After Shopify made changes to its top leadership, its shares witnessed a rise of nearly 10 percent last week, according to data from S&P Global Market Intelligence. On September 9, Friday, Shopify stock jumped 8.48% to $34.65. Despite the gain last week, its share price remained down almost 75 percent in 2022. Battered by slow growth, the replacement of its top executives shows that Shopify is getting ready for renewed growth.
As we position Shopify for the future, the addition of Jeff to our leadership team will continue to strengthen our ability to deliver value for our merchants, partners and investors.
Tobias Lütke, CEO and founder, Shopify
Leadership Change
On September 9, Shopify announced that it has hired long-time investment banker Jeff Hoffmeister to serve as its new Chief Financial Officer. He will replace Amy Shapero, who worked with Shopify during its explosive growth in the pandemic era. Hoffmeister has over two decades of experience at Morgan Stanley. He even led the e-commerce platform’s initial public offering (IPOO) in 2015.
The company even promoted its Vice President of Product, Kaz Nejatian to Chief Operating Officer. Replacing Toby Shannan, Nejatian will now serve both positions. Shannan who has been associated with the e-commerce giant for 12 years will retire and join the board of directors next year.
Losses And LayOffs
According to The Motley Fool, Shopify reported a $1.2 billion net loss. In the second quarter 2022 results, Shopify reported a massive loss and even warned investors of more losses in the remaining year. To tackle slow sales and rising costs, Shopify removed 10 percent of its global workforce in late July.
In a memo to staff, which was published on its official website, Tobias Lütke, Shopify CEO and founder wrote, “Give the growth we saw in the pandemic, 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. We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match. It’s now clear the bet didn’t pay off. Ultimately, placing this bet was my call to make and I got this wrong.”
As per a report published on theglobeandmail.com, Shopify also slashed 70 employees in August. A similar severance package was provided to staff laid off in August. However, in order to receive the compensation, they were asked to sign a non-disclosure agreement.
New Hope
Recently, the software maker completed its $2.1 billion acquisition of Deliverr, an e-commerce fulfillment company. Shopify has also launched Shopify Collabs to cash in on the creator economy. It even extended Shopify Capital in the Australian market. This would give quick access to funding to Australian merchants on its retail platform. These moves can be seen as Shopify’s measures to tackle the economic slowdown.
Commenting on the new addition to the Shopify team, Lütke said, “As we position Shopify for the future, the addition of Jeff to our leadership team will continue to strengthen our ability to deliver value for our merchants, partners and investors. We are fortunate to benefit from his more than 20 years of investment banking experience in the technology sector, and his keen vision of the future of the industry”.
Toby Shannan (COO) is retiring after 12 years with Shopify and will join the Board of Directors. I’ve asked @CanadaKaz to take over as VP Product & COO. Amy Shapero (CFO) will leave after the next quarter and then transition the role to Jeff Hoffmeister https://t.co/hhPaWV7URo
— tobi lutke (@tobi) September 8, 2022
Hoffmeister’s experience as an investment banker could help Shopify in its search for acquisition targets.
Analysts Comment
In a note to clients, Barclays analyst Trevor Young said, “the “change-up is a bit of a surprise and timing raises questions on both 3Q trends and whether we see another reset in the next few quarters”. According to him, this shake-up distracts from questions regarding Shopify’s future as the company is expected to face investors at various conferences this month.
However, ATB Capital Markets had a positive approach to the change. “CFO departures can be viewed as negative, given how depressed the stock is, we do not expect a significant impact,” it told its clients. “The addition of Jeff, a Wall Street veteran, introduces the opportunity to reposition the company with investors,” ATB wrote.
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