Shopify Stock Fell After Its Report. Here's the Price I'd Pay for It.

SHOP dropped 9% after its Q3 report, even though the headline numbers were strong. Revenue grew 32% to $3.7B, and free cash flow jumped 61% to $816M. The market focused elsewhere.

Gross profit growth slowed to 28%, down from the 31-32% range in prior periods. GMV growth also moderated, and the company plans to increase marketing spending. Together, those three items appear to have outweighed the top-line and cash flow beat.

The Motley Fool analyst still considers SHOP expensive at roughly 70x trailing free cash flow, even after the selloff. The writer is waiting for a price around $115, which would equal about 55x free cash flow, before considering a purchase.

Interpretation: the reaction suggests the stock was priced for sustained acceleration, and a deceleration in gross profit growth was enough to trigger a sharp repricing despite 61% free cash flow growth. The planned marketing increase adds a margin question that bulls now have to answer.