Why Shopify Stock Tumbled Today
What happened
Shares of Shopify (NYSE: SHOP) fell today after the company reported its fourth-quarter results. Investors pushed the company's share price down despite Shopify beating analysts' consensus earnings and revenue estimates.
The tech stock was down by 7.1% as of 11:39 a.m. EST.
So what
Shopify's fourth-quarter earnings increased by 267% from the year-ago quarter to $1.58 per diluted share and far outpaced Wall Street's consensus earnings estimate of $1.21 per share. Additionally, the company's revenue of $978 million for the quarter easily beat analysts' consensus sales estimate of $910 million.
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But investors may be concerned that Shopify's management expects sales to slow in 2021. The company said in a press release, "we will continue to grow revenue rapidly in 2021, albeit at a lower rate than in 2020."
Many investors have been aware of the fact that once COVID-19 vaccines roll out and social distancing and lockdowns start fading away, Shopify's business could slow down as consumers return to in-person shopping.
While that hasn't entirely happened yet, Shopify's management is indicating that 2021 will likely be much different than 2020 for the business.
Additionally, investors may have pushed Shopify's stock down today after it was reported yesterday that Amazon purchased Shopify competitor Selz.
Now what
Shopify didn't release any guidance for 2021 in its results but said that the shift toward e-commerce "will likely resume a more normalized pace of growth" this year. Even with today's share price drop, Shopify's stock is up an astounding 160% over the past 12 months. Inventors will have to wait and see how much a slow return to normalcy in 2021 will affect Shopify's top and bottom lines, but it's clear that the company's management is preparing for a slower year.
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