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Shopify shares are down 20% on Thursday: explore why

on May 5, 2022
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  • Shopify reports weaker-than-expected results for its fiscal Q1.
  • The eCommerce company says it will buy Deliverr for $2.1 billion.
  • Shopify shares are down nearly 20% on Thursday morning.

Shopify Inc shares (NYSE: SHOP) are down nearly 20% on Thursday morning after the eCommerce company reported weaker-than-expected results for its fiscal first quarter.

Key takeaways from Shopify Q1 earnings report

  • Lost $1.50 billion versus the year-ago figure of $1.3 billion in net income.
  • Per-share loss of $11.70 was much worse than last year’s $9.94 EPS.
  • Noted $1.60 billion in equity and other investments-related losses.
  • Adjusted per-share earnings stood at 20 cents in the recent quarter.
  • Revenue jumped 22% to $1.20 billion, as per the earnings press release.
  • FactSet consensus was for 64 cents of adjusted EPS on $1.24 billion in revenue.

In Q1, Shopify was up against very tough comparisons. In the first quarter last year, it saw its revenue grow at the fastest pace since 2015, when it went public. Inflation is also an ongoing headwind for the NYSE-listed firm.

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Shopify announces a $2.10 billion acquisition

Also on Thursday, Shopify said it will buy Deliverr (fulfilment-technology company) for $2.1 billion. The Canadian eCommerce giant will fund 80% of the deal in cash and the remaining in stock. In the press release, CEO Tobi Lutke said:

Our goal is to not only level the playing field for independent businesses, but tilt it in their favour – turning their size and agility into a superpower. Together with Deliverr, Shopify fulfilment network will give millions of growing businesses access to a simple, powerful logistics platform that’ll allow them to make their customers happy over and over again.

The stock is now down 70% for the year.