ GMV growth.

• Free Cash Flow (FCF) Margin: 18%, a steady improvement from 15% in Q1 and 16% in Q2.

• Specific Wins: B2B GMV surged 98%, and Offline GMV (Point-of-Sale) grew 31%, showing that Shopify is successfully diversifying beyond its "online-only" roots.

The "Lesson Learnt" from the Guidance

If the results were so good, why did the stock drop? The answer lies in the forward-looking guidance and the high valuation trap.

1. The "Mid-to-High 20s" Ceiling

Shopify guided for Q4 2025 revenue growth in the mid-to-high 20% range. While objectively strong, this represented a sequential deceleration from the 32% growth seen in Q3.

• The Lesson: For a stock trading at ~80x P/E (or ~20x Sales at the time), "good" guidance isn't enough; it must be accelerating. Investors interpreted the Q4 guide as a sign that the boost from the $PayPal(PYPL)$ partnership was beginning to lap (compete against) its own success, making future YoY comparisons much tougher.

2. The Margin vs. AI Trade-off

The company reported that its gross margin contracted slightly (down to 48.9% from 51.7% the previous year). This was driven by a shift toward lower-margin payments revenue and increased spending on AI infrastructure (specifically for "Agentic Commerce" and the Sidekick assistant).

• The Lesson: AI is expensive. Even though Shopify’s AI usage was up (Sidekick had 8 million conversations in October alone), the market remains wary of the "spending phase." If AI investments don't immediately translate into higher merchant subscription fees or "take rates," investors will punish the stock for margin compression.

3. Macro Sensitivities

Management’s commentary touched on potential US tariff impacts and a cooling consumer environment.

• The Lesson: Shopify is the "canary in the coal mine" for consumer spending. The market used the Q3 report to "de-risk," fearing that if 2026 brings a recession or trade friction, Shopify's high-multiple stock would be the first to get cut.

Strategy Moving Forward

The Q3 reaction taught us that Shopify is currently priced for perfection. As you look toward the upcoming Q4 report (Feb 11, 2026), the "lesson" is to watch for guidance on 2026 margins. If management can show that AI spending is leveling off while FCF margins continue to climb above 20%, the stock could reclaim its previous highs.

Key Metrics to Watch

Beyond the "top-line" numbers, investors should focus on these three indicators to judge Shopify's long-term health:

• Take Rate (Merchant Solutions Revenue / GMV): This measures how effectively Shopify monetizes the volume moving through its platform. Watch for the impact of the PayPal partnership and Shop Pay adoption, which historically boost this figure but face tougher year-over-year comparisons this quarter.

• B2B and Enterprise Momentum: Shopify has been moving "up-market." Last quarter, B2B GMV grew nearly 100%. If Shopify Plus and B2B growth show signs of slowing, it may signal that the enterprise transition is hitting a ceiling.

• "Agentic Commerce" and AI Guidance: Analysts (like Scotiabank and Citizens) are bullish on Shopify's lead in AI agents for retail. Listen for how many merchants are actually utilizing these tools to drive sales, as this is the primary "moat" narrative for 2026.

Shopify (SHOP) Price Target

Based on 44 analysts from Tiger Brokers app offering 12 month price targets for Shopify in the last 3 months. The average price target is $176.55 with a high forecast of $220.00 and a low forecast of $115.00. The average price target represents a 49.12% change from the last price of $118.40.

Short-Term Trading Analysis

The stock is currently a battleground. It has recently fallen from a peak of ~$179 to roughly $112 - $118, putting it in a potentially "oversold" position according to RSI indicators.

The Bull Case (The "Beat and Raise")

If Shopify beats on GMV and raises 2026 guidance based on AI adoption, the stock could see a massive relief rally. Several analysts maintain price targets in the $150 - $200 range, suggesting a 30%+ upside if the narrative shifts back to growth.

The Bear Case (The "Multiple De-rating")

The software sector has been under pressure. Even a "met" quarter could lead to a sell-off if the Free Cash Flow (FCF) guidance for Q1 2026 is conservative. Seasonal dips in Q1 are normal, but if Shopify forecasts a significant margin contraction, the stock’s high P/E (currently ~80x) makes it vulnerable.

Trading Tip: Look at the $105 - $110 level for support. If the stock holds this during the initial post-earnings volatility, it may provide a technical entry point for a bounce. Conversely, a break below $100 could indicate a fundamental shift in investor sentiment toward the SaaS sector.

Technical Analysis - Exponential Moving Average (EMA)

We saw SHOP recovering from its lows on last Friday (06 Feb) and we can see that the negative RSI momentum is reducing and the bulls might attempt to make another upside movement. So the software sector selling pressure seems to have eased from last night (09 Feb) trading, and could we expect investors to be vested more into the software names like SHOP?

Another important metrics would be the GMV from SHOP, there might be a better results considering Q4 2025 have the holiday season which could boost the merchants and also sales across the SHOP platform, but we can continue to watch the price action of SHOP for trading on 10 Feb 2026.

Summary

Shopify (SHOP) reports its fiscal Q4 2025 earnings on Wednesday, February 11, 2026, before the market opens. Following a roughly 30% sell-off in the past month, the stock is at a critical technical and psychological juncture.

The Numbers to Beat

Analysts are looking for a strong holiday quarter, though the growth rate is expected to show a "healthy deceleration" compared to earlier in 2025:

• Revenue: Expected at $3.58 billion (~27% YoY growth).

• Earnings (EPS): Consensus is $0.50, a 13.6% increase YoY.

• GMV: Forecasted at $120 billion, driven by record Black Friday–Cyber Monday sales of $14.6 billion.

Key Investor Focal Points

• The "Guidance Gap": Investors are hypersensitive to the 2026 outlook. Last quarter, the stock fell nearly 7% because growth guidance (mid-to-high 20s) didn't "accelerate" enough to justify its high valuation.

• Enterprise & B2B Growth: Watch for progress in moving "up-market" with high-profile brand wins (like Estée Lauder). B2B GMV grew 98% in Q3; maintaining this pace is vital for the bull case.

• Agentic Commerce: Analysts (e.g., Citizens, Scotiabank) are focusing on Shopify’s AI agents. The market wants proof that these tools are increasing merchant "stickiness" and driving higher take rates.

Short-Term Trading Opportunity

The recent decline to the $112–$118 range has pushed SHOP into "oversold" territory on some technical indicators (RSI).

• The Volatility Play: Options are pricing in an 11.1% move in either direction—higher than the historical average of 8.6%.

• Bull Strategy: If SHOP beats on GMV and provides 2026 FCF guidance above 20%, a relief rally toward $135–$140 is plausible as "multiple compression" fears ease.

• Bear Strategy: If the 2026 revenue guide dips toward 20% or lower, the stock may test the $100 psychological floor, as its ~80x P/E multiple offers little protection against a growth slowdown.

Appreciate if you could share your thoughts in the comment section whether you think Shopify could show a GMV beat with a positive 2026 outlook guidance and help to ease the pressure from the software sector selling off.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.