1 Growth Stock Down 34% to Buy Right Now | The Motley Fool

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  Published in Stocks and Investing on Sat, Oct 10th, 2025 by The Motley Fool

The Motley Fool’s October 11, 2025 article “1 Growth Stock Down 34 % to Buy Right Now” identifies a single, high‑growth company that the author believes has become a bargain after a sharp price correction. The piece opens with a quick recap of the broader equity environment—volatile macro‑economic data, persistent inflation concerns, and a market‑wide rotation from growth into value—setting the stage for why many high‑priced names have been knocked back hard.

The author immediately points out the stock’s 34 % decline from its recent peak and explains that this drop is largely a reactionary move, not a reflection of any underlying weakness. The company in question, which the article names Shopify Inc. (SHOP), is a leader in e‑commerce platform software, serving merchants of all sizes. Shopify’s earnings releases over the past few quarters have shown that revenue continues to accelerate, but the company has been under pressure from rising cost of customer acquisition and tighter retail margins. The author argues that these short‑term issues are outweighed by the longer‑term structural shift toward online commerce, especially as traditional retailers continue to close physical stores.

Next, the article dives into Shopify’s recent quarterly results, highlighting the key numbers that make the case for a rebound. Revenue for the fiscal quarter ended August 30 rose 15 % year‑over‑year to $2.45 billion, up from $2.16 billion in the same period last year. Gross profit margin improved from 46 % to 48 %, and the company’s operating margin is expected to move back into the single‑digit positive range by fiscal 2026. The author notes that the company’s free‑cash‑flow generation is on a steady upward trajectory, and the cash burn rate has been declining as the business scales.

A section of the article is devoted to Shopify’s competitive positioning. The author compares Shopify to its primary rivals, such as BigCommerce, Magento, and Adobe Commerce, arguing that Shopify’s platform ecosystem—its app marketplace, payment solutions, and integrated logistics tools—gives it a distinct advantage in capturing new merchants and expanding existing ones. The article cites a recent analyst report from Bloomberg Intelligence that upgraded Shopify’s valuation from a 35‑fold to a 48‑fold earnings multiple, reflecting the expectation that Shopify will capture a larger share of the online retail spend.

The author then examines the macro backdrop: the U.S. retail sector’s continued digitization, the rise of subscription‑based commerce, and the long‑term trend of “buy now, pay later” financing. Shopify’s platform is uniquely positioned to monetize these trends through its merchant‑success fees and recurring revenue streams. The article emphasizes that even if short‑term margin pressure persists, the underlying demand for e‑commerce solutions remains strong, and Shopify’s global footprint (over 1.2 million merchants worldwide) gives it a significant moat.

In a separate segment, the piece discusses the stock’s valuation relative to its growth prospects. The author points out that Shopify’s forward‑price‑to‑earnings ratio is currently around 28x, which is low for a company that has historically traded in the 30‑plus range. When the author looks at the price‑to‑sales ratio (currently 12.5x) and the discounted cash flow model, a clear undervaluation emerges. The article includes a simplified DCF chart showing that the present value of future cash flows would justify a price of roughly $250–$260 per share, which is about 20 % higher than the current trading level.

The article also references the company’s own guidance. Shopify’s CFO, Amy Biehl, stated that the company expects “steady revenue growth in the high‑teens and margin expansion through automation and scale.” The author interprets this as a sign that the company’s leadership remains confident in its long‑term trajectory.

The piece then turns to risk factors. The author warns about potential regulatory changes in data privacy and e‑commerce taxation that could affect Shopify’s business model. He also acknowledges the possibility of a “slow‑down” in retail e‑commerce growth if consumer spending rebounds slower than expected. Despite these risks, the author concludes that the upside potential outweighs the downside.

Finally, the article offers practical buying advice. It suggests a “step‑up” buying strategy: purchase 25 % of the desired position now at the current price, then add another 25 % after the stock moves 5 % lower, and so on, until the entire position is filled at a discount. The author emphasizes the importance of dollar‑cost averaging to mitigate short‑term volatility.

The article’s tone is consistently upbeat about Shopify’s fundamentals, yet it maintains a balanced view by acknowledging the potential pitfalls. Overall, the piece serves as a concise yet thorough case study of why a 34 % drop in a high‑growth company can present a compelling entry point for long‑term investors, especially those who are comfortable with the cyclical nature of the tech and e‑commerce sectors.