SHOP Stock Heads For Weekly Loss As Cathie Wood’s ARK Trims Stake After 25% August Rally: Valuation Nears 100x Earnings

• ARK Invest sold 40,392 Shopify shares from its ARKK and ARKW ETFs after SHOP gained more than 25% in August. 
• The sales came after Shopify reported strong Q2 results, including 34% revenue growth and 68% higher operating income. 
• Shopify’s rally has made its valuation expensive, with its P/E nearing 95x. 

Shopify Inc. (SHOP) stock is heading for a weekly loss as investors digest profit-taking by Cathie Wood’s ARK Invest following a blockbuster August rally. ARK sold more than 40,000 shares, raising fresh questions about the stock’s valuation. 

Shopify stock inched 0.3% higher overnight, ahead of Thursday. SHOP stock has tumbled 7% so far this week. 

Cathie Wood’s ARK Reduces Shopify Exposure

ARK Investment Management sold a combined 40,392 Shopify shares through two actively managed funds, according to its Sept. 2 trade activity. The ARK Innovation ETF (ARKK) accounted for 35,322 shares, while the ARK Next Generation Internet ETF (ARKW) shed another 5,070 shares.

The sales followed a powerful run for Shopify stock, which climbed more than 25% in August and traded as high as $158. The rally came after the company posted fiscal second-quarter (Q2) revenue of $3.58 billion, a 34% year-on-year increase that exceeded Wall Street's expectation of $3.4 billion, according to Fiscal.ai data. 

Shopify also generated $488 million in operating income, up 68% from last year. Gross merchandise volume (GMV) reached $115.57 billion, a 32% increase, while free cash flow climbed to $654 million. Its free-cash-flow margin improved to 18% from 16% a year ago.

ARK Shifts Capital Elsewhere As SHOP’s Valuation Becomes A Question

The trade activity suggests ARK is not simply sitting on the Shopify gains. ARKW and the ARK Fintech Innovation ETF (ARKF) together purchased 9,993 shares of the 3iQ Solana Staking ETF, increasing exposure to crypto-related assets.

ARK also bought shares of Intellia Therapeutics Inc. (NTLA) through its genomics-focused fund, highlighting continued interest in higher-risk biotechnology opportunities.

Shopify’s rapid appreciation has also pushed its valuation higher. According to Koyfin data, the stock’s trailing price-to-earnings ratio is approaching 95 times, while its enterprise value-to-sales multiple stands at 13.4 times. Investors are therefore weighing whether exceptional growth can continue to justify the premium valuation.

Last week, Phillip Securities downgraded Shopify to ‘Accumulate’ from ‘Buy’ because the stock’s recent rally has made its valuation look expensive. However, the firm remained positive on Shopify’s growth and believes the company stands to benefit from the growing use of AI-powered agentic commerce. 

SHOP Stock: Retail Stance 

On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory with a 37% gain in message volume over the past week. 

SHOP stock has declined nearly 12% year-to-date. 

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