Is Shopify A Scam?
2 days ago, renowned short seller Citron came out with a report suggesting SHOP is a multi-level pyramid scheme, comparing it to the likes of HLF, sending the stock plunging down 15%+. Whether HLF is or is not considered a pyramid scheme is still yet to be determined, but what we do know is that the stock price is much higher than it was 3+ years ago when the allegations first began, so that may not be such a bad thing after all.
The business of Shopify is to help individuals set up online stores to sell stuff. They help you source drop shippers in China via aliexpress, and also allow you to connect your shop to your social media accounts so you can can annoy all your friends with the stuff you have for sale. You don’t even need to know what you want to sell, they will ‘figure it out’ for you. In fact, that sounds so fun even I created a trial account some many months ago to test out.
How they go about acquiring customers is the issue. Through a network of ‘partners’, aka bloggers, they flood the internet with stories of people that started using shopify and went from rags to riches within a few months. Having a trial account, I am on their email list and witness this first hand. Those fuckers email me every single day about 10 new guys that are ‘turning their passion into profits’ from the comfort of their home.
As a general rule, anyone who needs to show pictures of members driving fancy cars and tell their success stories to recruit new members are dicks and should be ignored. I remember back in the day, seeing friends get enticed and swallowed up by the likes of Quickstar and Amway, only to get spit back out broke and with no friends. During training, they are brainwashed on how the sales pitch should flow; beginning with emotions and the pursuit of happiness, and ending with joining as a member as a means to fulfill those goals. Granted, that strategy works and develops a strong cult-like following, but is never built to last.
I personally know a few close to me that took it a step further, and went on to join schemes that used charity to extract tax-payer dollars. That is a big no-no and will earn you some time in the gaol. I remember listening to his pitch to recruit me and wondering how anyone could be so naive to get brainwashed by such chicanery. I actually thought my arms were going to involuntary start punching him in the face. Fast forward to today and that gent now owes the government $100k+ in fines for partaking in that crap and is on the verge of divorce.
What makes a pyramid scheme a scheme is the flow of money. In the real world, money should flow down, meaning your superiors should be paying you to work for them, not the other way around. When it starts to flow the other way, it becomes a scheme, but that’s also what makes it all the more attractive. The more people you get working under you, the better, no?
Back to Shopify.
Aside from their questionable marketing tactics, some of the tools they have created are actually quite useful. For instance, they have a so-called ‘exchange‘ where users can buy and sell website shops they created that are actually doing business. They disclose the revenue and traffic of the webshops, and the sale price is actually somewhat reasonable. On the surface, it sounds like a cool idea, but who knows, perhaps it is utter crap as well. I was thinking of buying one, just to test out and see the viability of the traffic, but opted not to as it sounds like a waste of time.
In other news, GOOGL broke through $980 and is now trading somewhere around $986. The calls I bought 2 days ago at $3.60 are now worth $14.00, but unfortunately I sold out at $9. It used to vex me to see stocks continue higher, immediately after I sell them, thinking about all the money I ‘could have’ made. Now I simply walk it off, and try come up with the next idea.
The NASDAQ is at all time highs and risk is clearly back on. With the proceeds, I might just dive into another high-beta momo stock.