Shopify (SHOP -4.29%) will announce its earnings for the second quarter of 2026 on Aug. 5 before the opening bell. The company beat revenue estimates in all four previous quarters and exceeded earnings expectations in three of them.
Despite that generally strong track record, investors should probably not add shares in the e-commerce company before Aug. 5. Here's why.
Image source: The Motley Fool.
Shopify has become a leading platform and ecosystem for e-commerce operations. While that has boosted the stock over time, it has barely made any net gains over the last year.
Unfortunately, post-earnings reactions have typically hurt Shopify stock. Indeed, it made a 22% one-day gain following the Q2 2025 results in August of last year. However, it dropped after each of the last three earnings announcements, especially after the Q4 2025 release in February, when it missed earnings estimates and fell 7% in a single day.
NASDAQ: SHOP
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Moreover, investors should not assume history will repeat last August's post-earnings bump. Shopify recently sold at a P/E ratio of 128, rising from 68 one year ago. That higher valuation could mean that it needs a blowout report to repeat the post-earnings increase from last August, a feat Shopify could struggle to meet in a market where indexes have fallen in recent weeks.
This near-term outlook does not end the bull case for Shopify. It grew revenue by 34% in Q1, and if history is a guide, revenue growth could easily exceed the high-20s number Shopify estimated for Q2. Consequently, Shopify should remain an excellent holding, with one Wall Street analyst estimating the stock could soar 150%.
However, such optimistic estimates do not always come to fruition, and the high valuation makes it less likely that Shopify will achieve this feat over the next year. Also, with the increasingly negative market sentiment, investors are likely best off waiting to buy shares.
