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   Technology StocksShopify Inc (SHOP: NASDAQ) SHOP.TO


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From: IceHawk10/4/2017 5:00:48 PM
   of 13
 
Shopify shares fall 11% as short seller calls firm a 'get rich quick scheme' ... Citron Research says most of the businesses Shopify works with aren't legitimate

CBC News Posted: Oct 04, 2017 12:28 PM ET Last Updated: Oct 04, 2017 4:17 PM ET

Shares in Shopify were down by as much as 11 per cent on Wednesday after a high-profile American short seller said most of the 500,000 businesses the company works with aren't legitimate.

Citron Research's Andrew Left released a video Wednesday morning alleging that Ottawa-based Shopify's hype is unsustainable, and argues the stock should be worth half what it is.

Shopify makes money by helping small and medium-sized businesses sell their products and services online, by handling all of the back end logistics of payments, inventory and web design via a cloud-based service.

Since going public on the TSX in 2015, the stock has more than doubled this year, to become one of Canada's largest technology companies.

But in his video and accompanying website, Left alleges that most of the company's customers aren't legitimate businesses, but rather simply people who have been sold dubious "business opportunities" built around reselling, which goes against Federal Trade Commission rules.

"They are not selling them to business owners," Left said of the websites. "They are selling them to people as opportunities to get rich quick."


Shopify is "a company that has mastered the good old get rich quick scheme," Left said, saying he can't account for as much as 90 per cent of the company's customer base.

"This is not an $11-billion company," Left said. "This needs to get completely looked at by the FTC and completely looked at by Wall Street."

He also accuses the company of paying bloggers and other online influencers to produce content favourable to Shopify without disclosing that relationship.

Shopify did not reply to a request for comment by CBC News. Trading volume in the company's shares was about twice as much as normal on the stock market in Toronto.

Left is what's known as a short seller, which means he makes money by betting against the performance of stocks that he thinks are overvalued. According to data compiled by Bloomberg, just over four million shares in Shopify are currently held by short sellers, about three per cent of the total. But that ratio has doubled since the middle of August.

Left rose to prominence in 2015 when he went public with allegations that drug company Valeant was fudging its numbers.

The rise and fall of Valeant PharmaceuticalsThe Montreal based drug maker was the most valuable company in Canada at the time, but has since lost more than 90 per cent of its value.

Other high profile Citron Research bets, however, have been much less successful, including attempts to trade against chip maker NVIDIA and car company Tesla.


http://www.cbc.ca/news/business/shopify-citron-research-andrew-left-1.4327736



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To: IceHawk who wrote (9)10/5/2017 10:15:43 AM
From: ggamer
   of 13
 
Not sure why the company management is not our defending the company? I am a user of this company for the past year and I have been very happy with their product and service. They have extremely knowledgeable and friendly reps and every day their are trying to make their product better. I bought more shares yesterday but I am disappointed that the company is not out in media defending themselves. Unless I missed it.

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From: IceHawk10/5/2017 12:00:57 PM
   of 13
 
Shopify fires back after short-seller’s attack


:

The Shopify sign is seen at its Toronto offices.

FRED LUM/THE GLOBE AND MAIL

SEAN SILCOFF
OTTAWA
15 MINUTES AGO OCTOBER 5, 2017

Shopify Inc. has fired back a day after an American short-seller attacked the Ottawa e-commerce software company's business model and marketing practices and said the stock was vastly overvalued, causing the stock to plunge.

"We vigorously defend our business model and stand resolutely behind our mission and the success of our merchants," the company said in a brief statement on its website that did not directly address the accusations in a note and video posted Wednesday by Beverly Hills, Calif.-based Citron Research.

Shopify stock was trading down about 4 per cent on the New York Stock Exchange just before noon. The shares fell 11 per cent the day before.

Citron's managing editor Andrew Left, who is shorting Shopify stock, alleged Shopify's business was "dirtier than Herbalife" and said the Ottawa-based company had "mastered the good ol' get-rich-quick scheme." Herbalife is a multilevel marketing company that sells nutritional and weight-loss products, and which agreed to pay $200-million (U.S.) in a settlement with the U.S. Federal Trade Commission (FTC) after being accused of pyramid-scheme practices.

Mr. Left – who has been called the "the shock jock of short -sellers" because of his incendiary attacks on publicly traded companies whose stocks he has shorted – commended Shopify's technology, which enables merchants to set up and run online stores over the Internet. But he said Shopify's "dirty little secret" is an affiliate marketing program that allows third-party promoters to earn commissions for persuading new merchant customers to sign up.

Affiliate marketing is a common online selling practice, giving individuals and businesses a cut of money made from online purchases if they've helped direct the buyer to that product, typically through reviews or blogs. Some affiliate marketers are mainstream celebrities or social-media personalities and established companies including Amazon also use the practice

However, affiliate marketing has drawn recent scrutiny from the FTC, which warned in a blog post last month that many such marketers put out "exaggerated claims or misleading information to get people to click. They may say anything to get you to click on their ad because they have an incentive – getting paid."

Shopify offers its 13,000 affiliate partners the equivalent of the first two months of a new customer's monthly fee once new merchants they refer sign on to its platform. Customers pay monthly subscription fees starting at $29 to use Shopify's cloud-based software .

Mr. Left, whose note was long on accusations but short on detail, also alleged that Shopify improperly promotes the notion that its merchants can become millionaires, that third-party affiliates do not disclose they are compensated by Shopify and that most of Shopify's customers are not true merchants but "people who are buying a system" to make money online. He argued those and other practices would face FTC scrutiny.

Mr. Left also claimed Shopify stock was worth just over half of its value as of Tuesday. Shopify has been a top performer on both the Toronto Stock Exchange and the New York Stock Exchange, nearly tripling in value in the past year and trades at a substantial premium to other subscription software providers.

In its statement, Shopify said it is helping to enable the growth of entrepreneurship by making it as easy as possible "to enable anyone, anywhere, to build, grow and scale a business." It noted more than 131 million consumers have made purchases from a Shopify store in the past year. But Shopify did not otherwise address the allegations raised by Citron and Mr. Left.

National Bank of Canada analyst Richard Tse said in a research note "we can't unequivocally rule out that this negative report will not surface some regulatory scrutiny even if we think it's remote." He said any issues would stem from a group of "transient subscribers who do not represent a meaningful portion of value for Shopify."

However, he said "in the short-term, there's little doubt it will weigh on the stock despite what we believe to be an unchanged fundamental outlook," noting Shopify's annualized revenue per merchant customer has been rising and that the business appears to be on track to meet its target of becoming profitable by the fourth quarter. The weakness in the stock "opens up a window for long term investors" to buy, he said.

Mr. Left has made a name for himself targeting publicly traded firms he accused of engaging in fraudulent tactics, being overvalued or both. His best-known target was Valeant Pharmaceuticals International Inc., which he compared to Enron Corp. in 2015 before its rapid descent.


https://beta.theglobeandmail.com/report-on-business/shopify-fires-back-after-short-sellers-attack/article36498524/?ref=http://www.theglobeandmail.com&



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From: IceHawk10/5/2017 12:02:50 PM
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Investor Relations

October 5, 2017

Entrepreneurship is on the decline, and Shopify is committed to fighting this trend.

Shopify’s growing community of entrepreneurs includes makers, creators and innovators, from students trying to pay for school to merchants who have successfully scaled their businesses.

Shopify has always strived to take the path that leads to more entrepreneurs by designing its platform to remove the technical, operational, and financial barriers to enable anyone, anywhere, to build, grow, and scale a business.

Some numbers on Shopify helping businesses start, succeed and scale:

Every 90 seconds a store using Shopify makes their first sale

A LOT of people buy from stores that use Shopify: over 131 million consumers have bought from a store using Shopify in the last 12 months

Stores using Shopify generated $10.7 billion USD in gross merchandise volume in the first half of 2017

We vigorously defend our business model and stand resolutely behind our mission and the success of our merchants.




https://investors.shopify.com/Home/default.aspx



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From: IceHawk10/11/2017 8:16:58 PM
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Chief Executive Tobi Lutke said on Twitter on Tuesday that he would respond to Left's claims on the company's next earnings call, which is expected the week of Oct. 30.

"Lots of people want me to address the short-selling troll thats targeting $SHOP. Looking forward to next earnings calls to do so"

Tobi Lütke @tobi
CEO by day, Dad in the evening, hacker at night. - Rails Core alumni; Author of ActiveMerchant, Liquid. Comprehensivist

tobi.lutke.com

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