Shares of Canadian technology company Shopify (SHOP) continue to slide amid a broader
downturn in technology stocks.
Shopify’s stock has fallen 23% since April 11 when the company announced a 10-for-1 stock
split that was supposed to attract retail investors. However, now Shopify’s stock is trading near
$600 a share, down 66% year to date.
Shopify’s shares have far underperformed Canada’s benchmark Toronto Stock Exchange index,
the Nasdaq 100 Index, and shares of many other software companies.
After surging during the early months of the pandemic to become Canada’s most valuable
company, Shopify stock has taken a turn for the worse. Investors are looking closer at its
slowing growth rate, modest profitability, and rising interest rates, which puts pressure on high-
multiple stocks.
Shopify is now on the brink of falling off the list of the Toronto Stock Exchange’s 10 most
valuable companies.
The next catalyst for the stock may come when Shopify reports earnings on May 5, which is
when investors will get a look at the growth outlook as the company battles more competition
and a return of shoppers to physical store locations.
In announcing the stock split, Shopify also announced that it wants to give Chief Executive
Officer (CEO) Tobi Lutke a special “founder share” that will preserve his voting power as long as
he’s at the company. Lutke could retain 40% of the votes at the company even if his equity
stake declines.
The new structure, which is subject to approval from shareholders, would shield Lutke and
Shopify from shareholder activism. Analysts have questioned the share restructuring.
