Short Seller Takes Aim at Dollarama, Stock Falls Suddenly

Whilst having a tough year already, the Montreal-based company Dollarama (TSE: DOL) stock price drops as low as 9% during the day on October 30, 2018. The main cause of this event was the release of a report published by a New York hedge fund which estimates that Dollarama stock should fall to $CAD 24.60 , which means a 40% loss of its current value.

Spruce Point Capital Management is a firm based in New York which focuses on in-depth research of companies’ vulnerabilities. The hedge fund estimates that this family enterprise, established in 1910, is likely to witness its toughest drop since it went public nine years ago. During the Robin Hood Investors Conference which took place on October 29th 2018, the man behind Spruce Point, Ben Axler, declares that the “troublesome management and governance” have been quite questionable. Furthermore, the Canadian company raised its prices up to $CAD 4 just recently, which decreases the number of customers shopping at their stores. Meanwhile, competition is offering better quality products at lower prices. In addition to all theses factors, the rise of workforce and transportation costs led Axler to conclude that theses “unlikely margins” won’t last for too long.

The Spruce Point report scared away investors, which explains the stock’s opening price the day after Robin Hood Conference. The management, who chose not to make any comments for now, will have to act accordingly. In fact, since the beginning of the year, Dollarama disappointed financial analysts with its results. The company’s earnings have been lower than expected. Stockholders’ Equity is shown to be negative due to the company’s liabilities being worth more than its assets, which is problematic. This ensues to a P/B (price to book) ratio with a negative value. Nevertheless, these results don’t seem to alter the CEO of Dollarama, Neil Rossy’s ambition to get into wholesale and online sales as he announced in June 2018. It remains to be seen if the measures will be sufficient to resolve the matter.



Spruce Point Management. (31 octobre 2018). Dollarama Inc. Spruce Point Report.  [En ligne]. Disponible:

Reuters. (31 octobre 2018). Spruce Point sees Dollarama stock price tumbling.  [En ligne]. Disponible:

La Presse. (31 octobre 2018). Dollarama visée par un vendeur à découvert.  [En ligne]. Disponible:

Les Affaires. (31 octobre 2018). Un vendeur à découvert s’en prend à Dollarama, l’action perd 7%.   [En ligne]. Disponible:

BNN Bloomberg. (31 octobre 2018). Dollarama’s stock falls as short seller Spruce Point takes aim. [En ligne]. Disponible:

Les Affaires. (31 octobre 2018). Dollarama se lance dans la vente de gros. [En ligne]. Disponible:


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