Shopify Stocks plunged 16%: Post-Q4 earning reports.

Shopify’s e-commerce services enable businesses to set up their own online stores, process payments, fulfill orders, manage marketing campaigns, and more.

Shopify‘s (SHOP) stock plunged 16% after it posted its fourth-quarter earnings report on Feb. 16. That slide continued the following day and extended Shopify’s year-to-date decline to more than 50%.

Stocks for Shopify Inc.

That drawdown has erased most of the stock’s gains since the onset of the pandemic in early 2020. Shopify was already growing rapidly before the pandemic started, but its growth in revenue, gross merchandise volume (GMV), and gross payment volume (GPV) all accelerated significantly throughout the pandemic as businesses scrambled to sell more products online.

Shopify didn’t provide an exact revenue forecast for 2022 during its fourth-quarter report, but it said it would be “lower than the 57% revenue growth achieved in 2021, but still rapid and outpacing the growth of e-commerce.”

Shopify also said its year-over-year revenue growth would likely be slower in the first quarter of 2022 as it laps the “COVID-triggered acceleration of e-commerce in the first half of 2021.” Those statements were a bit vague, but analysts expect Shopify’s revenue to rise 32% in 2022 and 33% in 2023.

Shopify’s adjusted gross and operating margins both expanded in 2021. Its adjusted operating margin has also improved significantly over the past three years, even as it ramped up its investments to expand its ecosystem.

However, analysts expect Shopify’s adjusted operating margin to drop to 7.5% in 2022 as its rising investments coincide with its slower revenue growth.

Written by Maryam Nawaz

MPhil International Relations (Specialization in International Politics and Economy)

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