Shares of Shopify are down 12% and weighing on the Nasdaq more broadly.
The company sent a memo to employees today saying that roughly 1000 of them, or 10% of the company's global workforce, would be laid off by the end of the day.
CEO Tobi Lütke said he had expected that surging e-commerce sales growth would last past the pandemic.
"We bet that the channel mix - the share of dollars that travel through ecommerce rather than physical retail - would permanently leap ahead by 5 or even 10 years. .. It’s now clear that bet didn’t pay off...the mix [is] reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead...Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust"
During the pandemic, a common refrain in tech circles was that the transition to ecommerce was being pulled forward by years. However it recent months, ecommerce sales have plummeted. Perhaps that's a sign the consumers overspent during the pandemic on goods or it could be something more troubling for ecommerce.
In any case, this report is weighing on futures with the Nasdaq down 0.6%. Combined with the warning from Wal-Mart and other soft earnings, I'm surprised it's not worse. AMZN shares are down to $116 from $121 premarket.