On Wednesday, Shopify’s shares plummeted almost 20% after the e-commerce platform reported a $273 million net loss in the first quarter of the year. This unexpected loss was a significant contrast to the $68 million profit recorded in the same period a year ago. Despite this setback, revenue for the company increased by 23% year-over-year to $1.9 billion.
However, Shopify anticipates that gross margins will decrease by 50 basis points in the second quarter due to the sale of its logistics business to Flexport in 2023. The stock was trading at around $62.50, which valued the company at approximately $80 billion. This drop in share price resulted in a $20 billion loss in market capitalization, erasing all the gains made in the past year.
Despite these challenges, Harvey Finkelstein, Shopify’s president, expressed optimism during an investor call, stating that they are witnessing the strongest version of Shopify in its history. He emphasized their commitment to building a “100-year company” and highlighted their dedication to long-term growth and profitability.