Jackson also made a comment about why Kaz Nejatian, previously Shopify’s COO, jumped ship to become Opendoor’s CEO a few months ago.
- Hedge fund manager Eric Jackson said AI is making core Shopify functions, such as storefronts and marketing tools, commoditized and easily replicable.
- Shopify won’t disappear, but its moat is diminishing, said the hedge fund manager known for his bullish bets on Opendoor.
- Shopify has been investing heavily in AI features; however, its revenue growth over the past five years has trailed that of 2015 to 2020.
Hedge fund manager Eric Jackson, known for his bullish stance on Opendoor Technologies, Inc., on Sunday posted critical commentary about Shopify, Inc., saying the Canadian online storefront company risks losing if it does not pivot faster with artificial intelligence.
In an X thread, Jackson argued that Shopify could see its distribution and value to users diminish, and believes that Opendoor CEO Kaz Nejatian, who joined in September after a stint as Shopify COO, jumped ship to a growth industry (housing + AI) from one that’s hitting maturity (e-commerce + AI).
AI Resetting Shopify/E-commerce
“AI isn’t going to ‘kill’ Shopify. But it will compress its moat unless the company pivots faster and deeper than investors expect,” said Jackson, adding that his comments should not be taken as a bearish signal for the company but as a structural analysis.
AI is making core Shopify functions, such as storefronts and marketing tools, commoditized and easily replicable. “Value migrates from tools → to distribution. This is why TikTok Shop, Instagram, Temu, Shein, and even Amazon are leaning hard into AI-driven storefronts: AI lets platforms collapse the entire seller journey into a single click. That’s real competition for Shopify’s core.”
He said Shopify won’t disappear, but it may face a shift in how investors value it, noting that his view on how AI is reshaping platforms is the same framework he’s used in the past when backing companies like Opendoor and Better Home & Finance.
Is Shopify Really Losing Ground?
Over the past two years, Shopify has rolled out a wave of AI upgrades across its merchant ecosystem, bolstering its Shopify Magic suite with tools that auto-generate product descriptions and other key content, and enhancing its Sidekick assistant, which can now build entire storefronts, recommend ideal product images and pricing, and guide inventory decisions using AI-driven insights.
However, e-commerce demand has been mixed of late, in part due to U.S. tariffs that have disrupted business for several of Shopify’s customers. Over half of Shopify’s customers, which are mainly small and medium enterprises, are based in the U.S.
Earlier this month, the company forecast a strong holiday quarter, although its investments in AI functionality are also pressuring margins. Analysts forecast the company’s revenue growth at 29% in the current year, the fourth year in a row of sub-30% growth since the company went public in 2015.
Retail’s View
On Stocktwits, the retail sentiment for SHOP remained ‘bearish,’ unchanged over the past week, with ‘low’ message volume. The stock is down about 20% from its all-time high on Oct. 29, but is still up 37.5% year to date.
Opendoor is coming off a brutal week, during which the stock declined nearly 17% – its worst performance since the final full week of July. The Stocktwits sentiment for OPEN was ‘neutral.’
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