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Shopify Suspends Guidance for 2020 Amid Coronavirus Pandemic

By John Ballard – Apr 2, 2020 at 10:20AM

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The company is see a dramatic shift in consumer shopping patterns, while merchants are resorting to discounting to shore up the drop in demand.

The e-commerce solutions provider hasn't been immune to the economic weakness caused by COVID-19. Shopify (SHOP -2.25%) handles e-commerce solutions for many brick-and-mortar stores that have felt the blunt end of the stay-at-home policies to stop the spread of the virus.

On Wednesday, the company issued a business update discussing the impact it is seeing from the novel coronavirus. In a statement, Shopify said, "Given the uncertainty surrounding the duration and magnitude of COVID-19, Shopify is suspending the financial expectations provided for full year 2020." 

Also, Shopify said that its growth from 2019 had carried over to January and February. "This will enable us to report revenue and adjusted operating income for the first quarter within or ahead of the range of expectations provided on February 12, 2020, despite the global economic disruption that emerged in March triggered by COVID-19," the company said in a statement.

A woman using a laptop to shop online.

Image source: Getty Images.

Gathering insights about impact

Shopify has been closely monitoring the impact of COVID-19. In addition to prioritizing the health of employees, Shopify has taken steps to support its merchants through this difficult time, including extending free trials to all new standard plan signups and fast-tracking a $200 million commitment for Shopify Capital in core geographies.

The company said it has analyzed data across its platform to learn how it can provide the most effective support to merchants. Shopify has observed merchants shifting resources to support online ordering as consumer demand turns to digital channels. Merchants are also heavily relying on discounting, signaling a drop off in demand.

Some merchants could go out of business during this crisis and that would clearly impact Shopify in the short term. Shopify ended 2019 with over 1 million merchants using its services across the world.

John Ballard owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.

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