(Bloomberg) — Shopify Inc. tumbled as much as 10 percent, the most in 11 months, after short-seller Citron Research issued a stinging rebuke of the Canadian e-commerce company, calling it a “get-rich-quick scheme.”
In tweets and videos, Citron said Ottawa-based Shopify is “not the company Wall Street has sold you” and “dirtier” than Herbalife Ltd., which has been targeted by regulators for deceptive business practices.
Andrew Left, the founder of Los Angeles-based Citron Research, said in an email he was shorting Shopify. Shopify didn’t immediately respond to requests for comment.
Shopify, which provides websites, payments and shipping for online merchants, has been one of the top technology stocks globally in recent years, gaining eight-fold from its initial public offering in May 2015. The shares fell 6.1 percent to C$136.78 in Toronto at 11:05 a.m., after falling as low as C$131.09.
Left, who’s perhaps best known for his unsparing assessments of Valeant Pharmaceuticals International Inc., urged the U.S. Federal Trade Commission to look at Shopify’s claims that members can quit their jobs and become millionaires. A post on Shopify’s Facebook page says that “2,700 people become millionaires each day,” and the company brands itself as “the online store for someday millionaires.”
In a $200 million settlement with nutrition company Herbalife, the FTC prohibited the company from claiming that “members can ‘quit their job’ or otherwise enjoy a lavish lifestyle.”
Left also accused Shopify of paying bloggers and influencers to promote the company without disclosing those relationships.
“This is not an $11-billion company,” Left said in a video posted to Citron’s website. “This needs to get completely looked at by the FTC and completely looked at by Wall Street.”