Shopify (SHOP  ) was 10% higher following its Q3 earnings report despite missing in terms of key metrics such as earnings, revenue, and gross merchandise volume. It also marked Shopify's first miss in terms of expectations in nearly 5 years.

The company and investors seem to concur in their belief that this slowdown is a one-time event due to supply chain issues that have made it more difficult for sellers to meet demand. The company also faced tough comps due to e-commerce sales surging last year at this time, aided by stimulus payments.

Inside the Numbers

In Q3, Shopify reported $0.81 per share, while analysts were looking for $1.23 per share. It was also a decline from last year's EPS of $1.13 per share. Revenue was 46% higher to $1.12 billion which fell short of expectations of $1.15 billion. Gross merchandise volume also fell short at $41.8 billion vs expectations of $43.3 billion.

One reason that the stock was bought despite the miss is that its initiatives with social media companies like Facebook (FB  ), Instagram, and TikTok are already yielding fruit with social media becoming an increasing share of GMV. This is also symbiotic with social media companies who are in an environment where ads may become less profitable with Apple's changes in its newest iOS.

Another aspect of Shopify's business is providing services and premium features for the sellers on its platforms. This part of the business - merchant solutions - saw a 51% increase in revenue to $789 million with a 37% increase in subscription revenue. In total, it added 48,000 merchant customers during the quarter.

Stock Price Outlook

Investors seem to have priced in this bout of weakness in Shopify's stock and don't see it as being reflective of its longer-term outlook. The company's current growth initiative with social media companies is working out, and it also has a variety of new initiatives in the works such as international expansion, a PoS system, and a more expansive fulfillment system.

Therefore, investors who believe in the company's ability to execute and maintain current growth rates should consider using the stock's recent correction as an entry point. The company has made it clear that it will use cash flow to reinvest in its business rather than focusing on profitability. This means the stock's success will depend on its ability to execute.