Shares of Shopify (SHOP 1.43%) plummeted 18.2% this week on several bits of news. First, shares fell earlier in the week when revised GDP figures were released, showing that the economy was slowing down slightly more than expected.
Additionally, a new report released yesterday, showing that inflation remains stubbornly high despite the Federal Reserve's efforts to bring it down, is likely weighing down on the stock this week.
Many technology investors were already pessimistic about the economy, but their worries got further confirmation on Wednesday, when revised first-quarter GDP figures showed a decline of 1.6% over that period, compared to a previously reported 1.5% decline.
A slowing economy is, of course, bad news for all companies. But it's a particular concern for Shopify, which sells a service to businesses to help them set up e-commerce shops.
Shopify shareholders were also concerned this week about new Commerce Department data that showed core personal consumption expenditures prices rose 4.7% in May, remaining at a nearly four-decade high.
The Federal Reserve keeps a close eye on this figure, and the fact that it remained high despite several previous hikes to the federal funds rate means the Fed has more work ahead of it to tamp down inflation.
It's no surprise that Shopify investors would be concerned by both slowing GDP and persistently high inflation. Fears of an economic slowdown and a recession have plagued the market for many months, and technology stocks have fallen particularly hard.
Unfortunately, it's likely that there could be more share price volatility in the short term, as investors continue to process new information about the economy and rising interest rates.
Shopify shareholders will want to keep a close eye on the company's next quarterly financial results, which will likely be released at the end of this month, to find out how the company is doing right now.