Shopify Stock Drops After Q1 Profit Miss, Cautious Q2 Guidance

Shopify (SHOP) shares fell more than 5% at market open on Tuesday after the e-commerce platform missed first-quarter earnings forecasts and issued second-quarter guidance below Wall Street’s expectations.

The Canadian company reported a loss of $0.53 per share, well below analyst expectations for a profit of $0.17, according to data from Koyfin. Net loss totaled $682 million, compared with a projected net profit of $341 million.

Revenue for the quarter was $2.36 billion, roughly in line with Wall Street's expected $2.33 billion. Subscription solutions generated $620 million in revenue, while merchant solutions brought in $1.74 billion.

“Our Q1 results confirm two clear facts. First, we are delivering both growth and profitability at scale. Second, businesses perform better on Shopify, regardless of market conditions,” said Shopify President Harley Finkelstein.

Despite his optimistic tone, Shopify expects gross profit dollars to grow at a high-teens percentage rate in the current quarter, below analyst expectations of a 21.4% growth. 

The company projected revenue to increase at a mid-twenties percentage rate year-on-year, slightly above consensus forecasts of 22.4%.

Shopify’s cautious outlook follows similar commentary from Amazon (AMZN), which also forecast second-quarter operating income below estimates, signaling broader pressure across the e-commerce sector.

According to a report by The Information on Tuesday, there are “signs” that Shopify is pulling back on some of its new loan offers to optimize its financial services amid rising trade risks and a tightening lending environment. 

To keep costs down, CEO Tobi Lutke told employees in a memo last month that they’ll have to show that jobs can’t be done by artificial intelligence (AI) before asking for more manpower and resources.

Shopify’s stock has fallen more than 12% year-to-date but has gained 23% over the past 12 months. 

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