Shopify (TSX:SHOP)(NYSE:SHOP) debuted on the TSX Index all the way back in 2015. The e-commerce
company grew into one of the best stories in the tech space in the latter half of the 2010s. It climbed to
new heights during the COVID-19 pandemic as more users migrated to the digital commerce space.
Unfortunately, that shine has worn off considerably in 2022. Yesterday, Shopify announced that it would
proceed with layoffs of 10% of its staff. Its shares plunged immediately after the news broke. However, it
finished the day up 11% on the back of a broader rally in the Canadian tech sector.
The company unveiled its second quarter 2022 earnings on the same day. Total revenue still rose 16%
year-over-year to $1.3 billion. However, its revenue growth has slowed considerably in recent months.
Worse yet, it posted an adjusted net loss of $38.5 million or $0.03 per diluted share. It also reported an
adjusted operating loss of $41.8 million, or 3% of revenue.
Digital commerce sales erupted during the COVID-19 pandemic as brick-and-mortar retailers were
forced into mass closures. However, Shopify’s e-commerce sales have slowed considerably with
consumers pressured by a soaring inflation rate. Founder and CEO Tobias Lütke admitted the strategic
mistake which caused the company to pull back significantly on staff.
Shares of this tech stock are still trading in favourable value territory compared to its industry peers. The
e-commerce space is geared up for solid growth going forward, even in the face of recent setbacks.
Shopify is a stock worth monitoring as it hopes to bounce back from its recent failures.
