Retail software platform Shopify's chief executive officer, Tobi Lutke, wants to address complaints lodged by short seller Andrew Left of Citron Research during its upcoming earnings call, reports said Monday (Oct. 30), but the company may be limited in what it can say.
The Reuters report, citing a shareholder and several analysts, reported many think it is a bad move to disclose company secrets just to quiet someone like Left. The investor explained that if Shopify reveals the average amount it's nearly 2,500 high-end Shopify Plus members pay monthly, it could result in a short squeeze.
According to the report, the minimum amount for high-end customers is $2,000, but there are more charges for those processing more sales. Left has criticized Shopify’s payments to bloggers and others that get merchants to sign up for the company's eCommerce platform. He also wants the company to state the rate of customers that leave the platform, otherwise known as churn.
Analysts told Reuters that Shopify CEO Lutke can push back against Citron by telling investors — on the Shopify earnings call — how many of its customers sell goods with a value exceeding $100,000 each year.
“I’d love to have churn, I just don’t think we’ll get it,” said Ross MacMillan, RBC Capital Markets analyst, in an interview with Reuters.
MacMillan downgraded Shopify to a sector perform earlier in 2017 due, in large part, to the company's lofty valuation and its longer time frame before new services will be poised to increase earnings at the company. Reuters noted that despite the push from Left to get more details on business operations at Shopify, it hasn’t resulted in an increased short interest — or those betting the stock will go lower.
In addition, the Monday report noted that since Left’s negative report on Shopify, short interest has fallen to 3.66 percent of shares outstanding as of Oct. 12. That compares to a short interest of 3.83 percent as of the end of September.