After reading Citron paper, I am thinking the same given SHOP’s volatilty,
I didn’t make the connection between SG&A and Citron’s point of a threat to SHOP’s revenues from entrepreneurs who should be impacted due to tighter data privacy regulations. Are you suggesting that SHOP’s advertising cost to sell to ‘entrepreneurs’ should be reflected in SG&A?
Yes, that’s where it would go. The Citron thesis is based on excessive spending to acquire customers then those customers don’t generate enough revenue to cover the cost of customer acquisition. If that was true, then SG&A would be growing must faster then revenue. They’d be spending $100 to acquire a customer that spends $50.
To add more, SHOP is using middle agencies to get new customer and SHOP pays to the middle agencies commission, that falls under SG&A expenses. How much Citron pays to them, to get a new customer, is not revealed or percentage (is it 15 or 75% or 125%). Citron is suspicious that SHOP is paying excessive amount that eats the profit.
In addition, every now and then SHOP is diluting shares by issuing follow-on shares. In short, SHOP is playing with our money. But the stocks go up similar to bitcoin mania.
It is amazing to me that Tesla stock closed the penultimate day of February above $350 per share and today is struggling to hold $295 per share. The volatility in TSLA shares has bitten the longs with a 15% decline in 19 trading days, and the bulls are struggling to make coherent arguments. That points to the most pressing issue facing Tesla and its CEO Elon Musk: time.
The Tesla bull case is based on the idea that TSLA will dominate a future world in which battery-electric vehicles (BEVs) and autonomous vehicles (AVs) are prevalent in global markets. The problem with that argument is that Tesla already dominates the global market for BEVs, and yet the company burned through $3.5 billion of cash last year. The Tesla Model S is the most important automotive product of this generation, it is undeniably the car of the century (thus far,) but what does that get Tesla shareholders? Nothing in terms of real economic returns.
It’s terrible and their “research” reports are full of hyperbole and little to back their claims. They look like they were written by HS kids. It’s a collection of out of context quotes. It’s as bad as those click farm websites. I don’t get how anyone can read one of those reports and think it’s serious research. It’s the equivalent of reading Breitbart or Occupy Democrats and thinking you’re getting factual information.
That is my thought too. Probably sideways for a few months. Nearly 90% cash in 10x aka mad money account.
Biggest position is IRBT which I’ve collared it to protect from sudden big decline like SHOP. Long calls are scared of sideways, theta kills, forcing me to close position