The stock of Shopify (SHOP) is down 16% on Nov. 3 after the Canadian e-commerce firm reported quarterly financial results that fell short of analysts’ consensus estimates.
Ottawa-based Shopify reported third-quarter earnings per share (EPS) of $0.49 U.S, which beat Wall Street’s forecast of $0.47 U.S.
Revenue of $3.74 billion U.S. matched consensus estimates. Shopify’s sales were up 32% from a year earlier.
What sent SHOP stock plunging was the company’s gross merchandise volume, which represents the total value of orders placed through the company’s platform.
Shopify reported that its gross merchandise volumes rose 29% year-over-year to $119.1 billion U.S. That was short of Wall Street’s expectations for $120 billion U.S.
Growth also slowed from the second quarter, when gross merchandise volume increased 31%.
The metric is a key indicator of Shopify’s current and future growth. There are concerns that the company’s business could be disrupted by artificial intelligence (A.I.).
Looking ahead, Shopify said it expects revenue growth in the current fourth quarter in the low-30% range, in line with Wall Street’s expectations.
Management noted that the company’s free cash flow surged 61% year-over-year to $816 million U.S. in the latest quarter, while its free-cash-flow margin expanded to 22% from 18%.
At one point in early trading on Nov. 3, SHOP stock was down 19%, putting it on track for its largest one-day decline on record.
Prior to Nov. 3, Shopify’s share price had fallen 10% over the past 12 months to trade at $156.22 U.S.
