Becoming the synonym for eCommerce for retailers all across the world, Shopify stocks were looking very promising. Global changes are rapid, and so are the changes in the stock market. Some companies that lost a lot at the pandemic’s peak are now flourishing, while others that gained a lot are not experiencing a shaky period.
It is evident that Shopify lost a lot of worth on the stock market, and there are several reasons behind that. Let’s dig a bit deeper and understand why is Shopify losing money and what other things we should consider when observing such changes.
Fast growth isn’t stable
As already mentioned, Shopify gained a lot of popularity in the pandemic days, so it became an excellent solution for many retailers who started digitalizing their businesses. These two elements created a massive need for Shopify and platforms offering similar services.
Investors and stakeholders who were indecisive about where to put their funds in these uncertain times saw an opportunity. Investing in a platform like Shopify seemed very rational, and it was indeed. Shopify stocks grew rapidly in the given situation.
However, everything that grows fast does reach a point where it needs to stabilize. The same happened with Shopify since many alternatives appeared in the meantime for users. Pandemics got under control worldwide, and demand started to decline, leading to a vast infrastructure being underused. Investors again saw a signal, only this time, for selling rather than buying Shopify stocks.
Investors are looking for safety
Now we have come to the point where other global events are shaping the market for the period to come. Investors are getting excited about industries that are flourishing under new circumstances and are transferring their portfolios from pandemic to post-pandemic trends.
This all seems very logical and calculated, yet the fact is that at the current moment, no safety is guaranteed. Investors do look for safety, yet safety is a highly relative term in these times. This is why big companies are actively investing, and so to say, playing on the market.
Shopify is not alone
Other eCommerce platforms are also experiencing similar changes. Since the niche became saturated, it became clear that there are already plenty of big players in the eCommerce market. Even though Shopify itself could go in the category of big players, dozens of companies like Shopify are stopping their operations.
Many of these companies saw the growth of Shopify and Amazon as a signal to get into the eCommerce business, which will grow to infinity. Unfortunately for them, the resources we have available worldwide, users, and cash are limited. This means that even if there were still high demand, sooner or later, it would stop.
eCommerce is the future
The future of eCommerce still seems bright, and it would be shocking to see a drop under the pre-pandemic levels. However, keeping in mind that the industry is not rapidly growing can help businesses to make excellent and long-term decisions.
The changes we saw in the first significant growth of eCommerce were sudden. This means that there was a lot of trial and error involved. In a world that is going towards digitalization in every single sense, it means that changes will be more calculated, and business owners will be more careful rather than excited about getting on board with online selling as the only option for running the business.
The crash of Shopify stocks indicates that we are leaving the era of eCommerce at any price and entering the age of advanced online shopping experiences. New technologies will allow us to experience new things when shopping online, yet such changes require time. Until then, most of us will continue shopping online with what was built in the first big growth of eCommerce.