Shopify shares plunge 18% on weak guidance

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shares plunge 18% on weak guidance

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shares tumbled 18% on Wednesday, shaving almost $20 billion off the company’s value, after the company

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revenue and profit guidance for the current quarter that spooked investors.

Here’s how the company did for the first quarter, compared with consensus expectations from LSEG:

• Earnings per share: 20 cents adjusted vs. 17 cents expected
• Revenue: $1.86 billion vs. $1.85 billion expected

The better-than-expected first-quarter results were overshadowed by

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’s

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for the current quarter. The ********* e-commerce company said it expects second-quarter revenue to grow at a high-teens percentage rate year over year, which is in line with consensus estimates for growth of 19.5%, but still represents a slowdown from recent quarters.

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has posted year-over-year revenue growth in the low-to-mid 20s for the past six quarters.

On a conference call with analysts,

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executives said consumer spending in the U.S. ******** strong, but “we have factored in headwinds related to [foreign exchange] from the strong U.S. dollar and some softness in ********* consumer spending in our Q2

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.”

****** margins for the second quarter are expected to decrease by about 50 basis points compared with the first quarter, as a result of the ***** of

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’s logistics business to freight forwarder Flexport last May. Meanwhile,

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said it expects operating expenses to increase in the low- to mid-single digits quarter over quarter, while Wall Street had projected flat growth.

Baird analysts said in a note to clients Wednesday morning that the higher operating expense guide clouded “an otherwise solid Q1 report as the company is probably leaning into marketing and R&D (AI/GenAI) investments.”

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, which makes tools for companies to sell products online, in recent quarters has stepped up its artificial intelligence features for businesses, including “

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Magic,” which can automatically generate listings and edit images, among other things. Rivals including

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, Etsy and

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have also introduced AI features for sellers on their platforms.

“Without a clear positive impact on [****** merchandise volume] and revenues from recent investments, investors will question the margin trajectory which will rerate the stock a bit,” the Baird analysts wrote. They have an outperform rating on

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’s stock.

While it has invested in AI,

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has pulled back in other areas like logistics services. Last May, the company ***** off 20% of its workforce as it navigated a post-pandemic slump in e-commerce.

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President Harley Finkelstein said in an interview with CNBC’s “Squawk on the Street” that the company is “long-term-focused.”

“We want to be able to make those investments for the future, which is why we gave the guide we did,” Finkelstein said.

The company reported a net loss of $273 million, or 21 cents per share, compared with a profit of $68 million, or 5 cents per share, during the year-ago quarter.

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said ****** merchandise volume, or the total volume of merchandise sold on the platform, increased 23% to $60.9 billion. That surpassed consensus expectations of $59.5 billion, according to StreetAccount.

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#shares #plunge #weak #guidance

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