Shopify Stock Is Sliding. Investors Are Worried Growth Is Slowing.

To be sure, the December quarter was solid. Shopify reported revenue of $1.7 billion, up 26%, and above the Street consensus forecast of $1.65 billion. Shopify posted an adjusted profit of 7 cents a share, beating the consensus forecast for a loss of a penny a share. Gross merchandise volume in the quarter was 13% to $61 billion—that compares favorably to the 2% decline in
Amazon.com
(AMZN) online stores revenue in the quarter. On a constant currency basis, GMV was 17% higher.

Shopify President Harley Finkelstein said in an interview with Barron’s that the company took a conservative approach to guidance to reflect an uncertain economic environment.

Shopify said first-quarter revenue growth will be “in the high teens percentages” on a year-over-year basis. Street consensus had called for 20%.

Shopify also said gross margin would be up “slightly” from the fourth quarter, with operating expenses up in the low single digits.

Finkelstein said that the company has demonstrated over the last several quarters that Shopify can produce solid growth even while it reduces spending—as he notes, the company was ahead of most other technology companies on tightening its belt, cutting staff 10% in July. He notes that Shopify recently boosted pricing with limited pushback from customers. And he added that Shopify is finding growing traction for its platform with larger companies.

Overall Finkelstein sounds bullish about the business. He notes that “the consumer is strong,” and that merchants are looking for new ways to sell services. He said the March quarter guidance simply reflects a prudent approach in an uncertain environment.

Analyst reaction was cautious.

Citi analyst Tyler Radke writes in a research note that Shopify’s fourth-quarter numbers “confirmed more resilient demand trends,” while the guidance included “a more cautious tone” about the sustainability of the solid consumer demand. He also notes that the stock had been up 54% for the year through Wednesday, setting the stage for a round of profit-taking. The analyst, who has a Hold rating on the stock, also said it was “underwhelmed” by the limited detail the company provided on a path to sustained profitability.

Oppenheimer analyst Ken Wong maintains his Outperform rating on the stock, but he had a similar reaction to the report. He writes that the limited commentary on demand beyond the first quarter, “conservative pricing commentary,” and the uncertain macroeconomic environment “raise revenue risk.”

Shopify stock is down 16%, to $44.90.

Write to Eric J. Savitz at eric.savitz@barrons.com