Shopify Inc. was among the first technology giants to slash its workforce during last year’s market rout. Now, some investors say its stock is poised to outperform peers over the course of 2023 as those job cuts translate into lower costs, narrower…
The Canadian e-commerce firm shocked the market when it cut 1,000 jobs in July – a move that sent the stock plummeting 14 per cent in a day as Chief Executive Officer Tobi Lutke said the company need to lower expenses after an aggressive pandemic expansion plan. The move preceded waves of layoffs across the tech sector, including at Amazon.com Inc. and software maker Microsoft Corp.
“We are pretty excited about the cost actions’ impact on this year,” said Ivana Delevska, chief investment officer at Spear Invest. Her firm built up a position in Shopify in the fourth quarter, betting on a rebound. Since the job cuts, Shopify has announced new partnerships, a flurry of updates for customers and a significantly higher pricing plan. Delevska said the combination of those efforts should be visible in the earnings. “I think there is going to be a bump at the next set of results,” she said.
Shopify’s profitability plan is “likely to be the main focus area of attention” during its earnings call, Bloomberg Intelligence analyst Anurag Rana wrote in a report, adding that an e-commerce rebound is expected after Amazon’s third-party business unit posted 20 per cent growth compared with consensus expectations of 7 per cent.
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