I have been looking for news that might provide insight as to what is driving the big drop today. Nothing on the SHOP website, nothing in the news section of my brokerage account and traditional sources. The people on this board have been so insightful in so many ways I thought I would ask where you guys go for news?
Shop lower on hi volume 200dma 84 or so
Probably some institutional selling driving the price lower…
I think it’s due to the following:
Shares of Shopify (SHOP.TO 8.27%) extended their declines in early trading Tuesday and at least one Canadian money manager is betting on further weakness. In an interview on BNN, Dynamic Funds Portfolio Manager Alex Lane said he had taken up a short position in the Ottawa-based software company, echoing some of the concerns surrounding customer turnover raised last week by Citron Research.
“I believe that a lot of things raised in the report last week go to the root of some of our concerns, as there’s this birth-death ratio for the company where they have to continually replenish customers — about 40 per cent of their customers each and every year,” he said. “And the larger you get, the harder it get to replenish those customers.”
He’s not as bearish as Left and this is more a valuation short as he mentioned later in the article:
Lane said he did not share Left’s view the company was operating as a multi-level marketing scheme, merely that the company’s valuation had run too far, too fast, given his view of the high turnover rate as a structural impediment.
“It’s nothing against the business model, or anything like that. They’ve done a fantastic job, it’s great to see the creation of a new Canadian technology champion,” he said. “Valuation got a little bit ahead of itself, I would say, and if you’re looking for pockets of euphoria in the market, that was clearly a stock that was based on a lot of euphoria.”
Lane said he doesn’t anticipate holding his short position in the firm for the long-term as multiples return to more reasonable levels.
I think Brian Stoffel’s article did a good job of talking about the churn here:
But first, it’s important to remember Shopify’s mission – “to make commerce better for everyone,” especially small and medium-sized businesses. And as fellow Fool Keith Speights has pointed out, half of all small businesses will fail within five years, and two-thirds will be gone within a decade.
Many of the vendors that sign up with Shopify will fail over time. That’s not the company’s fault – it’s simply a characteristic of a healthy and functioning economy. For people who want to try their hand at the e-commerce game, there’s little risk involved with signing up for Shopify’s cheapest plan – Shopify Lite, at $9 per month – and seeing how it goes.
Most will fail. And that’s OK.
Looks like a good time to buy. If it goes a little lower, I will look to pick up more 2020 LEAPS.
where you guys go for news?
I don’t know about others but I would search up $SHOP on Twitter.
nd as fellow Fool Keith Speights has pointed out, half of all small businesses will fail within five years, and two-thirds will be gone within a decade.
It is sort of like rule breaker picks. You get one Amazon, many very good ones and some duds. But for SHOP, of the good customers that survive, some will grow bigger and bigger and buy more services. Meanwhile, thousands of new small business start each year. I have a colleague at work that has a small business on the side with his boyfriend, don’t know if it will grow or die, but thousands try and need Shopify and Square.