Shopify Inc executives say: SHOP-T The company’s broken stock is a buy, and they’re putting their money where they belong.
In a series of tweets on Wednesday, several Shopify executives said they are buying shares to show their confidence in the company. They have described the company’s stock price drop as a case of market turnover, as investors flee tech stocks.
Founder and CEO Tobias Lutke has stated that he has placed an order for $10 million in Shopify stock. “Time to build,” he wrote on Twitter.
Wednesday’s tweets are a rare event for Shopify, and indicate a clear shift in the tone of communication from its leaders. The Ottawa-based e-commerce company has maintained a culture of not commenting on market activity. It used to be a pride that Shopify executives didn’t publicly talk about its rise at the time Involved.
Kaz Nejatian, vice president of commerce services at Shopify, said he spoke to his team “for the first time ever” about the stock price on Wednesday. “I liquidated some of my family’s wallet and bought a large amount of SHOP in US dollars,” Mr. Ngatian chirpshares a screenshot of a note he sent to his team.
In his note, Mr. Ngatian described the analysts as “stock pickers” and told his team that they could prove them wrong. “When everyone seeks the reward from safety, we seek the reward from serving others and from taking risks. And every year, we get better and better at taking greater risks and serving more people,” he wrote.
Shopify’s stock price is down nearly 80 percent since its peak in late 2021. Two years ago, Shopify stock was trading at about $500 a share on the Toronto Stock Exchange. Its price more than quadrupled, hitting a record high of $2,228.73 late last year, before bottoming out. Shares closed at $414.41 on Wednesday, down more than five percent from Tuesday.
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Last week, Shopify posted its slowest quarterly growth in seven years, adding to the global trajectory of e-commerce companies and deepening concerns about declining consumer spending. These results missed analyst expectations on a number of points – including earnings, revenue and overall merchandise volume.
Harley Finkelstein, President of the Company chirp On Wednesday he was “putting my money where my mouth is and buying more Shopify stock.” According to the Electronic Insider Disclosure System, or SEDI, which provides data on major shareholders in public companies, Mr. Finkelstein has not made any public market acquisitions of Shopify prior to this week.
Mr. Finkelstein bought 2,959 secondary shares on Tuesday at $337.86 per share. Data from SEDI shows that prior to that, Mr. Finkelstein owned only 94 shares of Shopify, usually exercising the options and then selling the underlying shares. Attorney General Jessica Hertz also bought 147 shares on Tuesday, but prior to that, she owned zero shares (not including restricted stock units).
Also on Tuesday, Mr. Lutke bought 29,617 shares, and Toby Shannan, COO of Shopify, bought 2,959 shares – both at $337.86 a share.
On Sunday, the company’s CEO publicly expressed frustration about analyst modeling, which he said was unreliable. “Is there a place where financial analysts keep tracking logs? People seem to care but are they being held accountable?” Mr. Lutke tweeted to his more than 250,000 followers.
“Analysts’ expectations that Company X,Y outperforms” is just a different framing than “Analysts’ failure to accurately predict Company X,Y,” Mr. Lutke wrote. “Especially when it’s the macroeconomic factors that often cause this. The tides are all sort of boat lifting stuff. It looks like the analysts should do that in their models.”
Dan Romanoff, senior analyst for e-commerce and software firms at Morningstar Inc. Based in Chicago, not talking about their company’s stock price publicly is usually a “best practice” for executives, but sees how positive message from Mr. Lutke to “mobilize forces a bit” can be beneficial to Shopify.
“I mean this respectfully, and more so in a complementary way, but it is not clear that he understands the role of the sell-side analyst,” Mr. Romanov said on Wednesday of Mr. Lutke.
“I saw Toby making some comments a few days ago about the analyst community and my mental reaction to them was that SHOP doesn’t provide guidance, which doesn’t help. Nobody understands the business more than him, so his thoughts on what the next quarter and year hold will help calibrate investor expectations” .
With reports from Sean Silkoff
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