Investors have been worried about the condition of the economy for a while now, and Thursday's stock market action didn't suggest that anyone feels much more confident about what 2023 will bring. Although stocks trimmed their early losses by midday, the Dow Jones Industrial Average (^DJI 0.23%) remained down about 0.5% as of 12:30 p.m. ET today.
Amid the rush of companies releasing their latest financial results, some gave their shareholders big disappointments. Two of the biggest decliners on the day were Boston Beer (SAM -0.66%) and Shopify (SHOP 0.28%). Below, you'll learn more about what happened to both businesses and why investors don't seem as confident about their prospects for 2023 and beyond as they did before the companies issued their reports.
Boston Beer has a hangover
Shares of Boston Beer were down 14% in early afternoon trading on Thursday. The maker of Sam Adams beer has had to deal with a big change in consumer preferences during 2022 that put the brakes on past growth opportunities.
Boston Beer's fourth-quarter financial results showed that customers continue to move away from once-popular beverages. Revenue of $447.5 million was up 29% year over year, but some of those gains were due to a 14-week fiscal quarter compared to last year's 13-week period.
Cases sold to retailers via distributors fell 3% on a 13-week comparable basis, but comparable shipments from the company to distributors for the same period were up 11%.
Boston Beer posted a net loss of $11.4 million, or $0.93 per share. That was a narrower loss than in the prior-year period, but it still was worse than what investors had wanted to see.
One major culprit in Boston Beer's report was the continued slowing of growth in the hard-seltzer category. Brands like Truly Hard Seltzer had made substantial contributions to the company's rise in sales in past years, but order volume was poor during the fourth quarter. Products under the Samuel Adams brand also saw weaker demand.
Boston Beer sees a return to profitability in 2023, projecting earnings of $6 to $10 per share. But it expects drops of 2% to 8% in shipments, and price increases of just 1% to 3% will have a hard time giving the beer stock a boost.
Shopify loses its momentum
Elsewhere, shares of Shopify dropped 16%. The e-commerce platform provider enjoyed strong financial performance in its fourth-quarter results, but it foresees a slowdown in the current quarter.
Shopify's sales figures looked strong. Revenue grew 26% year over year to $1.7 billion, as gross merchandise volume climbed 13% to $61 billion. The strongest growth came in the merchant solutions segment, where features like Shopify Payments and Deliverr added the most value.
Monthly recurring revenue from the subscription solutions segment climbed 7% to $109.5 million, with Shopify Plus merchants contributing about a third of total recurring revenue. Adjusted net income of $91 million was down by nearly half from year-ago levels, however.
What really caused investors to balk, though, was Shopify's forecast for the first quarter of 2023. The e-commerce disruptor expects revenue growth in the high-teen percentages for the quarter, with a slight improvement in gross margin from fourth-quarter 2022 levels. But rising operating expenses will offset some of the sales gains in determining eventual profitability.
Shareholders were pleased when the company announced price increases earlier this year. However, if merchants are struggling, then it could lead to persistent headwinds that Shopify will have to overcome in order to prosper.
