Shares of e-commerce firm Shopify (SHOP) soared Thursday after the company reported a smaller-than-expected loss for the September quarter and revenue that topped analyst estimates. SHOP stock was up by double digits on the news.
Canada-based Shopify said it lost 2 cents per share on an adjusted basis. Revenue for SHOP stock rose 22% to $1.4 billion, the company said. Revenue growth reaccelerated after six quarters of slowing growth due to the coronavirus pandemic fading and online shopping normalizing.
Analysts expected Shopify to report a loss of 7 cents on revenue of $1.34 billion. A year earlier, Shopify earned 8 cents per share on revenue of $1.12 million. Third-quarter results included recently acquired logistics firm Deliverr.
SHOP stock surged 17.3% to close at 34.10 on the stock market today. Prior to Thursday, Shopify stock had retreated 78% in 2022 amid the bear market.
“Results showed SHOP stock is not out of the woods, but is making positive progress,” Jefferies analyst Samad Samana said in a note to clients.
SHOP Stock Exceeds Expectations
At D.A. Davidson, analyst Tom Forte said in his note to clients: “On first blush, we see Shopify’s sales exceeding expectations for the September quarter as a reflection of its ability to exploit not only the online e-commerce opportunity but also the offline retail one; for example, with its point-of sale efforts.”
He added that Shopify “may have benefited from the strength in the U.S. dollar versus the Canadian dollar with its revenues in U.S. dollars and many of its operating expenses in Canadian dollars.”
At Evercore ISI, analyst Mark Mahaney said in his note: “Shopify is showing that it is willing to manage down expenses – through layoffs and marketing spend discipline – in order to protect profits or minimize losses. Which is exactly what the markets want these days.”
Also, gross merchandise volume from merchant customers came in at $46.2 billion, up 11%, slightly below estimates of $46.87 billion.
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
Meanwhile, the company plans to cut 10% of its workforce. SHOP stock holds a Relative Strength Rating of 13 out of a best-possible 99, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_techfor updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
An autonomous robot delivering a pizza from Pizza Hut is shown in Vancouver.
When customers in downtown Vancouver placed orders with Pizza Hut in September, many of the pies landed on their doorsteps without a courier in sight.
Instead, diners were met by Angie, Hugo or Raja — autonomous robots resembling a cooler on four wheels with eyelike lights. They travelled by sidewalk to customers, who used unique codes to open their lids and reveal their food.
The value proposition for Serve Robotics — a spinoff of Uber’s 2020 food delivery acquisition Postmates that created the trio and a fleet of zero-emission robots — is simple: with slim restaurant margins, a labour crunch and climate change worries ‘”why move a two-pound burrito in a two-ton car?”
A handful of other robotic delivery companies have the same ethos, but their paths to ubiquity are facing several roadblocks.
Delivery robots have been banned from some major cities like Toronto, which argued they are a hazard for people with low mobility or vision, as well as seniors and children. Cyclists already gripe about e-scooters in bike lanes and don’t want robots there either.
“They’re drawing a lot of attention from pedestrians while they’re out on the sidewalk because they’re not seeing them that often and people are excited to see them, but as usage continues to increase, this can cause a lot of congestion on already narrow sidewalks,” said Prabhjot Gill, a McKinsey & Co. associate partner focused on retail.
There’s also worries autonomous robots or ones manned by staff overseas will take jobs away from couriers.
Ali Kashani, Serve’s Vancouver-bred chief executive, considers the criticism to be a natural part of innovation that even the bicycle experienced, when it was invented and many thought it would cause divorce.
He’s tried to quiet concerns by ensuring his robots (Kashani won’t say how many there are) chime and flash their lights to alert people they are around. They are equipped with automatic crash prevention, vehicle collision avoidance and emergency braking.
Ultimately, he thinks they are “a win-win for everybody” because they reduce traffic, boost local commerce and help merchants get food to consumers in a less expensive way.
The environment benefits too because Serve replaces delivery vehicles. Kashani estimates roughly half the deliveries made in the country cover less than 2.5 miles and 90 per cent are completed by car. About two per cent of global greenhouse gas emissions worldwide are attributable to people using personal cars for local shopping and errands.
“There’s a lot of reasons to replace our cars with these robots as quickly as we really can, but there’s no reason for us to make anyone an enemy,” Kashani said.
Knowing how much opposition new ideas can face, Serve is careful to engage with governments and authorities before launching in a city, even if it has no legislation allowing or banning robots.
However, David Lepofsky, chair of the Accessibility for Ontarians with Disabilities Act Alliance, said there’s no way for such robots and humans to coexist because they will always present a tripping hazard and worse, they could be used to transport contraband or explosives.
He insists the fight he and others have waged to keep robots off sidewalks is not an attack on innovation.
“It’s not like we’re denying people a service,” he said. “We’ve got a way to deliver pizzas that we’ve had since we’ve had pizza delivery. It’s called human beings.”
Manish Dhankher, Pizza Hut Canada’s chief customer officer, agrees no pizza delivery is worth risking somebody’s safety, but said his company only partnered with Serve once the robots had made thousands of injury-free trips.
Serve robots only made nearby deliveries for Pizza Hut’s 1725 Robson St. location for two weeks, but the pilot generated “childlike excitement” from customers and had a 95 per cent satisfaction rate.
Dhankher stresses the goal was modernizing pizza deliveries, not cost reduction. Couriers made the same number of deliveries they did before the robots were in use.
But Pizza Hut isn’t ready to roll out robots permanently.
“We want to learn more,” he said. “What happens when you put this in the snowy areas of Saskatchewan and what happens when there is freezing rain?”
Another question: what happens when cities won’t welcome the robots?
Tiny Mile, a company behind a series of pink, heart-eyed robots named Geoffrey, knows the answer.
Years after Geoffrey started making Toronto deliveries for delivery services like Foodora, Lepofsky and others argued people may be impeded by stopped or stalled devices or unable to quickly detect their presence.
Toronto’s city council voted last December to prohibit the devices that run on anything but muscle power from sidewalks, bike paths and pedestrian ways until the province implements a pilot project for such devices.
Geoffrey was then spotted in Ottawa before the city confirmed such robots aren’t permitted there either and Tiny Mile decamped from Canada completely.
“We almost went bankrupt,” said Ignacio Tartavull, Tiny Mile’s chief executive.
“It was basically a miracle we survived.”
To keep Geoffrey alive, Tiny Mile headed to Florida and North Carolina.
“It was love at first sight,” Tartavull said. “We spoke with cities and they were basically competing for us to go there.”
He believes that adoration will spread as the cost of robot deliveries — now roughly $1 — sink to 10 cents in the next seven years.
“It’s likely going to take a few years before we have it in the big cities but in the long term, it’s kind of undoubtable because the technology is here, it works and we can deliver on time and at a much lower cost,” he said.
As for Serve, it’s focused on Los Angeles right now, but Kashani said its mission is to get five per cent of delivery vehicles off the road in the next five years.
“But I definitely hope that if you fast forward one or two decades, these robots would be doing more local transportation of goods… so that we can not rely on cars.”
Apple is increasing its efforts to shift production outside of China, according to the Wall Street Journal.
Production at factories like Foxconn has taken a massive hit amid riots over zero-Covid policies.
Shifting production will likely be difficult in the current global economic climate, sources told WSJ.
Apple is pushing to expedite a pivot away from manufacturing in China, as protests swell over the country’s strict zero-Covid policies and riots thwart production.
The technology giant is ramping up efforts to shift production to other Asian countries like India and Vietnam in order to distance itself from Foxconn, one of the company’s top suppliers and operator of the world’s largest iPhone factory in China, according to the Wall Street Journal.
In November, the area known as “iPhone City” erupted into violent protests among employees over withheld pay and strict zero-Covid policies that prompted a lockdown in Zhengzhou. As demonstrations grew, Foxconn, which employs upwards of 300,000 factory workers, offered workers $1,400 to quit their jobs, and later, $1,800 bonuses to stay to retain its hemorrhaging workforce.
The turmoil’s impact on Apple’s bottom line has led to a sense of urgency to diversify production away from China, which has long dominated manufacturing for the company. However, the economic slump and slowed hiring is proving challenging to outsource production and forge partnerships with new suppliers, the Journal reported.
“Finding all the pieces to build at the scale Apple needs is not easy,” Kate Whitehead, a former Apple operations manager and owner of a supply-chain consulting firm, told the WSJ.
According to the Journal, Apple plans to source up to 45% of iPhone production from factories in India, where it currently manufactures in just the single digits, and to ramp up manufacturing of products like computers, watches, and AirPods in Vietnam.
“This last month in China has been the straw that broke the camel’s back for Apple in China with the head-scratching zero-Covid policy untenable with major strategic changes ahead for Cupertino in this key region,” Ives Wedbush Securities analyst Daniel Ives wrote in a note to clients.
Canada’s labour market added 10,000 jobs in November, building slightly on its massive 108,000 gain from the month prior, Statistics Canada reported on Friday.
The gain was driven by an increase in full-time positions. Employment rose in sectors such as finance, real estate and manufacturing but fell in construction and wholesale trade.
The unemployment rate ticked lower to 5.1 per cent as labour force participation edged down.
Average hourly wage growth across all industries remained unchanged in November at 5.6 per cent, while wages for permanent employees tapered gains to 5.4 per cent on an annualized basis.
It’s the sixth month in a row that wages have risen by more than five per cent and a key measure the Bank of Canada is watching as it tries to head off a wage-price spiral.
“A host of wage metrics suggest that Canadian wage growth is either stabilizing or decelerating,” Royce Mendes, managing director at head of macro strategy at Desjardins, said in a note.
“As a result of the only modest gain in headline employment and the absence of any signs of accelerating wage growth, we continue to expect the Bank of Canada to hike rates just 25bps next week.”
However, other economists are still betting on a half-point hike from the central bank.
“Over the past 6 months, the Canadian labour market has largely stood still, with average gains of just over 4K a month. However, given still strong wage growth, the composition of job gains in November (mainly private sector and full-time), and the low unemployment rate, this report supports our view that the Bank of Canada will increase rates by 50 bps next week, before pausing in 2023,” Karyne Charbonneau, the executive director of economics at CIBC Capital Markets, said in a note.
The small gain in employment comes as economic growth in the third quarter was stronger than expected.
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