Shopify warns on margins and posts big quarterly loss, sending shares plunging
Shopify stunned investors after reporting a surprise loss for the first three months of the year.
The e-commerce platform posted a $273 million loss for the first quarter.
It marks new low following its boom years during the COVID-19 pandemic.
Shopify shares plunged almost 20% on Wednesday after the e-commerce giant sunk into the red for the first three months of the year.
The Canadian platform for online merchants posted a $273 million net loss in the first quarter, marking a sharp decline from the $68 million profit for the same period a year ago.
The loss came despite revenue jumping 23% year-on-year to $1.9 billion. Shopify also said it expected gross margins to fall by 50 basis points in the second quarter following the sale of its logistics business to supply chain firm Flexport in 2023.
The stock was trading at about $62.50, valuing the company at about $80 billion. The plunge wiped about $20 billion off its market cap and wiped out all the gains of the past 12 months.
The losses mark a surprise fall for Shopify after last year reclaiming some of the gains it made during the pandemic online shopping after hitting a low around October 2022.
The company has also undergone a number of rounds of layoffs, with a significant 20% cut made to its workforce in May last year.
Harley Finkelstein, president of Shopify, told investors on Wednesday that they're "seeing the strongest version of Shopify" in its history while claiming that the goal is to build a "100-year company."
"Our outstanding Q1 performance is clear proof of our dedication to the new shape of Shopify, our commitment to operating with a consistent team size, and our focus on building for the long-term to deliver both growth and profitability," he said.
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