Shopify shares sink as company grapples with costs, seeks possible Amazon partnership

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The e-commerce company’s cost-cutting measures over the past few months have failed to provide an expected boost to its financial performance

“Investors are disappointed by Shopify,” said Gil Luria, managing director and senior software analyst for U.S. investment bank D.A. Davidson. “Because Shopify was bootstrapped and not tied to venture-capital money, from its very beginning, they had to always maintain profitability. But when we saw that the company’s growth reversed and slowed down in 2022, that profitability went away, so they reacted with fairly large cost cuts.

But now, Shopify believes that scheme, coupled with its major efforts to build a fulfilment and delivery network, is piling on top of the company’s operating expenses. And those expenses have grown progressively over the last few quarters, Shopify executives said this week. “Given the timing of when we initiated these changes, the year-over-year comparability will be impacted during the first three quarters of 2023,” Mr.

Mr. Luria believes investors may have good reason to be antsy about the progress from Shopify’s fulfilment network. “It’s a tough hill to climb when you’re competing against Amazon, the most robust distribution network in the Western Hemisphere,” he said.

 

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