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Shopify Falls on Forecasting Slower Revenue Growth in 2022


© Reuters.

By Dhirendra Tripathi – Shopify stock (NYSE:SHOP) traded 10% lower in premarket Wednesday after projecting a lower revenue growth in 2022, recognizing that the pandemic-fueled boom in shopping is cooling off now.

Higher inflation and a return to offline shopping are also expected to keep Shopify’s revenue growth under pressure.

The company rode the pandemic to help merchants set up online stores through subscription-based software tools, while offering services for shipping and payments. That growth is set to ebb now.

“We believe that the Covid-triggered acceleration of ecommerce that spilled into the first half of 2021 in the form of lockdowns and government stimulus will be absent from 2022, and there is caution around inflation and consumer spend near term,” the company said in a statement.

The company also warned about changes in its partnership terms with apps and theme developers hurting its subscriptions solutions revenue in the first half, particularly in the first quarter.

As a result, it expects 2022 revenue growth to be lower than the 57% rise in 2021.

December-quarter revenue was 41% higher at $1.4 billion, beating estimates.

Gross merchandise volume, a metric defining the total value of all transactions on an online platform, jumped 31% to exceed $54 billion.

On an adjusted basis, Shopify earned $1.36 per share, beating estimates.

Shopify Falls on Forecasting Slower Revenue Growth in 2022

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