Shopify’s (SHOP) stock fell as much as 16% on the same day e-commerce platform announced it will cut about 10% of its workforce, or 1,000 workers, by the end of Tuesday.
The changes were explained in an email to employees by CEO Tobias Lütke.
When the pandemic hit, demand for Shopify “skyrocketed,” he wrote.
“We bet that the channel mix — the share of dollars that travel through e-commerce rather than physical retail – would permanently leap ahead by 5 or even 10 years,” he continued. “It’s now clear that bet didn’t pay off.”
“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” added Lütke.
The layoffs will impact roles are in recruiting, support, and sales. Lütke also signaled over-specialized and duplicate roles will be eliminated.
Shopify, which helps merchants establish and e-commerce presence, is the latest tech related company to announce layoffs or hiring freezes.
Shopify shares are down 77% year-to-date. The stock sank in early May following a first-quarter earnings miss as the pandemic waned.
On June 29, the company completed a 10-for-1 stock split on an adjusted basis. The move is often intended to attract more interest from retail investors and the options market. Tesla (TSLA) and Apple (AAPL) saw their shares rise when they did similar stock splits in 2020. Shopify’s stock fell on the first day of trading on a split adjusted basis.
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre