In this year’s sell-off, few stocks have been struck as badly as Shopify stock ( NYSE:SHOP ).
The e-commerce software company’s stock has dropped over 85% from its high about a year ago.
It’s also changed its leadership team, announced an unexpected stock split, and seen its earnings from a year ago turn into losses.
However, there is another reason why Shopify stock ( NYSE:SHOP ) has plummeted this year. New competition from Amazon (AMZN) in the form of Buy with Prime has worried investors, who are concerned that the e-commerce behemoth may force Shopify out of a lucrative income stream.
Is This a True Shopify Stock Killer?
Bloomberg reported in September that Amazon was closing or scrapping plans for 42 facilities and postponing the construction of 21 more.
The announcement is just another indication that Amazon’s sales growth is falling short of the company’s own projections. Amazon also announced a hiring freeze in its corporate retail sector. The decision to have a second Prime Day seemed to be motivated by the desire to clear off surplus inventory before the Christmas season.
Shopify is no longer a minor player in the e-commerce industry. The company’s platform currently boasts more than $200 billion in yearly gross merchandise volume (GMV), making it one of the world’s largest retail companies. Last year, Amazon’s GMV surpassed $600 billion.
Amazon may be three times the size of Shopify in terms of sales volume, but it will still need a large increase in capacity to make a dent in Shopify’s revenues. The choice to shut or postpone additional wareh...
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