Several major tech companies have announced large rounds of layoffs recently in response to recession fears, slowing growth, and other factors. Shopify (SHOP -2.04%) just became the latest company to join this group, and investors aren't happy. Shares fell by 15% Tuesday morning in response to the announcement. 

In Shopify's case, the main reason behind the layoffs is sluggish e-commerce performance as COVID-19 pandemic restrictions have been relaxed, allowing brick-and-mortar retailers to return to business as usual. This headwind, combined with the prospect of slowing consumer discretionary spending, hasn't exactly resulted in the best environment for Shopify, which grew its business aggressively in recent years.

To be sure, layoffs like these are always unfortunate. However, from an investor's perspective, are these layoffs a sign that the best part of Shopify's growth story is behind it, or could this be an opportunity for patient long-term investors to add shares at a relative discount?

Why is Shopify reducing its workforce?

In a letter to employees, Shopify CEO Tobi Lütke confirmed that the company will reduce its workforce by about 10%, which means that about 1,000 people will lose their jobs. The bulk of the reductions will be in recruiting, support, and sales, plus Shopify plans to eliminate "over-specialized and duplicate roles." 

In a nutshell, Lütke thought that the massive surge in e-commerce demand that resulted from the COVID-19 pandemic would be more durable than it turned out to be. As he said in the letter, the company bet that the share of retail that took place through e-commerce would permanently leap ahead by five to 10 years. Now this doesn't seem to be the case. E-commerce adoption is trending back to where its growth trajectory was heading before the pandemic happened.

Does the business still have room to grow long term?

Shopify is already an e-commerce powerhouse. Its platform has the No. 2 share of e-commerce sales in the U.S., behind Amazon. In fact, Shopify merchants have higher online sales volume than Walmart, Best Buy, and Costco combined, based on 2021 data. More than 10% of all e-commerce sales are facilitated by Shopify.

Although this is certainly impressive, that doesn't mean the company doesn't still have plenty of runway ahead of it. As Lütke correctly points out in his letter, e-commerce makes up less than 15% of all addressable retail sales in the United States. And there are millions of small and medium-sized businesses that could potentially set up shop on Shopify's platform. He believes the "opportunity is massive and it's still early days for Shopify."

In fact, the company has estimated that its addressable market of small and medium-sized businesses worldwide represents a $160 billion revenue opportunity. It certainly isn't going to get it all, but with less than $5 billion in revenue over the past four quarters, it's fair to say that Shopify still has potential. And keep in mind that the $160 billion figure is based on the current e-commerce landscape -- as more retail shifts to online channels over time, the company's addressable market should grow.

Is now the time to buy?

Shopify's stock price fell by more than 15% on the news of layoffs and is now down by about 82% from its 52-week high. And while some decline is certainly justified, there are still some compelling long-term catalysts that could result in tremendous, long-tailed growth for the business. Several members of Shopify's management team, including Lütke, have made large stock purchases after the recent downturn and clearly see a long-term value opportunity here. If they're right, the current share price could end up being a massive bargain.