Shopify's revenue in the first quarter fell short of expectations! The stock price fell to the lowest point in two years!

It is learned that Shopify announced that its 2022Q1 quarter performance fell short of expectations, revenue growth slowed, and its stock price plummeted by more than 18% after the opening. After a sharp fluctuation, Shopify's stock price reached its lowest point in two years.

In the first quarter of 2022, Shopify's revenue increased by 21% year-on-year to $1.2 billion, lower than the expected $1.24 billion. The 21% increase was much lower than the 110% increase driven by the epidemic in the first quarter of 2021, which was also the highest revenue increase in history. GMV increased by 16% year-on-year to $43.2 billion, but was lower than the $46.5 billion expected by analysts.

Shopify reported a net loss of $1.47 billion in the first quarter of 2022, compared with net income of $1.3 billion in the same period last year. Earnings per share of $0.20 were lower than the expected revenue per share of $0.64, which was the result of Shopify's equity and other investment losses. To date, Shopify has made a series of different strategic investments in other technology companies, some of which have seen their market value fall due to the sell-off in technology stocks.

Prior to the earnings report, analysts had been lowering their earnings expectations for Shopify's first quarter due to widespread concerns about the e-commerce industry, and many analysts had also lowered Shopify's stock price. Shopify expects lower year-on-year growth rates in the first half of 2022, which are expected to peak in the fourth quarter.

Shopify became the worst-performing Canadian company on the S&P/TSX Composite Index last week, with a 69% drop in market value since the beginning of the year and more than $155 billion in losses, The Globe and Mail reported.

Shopify's fourth-quarter and 2021 earnings suggest that the company's growth has begun to slow as the strong control of the epidemic, government lockdowns, and stimulus tailwinds that drove the rise of e-commerce begin to wane. The e-commerce industry will face many challenges in the future, including inflation and continued supply chain disruptions and the impact of Russia-Ukraine tensions.

Shopify acquires logistics company Deliverr to expand delivery network

The Ottawa-based e-commerce giant also announced its largest acquisition ever, saying it has reached an agreement to acquire San Francisco-based logistics company Deliverr for $2.1 billion in cash and 20% of Shopify's Class A subordinate voting rights to expand its warehousing and logistics capabilities. Shopify and Deliverr expect the transaction to be completed after regulatory review. If the deal goes through, Shopify will be able to use Deliverr's national delivery network in the United States.

Shopify began entering the logistics space in 2019 by imitating Amazon-style distribution centers. But in January 2022, Shopify terminated several contracts with third-party warehouse and distribution partners. But in a February earnings call, Shopify outlined plans to invest $1 billion over the next five years to build its distribution network.

Shopify invests in many US technology companies to serve sellers

Last month, Shopify invested in Crossing Minds, an American artificial intelligence (AI) company. The move is the latest in the company's long-term strategic investments and acquisitions in technology startups, many of which serve Shopify's seller ecosystem.

Shopify has previously invested in a number of companies, including Vancouver bookkeeping company Bench, Israeli e-commerce marketing company Yotpo, and US customer relationship software startup Loop. Shopify also holds a large stake in US payment processing company Stripe, pay now, buy later company Affirm, as well as companies such as Handshake and Dovetale.

It is learned that Shopify expects its business plan and sales and marketing investments in the second half of the year to "gain momentum" in 2022. Shopify also plans to continue to reinvest all of its gross profits into its business in 2022 to expand its services to more sellers in more regions, develop new products, and strengthen its partner ecosystem.

Editor ✎Estella/

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