Shopify Falls After Short-Seller Citron Criticizes Marketing Model

Shopify Falls After Short-Seller Citron Criticizes Marketing Model

Shares in Shopify ( SHOP ) plunged Wednesday after short-seller Citron Research criticized the company’s marketing model in a video post and set a price target of 60, roughly half its opening price on Wednesday.

[ibd-display-video id=2326939 width=50 float=left autostart=true]Citron Research’s Andrew Left, known for making prescient bets against companies such as Valeant Pharmaceuticals ( VRX ), said Shopify may not have the number of participants it claims.

Shopify is billed as a provider of e-commerce solutions for small and midsize businesses. But Left is concerned that among the 500,000 merchants it claims as participants, there may be a large number of firms that are “opportunity” sellers with less-than-sterling reputations.

Shopify, an e-commerce platform provider, fell nearly 9% before shares rebounded a bit. Shopify was down 6% to 109.61 on the stock market today . Shares had opened at 116.80. Shopify stock had soared 171% in 2017 as of Tuesday’s market close, hitting an all-time high of 123 on Sept. 19.

Merchants use Ottawa, Canada-based Shopify’s software to set up and manage their online stores. Shopify garners revenue from subscriptions and fees that it charges merchants when their customer orders are processed through its payment system.

Shopify on Tuesday rolled out a new social-media service for its merchant customers, reported TechCrunch. Shopify added an Instagram feature to its online platform, which already includes Facebook and Messenger.

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Shopify in the first quarter rolled out a point-of-sale card reader for small businesses that competes with products from Square ( SQ ) and others.

Shopify in August reported a narrower-than-expected, adjusted second-quarter loss as revenue jumped 75%. Shopify said it had an adjusted Q2 loss of 1 cent per share, narrowing its loss from 4 cents a year ago, with revenue rising 75% to $151.7 million, topping consensus estimates.

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