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Shopify (NASDAQ:SHOP) saw its U.S.-listed shares fall 8% in premarket trading after the Canadian e-commerce giant forecast lower-than-expected second-quarter profits. The disappointing outlook, combined with a first-quarter earnings miss and weaker-than-anticipated subscription revenue, has raised concerns over the platform’s exposure to rising global trade uncertainty.
As U.S. President Donald Trump's aggressive tariff policies fuel tensions with key trade partners like China, businesses—especially small and mid-sized merchants—are feeling the strain. These businesses, which make up a large portion of Shopify’s user base, are struggling to manage increased import costs, leading some analysts to speculate that merchant attrition could be impacting Shopify’s bottom line.
D.A. Davidson analyst Gil Luria noted that tariffs may be discouraging some merchants from continuing their operations, potentially contributing to the company’s underwhelming earnings forecast. Shopify projected second-quarter gross profit to grow in the high-teens percentage range, falling short of the 20.2% analysts expected, according to LSEG data.
Despite the softer profit outlook, Shopify offered some positives. The company expects revenue to grow in the mid-twenties percentage range, surpassing the consensus estimate of 22.4%, signaling that its strategic investments—particularly in AI-driven features and platform enhancements—are starting to pay off.
For the first quarter ended March 31, Shopify reported $2.36 billion in revenue, slightly ahead of the $2.33 billion estimate. Still, the miss on profit and segment revenue has left investors cautious, especially as broader macroeconomic factors continue to weigh on the e-commerce sector. Amazon (NASDAQ:AMZN), the industry leader, has also guided for lower-than-expected operating income in Q2, adding to concerns across the sector.
Shopify's outlook underscores how global economic volatility is reshaping the e-commerce landscape.
