Shopify's fourth earnings miss in a row leads SHOP stock down further following layoffs

Shopify missed on top and bottom lines for Q2.
SHOP stock is down more than 6% in Wednesday's premarket.
The Canadian e-commerce platform has begun laying off 10% of its workforce.

Shopify (SHOP) stock is having a bad week, to say the least. First, the company announced mass layoffs that would affect about 10% of its workforce or 1,000 employees. That news on Tuesday led SHOP to lose 14.1% of its value. The Canadian e-commerce platform then offered up a fourth earnings miss in a row on Wednesday morning that confirmed the firm is failing to pivot quickly after the pandemic led the company into explosive growth.

Shopify stock earnings

Shopify lost $0.03 in adjusted earnings per share compared with the average forecast that it would gain $0.03 in the second quarter. Revenue of $1.295 billion also missed the consensus of $1.33 billion. Worse still were gross merchandise value transactions through the Shopify platform reaching $46.9 billion, well below the $48.8 billion projection.

Revenue for both the merchant solutions and the subscription solutions underperformed expectations.

What made matters worse is that management did not even try to play it off, saying this year as a whole would be a transition year. "E-commerce has largely reset to the pre-Covid trend line and is now pressured by persistent high inflation," the statement read.

Management, headed up by CEO and founder Tobi Lutke, said losses would continue in the coming third quarter.

Shopify stock forecast

SHOP stock had been trading under the $40 level since May and recently appeared to break through that obstacle, leading to FXStreet forecasting a higher run. However, this earnings miss will now lead SHOP to make the $30 support level its new resistance point. The 9-day moving average will soon cross below the 21-day moving average.

Expect SHOP to dawdle around the high $20s in search of support. October and November of 2019 had Shopify discover support just above $28. That may again provide a base.

SHOP stock chart, daily

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.