Shares of Canadian e-commerce company Shopify (SHOP) fell 15% yesterday (May 5) on news
of weaker-than-expected earnings, bringing the stock down below its pre-pandemic level.
The Ottawa-based company missed Wall Street revenue and profit estimates, prompting many
analysts to lower their outlook on the stock.
Shopify’s share price fell 14.7% to $413.64 U.S. in New York trading, bringing this year’s decline
to 70%. The stock is now 2% below where it closed in March 2020 when the World Health
Organization officially called COVID-19 a “global pandemic.”
COVID-19 lockdowns around the world triggered a rally in e-commerce shares as businesses
moved to sell goods online, pushing Shopify’s market capitalization as high as $212 billion U.S.
and making it Canada’s most valuable company.
However, e-commerce stocks have been hit hard this earnings season on concerns that online
shopping is slowing as the COVID-19 pandemic fades.
Shopify earned $0.20 U.S. per share on an adjusted basis in the first quarter, far short of analyst
forecasts of $0.64 U.S. Revenue rose 22% to $1.2 billion U.S. from a year earlier, but couldn’t
match analyst expectations of $1.25 billion U.S.
The company also gave a weaker outlook for adding new business customers in 2022, and
announced the largest acquisition in its history, a $2.1 billion U.S. deal for delivery start-up
Deliverr. But, overall, Shopify gave few financial specifics about the year ahead.
At least seven analysts lowered their share price targets on Shopify stock by yesterday
afternoon, adding to a series of target cuts in the weeks before the company’s earnings were
released.
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