Business

Shopify shares down 6% as Adobe buys rival Magento

Shares in Canadian e-commerce software maker Shopify Inc fell around 6 per cent on Tuesday after Adobe Systems Inc. announced it was buying rival Magento Commerce.
Shopify shares sold off on Monday after Adobe bought up a rival of the Ottawa-based technology company. (Richard Drew/Associated Press)

Shares in Canadian e-commerce software maker Shopify Inc fell around 6 per cent on Tuesday after Adobe Systems Inc. announced it was buying rival Magento Commerce.

Magento, which counts CocaCola Co, Intelligentsia Coffee, Canon Inc and Burger King among its customers, helps companies build online stores, competing with Shopify whose software and consulting expertise helps merchants sell everything from infant formula to cosmetics online.

Analysts said the deal gave Adobe, best known for photo-editing suite Photoshop and PDF reader Acrobat, greater exposure to the digital commerce industry and posed a threat to Shopify's "Plus" larger-scale enterprise solutions.

"We see the Adobe/Magento combination as a new long-term threat for investors to consider as Shopify continues to target larger merchants," Brian Essex, analyst at Morgan Stanley wrote in a note.

Shopify shares fell as much as 5.5 percent on Monday after market when Adobe announced the Magento deal.

Tuesday was the first chance for trading in Shopify in Canada after the long weekend holiday closed the TSX on Monday.