Shopify soars on tech rally despite weaker earnings outlook - BNN Bloomberg

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Shopify rallied to one of its biggest gains of the year despite releasing disappointing earnings and a weak profit outlook for the rest of 2022.

Shopify Inc. rallied to one of its biggest gains of the year despite releasing disappointing earnings and a weak profit outlook for the rest of 2022.

The company’s riskiest bet is its move to build its own distribution network to help its merchant customers, Chief Executive Officer Tobi Lutke said during a conference call with analysts. Making bold bets is something “our company especially is defined by -- not following some kind of orthodox playbook,” he said.

The worse-than-expected results came one day after Shopify said it would cut 10 per cent of its workforce, after it wagered on a hiring spree to meet pandemic-driven demand from businesses moving their sales online. On Wednesday, the company warned of higher operating losses in the second half of the year and said inflation was beginning to hurt the sector.

While Shopify’s move to providing payments services in physical stores could help the company weather an e-commerce slowdown, investors should brace for weakness beyond 2022 as macroeconomic concerns mount, according to DA Davidson analyst Tom Forte.

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