Image Source: Wayfair

What: Shares of online retailer Wayfair (NYSE:W) declined 13.8% during February, according to data provided by S&P Global Market Intelligence. While the company reported better-than-expected results late in the month, harsh criticisms from Citron Research sent the stock tumbling

So what: Wayfair has been growing its revenue at a breakneck pace, with sales jumping 80% during the fourth quarter, but it remains unprofitable, like many fast-growing Internet companies. Citron Research first published a report on Wayfair in Aug. 2015, calling it "the most mispriced stock it had seen in years." The firm criticized Wayfair's "asset-light" business model, suggesting that intense competition and high marketing costs would make it impossible for the company to ever generate meaningful profits.

In February, Citron doubled down on its criticism of Wayfair, tweeting that the company has the worst business model on the Internet.

The following week, Citron's Andrew Left appeared on Bloomberg TV, reiterating the firm's negative stance on the company. Shares of Wayfair stumbled thanks to all of this negative commentary, and while the stock clawed its way back throughout February, it was still down double digits for the month.

Now what: Wayfair is a controversial stock due to its extremely fast growth coupled with persistent losses. The company now generates about $2.25 billion of revenue annually, but its inability to turn a profit on this level of sales should certainly be a concern. Citron's view is that the company will never be able to make a profit because of intense competition and the need for extensive advertising in order to drive sales. During 2015, Wayfair spent 12.4% of revenue and 51.5% of gross profit on advertising.

Whether Citron's criticisms of Wayfair turn out to be justified remains to be seen, but they managed to send the stock lower in February.

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.