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Citron sends a shockwave: Panicked investors dump Shopify

Shopify (NYSE: SHOP) stock was trending during intra-day trading on Thursday, with over 2.87 million shares changing hands. The high-volume sell-off was spurred by bearish outlook given by research firm Citron on the stock.

Setting the 12-month price target on the stock at $100, Citron said it sees “drastic changes” in Shopify’s competitive landscape, which could hinder the company’s growth prospects.

The research firm was referring to reports that bigger tech firms including Microsoft (MSFT) or Facebook (FB) could soon be bringing out similar services, which in turn would eat into Shopify’s market share.

The short recommendation sent SHOP shares down over 6%. In the trailing 52 weeks period, the stock has gained 61%.

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This is the second time in the past three years that SHOP shares have suffered due to caution from Citron. The first stock plummet happened in the rear half of 2017. However, the stock rebounded soon after, thanks to the confidence of institutional investors including BNY Mellon, T. Rowe Price, and Fidelity Investments.

Investors have recently been worried about the deceleration in Shopify’s top line. In February, despite reporting market-beating fourth-quarter results, shares of Shopify (SHOP) fell over 6%, on the same reason.

Revenue for the quarter jumped 54% to $343.9 million, beating the market consensus. But the 54% increase in Q4 revenue marks the fourth consecutive quarter of growth rate decline. Revenue growth has consistently declined in the past three quarters, registering at 68% in Q1, 62% in Q2 and 58% in Q3.

 

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