Shopify Stock Plummets Despite Strong Q4 Earnings Report

Shopify shares took a sharp dive of about 10% on Tuesday morning following the release of the company’s fourth-quarter earnings report, which surpassed analyst expectations but came with a mixed outlook for the current period. The Canadian e-commerce giant’s performance for the quarter was compared against consensus forecasts from LSEG, previously known as Refinitiv.

Jeff Hoffmeister, Shopify’s CFO, credited the company’s robust results to an increased volume of products being sold on its platform. The gross merchandise volume for the quarter saw a 23% uptick to $75.1 billion, outperforming the $72.1 billion estimate by analysts.

Despite beating earnings and revenue estimates, Shopify’s lighter first-quarter guidance overshadowed the positive report. The company projected a free cash flow margin in the high single digits, falling short of Wall Street’s anticipated 13.6%.

In a research note, Wedbush analysts pointed out that Shopify’s guidance suggests an operating income well below their own estimates, as well as the consensus. The company’s forecast indicated an adjusted operating income of $178 million, compared to the $382 million expected by the consensus. Wedbush currently maintains a neutral rating on Shopify shares.

Shopify’s first-quarter revenue growth was guided to be at a ‘low-twenties percentage rate,’ translating to a mid- to high-20s year-over-year growth rate after adjusting for the sale of its logistics business. Last May, the company divested its last-mile Deliverr and fulfillment units to Flexport.

The reported net income for the quarter stood at $657 million, or 51 cents per share, contrasting with a loss of $623 million, or a loss of 49 cents per share, in the same quarter the previous year.