Shopify Continues Its Plunge on Thursday
Shares of the Canadian e-commerce giant Shopify Inc (TSX:SHOP)(NYSE:SHOP) were down 1.11% close to the bottom of the noon hour on October 5. The stock has dropped back to August levels after comments from famed analyst Andrew Left on October 4.
Left heaped criticism on the rise of Shopify, calling its business model unsustainable and said the stock was significantly overvalued. In the video Left argues that Shopify has pitched its hyped platform not to successful business owners but to individuals as a get-rich-quick scheme. The comments sparked an 11.5% plunge in Shopify shares the same day.
Although the comments made headlines, this is not the first time experts and analysts have questioned some of the internal workings of Shopify. The company does not make its month-to-month customer information publicly available, which has some suspicious of a large number of burn out accounts. Shopify has branded itself as a home for a wide variety of successful small businesses, and Mr. Left’s criticism alleges that this claim is not only unfounded but possibly a fabrication.
For its part, Shopify defended its business model on Thursday and reiterated that it stands behind its mission and the success of those who use its platform.
Shopify stock is up 120% in 2017 and an impressive 263% since its initial public offering in May 2015. Its meteoric rise had some concerned with its valuation, so this correction may be long overdue. Perhaps this may also motivate Shopify’s leadership to be more transparent about its customer base.