Shopify (SHOP -3.29%) reported fiscal 2022 second-quarter earnings on Wednesday, July 27. The e-commerce enabler experienced double-digit revenue growth, but expenses rose sharply, generating an operating loss for Q2. 

Tellingly, days before the earnings release, the company announced it would lay off 10% of its workforce to recalibrate its headcount amid slower-than-expected revenue growth. Shopify thrived at the onset of the pandemic as millions of shoppers avoided brick-and-mortar stores. As economies reopen, folks are reverting to pre-pandemic habits that include more in-person shopping. The sharp reversal has some investors asking if it's time to sell Shopify stock.

Sales growth is decelerating at Shopify

In its most recent quarter, which ended on June 30, Shopify's revenue grew by 16% year over year to $1.6 billion. To put that figure into context, dating back to 2013, Shopify's smallest annual revenue increase had been 47% in 2019. The 16% rate is a meaningful deceleration.

To make matters worse, the growth was driven by Shopify's lower-margin "merchant solutions" business, which grew 18% year over year in Q2. That meant that gross profit barely grew by 6% despite the 16% growth on the top line. Further down the income statement, Shopify's operating expenses rose sharply. Management warned investors that it would reinvest all gross profit dollars into the business, but it went beyond that in Q2.

One key area of investment for Shopify is its fulfillment network. Several months ago, it announced the acquisition of logistics company Deliverr, which closed in July. Shopify aims to simplify the fulfillment process for merchants on its platform, offering them a low-cost, convenient way to promise fast shipping to customers. That ambition has worried investors because of the significant capital investment required and takes Shopify in a different direction from its previously asset-light business model. 

Shopify is going through a tough time

The company is going through a transitionary time when revenue growth is slowing while expenses are rising, with expectations that this scenario will be around for several quarters more at least. 

However, for shareholders who stick around, the reward could be worthwhile. E-commerce spending has grown steadily over the last two decades, and the pandemic lit a fire under that trend. It's understandable there would be some reversion to a more normalized mix between online and in-person shopping. That said, e-commerce sales totaled just 14% of overall sales in 2020. According to Statista, that's estimated to grow to 22% by 2025. Undoubtedly, Shopify and its shareholders will benefit from that trend.

Moreover, the concerns mentioned above are arguably already priced into Shopify's stock, which has fallen 70% so far in 2022. The name of the game is to buy low and sell high; Shopify is down right now. In other words, this might not be an opportune time to sell the stock. On the contrary, it could be an excellent time for long-term investors to start a position.