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Shares of Shopify (SHOP - Free Report) fell more than 10% after notorious short-selling firm Citron Research argued that the e-commerce platform is fraudulently promoting “get-rich-quick schemes.”

In a video posted on Citron’s website, Andrew Left, who has garnered attention for successful bets against companies like Valeant Pharmaceuticals (VRX - Free Report) , questioned Shopify’s user claims and compared its business to multi-level marketing companies like Herbalife (HLF - Free Report) .

“Shopify says they have 2,500 Shopify plus merchants out of their universe of 500,000. Now let's say they have another 20,000 Shopify Advanced. The question I ask you, the question no one on Wall Street has addressed is who are the other 450,000 merchants on Shopify?”, Left said.

In a larger report, Citron criticized Shopify’s marketing strategy, which relies on “partners” to refer new merchants to the platform. The report also took jabs at the company’s hyperbolic advertising copy. For example, Citron noted that Shopify’s website uses the word “millionaire” at least 92 times.

It’s certainly true that Shopify attempts to appeal to entrepreneurial-minded individuals, and as Citron mocked, the company even includes a sample resignation letter on its site—insinuating that customers could quit their day jobs and open a Shopify store.

But Citron’s report makes several mentions of the Federal Trade Commission and concludes by implying that Shopify could soon find itself in some legal trouble:

“We are forwarding all of our information (hundreds of pages) to the FTC and we expect Shopify to face the same scrutiny as the many companies of the past who sell dreams to unsuspecting customers.”

Left gave the stock a $60 price target and suggested that it could slip further if the FTC gets involved. That call would represent a 49% slump from Tuesday’s close and a 42% drop from Wednesday’s intraday low.

Whether or not Shopify has intentionally or illegally misled customers and investors is a question that only regulators can answer, and it is worth noting that Left confirmed he is short the stock. Nevertheless, Citron have an interesting track record with pointing out dubious business models and making accurate short calls in the past.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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