Shopify down 12% on report it will lay off 10% of its workforce
JHVEPhoto
- In an internal memo cited by Wall Street Journal, Shopify (NYSE:SHOP) indicated that it plans to cut ~1K jobs or 10% of its global workforce across all its divisions as it pulls back on e-commerce growth forecasts it had seen amidst the pandemic.
- Layoffs will occur mostly in recruiting, support and sales units. "We’re also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products," founder & CEO Tobi Lütke commented.
- Consumers have now resorted to old shopping habits and thus online orders have eased, hampering the company's growth; it now expects revenue growth to slow this year.
- Q2 earnings are scheduled for July 27, 2022; In the past six months, the stock has eroded 59% in trading and 22 of the 46 Wall Street analysts covering the stock rate it a Hold while 19 have assigned a Strong Buy rating taking the average rating to "Buy" for the stock.
- In February 2022 when the stock traded at $62.62, Quant Rating stood at Strong Sell continuing to be at the same till date.
- See latest Earnings Estimates here.
- The job cuts are the first big layoffs the company has announced since Mr. Lütke started the company in 2006 and also among the largest so far in a flurry of layoffs and hiring freezes amongst technology companies.
- Shopify workforce multiplied 5 times to 10K in 2021 from 1.9K in 2016 led by the booming business; it also saw annual revenue growth of 86% in 2020 and 57% in 2021; however latest Q1 of 2022 earnings indicated a dull phase.
- The company is offering 16 weeks of severance to the laid-off workers, plus one week for every year of service.
