(Bloomberg) — Canadian e-commerce company Shopify Inc. had the average price target on its shares slashed to the lowest level since January 2021 after it signaled slower sales growth.
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More than 20 analysts cut their targets after the stock plunged 17% in Toronto on Wednesday, its biggest drop ever, following a company statement that full-year revenue growth will be lower than the 57% increase in 2021. Shares extended their slump Thursday.
Shopify’s business surged during the pandemic, with sales jumping 86% in 2020 as shoppers moved online. It became Canada’s most valuable company by market capitalization, overtaking Royal Bank of Canada. It surrendered that position in December amid a broader tech selloff, and as shoppers returned to brick-and-mortar stores.
Last month, Shopify said it had canceled warehouse and fulfillment-center contracts, pushing shares to a 16-month low. The company has tumbled almost 50% this year, losing about C$100 billion ($79 billion) in market value.
“The reality is that the above ‘in-line’ results combined with no firm outlook guidance was not enough,” National Bank analyst Richard Tse said in a note to clients. “If the above wasn’t enough to cause pause, a further notable fly in the ointment was a shift in the company’s SFN (fulfillment) strategy to own or run more of the major fulfillment hubs.”
Even as targets were gutted, analysts are largely positive on the stock: Shopify has only one sell rating, with 27 buys and 19 holds.
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