- Shopify (SHOP.US) shares fell more than 16.0% during today's session after the Canadian e-commerce company announced plans to lay off approximately 10% of its global workforce (around 1000 employees).
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CEO Tobi Lutke cited a pullback in online spending after a pandemic boom and took responsibility for a faulty growth strategy.
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Company sales skyrocketed during the pandemic and management assumed that this trend will continue in the future therefore decided to ramp up hiring and invest in technology. However once the restrictions were eased, e-commerce sales dwindled and Shopify's revenue growth decelerated for four straight quarters.
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"We bet that the channel mix — the share of dollars that travel through e-commerce rather than physical retail — would permanently leap ahead by 5 or even 10 years" "It's now clear that bet didn't pay off," Lutke wrote.
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Firm will report second-quarter earnings on Wednesday before the opening bell.
Shopify (SHOP.US) stock plunged 75% so far in the year and is currently testing pandemic lows at $32.30. In case of a break below the aforementioned support, downward move may accelerate. Source: xStation5
