Shopify’s stock was seen crashing down on Friday due to the macroeconomic conditions in the United States. Another e-commerce platform Amazon and iPhone maker Apple saw a similar fall in their stock rates. While Shopify stock fell by 7.4 percent on Friday morning, Amazon and Apple saw falls of 4.3 percent and 3.2 percent respectively.
These stocks fell on Friday because of economic fears caused by the Federal Reserve Bank’s strategy on inflation.
These are unfortunate costs of reducing inflation but a failure to restore price stability would mean far greater pain.
Jerome Powell, Federal Reserve Bank chair
Powell’s Speech
On Friday, Federal Reserve Bank chair Jerome Powell spoke of inflation during the annual economic symposium in Jackson Hole, Wyoming.
“Reducing inflation is likely to require a sustained period of below-trend growth. While higher interest rates, slower growth and softer labour market conditions will bring down inflation, they will also bring some pain to household and businesses,” Powell said in his speech.
“These are unfortunate costs of reducing inflation but a failure to restore price stability would mean far greater pain,” he added.
Insecurity
Powell’s comments left many businesses insecure as instead of a strategy to control inflation, the Federal Reserve Bank committed to continue with an aggressive campaign against the macroeconomic conditions.
He didn’t share specific details but suggested another hike of 0.75 percent in September, which would be the third consecutive rate hike in four months.
Calling it a price worth paying, Powell promised that a specific price rise next year will come with an equal rise in wages.
E-commerce Struggle
Shopify and Amazon are suffering consequences of inflations as much as physical stores. People’s purchasing power is already low amid rising prices. However, stockholders should not worry much as these companies have survived the worst of times in the past.
For Shopify, time is tough since it admitted to have made a “wrong bet” on e-commerce growth. The company suffered subsequent losses and had to lay to 10 percent of its workforce. However, Shopify is now investing in different ventures like Web3 toolkit, Paytm payments gateway and Shopify Capital. Shopify Partners program also helped the company earn a 32 billion revenue in 2021. One can hope Shopify to recover from past losses and gain a momentum with ventures ahead.
Disclaimer: This is not an advice or opinion on investment. Users must take caution before investing.
