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Shopify believers say payoff from early layoffs should start showing up in latest earnings

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Shopify was among the first tech giants to slash its workforce. Now, some investors say its stock is poised to outperform peers. Read on.

The payoff should begin to be evident on Wednesday, when Shopify reports fourth-quarter results. Analysts in aggregate have boosted earnings per share estimates by 37 per cent over the past six months, according to data compiled by Bloomberg. While free cash flow is still expected to be a negative US$109.3 million, that’s less than half the amount from the third quarter.Article content

The earnings bump that Shopify is likely to get may be a leading indicator for other tech companies that were relative latecomers to cost cutting, such as Facebook owner Meta Platforms Inc. Shares of Meta surged on Feb. 2 after chief executive Mark Zuckerberg pledged to make 2023 the year of efficiency.

Investors appear to have bought into the turnaround story. Shopify’s stock has jumped 40 per cent this year while Amazon shares are up 18 per cent. Indeed, it’s one of the five best-performing stocks in the MSCI World Information Technology Index in 2023 and traders are betting it has room to bounce further, with options pricing in an implied 9.5 per cent move after earnings.

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