Sometimes I get it wrong. I have been calling Shopify (NASDAQ:SHOP) stock a bubble stock for nearly two years, ever since short-sale researcher Citron sent out a report questioning how real their customers were.

But the louder I’ve wailed, the faster SHOP stock has risen. Since the start of 2019, shares are up 136% with a market cap of $36.7 billion.

I’m not alone. Our Laura Hoy calls Shopify’s current valuation a real problem. Our Chris Tyler suggests you wait for the drop. 

Maybe everyone’s wrong. But there’s a reason why, while I might be extremely bearish on a stock, I never sell short.

The Place to Be

Some credit for Shopify’s rise should go to their niche.

Shopify is a cloud-based app that lets anyone open a web store. It also re-sells apps that can make such a store attractive. That’s a fashionable niche. It’s where money wants to be this year. Cloud-based software companies pay one rent check to their hosts, one that can go down, and get monthly income from their subscribers, which can often go up. It’s a sweet, sweet business.

This week, Shopify held its annual Unite conference, heralding the new capabilities of its platform. It issued a State of Commerce Report, filled with internet buzzwords that make you swoon, like mobile, social and brand loyalty.

The company announced a two-day shipping service, giving merchants Amazon-like fulfillment. A start-up called Avatria, which specializes in increasing conversion rates, now integrates with Shopify. The company also bought Handshake, a wholesale portal, for under $100 million.

The purchase drew breathless gasps about Shopify competing directly with Amazon (NASDAQ:AMZN) and Alibaba (NASDAQ:BABA), which was launched as a wholesale portal 20 years ago. A split from privately-held Mailchimp, and the chimp’s purchase of a Shopify competitor called Lemonstand, got more tongues wagging.

The Squeeze Is On

The numbers, however, continue to look ugly for those seeking a safe investment in Shopify stock.

SHOP did $320 million of business in its last quarter, less than in the December quarter, and has yet to see a profit. Operating cash flow was just $24 million for March and, while the company has about $2 billion in cash and short-term securities in the bank, with under $100 million in debt, you’re paying 30 times sales and 367 times operating cash flow if you buy now.

Shopify stock is putting bears through a classic short squeeze, with 28% of the stock’s volume being short interest as trade opened. A short squeeze can take a stock well beyond its fundamental value, because those who are short have borrowed shares, and must “buy them back or go to prison.”

Bulls are calling Shopify’s Unite announcements a reason to buy SHOP stock, saying the new Shopify Plus can go head-to-head with Amazon, which has stopped buying from small suppliers and told them to build their own stores.

The Bottom Line on SHOP Stock

Much of what I’m reading about Shopify sounds like hype, but it will squeeze the shorts until they collapse, and there are indications that is starting to happen.

Our Luke Lango asked in late May when Shopify might hit $300. It has since blown past that number and keeps rising.

But I also know this. Every bubble bursts. Every short squeeze ends. Every company eventually trades at something like its fundamental value, albeit with a discount or premium based on the type of business it’s in.

When the Shopify bubble pops, there’s a long way it can fall before hitting anything like fundamental value. If you’re in it, congratulations and good luck to you. I’m going to keep sitting this dance out.

Dana Blankenhorn is a financial and technology journalist. He is the author of a new environmental story, Bridget O’Flynn and the Bear, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT.