Shopify Stock Has a Lot to Prove on Tuesday

One of this year's biggest winners is under attack, and Shopify (NYSE: SHOP) will have the perfect opportunity to justify its year-to-date gains, and debunk the accusations that have roughed up the stock in recent weeks, when it reports fresh financials on Tuesday. While Shopify stock is still up a hearty 150% so far this year, it took a hit earlier this month after Citron Research skewered its model and its valuation.

Citron's bearish argument accuses the e-commerce platform of using promotional language with its referral network that may violate the Federal Trade Commission guidelines. Citron also suggests that Shopify's merchant count -- currently at 500,000 and rising -- is inflated, in light of the addressable market size of the platform's opportunity. Throw in Shopify's lack of profitability, and Citron argues that Shopify has an immediate price target of $60 -- and eventually a lot less than that.

Shopify stock would go on to shed 22% of its value over six trading days following the bearish missive earlier this month. The stock has gone on to make back about half of that decline, but that only places more weight on Tuesday morning's report.

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Source: Fool.com