Shopify’s Selloff Is Overdone, Here’s What the Market Is Missing

Amid a brutal, months-long selloff in technology shares, Canadian e-commerce titan Shopify Inc. (TSX:SHOP) has been caught in the downdraft. The stock currently trades roughly 40% below its peak, mirroring the pain across the software sector. A recent note from investment bank Jefferies highlighted that approximately 73% of software stocks now screen as oversold—the highest reading on record.

Yet, while the market focuses on panic selling, Shopify’s underlying business tells a starkly different story. A striking divergence between robust operational metrics and a dismal stock chart may be creating a rare window for long-term investors.

Business Firing on All Cylinders: Black Friday Sales Double in Three Years

At recent investor conferences, Shopify’s Chief Financial Officer Jeff Hoffmeister and Head of Investor Relations Carrie Gillard detailed a company executing strongly across multiple fronts.

Over the 2025 Black Friday-Cyber Monday weekend, sales by merchants on Shopify’s platform reached US$14.6 billion, a 27% year-over-year increase (or 24% on a constant-currency basis). More notably, as Carrie Gillard pointed out at the UBS Global Technology and AI Conference, Shopify processed US$7.5 billion over the same weekend just three years ago, in 2022. This key performance indicator has essentially doubled in that short timeframe.

Shopify’s long-term appeal lies in the simultaneous activation of multiple growth engines:

International Expansion Powers Ahead: Growth in Europe remains robust, in the high-30% to low-40% range. This growth is balanced between existing and new merchants, indicating strong cohort health.

Enterprise Momentum Builds: The company now wins roughly four out of every ten enterprise-level deals, according to its disclosures. Recent flagship wins include brands like Estée Lauder and Canada Goose. As Hoffmeister explained at the Nasdaq Investor Conference, enterprise clients typically don’t migrate their entire business at once. They often start with payments or Shop Pay and gradually expand, creating a valuable “stacking effect” where each client becomes more lucrative over time.

Payments Penetration and Future Bets: A Long Runway Remains

Shopify Payments currently penetrates 65% of the Gross Merchandise Volume (GMV) flowing across its platform, with even higher adoption in North America. The company recently launched its payment solution in 15 new markets, primarily in Europe. As these regions mature, payment penetration is expected to climb, providing a natural tailwind to the company’s take rate.

Furthermore, Shopify has positioned itself as the infrastructure layer for the emerging trend of “Agentic commerce.” The company built its product catalog over two years ago with this future in mind, aiming to be the authoritative source for large language models searching for products. Hoffmeister emphasized that Shopify is uniquely focused on building technology to help merchants succeed in this AI-driven shopping era, not just facilitating consumer transactions.

Financial Outlook: A Glaring Value Disconnect

Analysts tracking Shopify project revenue to grow from US$8.88 billion in 2024 to US$26 billion by 2029. Over the same period, free cash flow is forecast to expand from US$1.60 billion to US$5.81 billion. If valued at 40 times forward free cash flow—a multiple below its one-year average of 77—the stock holds potential for significant appreciation in the coming years.

Shopify’s 40% decline from its highs is not a reflection of business failure but a consequence of an indiscriminate rout in software stocks. This stands in sharp contrast to a business that has doubled its Black Friday sales in three years, wins enterprise deals at a 40% clip, and is strategically aligned with the next wave of AI commerce. The platform is deeply embedded, its merchant ecosystem is formidable, and its innovation pipeline is substantial. When fear dominates the market, opportunity often quietly takes root.