Shopify Rallies on Q1 Earnings, Job Cuts
Shopify (SHOP:US) shares soared 24% on Thursday to record the biggest one-day gain since 2015 after the company announced several business updates.
Shopify said it will sell the majority of its logistics business to Flexport. Shopify’s logistics segment was seen as a low-margin business that is likely to help the company boost its troubled margins.
Moreover, the company announced massive job cuts with as much as 20% of staff being dismissed in a bid to cut costs as sales growth slows. These difficult decisions are made to set up the company better for long-term success, CEO Tobias Lutke said.
“We will require speed, agility, and a great deal of innovation,” Lutke wrote in a memo to staff.
Shopify estimates that it will incur charges of approximately $140-150 million in 2Q in connection with the workforce reduction.
Finally, the internet company announced its revenue rose 25% year-over-year to $1.51 billion, topping the $1.43 billion consensus. Gross merchandise volume (GMV) came in at $49.6 billion, up 15% YoY and ahead of the $47.68 billion consensus.
Overall, Shopify posted a profit per share of $0.01 while analysts were expecting a loss of $0.04 per share.
Several Congress members reported bigger-than-usual transactions involving SHOP shares in 2022 as the stock lost over 80% of its value in 12 months from November 2021.
Most lately, Congressman Josh Gottheimer disclosed the purchase of SHOP shares in January this year when the stock was still trading below $50 a piece.
On Thursday, SHOP stock closed at $57.30.