Shopify (SHOP  ) shares closed more than 16% lower following the company's Q4 results which showed it topping analysts' estimates on the top and bottom-line. However, shares declined due to management's comments that revenue was going to slow in the first half of 2022.

The company attributed it to factors like the surge in e-commerce spending during the pandemic subsiding, tough comps due to stimulus payments last year, and the impact of inflation. Additionally, investors were not enthused as the company increases spending to build out its fulfillment network. Shopify's weak guidance should not have been surprising given that other e-commerce companies have issued similar guidance.

Many merchants on Shopify's platform use Facebook (FB  ) for advertising which also had a poor quarter as its ads' effectiveness has been compromised with Apple's privacy changes in its new OS.

Inside the Numbers

In Q4, Shopify reported earnings per share of $1.36, beating estimates of $1.27 per share. This was a 14% drop from last year. Revenue increased 41% from last year and also topped expectations at $1.38 billion vs $1.34 billion.

However, shares fell on disappointing guidance which marks a big deceleration from its 57% revenue growth in 2021. It sees much slower growth in the first half of 2022 before some improvement in the second half of the year. The company also is spending more than expected on marketing and further building out its distribution network to store and ship products for its merchants and provide delivery in less than 2 days to most of the U.S.

Therefore, it's expecting an additional $1 billion in capital expenditures annually for the next 3 years. However, the company sees these investments as providing more savings and enabling more capacity, leading to more earnings growth.

It's understandable that Shopify's stock had such a negative reaction to news of a deceleration in revenue growth as it's a high-multiple stock even after its 58% decline from it's all-time highs in February of last year. YTD, the stock is down 46%.

The company's gross margins missed expectations at 50.8% vs 52.8%. Gross merchandise volume rose 31% to $54.1 billion vs. estimates of $53.03 billion.

Basically, Shopify had a strong Q4 and remained profitable despite a tough quarter. However, the near-term situation is likely to remain challenging especially as Shopify remains a high-multiple stock in an inflationary environment with rising rates and possibly "peaking" in terms of revenue growth.