Shopify Plunges After Earnings Miss, $2.1 Billion Startup Deal

(Bloomberg) -- Shopify Inc. dropped as much as 16% after it missed analysts’ estimates for revenue and profit and announced the largest acquisition in its history, a $2.1 billion deal for startup Deliverr.

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The Canadian e-commerce software firm said it earned 20 cents per share on an adjusted basis in the first quarter, short of analyst calls for 64 cents. Revenue rose 22% to $1.2 billion from a year earlier, but couldn’t meet analyst expectations of $1.25 billion, according to data compiled by Bloomberg.

The shares were down 14% to $416.50 in premarket trading at 7:50 a.m. in New York. They had declined 65% this year as of Wednesday’s close.

“While we’ve experienced massive macro shifts since the start of the pandemic, the one mainstay has been that Shopify is the commerce platform of choice for merchants in any environment, with the ability to support commerce on any surface,” Shopify President Harley Finkelstein said in a statement.

E-commerce stocks have been pummeled this earnings season on concerns that online shopping is slowing from its torrid pace in the pandemic. Amazon.com Inc. suffered the biggest one-day drop since July 2006 after it reported a weaker-than-expected revenue forecast.

Gross merchandise volume, the value of merchant sales flowing through Shopify’s platform, grew 16% in the first quarter from a year earlier to $43.2 billion. Analysts, on average, expected $46.5 billion.

Shopify also said it reached a deal acquire Deliverr to expand in fulfillment services, confirming an earlier report by Bloomberg News. In January, Shopify canceled several fulfillment and warehouse contracts intended to create its own distribution network.

“Being able to offer a delivery promise and fast fulfillment across all these channels boosts conversion,” Chief Financial Officer Amy Shapero said. “We are confident Deliverr’s ability to simplify the process, and arm merchants with visibility and control from the display of a delivery promise across multiple channels through its completion, will be a huge benefit to our merchants.”

Shopify has had a rough start to the year. A parade of analysts slashed the company’s price target ahead earnings.

In a bid to draw retail investors, Shopify announced in April plans to split its stock 10-for-1. The company is also seeking to make governance changes that would give Chief Executive Officer Tobi Lutke a special “founder share” that will preserve his voting power as long as he’s at the company, under certain conditions.

(Updates share move and other additional information)

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