Shares of Canadian technology giant Shopify (SHOP) plunged 17%, the stock’s largest one-day drop ever, after the Ottawa-based company provided a weak outlook for growth this year.
Shopify’s management said it is experiencing slower growth as online spending resets and consumers face higher inflation.
As a result, Shopify said full year revenue growth will be lower than the 57% increase seen in 2021. The Canadian-traded shares fell as much as 19.3% on the news. The company has lost nearly $100 billion in market value since the start of this year.
Shopify, which provides software and other services that underpin the websites of many small businesses, grew dramatically during the early stages of the pandemic, with sales jumping 86% in 2020. Investors, however, fear the company can’t sustain its growth as shoppers return to more normal buying patterns.
Those concerns intensified last month when Shopify said it had terminated contracts with several warehouse and fulfillment partners, sending shares to a 16-month low.
However, despite the weak forward guidance provided, Shopify did beat analysts’ estimates for revenue and profit in the fourth quarter of 2021.
The company’s revenue increased 41% to $1.38 billion U.S. Analysts had projected $1.34 billion U.S. in revenue, according to data compiled by Bloomberg Markets. Profit was $1.36 U.S. a share, compared with analysts’ average estimate of $1.26 U.S.
The company’s successful fourth quarter follows a difficult previous quarter, when the company’s results failed to meet analysts’ estimates for the first time since Shopify went public in 2015. At the time, Shopify cited supply chain issues and rising inflation for the disappointing results.
Shopify stock finished trading on the Toronto Stock Exchange yesterday (February 16) at $938.91 a share.
