Breaking News: Shopify Drops on Q4 Earnings

Breaking News: Shopify Drops on Q4 Earnings

Not even topping earnings estimates can reverse Shopify’s fortunes anymore. 

The e-commerce giant reported its Q4 earnings report before markets opened today and beat analyst expectations across the board. Reporting adjusted earnings per share (EPS) of $1.36 on revenue of $1.38 billion, the company outpaced predictions of $1.30 and $1.34 billion respectively.

Despite its earnings coming in above expectations, that figure is still down 14% from the year-ago quarter, perhaps partially explaining its pre-market drop of over 7% at the time of writing. The company is down almost 35% so far this year, with investors expecting its pandemic-induced boost to inevitably slow down.

As Shopify President Harley Finkelstein put it, “The last two years have been extraordinary.” With the company almost tripling revenue, and more than doubling gross merchandise value (GMV) in that time period, sustained growth of that nature was always unlikely. 

In its 2022 outlook, the company outlined that it doesn’t expect this accelerated growth to be maintained. Inflationary concerns and an anticipated pull-back in consumer spending are expected to be near-term headwinds entering 2022.

In order to get a greater insight into what this means for the long-term outlook for Shopify, we turned to MyWallSt Head Analyst, Rory Carron, for his thoughts:

“It's far too easy to look at the stock performance of Shopify over the last few months and think that the company is in serious trouble. Looking at what really matters, the business performance, we see a very different picture. This company has tripled revenue and doubled both Gross Merchandise Volume and the number of merchants on their platform in just two years.

Obviously, they were extraordinary years that brought a lot of tailwinds to the e-commerce space. Those tailwinds are likely to ease over the coming quarters, so one would have to assume a more cautious approach to guidance from management. We'll have to wait and see if management provide any more colour on the impact of tracking changes for advertising.”

With little change in Shopify’s underlying thesis, it continues to hold value for the future. Keep an eye on MyWallSt for any further developments.

Pádraig BolgerPádraig Bolger

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