Infamous short-seller and analyst Andrew Left from Citron Research is at it again with his latest Canadian target – Shopify Inc. (TSX:SHOP)(NYSE:SHOP). Shares of the dual-listed Canadian technology company plummeted more than 11% on Wednesday on news of the report, with the Citron report releasing a few key arguments which many investors and analysts have found hard to ignore.
Among the key arguments made to the detriment of Shopify, perhaps one of the most alarming key theses is the idea that Shopify has turned into a “get-rich-quick” scheme similar to other high-profile cases which have been investigated in recent history, including Herbalife Ltd. (NYSE:HLF). Linking the two companies’ growth methods has led to concern among some investors, considering the fact that Herbalife’s share price has seen some pretty nasty volatility in the past; with Shopify shares doing nothing but increase since the company’s initial public offering (IPO) over the years (270% over the past two years nonetheless), this damning report has done significant damage in the near term for investor confidence moving forward, given the business’ extremely high valuation multiple.
With investor optimism at all-time highs for any company operating in the e-commerce space, it is no wonder Shopify shares have soared in recent years. The sharp decline has worried many investors who have continued to buy on the way up, suggesting taking profits off the table may be the prudent thing to do at current levels.
Invest wisely, my friends.
