Canadian investing app Wealthsimple Trade is labelling some stocks as “risky” after a volatile week for shares of GameStop, BlackBerry and other companies favoured by self-directed retail investors.
The GameStop stock page on Wealthsimple’s trading app advises users that the ticker, GME, is considered risky and that traders should expect high volatility.
The Toronto-based robo-adviser suggests that investors who want to trade the stock place a limit order with a set price, as opposed to agreeing to buy or sell at whatever the market price is at the time.
AMC Entertainment and BlackBerry stocks also carry a warning on the app after prices whipsawed this week, posting steep gains or losses from day to day.
GameStop share prices have been on a wild ride this week because of a fight between self-directed retail investors buying up the company, and short sellers on Wall Street who bet heavily against it.
Other companies, including movie chain AMC, confectionery company Tootsie Roll, phone maker Nokia and even Canadian tech company BlackBerry have been swept up in the furor with huge stock price moves from hour to hour and day to day.
GameStop shares were up about about 70 per cent on Friday to just over $328 a share on Friday. At the start of the week, they were worth $75 US, but at one point on Thursday they were going for as low as $112 and as high as $483.
Trading platforms have moved to make it harder to trade in high-flying but highly volatile stocks this week. (CBC)
Wealthsimple has said it will not restrict trading on certain securities, after TD said it would increase margin requirements for short-selling and uncovered options for a handful of volatile names.
Royal Bank confirmed to CBC News on Friday that its brokerage will no longer allow customers to buy GameStop on margin.
Wealthsimple CEO Mike Katchen said the company’s free trading platform is seeing an “unprecedented demand” for orders.
“Just remarkable levels of interest obviously being driven by a few names in particular,” he told the CBC.
Katchen says the company does feel “like we have a responsibility … to remind clients of the the risk involved in speculation in the stock market [so] we sent an email to our clients yesterday reminding of these of these things.”
WATCH: Traders react as brokerages move to limit volatile stocks like GameStop
The price of GameStop stocks has been volatile after some brokerages restricted trade. A former U.S. Securities and Exchange Commission attorney says the ongoing saga ‘starts to put into doubt’ metrics used for companies’ valuations. 8:19
“People need to understand that before they jump in based on emotion and this fear of missing out,” Katchen said. “In my judgment, that’s not usually a smart and thoughtful way to invest.”
Robinhood, a stock trading app in the U.S., has been hit by a class action lawsuit on behalf of its customers, many of whom owned GameStop shares, and wanted to continue to trade them without any limitations.
Robinhood moved to allow some types of trading again on Friday, but the app has faced serious reputational damage for limiting trading in the volatile stocks.
Retail investors may have an ally in the U.S. stock regulator, the Securities and Exchange Commission, which warned on Friday that it will “review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.
“In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws,” the regular said in a statement.
Pace University law professor Jill Gross told CBC News that she expects the SEC is going to want to investigate any evidence of market manipulation on either side
“If the SEC doesn’t investigate, there will be lots more questions and criticism of the agency,” she said.
Retail investors on the prominent Reddit group that started the saga allege that it is short sellers who are the ones doing illegal activity by engaging in so-called “naked shorts” — selling stocks that they do not have the capacity to deliver or replace from where it was borrowed.
Andy Nybo, managing director at Burton-Taylor International Consulting, said brokerages were forced to act.
“The brokers were forced to take action because they would be in the firing line if an unsophisticated investor loses money,” he said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
