Following the latest set of earnings from Shopify Inc., experts are split regarding the stock’s ability to provide value for investors. 

On Wednesday, the Ottawa-based e-commerce company released its second-quarter results, which included a net loss of US$1.3 billion, down from a loss of US$1.2 billion a year earlier. The company also moved to reduce its workforce by around 20 per cent and sell its logistics business. 

Shopify’s second-quarter revenue hit nearly US$1.7 billion, up from around US$1.3 million the previous year. 

David Trainer, the founder and chief executive officer of New Constructs, said in an interview with BNN Bloomberg Thursday that he is bearish on the Canadian e-commerce company as an investment. He said the “business is terrifically unprofitable” and that valuations are “absurdly high.” 

“We really just need to reset here and be realistic about what is not really a very differentiated business. This service is core to e-commerce, but it is not a differentiated service,” he said. 

“I think what people need to recognize here is that it's a highly negative margin business, they're taking market share possibly yes, but at losing a lot of money doing it.” 

Additionally, if Shopify were to become profitable, Trainer said more competition would enter the market. 

He said that at this time, investors should avoid purchasing Shopify shares and “look for an entry point maybe in the low teens.” 

Trainer said he doesn’t necessarily think Shopify is a “bad company,” but that investors have to “take into account what you pay for that.”

“At the end of the day, you want to buy low expectations and sell high expectations, and the expectations in this stock price at this time are extremely high,” he said. 

Despite Trainer’s negative sentiment on Shopify shares, John Zechner, the chairman and founder at J. Zechner Associates, said in an interview with BNN Bloomberg Thursday that the company performed well during the second quarter.  

“The only thing not to like about Shopify from that quarter, quite honestly is the valuation because when you look at the other metrics, they're doing exceptionally well,” he said.

Shopify made some good decisions last year, Zechner said, which included reducing its workforce after over hiring during the pandemic and selling its logistics business which was competing with Amazon.

During the quarter, the company refocused itself on providing e-commerce solutions for retailer websites, Zechner said.

“Now they’re seeing growth again, pretty strong growth, so about 30 per cent [growth] in the quarter,” he said, adding that margins started to improve and the company generated some free cash flow.

“And they mentioned the magic words for 2023 which is AI, I think with Sidekick and Shopify Magic.” 

In April, the Ottawa-based e-commerce business launched Shopify Magic, which allows merchants to use AI tools to generate things like product descriptions.