Shopify Stock Rally Is Stifled By Weak Revenue Forecasts For 2023

(CTN News) – E-commerce company Shopify Stock (SHOP) reported earnings and revenue for the fourth quarter that exceeded analyst expectations.

As a result, Shopify stock plummeted Thursday after the company’s revenue forecast for the March quarter fell short of analyst expectations.

After the market closes on Wednesday, the company reports its earnings for the December quarter.

As of December 31, Shopify, a Canadian company, earned 7 cents per share on an adjusted basis, down 50% from a year earlier. Additionally, Shopify reported a 26% increase in revenue to $1.7 billion.

Analysts expected Shopify’s earnings report to reveal a loss of 1 cent on revenue of $1.65 billion. The company earned 14 cents per share on revenue of $1.38 billion a year earlier.

In morning trades today, Shopify stock fell 14.1% to 45.87. Shares rose 6.5% on Wednesday.

‘High Teens’ Revenue Growth for Shopify Stock

The company forecasts revenue growth in the “high teens” for the first quarter of 2023, compared to analysts’ predictions of over 20%.

According to Jefferies analyst Samad Samana, the revenue guide implies that Q1 gross merchandise volume will be lower than expected. “Management noted that the uncertain macroeconomic environment had been factored into the outlook.”

As Paul Treiber noted in his note at RBC Capital, guidance implies a return to negative EPS (we estimate a loss of five cents), falling short of consensus for zero cents.

Although Q1 guidance below consensus may reflect conservatism, the absence of annual guidance suggests limited near-term visibility regarding the sustainability of consumer spending.”

“We are incrementally more negative on SHOP post earnings given virtually flat merchant counts year-over-year, which the company will no longer disclose,” said UBS analyst Kunal Madhukar.

The company’s chief financial officer

As a result of its plunge in 2022, Shopify stock has increased by 44% this year.

In January, Shopify Stock increased its merchant pricing.

In addition to building e-commerce websites for small businesses, Shopify partners with other companies to handle digital payments and shipping.

Moreover, the company is establishing a distribution network in the United States for the purpose of storing and shipping products for its merchant customers.

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