Ottawa-headquartered Shopify reported $171.5 million USD in revenue for its third quarter, a 72 per cent increase for the same period last year, but the strong earnings didn’t prevent the e-commerce platform’s share price from dropping.
The company’s stock was down as much as 14 per cent in early trading this morning, currently holding at $97 USD hours after Shopify shared its third-quarter earnings.
The slump in shares follows damaging statements made three weeks ago by Citron Research’s Andrew Left who questioned the high-growth company’s sustainability and marketing tactics, stating Shopify is promoting “get-rich-quick” schemes.
Shopify’s CEO Tobias Lütke took the third-quarter earnings call this morning to address criticism that the company didn’t respond strongly or quickly enough to these “preposterous claims” by someone he characterized as a “short-selling troll.”
Lütke defended his company’s business model, stating Shopify categorically dismisses the “misinformation” circulated by Left.
“We don’t sell business opportunities, we sell an e-commerce platform,” said Lütke. He assured investors Shopify complies with FTC rules and does not promise a merchant’s success by using its platform.
Rather, Lütke said most of their content shows how hard entrepreneurship is, and how Shopify is there to help small businesses.
“Saying these businesses are illegitimate is an insult to their hard work,” he said, adding that Shopify gives small businesses a chance to “survive and thrive.”
Shopify has continued to invest in growing the platform, its merchant base and its team instead of posting a profit, a move reflected in a third quarter operating loss of $12.7 million.
“Our partners ecosystem continues to grow, and the tremendous value it brings to merchants is unmatched in our industry,” said Harley Finkelstein, Shopify’s chief operating officer, on the earnings call.
The company raised its forecasts for 2017 based on the strength of its Q3 results, expecting the year’s revenues to top as much as $658 million.
Shopify recently announced it is expanding its Waterloo operations, adding a second office in early 2018 along with 300 to 500 new jobs in the region over the next two to three years.