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Opinion: Shopify shares rise as tech company announces 10-for-1 stock split – The Globe and Mail

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Tobi Lutke, CEO of Shopify, in the company’s Montreal office on Feb. 18, 2015.Paul Chiasson/The Canadian Press

Shopify Inc. SHOP-T co-founder, chair and chief executive Tobias Lutke has three young children. The billionaire is willing to give up the opportunity to pass along the company to his offspring in exchange for maintaining control for as long he works at the online commerce giant.

Ottawa-based Shopify, Canada’s largest tech company, announced on Monday it plans a 10-for-1 stock split in late June; the share price promptly jumped by 3 per cent on the Toronto Stock Exchange. Shopify is the latest tech company to see its shares soar on news of a split; similar moves took place at Amazon.com Inc. and Tesla Inc. in recent weeks.

The Shopify board also unveiled a governance structure that would award Mr. Lutke newly minted founder’s shares that lock in 40 per cent voting control, even if the company issues additional stock – for example, to pay for a takeover – or Mr. Lutke sells a significant portion of his stake, currently worth more than $5-billion.

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Shopify proposes changes to governance structure, announces 10-for-one share split

What is a stock split? Shopify is the latest tech company to announce its plans

The wrinkle here is the 41-year-old founder’s new shares come with a sunset clause – they expire when Mr. Lutke leaves Shopify, or his holding falls to less than 30 per cent of current levels.

If shareholders approve Shopify’s restructuring at a vote scheduled for June 7, the country’s tech flagship will go from a dual-share company that can pass control through generations to a one-share, one-vote structure after the founder’s departure.

“These changes will enhance Shopify’s strategic flexibility,” Robert Ashe, Shopify’s lead independent director, said in a news release. “Tobi is key to supporting and executing Shopify’s strategic vision, and this proposal ensures his interests are aligned with long-term shareholder value creation.”

Shopify’s board unanimously recommended shareholders vote in favour of the new structure, along with the stock split. Investors should applaud this evolution. In a 2019 report, Institute for Governance of Private and Public Organizations chair Yvan Allaire said sunset clauses have “gained salience as institutional shareholders and various agencies try to curtail, rein in and put a time limit on the relative freedom that a dual-class of shares provides to entrepreneurs and family corporations.”

Shopify’s plans are a welcome break from the entrenched ownership at many family-controlled companies, including Rogers Communications Inc., and at entrepreneur-controlled tech businesses such as Facebook parent Meta Platforms Inc.

While more than 60 companies with dual-class shares are listed on the Toronto Stock Exchange, a number of entrepreneur-led companies, such as Onex Corp. and Alimentation Couche-Tard Inc., feature sunset clauses, similar to the planned structure at Shopify. It’s worth noting that Couche-Tard’s founders tried to extend their control of the company in 2015, only to abandon the move in the face of shareholder resistance.

Mr. Lutke founded Shopify in 2004 after writing the software needed to operate his online snowboard business. The company went public in 2015, with investors offered Class A shares that carry one vote, while Mr. Lutke and other insiders maintained control by owning Class B shares that carry 10 votes each, stock that can be transferred to spouses or offspring.

Last year, regulatory filings show, Mr. Lutke cashed out $623-million in Shopify stock under an automatic sales program put in place more than two years ago.

Right now, Mr. Lutke and Shopify director John Phillips, a retired lawyer and early investor, control 97 per cent of the company’s Class B shares, while current and former employees and directors own the rest. If shareholders approve the founder’s share, Mr. Phillips will convert all his class B shares into single-vote shares.

After Mr. Phillips swaps his multiple voting stock, Mr. Lutke will hold about 40 per cent of the votes at Shopify. In a news release, the board said using the founder’s shares to preserve this stake “was appropriate as it is approximately the voting power he would hold under the current share structure.”

Shopify’s stock price dropped off sharply in recent months, as did that of many growth-focused tech companies, on concerns about a postpandemic slump in online commerce. However, analysts say the company continues to be a dominant player in a rapidly expanding sector. In a report last week, RBC Capital Markets analyst Paul Treiber said: “Shopify has a number of catalysts that we expect to help accelerate revenue growth and expand the company’s long-term total addressable market.”

Over the next two years, Mr. Treiber forecast Shopify’s gross merchandise volume, or the total value of orders processed on the platform, will increase from $175-billion to $310-billion annually.

Shopify’s new governance gives Mr. Lutke every opportunity to expand the company, confident in his control. The sunset clause in the structure simply means shareholders aren’t forced to give that same unfettered support to his three kids.

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Calgary breaks all-time record in housing starts but increasing demand keeps inventory low – CBC.ca

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Soaring housing demands in Calgary led to an all-time record for new residential builds last year, but inventory levels of completed and unsold units remained low due to demand outpacing supply.

According to the latest report from Canada Mortgage and Housing Corporation (CMHC), total housing starts increased by 13 per cent in Calgary, reaching a total of 19,579 units with growth across all dwelling types in the city.

That compares to a decline of 0.5 per cent overall for housing starts in the six major Canadian cities surveyed by CMHC.

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Calgary also had the highest housing starts by population.

“Part of the reason why we think that might have happened is that developers are responding to low vacancies in the rental market,” said Adebola Omosola, a housing economics specialist with CMHC.

“The population of Calgary is still growing, a record number of people moved here last year, and we still expect that to remain at least in the short term.”

Earlier this year, the Calgary Real Estate Board also predicted that demand, especially for rental apartments, wouldn’t let up any time soon. 

Industry can cope with demand, expert says

According to numbers from the report, average construction times were higher in 2023 for all dwelling types except for apartments.

The agency’s report suggests the increase in the number of under-construction residential projects might mean builders are operating at or near full capacity.

However, there’s optimism the construction industry can match the increasing need.

Brian Hahn, CEO of BILD Calgary Region, said despite concerns around about construction costs, project timelines and labour shortages, the industry has kept up with the demand for new builds.

Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary region CEO Brian Hahn.
Demand is expected to remain robust, but the construction industry can keep up, according to BILD Calgary Region chief executive officer Brian Hahn. (Shaun Best/Reuters)

“I’ve heard that kind of conversation at the end of 2022 and I heard it in 2023,” Hahn said.

“Yet here we are early in 2024, and January and February were record numbers again.”

Hahn added he believes the current pace of construction will continue for at least the next six months and that the industry is looking at initiatives to attract more people to the trades.

Increase in row house and apartment construction

Construction growth was largely driven by new apartment projects, making up almost half of the housing starts in Calgary in 2023.

The federal housing agency says 9,034 apartment units were started that year, an increase of 17 per cent from the previous year. Of those, about 54 per cent were purpose-built rentals.

Apartments made up around two-thirds of all units under construction, CMHC said, with the total number of units under construction reaching 23,473.

Growth, however, was seen across all dwelling types. Row homes increased by 34 per cent from the previous year while groundbreaking on single-detached homes grew by two per cent.

“Notwithstanding challenges, our members and the industry counterparts that support them managed to produce a record amount of starts and completions,” Hahn said.

“I have little doubt that the industry will do their very best to keep pace at those levels.”

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Ottawa real estate: House starts down, apartments up in 2023 – CTV News Ottawa

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Rental housing dominated construction in Ottawa last year, according to a new report from the Canada Mortgage and Housing Corporation (CMHC).

Residential construction declined significantly in 2023, with housing starts dropping to 9,245 units, a 19.5 per cent decline from the record high observed in 2022. But while single-detached and row housing starts fell compared to 2022, new construction for rental units and condominiums rose.

“There’s been a shift toward rental construction over the past two years. Rental housing starts made up nearly one third of total starts in 2023, close to double the average of the previous five years,” the report stated.

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Apartment starts reached their highest level since the 1970s.

“The trend toward rental and condominium apartment construction follows increased demand in these market segments due to population growth, households looking for affordable options, and some seniors downsizing to smaller units,” the CMHC said.

Demand from international migration and students, the high cost of home ownership, and people moving to Ottawa from other parts of Ontario were the main drivers for rental housing starts in 2023. The CMHC says rental and condominium apartment starts made up 63 per cent of total starts in 2023, compared to the average of 37 per cent for the period 2018-2022.

There was a modest increase in rental housing starts in 2023 over the record-high seen the year prior and a jump in new condominiums. The report shows 5,846 new apartments were built in Ottawa last year, up 2.1 per cent compared to 2022.

Housing starts in Ottawa by year. (CMHC)

Big demand for condos

The CMHC said condo starts reached a new high in 2023, increasing 3 per cent from 2022 numbers.

“As of the end of 2023, there were only 13 completed and unsold condominium units, highlighting continued demand for new units,” the CMHC said.

Condominum starts increased in areas such as Chinatown, Hintonburg, Vanier and Alta Vista, as well as some suburban areas like Kanata, Stittsville, and western Orléans. Condo apartment construction declined in denser parts of the city like downtown, Lowertown and Centretown, the report says.

Taller buildings are also becoming more common, as the cranes dotting the skyline can attest. The CMHC notes that buildings with more than 20 storeys accounted for nearly 10 per cent of apartment structure starts in 2022 and 2023, compared to an average of 2 per cent over the 2017-2021 period. The number of units per building also rose 7 per cent compared to 2022.

Apartment building heights in Ottawa by year. (CMHC)

Single-detached home construction down significantly

The number of new single-detached homes built in Ottawa last year was the lowest level seen in the city since the mid 1990s, CMHC said.

“The Ottawa area experienced a slowdown in residential construction in 2023, driven by a significant decline in single-detached and row housing starts,” the CMHC said.

Single-detached housing starts were down 45 per cent compared to 2022. Row house starts dropped by 38 per cent compared to 2022, marking a third year of declines in a row.

“Demand for single-detached and row houses also declined in 2023. Higher mortgage rates and home prices have led to a shift in demand toward more affordable rental and condominium units,” the report said.

There were 1,535 single-detached housing starts in Ottawa last year, 208 new semi-detached homes and 1,678 new row houses.

The majority of single-detached and row housing starts were built in suburban communities such as Barrhaven, Stittsville, Kanata, Orléans and rural parts of the city.

“Increased construction costs resulting from higher financing rates and inflation that occurred in 2022 and 2023 contributed to the decline in construction in the region,” the CMHC said. 

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Trump’s media company ticker leads to fleeting windfall for some investors

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A man looks at a screen that displays trading information about shares of Truth Social and Trump Media & Technology Group, outside the Nasdaq Market site in New York City, U.S., March 26.Brendan McDermid/Reuters

Possible confusion over the new stock symbol for former President Donald Trump’s Truth Social (DJT-Q) saw some investor brokerage balances briefly jump by hundreds of thousands of dollars on Tuesday, the first day Trump’s “DJT” ticker traded.

Several people complained on social media about briefly seeing the value of their DJT stock holdings on Charles Schwab platforms inflated to figures more in line with what they would be worth if the shares traded at the level of the Dow Jones Transportation Average.

Some users said they faced a similar issue in pre-market hours on Morgan Stanley’s E*Trade trading platform.

Shares of Trump Media & Technology Group opened Tuesday at $70.90, while the Dow Jones Transportation Average started the session at 15,937.73 points.

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For one trader, the Schwab brokerage balance jumped by more than $1 million due to the error, according to a screen grab shared on social media platform X. Reuters was unable to contact the trader or independently verify the brokerage balance.

“It sure was nice seeing millions in the account, even if it wasn’t real,” another person, going by the username @DanielBenjamin8, who faced the issue in his E*Trade account, posted on X.

Two X users and one on Reddit surmised that the inflated balances were due to the ticker symbol for the company being nearly identical to the index.

A spokeswoman for Charles Schwab said that certain users on some of Schwab’s trading platforms saw their brokerage balances briefly inflated due to a technical issue.

The issue has been resolved and investors are able to trade equities and options on Schwab platforms, she said. Schwab declined to describe the exact cause of the issue.

E*Trade did not immediately respond to a request for comment outside of regular business hours.

Trump Media & Technology Group and S&P Dow Jones Indices, which maintains the Dow Jones Transportation Average Index, did not immediately comment on the issue.

While social media users said the issue appeared to have been resolved, many rued not being able to cash out their supposed gains from the error.

“I better go tell my boss that I’m actually not retiring,” the trader whose account balance had briefly jump by more than $1 million, wrote on X.

Trump Media & Technology Group shares surged more than 36% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

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