Shopify shares fell 16% after the company reported a revenue miss and disappointing free cash flow, Yahoo Finance reported, despite beating earnings expectations. The e-commerce platform reported earnings per share of 49 cents, against analyst expectations of 45 cents, but its gross merchandise volume metric came in below analyst estimates by approximately 0.8%.
Shopify's platform enables merchants to build online stores without coding, handling website design, inventory tracking and payment processing. The company also operates the Shop app, which allows consumers to track packages, store payment details and discover products from Shopify merchants. Shopify president Harley Finkelstein has previously said that AI platforms such as ChatGPT and Gemini drove a tripling of traffic and orders to Shopify stores over the past year, with smaller merchants gaining discovery opportunities as a result.
The session saw multiple major companies report earnings, with investors focusing sharply on margins and cost structures. Apple beat earnings and revenue expectations, with iPhone sales rising 17.5% against a street expectation of 15.5%, but gross margins came in at 46.9%, below expectations.
The company guided for gross margins of 45.5% in the following quarter, below Wall Street's expectation of 46.3%. Palantir shares fell approximately 6% despite revenue growing 96% and adjusted EPS beating expectations, with investors focusing on US commercial total contract value rising 11% year-over-year as a disappointment.
Fiserv shares rose 10% after the company beat on earnings and announced a cost savings target of $1 billion. Zebra Technologies shares dropped 16%, with investors focusing on margin pressure even though the company surpassed estimates and lifted its outlook. Dynatrace cut its full-year EPS guidance due to margin pressure related to a recent acquisition, and its shares fell approximately 13%.
Eric Bleeker, chief investment officer of 24/7 Wall St., said any company showing cost structures that weigh on margins is experiencing severe share price declines, and that Wall Street is closely scrutinising how companies manage costs rather than focusing solely on headline earnings beats. Bleeker said the pattern of investors punishing margin pressure could reflect lumpiness in contract values in Palantir's case, but that any small misstep is being treated harshly by the market in the current earnings season.
WAGD, an Australian retailer of dog harnesses, was kept closed at Shopify's direction after third-party theme extensions delivered malicious code that sent at least one shopper to a fraudulent checkout page. App developer Logbase confirmed the store was among those affected.
Reporting: Yahoo Finance
Written by Pick & Scroll News from the reporting and documents linked above.
