Shopify plunged Wednesday after the Canadian company that helps retailers with online sales warned of easing revenue growth and thinner margins in the current quarter.
That caught a lot of investors off guard after the company rebounded strongly from the pandemic and started 2024 with a bang.
Shopify Inc. is predicting that revenue will climb by a high-teens percentage rate for the second quarter, well below the 23% jump in the first quarter.
The e-commerce company anticipates quarterly gross margin will decrease by about 50 basis points compared with the first quarter, in which its gross margin was 51.4%.
Shares slid 19.5% in afternoon trading, a bit of a recovery after having been down more than 21% earlier.
During a conference call Wednesday, Chief Financial Officer Jeff Hoffmeister said that while consumer spending in North America remains resilient, some softness in Europe and a strong U.S. dollar are factored into its outlook.
Europe’s economy perked up slightly at the start of the year, recording 0.3% growth in the January-March quarter compared to the last three months of 2023. But the economy has been held back by high inflation that has sapped consumer purchasing power, and by an energy price spike related to Russia’s invasion of Ukraine.
For the first quarter, Shopify reported an adjusted profit of 20 cents per share on revenue of $1.86 billion. Analysts polled by Zacks Investment Research expected a profit of 16 cents per share on revenue of $1.84 billion.
