Shopify experienced a significant drop of over 16% in its stock value during early trading on Wednesday, resulting in a nearly $20 billion decrease in the company's market capitalization. This decline followed Shopify's issuance of revenue and profit guidance for the current quarter, which fell short of investor expectations. Despite delivering better-than-expected results for the first quarter, Shopify's outlook for the upcoming quarter dampened investor sentiment.

In the first quarter, Shopify outperformed consensus expectations from LSEG, reporting adjusted earnings per share of 20 cents compared to the anticipated 17 cents, and revenue of $1.86 billion versus the expected $1.85 billion. However, the company's projections for the second quarter indicated a slowdown in revenue growth, with expectations of high-teens percentage growth year over year, largely in line with analysts' estimates but lower than recent quarters. Shopify attributed the anticipated challenges in the second quarter to factors such as foreign exchange headwinds from a strong U.S. dollar and softness in European consumer spending. Additionally, the company forecasted a decrease in gross margins and an increase in operating expenses, leading analysts to scrutinize its margin trajectory.