Citron Research is lambasting Wayfair, and the stock is diving

Andrew Left

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Andrew Left
source
Bloomberg

  • Citron’s latest stock target is Wayfair.
  • Wayfair has a losing business model, Citron wrote in a note.

Citron and its outspoken founder Andrew Left are no strangers to publicly antagonizing short targets.

Citron published a note Monday, saying that Wayfair won’t see sustainable growth unless it makes real changes to its business, the second such note on an internet company in less than a month.

Wayfair stock is down almost 7% on the news, according to investing.com.

Last Tuesday, Citron said that Twitter is the social media company most vulnerable to data regulation, which prompted investors to trade down the stock that day. In October of 2017, Left’s Citron Research published a note on Shopify, calling the company a “business dirtier than herbalife.”

The Wayfair note, which claims that “Wayfair is growing enemies faster than customers,” cites three core reasons investors should flee the stock.

  • Firstly, “increased costs” are “making the aspirational dream that much more difficult.”
  • Secondly, “intensified competition” is of concern. Overstock is “equipped with increased cash,” which it can use for “a noted intention to spend on customer acquisition.” Plus, Amazon and Walmart are “heating up.”
  • Thirdly, “partnership woes,” are of particular concern. Wayfair advertises on Facebook, and “recent privacy issues will cost Wayfair in the near-term.”

Wayfair is also an opponent of the president, further cementing Citron’s stance that Wayfair is a losing bet.

“Wayfair loses money without paying taxes and they are DIRECT opponents of President Trump,” Citron said, noting “they were one of the companies that immediately eliminated doing business and selling Trump branded furniture.”