Shopify warns about margins and reports large quarterly loss, sending shares lower

• Shopify surprised investors after reporting a surprise loss for the first three months of the year.

• The e-commerce platform recorded a loss of $273 million in the first quarter.

• It marks a new low after years of boom during the Covid-19 pandemic.

Shopify shares fell nearly 20% on Wednesday after the e-commerce giant plunged into losses for the first three months of the year.

The Canadian online seller platform reported a first-quarter net loss of $273 million, down sharply from a profit of $68 million in the same period a year ago.

The loss came despite revenue growing 23% year-over-year to $1.9 billion. Shopify also said it expects gross margins to decline 50 basis points in the second quarter following the sale of its logistics business to supply chain company Flexport in 2023.

Shares were trading at about $62.50, valuing the company at about $80 billion. This decline resulted in a roughly $20 billion loss in the company’s market capitalization and wiped out all of its gains over the past 12 months.

The losses mark an unexpected decline for Shopify after it recouped some of its profits from pandemic online shopping last year after bottoming out around October 2022.

The company also saw a number of layoffs, and in May last year the number of employees was reduced by 20%.

Shopify CEO Harley Finkelstein told investors on Wednesday that they are “seeing the strongest version of Shopify” in its history, while also saying the goal is to build a “100-year company.”

“Our outstanding first quarter results are clear evidence of our commitment to the new shape of Shopify, our commitment to operating with a consistent team size, and our focus on building for the long term to ensure both growth and profitability,” he said.

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