News

Shopify stock slides after it warns pandemic boost will fade

In this article

SHOP-CA

An employee works at Shopify’s headquarters in Ottawa, Ontario, Canada.
Chris Wattie | Reuters

Shares of Shopify plunged more than 15% on Wednesday after the company forecast a revenue slowdown in the first half of 2022, as the online shopping boost from the Covid-19 pandemic cools off.

For the fourth quarter, Shopify posted revenue of $1.38 billion, which surpassed estimates of $1.34 billion. Adjusted earnings per share were $1.36, beating Wall Street’s expectations of $1.27 per share.

Shopify, which makes tools for companies to sell products online, said revenue growth for 2022 would be slower than the 57% it saw in 2021. It cited a number of headwinds, including an end to the pandemic-induced e-commerce surge, the removal of government stimulus and concerns that consumer spending could slow as a result of rising inflation.

Shopify became one of the biggest winners of the pandemic-fueled shift to e-commerce. When the pandemic forced physical stores to temporarily shutter, many of those retailers turned to companies like Shopify to establish a web presence. The company’s stock price surged in 2020 on the back of that momentum.

Now, e-commerce companies like Shopify, Etsy, eBay and Wayfair are under intense pressure to prove their businesses can continue to grow in a post-pandemic world.

Shopify said it expects year-over-year revenue to be highest in the fourth quarter, as “certain commercial initiatives and sales and marketing investments will gain momentum over the course of 2022.”

WATCH: If small business comes back, these software stocks stand to benefit, says GGV’s Richards

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News