Shopify overtook Royal Bank of Canada to become the country’s largest company by market cap earlier this month as the stock surged 140% in the last two months alone, and it emerges as one of the biggest winners during the pandemic.
It currently boasts a market cap of 92.3 billion Canadian dollars ($66.4) and has now slipped back to become Canada’s second-largest company by market cap.
Coronavirus has torpedoed economic activity and led most conventional stores to shut down, leaving shoppers to resort to online retailers.
But the future of stock is far less rosy analysts say.
Stock is overpriced
A number of analysts told Markets Insider Shopify’s stock price is not sustainable even if COVID-19 drags on for many more months.
Craig Kirsner, president of Stuart Estate Planning Wealth Advisors, said: “I 100% believe that companies like Shopify and Zoom are overpriced. They are based on the needs of the world right now and that need will go down once we are past coronavirus.”
He added: “I do believe these companies will be more important going forward. However, they are probably overvalued currently, as most bubble-type investments are.”
Robert R. Johnson, professor of finance at Heider College of Business, Creighton University, said: “The valuation of Shopify (SHOP) is, simply put, ludicrous. It is selling at 49 times sales. Not 49 times earnings, but 49 times sales. On a forward PE basis, it is selling at 5000 times consensus next 12 months earnings.”
Shopify posted earnings of $470 million a 47% increase year on year in its 1Q earnings this month.
Johnson cited advice by iconic fund manager Peter Lynch, who led the behemoth Fidelity Magellan fund, stressing that good investments are not only ones that are great products and services but also those companies that have a sustainable business model.
“In essence, there is no economic moat with Shopify. My advice is for investors to use the products offered by Shopify, just refrain from buying shares of its stock,” Johnson said.
Facebook’s partnership with Shopify is a new free tool that helps merchants create a customized online storefront for Facebook and Instagram.
How economies will fare after reopening
Kunal Chopra, chief executive of eTailz, pointed out that the start-up could lose steam if more retailers begin declaring bankruptcies.
“A big driver is whether economy consumer spending may change when economies open up.”
“There may be multiple bankruptcies, especially in the non-essential categories where that is going to [hurt Shopify].
But Ygal Arounian, equity research analyst covering SHOP for Wedbush Securities, thinks potential bankruptcies would help Shopify.
“Our view is that we are not going back to the pre-COVID normal. You are already seeing significant changes in the retail landscape. You are seeing bankruptcies for major retailers’ department stores.”
Arounian added: “It’s a positive for e-commerce and Shopify. It’s going to be a new normal and it’s going to include a lot more online and omnichannel commerce. Shopify will help facilitate that for many SMEs.”
But, Chopra said Amazon’s long-established infrastructure means Shopify won’t snatch a lot of market share in the long-term.
Chopra said: “One advantage Amazon has it has one of the best operational infrastructures in the world. It has fulfillment by Amazon. You don’t get two-day Prime, one-day Prime, on Shopify unless you as a merchant can support that.”
“The other perspective is that that is where consumers are. One of the issues is that Shopify has to direct traffic to its site brand, it has to build that brand presence.”
Though he pointed out, Shopify allows the merchant to own the customer relationship where Amazon doesn’t.
He added: “E-commerce here is to stay and they are both going to compete for market share, you will see a good balance between D2C and market places in the future,” but for now, our “short-term indication is a hold, long-term indication it is a buy.”
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
