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Home>UPDATE: Why a short-seller's big blitz on a tech darling creates a buying opportunity

UPDATE: Why a short-seller's big blitz on a tech darling creates a buying opportunity

UPDATE: Why a short-seller's big blitz on a tech darling creates a buying opportunity

10/05/2017

By Victor Reklaitis, MarketWatch

Critical information for the U.S. trading day

Stocks are staying en route to another weekly win this morning, though tomorrow's jobs report or another factor still could sideswipe them.

A bunch of traders sound like they're getting a bit tired of all the winning by the main benchmarks. The small-cap gauge in particular looks like it should see "at least a pause in its breathless advance," says Dana Lyons (http://jlfmi.tumblr.com/post/166050146150/is-small-cap-rally-getting-extended) from J. Lyons Fund Management.

One high-flying tech stock just experienced quite a pause in its runup, and it's the subject of our call of the day, which comes from National Bank of Canada's analysts.

Shopify's stock (SHOP) (SHOP) tumbled 12% yesterday to $103 after storied Citron Research short-seller Andrew Left targeted the company (http://www.citronresearch.com/citron-exposes-the-dark-side-of-shopify/), blasting it as a "get-rich-quick scheme." Shareholders are still looking at a 141% year-to-date gain for Canada-based Shopify, which helps small businesses with their online sales.

But the bullish analysts from Up North say Shopify's drop will "open a window for longer-term investors who may have missed the massive run in this name." They stuck with their outperform rating and price target of $120, playing down Left's report.

The focal point of that report was a comparison to Herbalife (HLF) and its run-in with the FTC, writes a National Bank of Canada team led by Richard Tse. Left and his colleagues suggest Shopify could face similar scrutiny, "particularly as it relates to its marketing strategy that includes compensating 'influencers' who promote Shopify through various channels," the team adds.

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