Shopify stock plunges to two-year low as it strikes $2.1B deal to buy Deliverr
Shopify Inc. is making the biggest acquisition in its history as it tries to reverse the flagging faith in its growth path that has knocked it well off the perch of Canada’s most valuable company.
The e-commerce giant had already lost well over $100 billion in market capitalization in recent months before its announcement Thursday that it would buy logistics company Deliverr Inc. for $2.1 billion US pushed its stock down more than 18 per cent in morning trading.
By mid-afternoon, the losses had eased to around 14 per cent, or $86.22, to $532.08, while still leaving it at price levels not seen for the company since March 2020.
Shopify is pinning much of its hopes for a turnaround on Deliverr, which it bought to help deepen its inventory capabilities, broaden its storage and freight services and gain access to a new set of warehouses and couriers.
Deliverr, along with other automation and logistics technology, will be used to build out a network of both Shopifyowned and third-party warehouses that can deliver packages in two days or less to more than 90 per cent of the U.S., said Harley Finkelstein, Shopify’s president.
Shopify spokesperson Stephanie Ross declined to share what the typical delivery time and volume Shopify’s current network handles, but the company said Deliverr ships over a million orders per month across the U.S.
Shopify will pay about 80 per cent of the purchase price in cash and 20 per cent in shares for the San Francisco-based business.
The company, which keeps its books in U.S. dollars, reported Thursday a first-quarter loss of $1.5 billion US or $11.70 US per diluted share on $1.2 billion US in revenue.
The result compared with a profit of $1.3 billion US or $9.94 US per diluted share on $988.6 million US in revenue in the same quarter last year.
On an adjusted basis, Shopify says it earned 20 cents per diluted share in its most recent quarter, compared with an adjusted profit of $2.01 US per diluted share for the first quarter of 2021.