In a tweet, video rebuke, and post on his website, Citron founder Andrew Left called Ottawa-based Shopify a “get-rich-quick” scheme and “dirtier” than Herbalife Ltd., which has been targeted by regulators for deceptive business practices.
Citron’s report alleges the vast majority of them are recruited by promoters promising the website is an easy way to make money without doing much work, and that eventually the company’s growth will crumble when these merchants fail.
In an interview in August, Shopify Chief Operating Officer Harley Finkelstein readily admitted that many businesses on the platform fail, but said the point of the company is to make it easy and cheap for merchants to experiment with new ideas and eventually find success.
Left, who’s perhaps best known for his unsparing assessments of Valeant Pharmaceuticals International Inc., said marketing material on Shopify’s website that called it “the online store for someday millionaires” was a violation of U.S. Federal Trade Commission rules that say a company must back up exactly how a customer can become a millionaire with its products.
The question of how and when Shopify pays third-party promoters to get people to sign up for its stores does need more transparency, but it’s not an existential risk for the company, James Cakmak, an analyst at Monness Crespi Hardt & Co., said in a phone interview.
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- Shopify shares plunge after short-seller report questions company operationsMetroNews Canada
- Citron's Shopify and Herbalife Comparison: Off-Base?Barron's
- Short seller Andrew Left says he's found a 'business dirtier than Herbalife'Business Insider