Shopify stock, (Ticker SHOP) tumbled by nearly 15 per cent in early trading on Thursday, following the company’s announcement of a weaker-than-expected outlook due to rising costs and a challenging macroeconomic environment. The e-commerce software company’s shares were trading at $61.58 on the Toronto Stock Exchange, representing a drop of approximately 14 per cent. Shopify’s stock took a hit the day after it reported fourth-quarter earnings that surpassed analysts’ expectations.
The company’s weak guidance for the first quarter of 2023 weighed on the stock, despite expectations that total sales growth would be in the high-teens percentages year-over-year, and gross margin would be slightly higher than the 46 per cent reached in the fourth quarter of 2022. Shopify’s CFO Jeff Hoffmeister cited compensation and elevated costs related to the company’s fulfilment network as reasons for profitability expectations to be impacted in the next year. ATB Capital Markets analyst Martin Toner noted that the weak revenue outlook for the first quarter of 2023 spoiled what was a very strong quarter for the company.
The decline in Shopify’s stock comes amid broader tech concerns and worries about falling consumer demand.