Shopify down 27% in one month?!

Shopify posted fourth quarter results last week, and the Street did not like what it saw.

Shares are now down 27% over the past month for Shopify.

Shopify missed slightly on earnings expectations, but revenue is up 31% year over year!

The prevailing fear is that brands will use AI to create their own storefronts and offer their products directly on chatbots, like OpenAI, Gemini, or Claude. That would reduce the need for middlemen like Shopify.

I believe those fears are overstated.

J.P. Morgan analyst Reginald Smith agrees.

“The market is underappreciating the stickiness of the platform and value Shopify delivers to merchants by arming them with truly unique AI-enabled tools trained on data compiled across millions of merchants and billions of transactions,” Smith wrote in a note Thursday.

The stock’s valuation also remains a sticking point. Despite its 30%+ year- to-date pullback, it isn’t cheap. It trades at about 57 times the next 12 months’ earnings, well above the Nasdaq's p/e ratio of 25.7 and SP500's at 23.1

Could be a good company worth studying forward, but for me that valuation is still a bit too high