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SHOP til you drop! Shopify down 15% in premarket after earnings

SHOP til you drop! Shopify down 15% in premarket after earnings
Jordan Major

Shopify Inc. (NYSE: SHOP) exceeded Wall Street expectations for the first quarter of 2024 but saw its stock price sharply decline due to cautious guidance for the upcoming quarter.

Released before market open on May 8, 2024, the company announced a revenue of $1.86 billion, up 23% year-over-year and slightly above the expected $1.84 billion. 

Adjusted earnings per share came in at 20 cents, surpassing estimates by about 17% and showing significant improvement from the 1 cent reported in the same quarter last year.

Shopify stock crashes

Despite these positive metrics, Shopify’s stock plummeted by approximately 15% in early trading to $63.15. The drop was largely due to the company’s net loss of $273 million, a steep decline from the previous year and a cautious outlook for the coming quarter. 

SHOP stock 1-month chart. Source: Finbold

The gross merchandise volume also saw a strong year-over-year increase to $60.86 billion, although it decreased compared to the previous quarter.

This mixed financial performance reflects Shopify’s ongoing struggle to balance growth with profitability amidst fluctuating market conditions. While the revenue and gross merchandise volume indicate healthy demand and business expansion, the significant net loss and cautious future outlook highlight the challenges Shopify faces in maintaining its momentum. 

Investors are particularly cautious as the company prepares for what may be a challenging June quarter. Despite the downturn, Shopify continues to demonstrate strong YoY growth in key metrics like revenue and GMV, suggesting underlying strengths that could support a recovery in its stock price moving forward.

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