Canadian e-commerce Shopify announced on Tuesday that the company would trim its workforce by 10%. It is estimated that 1,000 employees will be affected by the layoffs. The decision caused the investors to lift their guards, with Shopify stock (SHOP) losing close to 15% of its value.
2022 has been quite bad for Shopify shares, which are 77% down year to date. The free fall is a result of many factors, including lesser purchasing activity after the pandemic slowed down and resulting in Q1 earnings misses. SHOP closed at $36.70 on Monday before plunging as low as $30.66 after the layoff announcement.
Reportedly, the layoffs will come across various roles in recruiting, sales, and customer support. There is also a goal to eliminate dual roles and roles that are considered overly specialized.
Shopify CEO Tobias Lütke addressed the subject in an email sent to employees on Tuesday morning. According to Lütke, the company believed the pandemic shift to e-commerce is actually there to stay. He also said that the company made a bet that simply “didn’t pay off.”
“Ultimately, placing this bet was my call to make, and I got this wrong. Now, we have to adjust,” said Lütke in an email obtained by Yahoo Finance. “As a consequence, we have to say goodbye to some of you today, and I’m deeply sorry for that.”