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Shopify projects dour Q2 profit as tariff clouds e-commerce landscape, shares fall
Shopify forecast second-quarter profit below Wall Street estimates on Thursday, sparking fears that the e-commerce company could take a hit from global trade uncertainty that's hurting businesses of retailers on its platform
U.S.-listed shares of the Canadian company fell 8% in premarket trading after Shopify also missed estimates for first-quarter profit as well as targets for revenue from sale of platform subscriptions and other applications
Shopify's dour profit outlook comes at a tough time for retailers - as well as the broader economy - as trade tensions brought on by U.S. President Donald Trump's sweeping tariff plans cast a long shadow on businesses
E-commerce industry leader Amazon has also forecast second-quarter operating income below estimates
Hefty duties planned on U.S. imports, especially on goods from China, stand to crimp business operations, particularly for small- and medium-sized businesses - which make up a large chunk of Shopify's clients
"There has been some concern over the impact of tariffs on merchants and whether some merchants are suspending or giving up on their business because of tariffs ... That could have an impact on Shopify and it's possible that that's what we're seeing," D.A. Davidson analyst Gil Luria said
The company forecast second-quarter gross profit dollars to grow at a high-teens percentage range, while analysts were expecting a 20.2% rise, according to data compiled by LSEG
It, however, projected better-than-expected revenue, in a sign that its investments in platform upgrades and roll-out of AI features were paying off
The company sees revenue growth in the mid-twenties percentage range, compared with analysts' average estimate of 22.4% growth
For the first quarter ended March 31, Shopify reported revenue of $2.36 billion, beating estimates of $2.33 billion
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