Individual Stock Discussions

It looks like ROKU is shortable if you’ve got a good broker, although it may be somewhat expensive.

Thanks! Will keep an eye on it next week.

Don’t need a broker. Can just do it on Fidelity. But their options transaction fees are high. Can someone recommend more reasonable brokerage for option trading?

My point was you can short sell ROKU now (although probably not at Fidelity, they’re pretty bad for that kind of thing), while you’d have to wait a week or however long it takes before the options market gets around to listing options on them to buy puts or sell calls. The stock is down 20% in the past two days so you may be missing out by waiting for options.

Interactive Brokers is good for both of these things, but they are not for the causal investor - complicated trading tools and limited customer service hand-holding. I hear ThinkOrSwim by TDA is pretty good for options and they’re much more approachable.

I’m following Shopify very closely right now. Big drop today:

Shopify shares fall 11% as short seller calls firm a ‘get rich quick scheme’

  • Shopify Inc. tumbled the most ever after Citron Research said it was shorting the stock and alleged that the Canadian e-commerce company’s rapid user growth was based off customers who would never become sustainable businesses.
  • In a tweet, video rebuke, and post on his website, Citron founder Andrew Left called Ottawa-based Shopify a “get-rich-quick” scheme and “dirtier” than Herbalife Ltd., which has been targeted by regulators for deceptive business practices.

A rebuttal:

  • Shopify is not a “get rich quick scheme.” Shopify does not sell any products directly to the end consumer. The comparison to Herbalife is terrible.
  • GMV is growing rapidly, indicating Shopify’s business is real and is enabling e-commerce. People are becoming millionaires, but Shopify is not claiming everyone will be come a millionaire.
  • Shopify’s operating leverage needs time to be revealed. It is growing too fast for the results to be seen.
  • In 3-5 years when the existing merchant base far outnumbers the new merchant additions, the operating leverage will be apparent.
  • Citron uses valuation comps of companies growing at 2-3x slower than Shopify, it’s no wonder they came to a price target of $60. Not a fair comparison.
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SHOP is a $10B company and while Citron is a well known, high profile short seller, I’m not sure they will have a long term impact here. One thing to remember is that the truth is often the first casualty in these war of words; even good short selling analysts have a tendancy to overstate their case, overlook positive or mitigating factors, and generally try to scare existing investors into selling. They often have large, relatively short term positions, sometimes short dated puts for example, and will be looking to exit much of their position in the immediate selloff in the wake of their press release. As such, the stock may well see a technical recovery over the medium term. Then again, looking at the chart, I would not be buying yet unless I really loved the stock.

HLF may be sketchy, but they weathered the short sellers’ and regulators’ attacks and any short in the stock would be lucky to have gotten out for breakeven. Ackman is proabably down $100M’s worth.

The Citron pitch is pretty silly and seemingly careless. However, I think the reason why the short worked yesterday is that no one has called SHOP a shady company yet - it’s a new short story that has very limited support and he uses HLF “precedent” to put SHOP in a box that they may not be in.

Morgan Stanely defends the stock:

Shopify Inc
Shining A Light On Shopify

With SHOP declining over 11% yesterday following circulation of a short report, investors have been digging into details on the company’s model. We continue to believe that Shopify has a strong core business model and highlight several of the more frequent questions asked, along with responses:

1. How does Shopify’s model compare to a pyramid marketing model?

A: Shopify has a success based model where its revenue is reliant on the success of its merchants. Unlike some pyramid models, there is typically little upfront investment required by merchants on the Shopify platform with no annual commitment required. If a merchant is not successful on SHOP’s platform, it can exit the platform with little cost of failure. Historically, we believe churn has been high but Shopify’s growth has been supported by the growth of its successful merchants which have outweighed the cost of those that have failed on its platform.

2. How does the company’s affiliate marketing platform work?

A: Shopify has over 13,000 ad agencies, consultants, and partners that support its marketing efforts with over 500,000 merchants now on its platform. When a partner refers business into Shopify , they can be eligible to receive a bounty. Where bounties are paid, Shopify may continue paying fees associated with referred merchants while they remain on the platform. Affiliate marketing models are not uncommon among SMB web services vendors. Other vendors that use affiliate marketing programs include Wix and Endurance.

3. How much revenue does Shopify generate from its business exchange?

A: Shopify rolled out a myriad of new products and services for its merchants this year. The company’s exchange was rolled out this summer and, like other services, is in its early stages and its size is not yet disclosed. We do not believe the company has generated a meaningful amount of revenue from this platform yet. Last quarter, 47% of the company’s revenue was generated from Subscription Solutions (subscriptions, themes and apps). The remainder of the company’s revenue (53% of total) can be attributed to its Merchant Solutions business which is primarily payments driven and benefitted from approximately $5.8bn of GMV sold over the platform.

4. How much do bloggers contribute to the company’s customer acquisition?

Shopify does not disclose this number. However, the company has stated that most of its merchants are introduced to the platform organically. Paid advertising is the second most meaningful source of new merchants followed by partners, of which bloggers are a subset.

5. To what extent do non-Plus merchants contribute to revenue growth?

We do not have a breakout of total revenue by merchant category but for Subscription Solutions, management stated that Shopify Plus merchants accounted for over 18% of total MRR last quarter compared to 13% for Q216, implying approximately 127% MRR growth for Shopify plus and 55% for non-Plus business. On the Merchant Solutions side, the company has disclosed that Advanced and Shopify Plus merchants are responsible for over 50% of GMV processed over its platform. We do not have detail on take rate needed to estimate Merchant Solutions revenue by category.

I think Shopify is one of the picks from the FoolAdvisor news letter

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Qualcomm (QCOM) is an interesting stock. It’s paying 4% dividend and has $38B in cash, but the stock got knocked down by Apple withholding royalties. I bought a few shares recently.

Qualcomm makes the best cell phone modems, but due to the royalty dispute, Apple will not be using Qcom’s modems in their $1000 Iphone X (which I believe is a HUGE mistake by Apple.)

Here is a Bloomberg story.

https://www.bloomberg.com/news/features/2017-10-04/apple-and-qualcomm-s-billion-dollar-war-over-an-18-part

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I just funded a Schwab Intelligent Portfolio, and accounts at Wisebanyan and Wealthfront. The portfolios that were most like what I’d do on my own were Wealthfront and Wisebanyan. However, only Wisebanyan is free (with a cap of $20 a month if you want them to do tax loss harvesting).

Wealthfront is a slick interface and they seem like they will be around for the long haul, or be acquired by someone who will be. Wisebanyan is questionable as to their longevity. I also do not like that they use e-mail to communicate – I can’t recall the last financial account (besides WiseBanyan) that I had that did not require me to log in to my account to see a “secure message”.

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The drugstores (Walgreens WBA and CVS Caremark CVS) are getting crushed due to rumor of Amazon entering the pharmacy business.

What do the great minds of this board think? Wolf cry, mortal threat, or something in between?

At what price, do you see SHOP worth picking some up? Citron has tried to short TSLA few months ago and didn’t go too well for them. So I am sure SHOP will rebound like Tesla since Citron has no solid evidence to prove it’s claim of “get-rich-quick” scheme.

QCOM may rebound briefly if they win the court battle. However, the war with Apple will carry on. If Apple keeps favoring Intel over Qualcomm chips, I can see QCOM revenue loss continue for future quarters. It’s best Qualcomm try to find amicable resolution instead of making their biggest customer become an enemy. INstead of buying QCOM, I recommend Intel. Regardless what happens with Apple and Qualcomm, Intel is going to get more business from Apple. So clear winner is Intel.

Is anyone buying TMUS? I just bought more this afternoon @ $61.26 because I think T-Mobile is going to get Sprint for a dirt cheap price. Sprint has a valuable spectrum that can help T-Mobile launch faster LTE-A. Even without a merger, TMUS should be trading around $66 after Q3 ER.

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I really don’t have a good feel for where you should buy the stock.

This is an excellent defense: Shopify's Short Narrative - Where it Fails and Perhaps Misleads - CMLViz.com

Long HMNY from $27 in the after hours today. Wish me luck! (This is the crazy MoviePass stock). Not planned as a long term hold.

Was up $3 / 10% this morning at $30 and then held too long on the way down. Gave up and sold at $22.75. So much for successful day trading.

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i bought ita (aerospace and defense etf) over the summer before the noko stuff really picked up, held it for a few weeks made about 5%. it’s still on the rise. thinking about getting back in…

Daytrading is a great way to make a small fortune. You just need to start with a large fortune and go from there.

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There are successful day traders, including consistently profitable ones. Various academic studies show something like 95% lose money over the longer term, 2-3% make money but are pretty close to breakeven after costs, and 2-3% are profitable. This shouldn’t be a surprise - the top 2% in skill at something are often able to do well at that job. However, it’s a full time job, not an easy one, and one that will likely cost you a fair bit in “tuition” losses before you might learn enough to have a chance to make some money.

The question is whether you can be a successful day trader. Almost no one can, but almost no one can go to an Ivy League college or win the lottery and yet there are thousands of such people every year… just not you.

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