An employee works at Shopify's headquarters in Ottawa, Ontario, Canada, October 22, 2018. REUTERS/Chris Wattie/File Photo, on Thursday posted a surprise first-quarter profit and announced plans to lay off 20% of its staff while allaying investor concerns by exiting its logistics arm, sending its shares surging about 28%.
The Canadian e-commerce company had aggressively built out an order-fulfillment network in recent years on expectations that a pandemic-fueled demand boom would last, mirroring similar moves by rivals. But that bet unraveled last year, sharpening investor scrutiny of the capital-intensive project that could weigh on earnings, and forcing the company to cut 10% of its workforce in July.in an all-stock deal.
"They can have the best of both worlds – a logistics business that makes them competitive with Amazon without having to manage a business that is not core to Shopify and had been losing money," said Gil Luria, analyst at D.A. Davidson & Co. Thursday's jump was set to add about C$22 billion to the company's market valuation, taking it to about C$103 billion.Meanwhile, its March quarter earnings signaled the benefits from a host of new tools that encouraged businesses from Mattel
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