Investors Send Shopify “Straight to Jail” After Earnings Falls $10M Short (Shares DAMP -9%)

Shopify CEO during earnings call: “Are you not entertained?”

Shareholders: “Straight to jail.”

One would think that hackers redirecting all your customers to fake checkout pages and stealing their credit card information would be the biggest scandal a company could face in one quarter…

But apparently, Shopify's real crime was facilitating credit card theft coming up $10 million short on $3.75 BILLION in expected revenue.

At least the hackers had to work for their money.

*Look away Mr. Beast*

Shopify shares nosedived 9% after the e-commerce platform delivered $3.74 BILLION in quarterly revenue, narrowly missing the $3.75 billion forecast.

Nevermind the fact that Shopify actually BEAT earnings expectations.

Adjusted earnings landed at $0.49 per share, topping estimates of $0.46 to $0.48, while revenue surged 32% year over year.

The company also delivered a 22% free cash flow margin.

For a company whose third-party checkout apps were apparently running a Buy Now, Pay Later Buy Now, Get Your Identity Stolen Later promotion, Shopify's numbers weren't half bad. 

Unfortunately, Shopify forgot to install two-factor authentication on its shareholders' expectations.

Of course, the revenue miss wasn't Shopify's only felony offense against shareholder expectations.

There's also the matter of $900 MILLION in merchandise sales that, much like my buddy's dad in 1997, went out for a pack of Marlboros and never came home. 

Shopify's gross merchandise volume reached $119.15 BILLION.

Analysts expected $120 billion.

Meaning approximately $900 MILLION in anticipated merchandise sales were missing.

Not great, Bob.

And considering Shopify recently opened its checkout systems to AI shopping agents, the timing couldn't be more embarrassing.

The company literally gave authorized AI bots the ability to complete purchases for customers…

And STILL couldn't find another $900 million worth of shopping.

Shopify: "You have permission to buy anything." 

AI agent: "In THIS economy?"

Unfortunately, the missing merchandise wasn't the only problem.

Shopify's subscription revenue came in at $836 million, below expectations of $848 million to $850 million.

Subscription gross profit also missed estimates by nearly $20 million, landing at $661 million.

Which is particularly uncomfortable because subscription revenue is supposed to be the predictable part of Shopify's business.

Now, to Shopify's credit, merchant revenue and merchant gross profit both exceeded expectations.

And management expects fourth-quarter revenue to grow in the low-30% range, broadly matching the street’s 32.1% forecast.

CFO Jeff Hoffmeister pointed to the company's multiple growth drivers and expanding market opportunity.

But after a quarter featuring fake-checkout attacks, an ongoing buy-now-pay-later monopoly lawsuit, and an aggressive push toward AI-powered shopping, investors wanted something more convincing than another promise of future growth.

Perhaps a signed confession explaining the whereabouts of the missing $10 million.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.