Out Fox The $treet

Based in part on the negative call by Citron Research, Wayfair (W) is down below $85 now. My previous articles ($$) were negative on the stock due to the similar issues of diseconomies of scale. Until the online furniture company shows that offering a global delivery network for heavy furniture items can scale profitably, the stock is likely to struggle. Citron has a $40 target on the stock, but something closer to $70 appears the most likely short-term target. My view is more constructive long term. The retail experience in the furniture market is less than desirable leaving a big opportunity for Wayfair that offers a better service and selection. The question is whether the company can leverage an already large tech department and turn this into a real business. Disclosure: No position. Please review the disclaimer page for more details. 

Shopify recently hit a double top around $175. Adobe Systems entered the sector with the purchase of Magento to compete for the e-commerce platform of large brands. The alarming rate of sales deceleration is a major red flag for an expensive stock trading at a forward P/S multiple of 10x. One of the ramifications of a massive market valuation is that competitors want a piece of the action.   Shopify   ( SHOP ) faces this exact scenario as investors rewarded the company with P/S multiple of 10x '19 revenue estimates. Read the full article for more details.  Disclosure: No position mentioned. Please review the disclaimer page for more details.   

Shopify (SHOP) has done everything to deserve dropping off an analysts Best Ideas list. The company recently sold shares in a secondary offering and has a new CFO, but the prime reason to avoid the stock now is a completely different reason.