Shopify Stock: Ignore Short Sellers & Buy [VIDEO]

Posted On October 10, 2017 2:24 pm

Shopify Inc (US) (NYSE:SHOP) is having an excellent year. Shopify stock is up over 128% since the start of this year. But the stock is currently losing value after Citron Research, a famous short-selling firm run by Andrew Left,  grilled Shopify in a video, accusing the company of running flawed business schemes. Left claimed that Shopify’s business model is based on the “get rich quick” dynamics which are illegal. He even compared the company to Herbalife, which has been under investigations for running pyramid schemes.

But Left failed to give specific reasons for his opinions. Left doesn’t like Shopify boasting of its success in allowing people to sell products from home and make a lot of money. But that doesn’t mean the company is running a scam. There are numerous success stories of people who were able to establish their business using it. Left said that Shopify promises its users to make them millionaires in its ads. But Baird analyst Colin Sebastian said that his research on Shopify ads and Facebook posts negates this notion.

Investment firm Credit Suisse’s analyst Michael Nemeroff rejected Citron’s report, and said that it was not worth his comments. Nemeroff said that Shopify is a Buy because the company has strong growth potential due to its highly popular e-commerce platform based on Cloud.  The analyst is also bullish on Shopify stock based on the increasing confluence of e-commerce and brick and mortar stores.  Nemeroff also cited Shopify Plus, wholesale measures and other initiatives by the e-commerce company in his report.

Citron’s report was also rejected by Colin Sebastian, who called the report “off base”.  Citi’s analyst Kenneth Wong also said that Shopify stock should be bought on the current weakness.

Shopify has explosive growth opportunities. Retail e-commerce sales are expected to grow to $4 trillion by 2020. In the US alone, retail sales will increase to $459 billion by 2020. The most important metric which shows the growth potential is the fact that only 8.7% of the total retail sales are executed online. US and international retail markets are rapidly migrating to e-commerce, which means more money and opportunities for Shopify. The company is challenged by no other significant player.

Shopify is based on solid business dynamics. As of the end of the fourth quarter, about 500,000 businesses rely on Shopify’s platform, more than 325,000 in the previous quarter.

Related: Will This Company Survive Competition from Google? 

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