Why Shopify Stock Crashed and Burned on Tuesday
Shares of Shopify (NYSE: SHOP) were crushed on Tuesday, tumbling as much as 17.2%. As of 10:24 a.m., the stock was still down 16.2%. The catalyst that sent the e-commerce-tools provider plunging was the decision to significantly reduce its workforce amid slowing online sales growth.
In a missive to employees on Tuesday, CEO Tobi Lütke said Shopify plans to lay off 10% of its staff, or roughly 1,000 workers, by the end of the day. The bulk of the dismissals are coming from the sales, support, and recruiting areas.
More important to investors was Lütke's commentary about the reason for the downsizing. At the height of the pandemic, the Shopify "bet that the channel mix -- the share of dollars that travel through e-commerce rather than physical retail -- would permanently leap ahead by five or even 10 years ... It's now clear that bet didn't pay off ... I got this wrong."
Source Fool.com
