hares of Shopify were down by the most in the stock’s history in midday trading Wednesday after the e-commerce giant reported a surprising first-quarter loss and warned that last year’s sale of its logistics business could shrink revenue growth this quarter—wiping off more than a billion dollars from the net worth of billionaire CEO Tobias Lutke.
Shopify shares were down 20% shortly after 1:30 p.m. Wednesday to $61.99, putting the company on track to record its biggest daily loss since it went public in 2015.
The stock was down as much as 21.3% to a low of $60.64 in intraday trading, but regained some lost grounds thereafter.
Despite growing revenue by 23% to $1.9 billion in the first quarter compared to the same period a year earlier—beating expectations—the Canada-based e-commerce company reported a net loss of $273 million after struggling to curtail expenses.
That’s not all—Shopify said it expects second-quarter revenue growth, which could have been “in the low-to-mid-twenties”, to be weaker “at a high-teens percentage rate,” following last year’s sale of its logistics unit to Flexport that would create a “revenue growth headwind” by 3% to 4% .
The company said the sale will, however, create a “tailwind” for gross margin by increasing it 2% to 3% in the second quarter from the same period last year, even though it expects the proportion of its gross profit from revenue to shrink on a quarterly basis in three months through June.
Shopify president Harley Finkelstein said the loss was fueled by expenses, including new marketing strategies, but the company is willing to take advantage of opportunities to “double down” on business areas that could lead to “great growth,” according to Barron’s.
