- Shopify missed on top and bottom lines for Q2.
- SHOP stock is down more than 6% in Wednesday’s premarket.
- Shopify has begun laying off 10% of its workforce.
Shopify (SHOP) stock is having a bad week, to say the least. First, the company announced mass layoffs that would affect about 10% of its workforce or 1,000 employees. That news on Tuesday led SHOP to lose 14.1% of its value. The Canadian ecommerce platform then offered up a fourth earnings miss in a row on Wednesday morning that confirmed the firm is failing to pivot quickly after the pandemic led the company into explosive growth.
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Shopify stock earnings
Shopify lost $0.03 in adjusted earnings per share compared with the average forecast that it would gain $0.03 in the second quarter. Revenue of $1.295 billion also missed consensus of $1.33 billion. Worse still was gross merchandise value transactions through the Shopify platform reaching $46.9 billion, well below the $48.8 billion projection.
Revenue for both the merchant solutions and the subscription solutions underperformed expectations.
What made matters worse is that management did not even try to play it off, saying this year as a whole would be a transition year. “E-commerce has largely reset to the pre-Covid trend line and is now pressured by persistent high inflation,” theh statement read.
Management, headed up by CEO and founder Tobi Lutki, said losses would continue in the coming third quarter.
Shopify stock forecast
SHOP stock had been trading under the $40 level since May and recently appeard to break though that obstacle, leading to FXStreet forecasting a higher run. However, this earnings miss will now lead SHOP to make the $30 support level its new resistance point. The 9-day moving average will soon cross below the 21-day moving average. Expect SHOP to dawdle around the high $20s in search of support. October and November of 2019 had Shopify discover support just above $28. That may again provide a base.
SHOP stock chart, daily