Advertisement

Shopify shares plunge after report company operates outside the law

Shopify CEO Tobias Lutke, center wearing hat, is celebrated as he rings the New York Stock Exchange opening bell, marking the Canadian company's IPO, Thursday, May 21, 2015.
Shopify CEO Tobias Lutke, center wearing hat, is celebrated as he rings the New York Stock Exchange opening bell, marking the Canadian company's IPO, Thursday, May 21, 2015. Richard Drew/AP

VANCOUVER — Shopify Inc. shares plunged nearly 10 per cent Wednesday after a research report alleged the e-commerce platform company operates outside the law.

Citron Research, an online stock commentary website whose reports have previously moved the direction of shares for the likes of Valeant and BlackBerry, claims Shopify’s business model does not comply with guidelines set by the Federal Trade Commission.

READ MORE: Tech talent shortage means less education

In a video, managing editor Andrew Left says Shopify has mastered the get-rich-quick scheme, alleging the company’s partners recruit merchants by wooing them with promises of self-employment and million-dollar incomes.

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.

Get weekly money news

Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.
By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy.

Shopify did not immediately respond to a request for comment.

READ MORE: Shopify acquires messaging app Kit CRM

The company’s stock (TSX:SHOP) fell $14.25 or 9.78 per cent to $131.45 on the Toronto Stock Exchange in the afternoon, and US$10.28 or 8.8 per cent to US$106.53 on the New York Stock Exchange.

Story continues below advertisement

Citron Research said the stock should be closer to US$60, prior to any potential involvement by the FTC.

WATCH: Canadian company Shopify makes a deal with Amazon

Sponsored content

AdChoices