Shopify Inc (US) (NYSE:SHOP) stock tumbled 11% on Wednesday and extended its losses on Thursday, after short seller Andrew Left of Citron Research took aim at the stock in a video and article released Wednesday morning.

Left claims that Shopify’s marketing tactics run afoul of Federal Trade Commission regulations, which likely will lead to an investigation. From a valuation standpoint, he argues that SHOP stock essentially is just too overvalued.

On the first point, Left makes some compelling points — which even SHOP stock bulls should consider. But on the second point, Citron’s case isn’t quite as complete. And that suggests that the sell-off of the last two days may have gone too far.

Is Left Right on Shopify Stock?

While the standard cries of “market manipulation” have accompanied Citron’s bear raid, the firm does make a good case relative to Shopify’s advertising. And it’s worth pointing out that Citron has a solid, if occasionally flawed, track record. Left’s recent short call on Nvidia Corporation (NASDAQ:NVDA) hasn’t worked out. And the firm was way wrong in shorting Tesla Inc (NASDAQ:TSLA) back in March 2016.

But a 2015 Wall Street Journal piece showed Left has a long, and impressive, track record in his calls. And one of Citron’s best calls was on Valeant Pharmaceuticals Intl Inc (NASDAQ:VRX), which the firm called the “pharmaceutical Enron” that same year. Citron’s research led to wider exposure of the Philidor scandal and VRX stock wound up falling some 90%. Left also has had great success in calling out Chinese frauds.

The accusations against Shopify aren’t quite as serious. Properly understood, however, they are compelling. Citron’s comparison of Shopify to Herbalife Ltd. (NYSE:HLF) seems odd on its face. However, Citron’s point is not that the business models are similar, but that the FTC marketing rules put into place — partly due to the Herbalife investigation from earlier this decade — are being violated by Shopify’s promises of “becoming a millionaire” and talk of store owners being able to quit their jobs. As Left put it in an interview with Bloomberg, those promises “completely violate every FTC rule imaginable.”

And this seems to raise a major risk for Shopify stock.

Does It Matter for SHOP Stock?

The question, with SHOP stock now down about 15% in approximately two days, is the extent to which Citron’s claims matter from a fundamental standpoint — and it’s there that the short case made by Citron gets a bit weaker.

Bear in mind that Shopify stock has a market capitalization of nearly $10 billion, even after the two-session decline. Herbalife paid $200 million to compensate customers. LifeLock, now a unit of Symantec Corporation (NASDAQ:SYMC), paid $100 million in a major deceptive advertising case. Shopify likely will change its advertising practices — as Left himself predicted in Citron’s video. But even if the FTC investigates, and even if the FTC finds violations in the advertising, it’s highly unlikely that the penalty would be more than 2% of the current market capitalization of the company.

Citron also claims the stock simply is overvalued, advertising impact aside. But there’s a real question as to whether the advertising is boosting sales or earnings. In fact, it seems rather unlikely, based on Citron’s own logic.

Aggressive sales tactics by affiliates might be bringing in new customers that are, in essence, falling for the hype. But those customers, no matter how they were acquired, almost certainly aren’t driving payment processing revenue and seem unlikely to contribute much in the way of long-term growth in subscription revenue. As a group, they almost certainly represent an exceedingly small portion of Shopify’s revenue and sales. And that’s a problem for Citron’s bear case.

Shopify Stock Is Expensive — but Growth Typically Is

Even if Citron is right in terms of Shopify’s advertising, it’s not clear that it really changes the long-term outlook for SHOP stock, which is all that really matters from a fundamental perspective. In both the Citron video and in the Bloomberg interview, Left argues that a more proper revenue multiple, in line with SaaS leaders like Workday Inc (NASDAQ:WDAY), Salesforce.com, Inc. (NYSE:CRM) and Square Inc (NYSE:SQ), suggests a valuation of $60.

That might be true, though SHOP bulls would argue Shopify’s faster revenue growth merits a higher multiple, but the specific problem here is that the $60 price target really isn’t based on the alleged FTC violations. Assuming Left is correct about the legality of some of Shopify’s marketing practices, it doesn’t then follow that SHOP’s multiple should collapse, given that very little — if any — revenue is coming from those advertising efforts.

In other words, if Citron is right about Shopify’s advertising, it does not mean that Citron is right about Shopify stock. Furthermore, I’d argue that Citron’s research, right or wrong, doesn’t materially change the bull and bear cases for SHOP stock. The revenue that drove share prices to $120+ last month isn’t really the subject of Citron’s criticism.

This, in turn, suggests a bit of an overreaction from the market over the past two days, as many SHOP shareholders have argued. And it also suggests an odd conclusion: Both Citron, and Shopify bulls, might be correct.

As of this writing, Vince Martin has no positions in any securities mentioned.