Shares of Ottawa-based Shopify took a hit to start the week as a familiar foe attempted to ensnare the e-commerce giant in the recent Facebook data controversies.
Shopify (TSX:SHOP)(NYSE:SHOP) shares fell roughly 11.9 per cent from Monday’s highs, closing at $165.65 on the Toronto Stock Exchange Tuesday. The firm’s shares have taken a tumble since hitting an all-time high of $200.32 a week ago.
Citron Research’s Andrew Left, the short-selling investment adviser whose video prompted Shopify’s shares to plunge last October, released a new note yesterday that accused the firm of having an “unholy alliance” with Facebook and attempting to connect Shopify to the social media giant’s recent data controversies.
OBJ360 (Sponsored)
![Dr. Rebecca Auer](https://assets.obj.ca/2024/08/Rebecca_Auer_2024-200x300.jpg)
The Ottawa Hospital’s Dr. Rebecca Auer Leads Cutting-Edge Research and Innovation
Every Tuesday, for last 15 years, Dr. Rebecca Auer could be found in an operating room at The Ottawa Hospital (TOH) removing cancer tumours from patients. As a surgeon who
![Foreign Investment](https://assets.obj.ca/2024/08/AdobeStock_801970087-300x168.jpeg)
Foreign Investment in Canada: How to Navigate the Legal Landscape
Canada has consistently maintained its identity as an open trading economy, where foreign investment plays a pivotal role in enhancing the vitality of its business sector. This article focusses on
The note alleges that Shopify’s “punchbowl” has been targeting potential customers with misleading ads, driven by the behavioural data Facebook has collected. The security of Facebook users’ private information has been at the forefront of recent stories surrounding Cambridge Analytica, an analytics firm connected to Donald Trump’s presidential campaign that purportedly made improper use of the social media giant’s data.
Similar to its allegations last year, Citron wrote that Shopify over-promises merchant success with ads that suggest users could become “Facebook millionaires” by opening a store on the platform. The e-commerce firm has garnered skepticism from media outlets and bloggers for its partner program that promotes “dropshipping,” whereby merchants set up a store to market and resell items such as those sold cheaply on the Amazon-like Chinese marketplace Alibaba.
Citron suggests that Facebook will be forced to revise policies around who gains access to its user-tracking data, and that Shopify will be left out of the new model because of its “misrepresenting” offers, leaving the firm with a diminished platform to attract new merchants.
Shopify CEO Tobi Lütke addressed Cirton’s claims via Twitter, saying the accusers should “get the rest of their facts right.” He also defended promoting Facebook as a sales channel for merchants, but suggested any decline would not have a significant impact on Shopify.
Our 600,000+ entrepreneurs can sell on any channel they want to. If their customers want to buy via carrier pigeon, we’ll build a channel for that too. The health of any individual channel has little effect on the overall platform. Demand migrates.
— Tobi Lütke (@tobi) March 26, 2018
Following Citron’s initial attacks, in which Left alleged Shopify violated Federal Trade Commission guidelines, Lütke responded during the firm’s subsequent quarterly earnings call to brush off the claims and the long-term damage they would have on share price.
“Some days the stock’s higher and some days the stock’s lower, but over the years, it will approximate to how well the company’s doing,” he said then. He added that the FTC had not contacted the firm about any potential violations.
Despite the rough week, Shopify’s shares have surged in the first quarter of 2018. Shares began the year trading at $132 on the TSX and have since increased by roughly 32 per cent.