$SHOP · The Motley Fool · 2026-11-03

Coming up after the break, we're going to dive into Shopify and Palanteer's earnings. Diving right back into earnings weeks. We have Shopify and Palunteer. And the guys, the market was not huge on the results today.

As we're taping right now, Shopify's uh shares are down about 7%.

Uh, I believe shop Shopify actually didn't quite meet sales guidance

But when you're Palanteer and you're trading at 110 times forward earnings or with Shopify trading at only 80 times expected earnings, you are, as the cliche goes, priced for perfection.

And anything short of perfection gets you stung.

>> Yeah, we could call it it was light speed instead of ludicrous speed, which I think kind of talks to what we're talking about with with Shopify, too, because again, pretty good numbers in a vacuum. slightly lower than expectations, but the market didn't seem to like it because again, the market is anticipating ludicrous speed.

What did you see in the in the report, Matt, that may have like sort of changed your mind or saw why things are not quite as rosy at Shopify, at least on this most recent earnings report?

>> Yeah, as Lou said, Shopify was priced for near perfection going into this report. I do think it was a bit of a knee-jerk reaction. As you mentioned, it was down way worse in the pre-market.

It seems like the market's kind of coming to its senses that the stock is not worth 15% less than it was yesterday.

Uh the the numbers generally looked great. Uh just like Palanteer, uh revenue was up 32% year-over-year. Uh merchant solutions revenue was up 35%, operating income up 66% year-over-year.

Those are numbers that can justify trading for 80 times earnings or or or something similar to that.

Uh, I mean, free cash flow margin was up four percentage points from a year ago to 22%. Uh, Shopify's buying back shares fairly aggressively for a large tech company like that that's still growing rapidly.

Over half a billion in buybacks in this quarter alone.

There were two small misses uh and and very slight. One was on GMV, which is gross merchandise volume, total sales through Shopify's platform. That came in just slightly below expectations.

It decelerated from the second quarter. The deceleration was expected. the the miss was not subscription revenue which is you know uh the the monthly ser the monthly subscription plans that Shopify sells to merchants uh that came in just short of expectations small misses missed by you know up roughly 1% on on both uh compared to guidance

and the stock tanked by 15% in pre-market and as we said it came back uh when the market opened but it was roughly priced for you know near perfection I don't want to say perfection uh but it's it's a valuation problem, not a a business problem.

And the market is seeming to rerate some of these companies after posting excellent quarters because the quarters were not, as you say, ludicrous mode. So, it it it was a very very solid quarter, but not what the market wanted.

>> Now, the last couple times Shopify has been we've done their earnings reports and we talked about them in the off earning cycle, it's been a lot about agentic shopping or a agentic agent shopping.

Um, was there any real update in that regard or is it still just kind of a a a theoretical we haven't quite figured out how to really deploy this in scale yet?

>> Yes and yes to all of that. Uh, I mean Harvey Flestein says Shopify is building commerce, here's his quote, into every surface, every agent, and increasingly everywhere. Which means we're still working on the AI strategy.

I mean, AI shopping needs someone to handle checking in payouts. Not just automated shopping, but just, you know, when you're searching in in Claude or ChatgPT for a purchase, there needs to be a seamless way to check out and and pay for that.

So, they're they're really trying to insert their their platform everywhere. It's still very much a work in progress like it is with pretty much every other e-commerce tool at this point. Uh, but management sounds excited about it.

>> As we kind of finish up here, I'm going to give you each like a 10second response to this. So, we've got Shopify, we've got Palunteer, uh, off the earnings. Of the two of them, which one actually looks more attractive as an investment right now?

>> I'd probably go Shopify, but I don't find either really hugely um, attractive. I'll say Shopify gone nowhere for 5 years. I know there's a pandemic effect there, but wow, it's it's really been just nothing for a while. I think that could continue.

Well, it it it tanked and then came back. So there there was it wasn't a straight path. So I I Shopify I own out of the two. Um so that's the one I would add to today, especially if these current prices hold.

Maybe hopefully they'll be able to kick it into ludicrous speed when in the upcoming quarter.