One of last year's most vocal and prolific bears when it comes to Shopify (NYSE:SHOP) is at it again. Citron Research is arguing that Shopify's merchant base and stock price face potentially big hits in light of the profile harvesting outrage at Facebook (NASDAQ:FB).  

Shopify offers budding entrepreneurs e-commerce solutions that can be seamlessly woven into Facebook pages. Customers can browse products from these pages before checking out through Shopify's platform. Citron claims Facebook will have to scale back on the amount of personal information that it it shares with Shopify. It will also be harder for Shopify to recruit new merchants on Facebook. Citron argues that Shopify shares should immediately trade down to $100, 29% lower than where the stock was when the week began.

Shopify's Facebook shop builder on mobile and desktop.

Image source: Shopify.

Store fronts

Shopify stock wasn't immune to last week's slide in Facebook, though its 4% slide was nothing compared to Facebook's 14% tumble. Citron's shots have some merit since the lion's share of Shopify's 600,000 merchants fall into the camp of budding entrepreneurs, a group that Citron has alleged is being wooed by aggressive and possibly illegal affiliate marketers.

The flip side here is that Citron has been on the wrong side of this trade. It put out three reports back in October, skewering the business model and Shopify's practices. The stock went on to rise by more than 40% since the last update. Shopify was one of last year's biggest gainers. 

Citron argues that Shopify is trading at a nosebleed price-to-sales multiple and that there's no earnings-based ratio to figure out because Shopify continues to post losses. The valuation is certainly not for the timid, but Shopify's heady growth deserves a healthy market premium. Revenue soared 71% in its latest quarter and 73% for all of 2017. Bears have argued that Shopify is a haven for inexperienced merchants, but the platform still generated a whopping $9.1 billion in gross merchandise volume during the holiday-containing quarter. 

Facebook cracking down on data mining and perhaps even advertisers could leave a dent in that volume. Shopify could also suffer if the #deletefacebook trend finds potential customers swearing off the world's top social networking site. Shopify generates revenue through merchant subscriptions (up 67% in its latest quarter) and merchant solutions (up 74%), and anything that makes it more difficult for recruiting new merchants or helping them close sales could slow growth.

Citron's comments last time out drummed up a public response from Shopify. Citron fired back, but the stock chart over the past five months shows us that Shopify won that round. We'll have to see how things play out this time, but unlike last time when it was all up to Shopify, this time it's going to need a little help from Facebook to bounce back. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.