What Happened?

Shares of e-commerce software platform Shopify (NYSE:SHOP) fell 5.6% in the morning session after the Bureau of Economic Analysis reported that the Fed's preferred inflation gauge (the Personal Consumption Expenditures (PCE) price index) revealed core inflation came in hotter than expected, fueling fear of stagflation (an economic situation of slow growth and rising prices). Core inflation excludes food and energy prices. 

The Core PCE index showed inflation rose 2.8% (vs. estimates for a 2.7% increase) in February 2025 compared to the previous year and accelerated 0.4% (vs. estimates for a 0.3% increase) over the previous month. These figures added to concerns over proposed tariffs, which rattled markets all week. The combination of rising inflation and escalating trade tensions likely clouded the economic outlook, raising uncertainty for businesses and policymakers.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Shopify? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Shopify’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock dropped 5.9% on the news that stocks pulled back (Nasdaq -1.5%, S&P 500 -1.2%) amid fresh concerns about trade tariffs. The pullback followed comments from President Trump clarifying the scope of his administration's 25% tariffs on Venezuela. He noted that it would apply to any country that does business with Venezuela. For example, 25% is on top of the already-in-place 20% tariff on China because China imports oil from Venezuela, which could translate to a 45% tariff on some Chinese goods. This announcement could significantly raise the operating costs for affected companies and institutions. 

Adding to the market unease, the President announced plans for new tariffs on auto imports before the planned "reciprocal" tariffs on April 2, 2025.

Shopify is down 10.3% since the beginning of the year, and at $96.49 per share, it is trading 25.4% below its 52-week high of $129.31 from February 2025. Investors who bought $1,000 worth of Shopify’s shares 5 years ago would now be looking at an investment worth $2,242.

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