Shopify has authorized itself to buy up to $5 billion USD ($6.9 billion CAD) of its own shares, as it deals with a declining stock price and an activist investor proposal ahead of its annual general meeting later this month.
The Ottawa-based e-commerce giant announced on Tuesday evening that its board of directors increased the $2 billion repurchase program it launched in February by another $3 billion. Shopify said it had used up almost three-quarters of that initial allotment before the increase.
Ahead of its annual general meeting, Shopify is facing a shareholder proposal from an activist investor group demanding that the company adopt responsible AI policies.
Shopify CFO Jeff Hoffmeister said in a statement that the buyback increase shows Shopify’s “confidence in the durability of [its] business and the opportunity ahead.”
Companies use share buyback programs to signal confidence by literally investing in themselves, increasing their stocks’ value by reducing the supply of shares available to purchase. Shopify’s share price on the Toronto Stock Exchange has declined nearly 27 percent since the beginning of the year, as part of a broader slump in software stocks.
A repurchase program does not obligate a company to spend its full amount. Shopify said it will continue to execute the program using pre-arranged algorithmic trading instructions, with no set quarterly or annual minimums
The company is doubling down on itself ahead of its annual general meeting on June 16, where it is facing a shareholder proposal from an activist investor group demanding that the company adopt responsible AI policies.
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The proposal from Canadian non-profit organization Shareholder Association for Research and Education (SHARE), on behalf of The Pension Plan of the United Church of Canada, calls on Shopify to pledge that it will respect human rights and align with international standards when using AI in its tech and operations.
“Shopify lags behind several peers in meeting internationally recognized standards on responsible AI through the adoption of responsible AI policies,” the SHARE proxy statement argues.
Shopify is asking its shareholders to reject the proposal, claiming in its opposing statement that it’s “a solution in search of a problem,” and that its internal code of conduct already covers ethical and legal responsibility. Shopify has embraced AI, both mandating its usage internally and building toward the idea that the technology will transform online shopping.
Tech stocks like Shopify have had a rough year amid investor uncertainty about AI disrupting traditional software businesses. The company posted a $581-million USD ($790-million CAD) net loss in its Q1 earnings statement last month, but still beat revenue expectations. Shopify has also been laying off employees every few months, most recently in its operations team.
Shopify is projecting revenue growth of 25 to 29 percent next quarter, a slowdown from its previous forecast of low-thirties revenue growth last quarter.
With files from Madison McLauchlan.
Disclosure: BetaKit majority owner Good Future is the family office of two former Shopify leaders, Arati Sharma and Satish Kanwar.
Feature image courtesy Open Grid Scheduler/Grid Engine on Flickr.