Shopify drops again after warning of weak outlook, bigger losses
Shopify said it expects operating losses in the third and fourth quarters.
Fransebas
Shopify Inc. slumped in premarket trading after it warned of higher operating losses in the second half of the year and said inflation was beginning to hurt the e-commerce sector.
Shopify said it expects operating losses in the third and fourth quarters will exceed those of the second quarter, when it lost $190 million on an operating basis. The company is cutting about 10% of its workforce, it announced Tuesday.
The stock was down 1.4% to $31.10 as of 9:09 a.m. in New York after earlier dropping about 8%.
“We now expect 2022 will end up being different, more of a transition year, in which e-commerce has largely reset to the pre-Covid trend line and is now pressured by persistent high inflation,” the Ottawa-based company said in a statement Wednesday morning.
The dour outlook and the job reductions came with an admission from CEO Tobi Lutke that executives had misjudged the durability of the pandemic-related boom in online sales and that company’s rapid expansion was unsustainable.
“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust,” Lutke said in a memo to employees. “As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that.”
Ottawa-based Shopify posted a loss of 3 cents per share on an adjusted basis in the second quarter, falling short of estimates for a profit of 3 cents, according to data compiled by Bloomberg. Revenue rose 16% to $1.3 billion from a year earlier, broadly in line with expectations of $1.33 billion.
Gross merchandise volume—the value of merchant sales flowing through Shopify’s platform—grew 11% to $46.9 billion during the quarter, missing estimates of $48.6 billion.
The worse-than-expected results came one day after Shopify said it would cut about 1,000 jobs, mostly in recruiting, support and sales.
The shift out of pandemic lockdowns, elevated inflation and the threat of a recession have shifted consumer habits. Retail stocks fell earlier this week after Walmart Inc. made a surprise cut to its profit outlook as surging prices cause consumers to spurn bigger-ticket purchases.
