Analysts push Back
More analysts are coming to the defense Shopify (SHOP), which has suffered a huge retreat after storied short-seller Citron Research blasted the Canadian e-commerce company as “a get rich quick scheme.”
Reuters reports that Shopify issued a statement today in which it “vigorously” defended its business model and claimed that retailers using its software had generated $10.7 billion in gross merchandise volume in the first half of the year.
Still, Citron’s allegations continue to hang over the stock. After falling 12% yesterday, the shares have tumbled another 2% today to $101.27 after falling more than 9% earlier in the day.
Credit Suisse analyst Michael Nemeroff weighed in with a brief note that called the central logic in Citron’s report “flawed,” and continued to recommend that investors buy the stock.
I love the company but I follow the rules (my rules) so I never love a stock. That said, anyone who reads much here knows SHOP is my largest position and I feel it is one of those once-in-a-career stocks we all hope to find. But even as I said that I almost always joked about the price being too high. Well, it wasn’t a joke. I will own SHOP again, I have no doubt. But I’m 70% ahead on SHOP with a CAGR of 135% (far down from its high) so I’m going to book profits now and watch it like a hawk for a re-entry position.
I don’t recommend this for anyone else, but having been such a cheerleader for SHOP I feel I owe it to you guys to tell you what I’m doing. It’s only a few hundred shares; I’m just a little guy, so not to worry. I hate what Citron has done, what a wimp. But unless the SEC decides to do something about this mouth-without-a-brain–theoretically it could happen–the affect will be real.
But arguments about valuation, folks … I use many formats to value companies including rockets and well, if I can’t justify the price, maybe no one can. To be clear, I can not, not even close.
I haven’t had time to spend on ports lately, except to sell a few positions that weren’t meeting my high bar of performance. I haven’t replaced anything, so now I’m way over 50% cash due to time factors only, nothing to do with market valuation. Meanwhile I wish you true blue loyalists the best of luck.