Citron Calls Shopify's Business 'Dirtier Than Herbalife', Values Shares At $60

Herbalife Ltd. HLF can catch its breath for a second as Citron Research Managing Editor Andrew Left takes on a new target.

“When you see what Shopify Inc (US) SHOP does, it’s to a level that you cannot even imagine,” Left said in a Wednesday video.

Shopify sells e-commerce solutions to established merchants and “business opportunities” to those yet to get started. Left raised issue with recruitment methods for the latter segment.

By his assessment, Shopify “has mastered the good old ‘get rich quick’ scheme” by misrepresenting merchants’ financial potential through testimonials of allegedly made millionaires.

“If I had to make a guess, I’d say Herbalife has quite possibly created more millionaires than Shopify,” Left said.

He also objected to Shopify’s alleged disregard for regulatory guidelines that prohibit Herbalife from “claiming that members can ‘quit their job’ or otherwise enjoy a lavish lifestyle” upon enrolling in its program. Shopify actually offers merchants sample resignation letters.

The ostensible offense is compounded by Shopify’s undisclosed payment of bloggers and influencers to partner with and promote its services. Shopify’s website provides instruction on post composition.

“Shopify is not only teaching you how to run a store but how to make money writing a blog about Shopify,” Left said. “This is not an $11 billion company.”

Citron anticipates a Federal Trade Commission investigation and Wall Street’s reevaluation of the firm’s worth.

Shopify could not be immediately be reached for comment.

Left valued Shopify around $60 per share. At time of publication, the stock traded at $108.97, down 6.7 percent off the open.