Shopify Inc. (SHOP.TO)

A brilliant concept, although one US analyst has called it a Ponzi scheme. From what he knows, he doesn’t think that is the case. Long-term, if this company delivers on its promise, it could be worth a lot, but you are paying for that future now, and have to be prepared for volatility.

He still owns it. The story is not broken despite the short report. They don’t have the income or ROE metrics. They are a bit of a rule breaker. They are growing like gang busters. Some of their merchants should be VERY successful. He thinks SHOP-T will be successful.

If it closes below $117.50 on a weekly basis, there is a good chance it is going to have some further downside. The chart shows it has support at around $111.

(A Top Pick Jan 11/17, Up 110%) The short seller’s research was nonsense in his opinion. They are a one stop shop for a small business to get into ecommerce. It is a powerful emerging technology player in Canada.

He gets the sense that many investors are buying stocks like this with no view as to what the earnings, cash flow or growth is going to be. This is in the news every day, and is going up almost every day, and that is attracting investor flows, so you are not buying a company like this for any fundamental reason, except thinking that someone else is going to come along tomorrow and pay even more before it.

Has gone from one of the best performing stocks, to becoming much more of a trading stock. She would be shocked if Citron were to give up on their Short. Thinks that when the stock is really hammered you buy some. When there is a really good day and it is up $5-$6, then you let it go. Doesn't think it will make new highs over the next year. It's going to have a hard time.

Valuation was at a ridiculous 12X forward revenue, so had Shorted the stock. Then the report came out questioning the strength and the viability of their operations. This is a real business operation, a real company, and he doesn't think there is any fraud or anything like that. Right now, you are paying for probably the best growth scenario through to about 2020, and that is where he is uncomfortable. He can't see buying this because he expects growth is going to slow. He did cover his Short, and will just watch this from the sidelines.

This was a market darling. It consolidated very nicely, broke out and moved up. There is a pretty good level of support, so it is not necessarily a bearish looking chart, but is nowhere near a bullish looking chart. It is not making new highs, and is struggling to make a higher low. To him, that is a consolidation pattern. He would avoid this.

They report tomorrow. It is a great company but every morning he has to wake up and decided if it has the best risk/reward and he does not think that right now. The allegations against them are not that valid but a lot of people probably sold on the announcement because they didn’t know much about the company.

A short-seller dropped the stock price, and the battling back-and-forth has created problems. The sector is doing really well. This has been trading in a range recently. They are coming on with earnings next week, and will clarify their positions. We are at the top end of the trading range in the sector’s seasonal period. Wait until the earnings actually come out. If it breaks out in the top end of the range, that is a very positive sign.

Sold his positions some weeks ago. It’s a little early yet to step back in. He doesn’t like being in a situation where there is an activist creating waves. Loves the company and loves the concept, but it is a situation where there are no earnings yet. Wait a little.

They will probably beat estimates. They consistently jump over the bar that people have set for them. It has been a great success story but it is an expensive stock and he is a value investor. He forecasts strong growth in the near term.

Vulnerable to the Shorts, because the valuation is incredibly expensive. They are still not making any money. Believes the Bulls have $.20 in earnings for 2018, back-end loaded. That would mean it is trading at 600X earnings, and something like 30X EBITDA. Still too expensive and vulnerable. You could maybe trade it, but if it ever misses it would be $80 before you could shake a stick at it.

(A Past Top Pick Jan 18/17, Up 85%) It has been called a multilevel marketing company. They have never missed a quarter as a public company. There are a lot of eyes on it. They have recurring revenue. None of the allegations are new.

A great case study. Basically, traded from $15 to $120, and consolidated nicely along the way. When the Citron report came out, the stock was at $105. Fundamentally, it is a great business. The Citron report had enough holes to drive a truck through, but there is some smoke. He was stopped out at $105 and has moved on. He’ll wait and see how the company handles this. There will be more when earnings come.