Shares of Shopify the Canadian e-commerce company fell Tuesday despite earnings that were better than had been expected, as concerns over future growth and a lack in the amount of fresh disclosures rattled investors following a recent attack of short selling.
Analysts and investors hoped Shopify would have released additional details about operations and customers following a report that criticized the retail software business early last month.
CEO and founder of Shopify Tobi Lutke announced during a conference call about earnings, the company’s legal counsel dismissed the claims by the report as being preposterous and it did not and has not been in touch with the Federal Trade Commission in the U.S. following the critical report.
The fast growing company’s revenue for the third quarter was up 72% and it posted an adjusted profit as a public company for just the first time, one quarter earlier than the company had earlier suggested, but forecasted slower growth in revenue during the fourth quarter.
Shares of Shopify, which is based in Ottawa, fell by up to 13.6% during trading Tuesday.
The report complained about blogger payments as well as payments to others who get different merchants to sign on for the commerce platform of Shopify and suggested that the FTC should be investigating Shopify.
On Tuesday, one analyst said he was not impressed with the response by Shopify. He added that material had been sent to the FTC, a regulator in the U.S., and was certain that Shopify would be facing an investigation.
The FTC made no public comment when reached this week.
By early Tuesday afternoon, shares of Shopify were 10% down, while the Toronto exchange was 0.3% up.
The company provided no additional operational data. The report that criticized Shopify asked the company to disclose the portion of merchants that drop off its platform monthly.
Another industry analyst said that the market was anticipating more of an upside, taking the luster from the earnings beat by Shopify.
The bottom line said the analyst; Shopify beat on the numbers, but by less than what they had been beating them by before.
Shopify has beaten consensus expectations by analysts for revenue the past 10 consecutive quarters. The company moved toward smaller growth in revenue during its current quarter than it has had previously, including the fourth quarter of last year.