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The Ottawa headquarters of Canadian e-commerce company Shopify on May 29, 2019.Justin Tang/The Canadian Press

Shares of Canadian e-commerce company Shopify Inc. sank more than 13 per cent Friday amid a broad selloff in tech stocks, bringing the year-to-date drop of the company’s market capitalization to about $79-billion.

The website Insider reported Friday that executives from four different order-fulfilment companies that work with Shopify had either reduced the scope of their work with the company or ended their partnerships.

Shopify did not confirm the details of the Insider report, but spokesperson Rebecca Feigelsohn said in an e-mail that “we can confirm we have communicated upcoming plans to help merchants compete with big-box retailers, such as prioritizing key benefits like 2-day shipping at affordable prices and access to easy returns for U.S. shoppers.”

Richard Tse, an analyst with the National Bank of Canada, told The Globe and Mail that he believed Friday’s Shopify pullback was related to the Insider report’s suggestion that the company was changing its fulfilment strategy.

“The speculation is getting airtime across broader industry sources in a market that’s sensitive to potentially bad news – and that’s adding fuel to a fire that was already burning across high-growth tech,” Mr. Tse said in an e-mail.

There’s been a broad-based selloff of tech stocks as the spectre of rising interest rates dampens investor interest in higher-risk equities, particularly of unprofitable but fast-growing software stocks. Companies with bad news, including Peloton Interactive Inc. and Netflix Inc., have been severely punished by investors this week, and the Nasdaq 100 index entered into correction territory, down 13.8 per cent from its historic high in November.

The markdown of valuations has been pronounced in Canada, which had seen a surge of initial public offerings by technology companies during the pandemic. In the 20 months ended December, 2021, technology companies went public on the TSX at a rate of just over one per month, compared with the prepandemic rate of about one a year in the prior decade.

Of those 20 companies, 10 are trading below their issue price. Seven of the 20, plus Lightspeed Commerce, which went public in 2019, all hit 52-week lows Friday, including BBTV, Farmers Edge, Dialogue Health Technologies and Coveo. Another two, Q4 Inc. and E Automotive, hit their 52-week lows earlier this week.

Though Shopify began as an e-commerce platform for merchants, it has since vastly expanded its offerings as it frames itself as a one-stop shop for smaller retailers hoping to compete with giants such as Inc.

That includes warehousing and order-fulfilment services. In June, 2019, the company said it would spend more than $1-billion over several years to build out a fulfilment network. Later that year, it spent US$450-million to buy the Boston-area warehouse robotics company 6 River Systems.

Shopify has since at times been Canada’s most valuable public company as small businesses all over the world harnessed it to help them sell online during the first two years of the pandemic. But its shares have been battered since mid-November, and analysts have warned that consumers’ gradual return to physical stores might have impacted its operating results.

“We see the recent selloff in shares of Shopify as, primarily, a reflection of investors’ concerns about rising interest rates negatively impacting the valuations of high-multiple stocks,” said Tom Forte, an analyst with D.A. Davidson Companies, in an e-mail Friday.

Shopify’s Ms. Feigelsohn said that the company will share more details on its fulfilment strategy when it announces its next quarterly results.

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