Shopify Inc. defied market expectations in the third quarter, posting stronger-than-expected results as the global pandemic continued to push shoppers and companies onto online platforms.
Revenue at Canada’s largest company by stock market value nearly doubled to US$767.4 million while adjusted earnings were US$1.13 per share, more than twice analysts’ estimates of 52 cents.
“The accelerated shift to digital commerce triggered by COVID-19 is continuing, as more consumers shop online and entrepreneurs step up to meet demand,” Shopify President Harley Finkelstein said in the earnings statement.
The shares initially rose in premarket trading, then fell back. Shopify was down 2.1 per cent to $1,335.88 in Toronto trading as of 9:40 a.m.
- Gross merchandise volume — a measure of product sales flowing through its platform — was $30.9 billion, an increase of 109 per cent over the third quarter of last year, reflecting strong e-commerce spending by consumers. It was the second straight quarter in which GMV more than doubled on a year-over-year basis.
- The company continued to gain traction in new services it offers to customers. Shopify said 51 per cent of eligible merchants in the U.S. and Canada used Shopify Shipping in the third quarter of 2020, versus 45 per cent in the third quarter of 2019.
Its lending business is growing as well. Merchants in the U.S., Canada and the U.K. received US$252.1 million in merchant cash advances and loans from Shopify Capital in the quarter, an increase of 79 per cent from the amount received by U.S. merchants in the same quarter last year.
The company expects its model to remain popular with buyers and sellers in the pandemic but cited macro risks in its decision not to provide fourth quarter or full-year guidance.
“These include unemployment, fiscal stimulus, and the magnitude and duration of the Covid-19 pandemic, all of which may impact new shop creation on our platform and consumer spending”: Shopify
Chief Executive Officer Tobi Lutke said in a conference call with analysts that he remains skeptical about acquisitions. “The opportunity cost of integrating is enormous,” he said. “We are trying to take a broad picture perspective. This has made us potentially more careful but I also think just more realistic.”
Founded in 2004, the Ottawa-based firm’s core business is helping retailers get online quickly and cheaply. But it has expanded to offer an ever-widening suite of services, including lending, payments and shipping solutions.
Explained: Why the Dow topped 30000 for the first time – CTV News
NEW YORK —
Wall Street busted through its latest milestone Tuesday, when the Dow Jones Industrial Average topped 30,000 for the first time.
The Dow rose 454.97 points, or 1.5%, to close at 30,046.24. Investors were encouraged by progress in the development of coronavirus vaccines and news that the transition of power to President-elect Joe Biden is finally beginning. Traders also welcomed word that Biden has selected Janet Yellen, a widely respected former Federal Reserve chair, as treasury secretary.
The milestone is an attention-grabbing psychological threshold, and it’s an encouraging signal that the market’s rally is broadening beyond the handful of stocks that carried Wall Street through the pandemic. But the Dow at 30,000 means less to most investors’ 401(k) accounts than the fact that broader market indexes are also at record highs.
Here’s a look at how the Dow has rallied to its latest multiple of 10,000, the first time that’s happened since January 2017, and what it means for investors.
WHAT IS THE DOW, EXACTLY?
It’s a measure of 30 companies, mostly blue-chip stocks spread across a range of industries. They include tech stars like Apple and Microsoft, as well as more traditional industrial companies like Boeing and Caterpillar. Other behemoths in the Dow include Nike and The Walt Disney Co.
Unlike many other measures of the market, the most important thing for the Dow is how big a stock’s price is, not how much a company is worth in total. That means a 1% move for UnitedHealth Group has a bigger effect on the Dow than the same movement for Apple, even though Apple is worth more than six times the insurer. That’s because UnitedHealth Group’s stock price is US$336.01 versus $115.17 for Apple, due to having a smaller number of total shares.
HOW BIG A DEAL IS DOW 30,000?
It’s just an arbitrary number, and it doesn’t mean things are much better than when the Dow was at 29,999. What’s more impactful is that the Dow has finally clawed back all its losses from the pandemic and is once again reaching new heights. It is up 61.5% since dropping below 18,600 on March 23.
It took just over nine months for the Dow to surpass the record it had set in February, before panic about the coronavirus triggered the market’s breathtaking sell-off.
WHAT GOT THE DOW THIS HIGH?
The Dow’s rocket ride to 30,000 got big boosts from the Federal Reserve, which slashed short-term interest rates back to roughly zero and took other measures to stabilize financial markets, and Congress, which came through with trillions of dollars of financial aid for the economy.
The economy has improved since the pandemic’s initial shock. For instance, claims for unemployment benefits dropped from 6.9 million in March to 742,000 last week. Company profits didn’t tank as much as initially feared. And the possibility that a COVID vaccine could begin distribution by the end of the year has recently given the market more reason to be optimistic.
Among individual companies, Apple did much of the heavy lifting early in the Dow’s recovery after its price soared nearly $275 to above $500 by late August. A four-for-one stock split on Aug. 28 cut Apple’s stock price below $130, diminishing its impact on the Dow, even though its total market value continued to rise.
Since then, Honeywell and Caterpillar have provided the biggest boosts to the Dow as expectations have built for a recovering economy.
Looking over the longer term, profits strengthened sharply for most Dow companies since it first rose above the 20,000 threshold at the start of 2017. At American Express, for example, analysts expect earnings per share to bounce back from the pandemic and tally $6.69 next year, versus $6.07 in recurring earnings in 2016.
At the same time, investors today are more willing to pay higher prices for each $1 of earnings because alternatives are less attractive. The yield on the 10-year Treasury Tuesday was 0.88% compared with 2.5% in January 2017.
SO THIS MEANS MY 401K IS DOING BETTER?
Probably, but not because the Dow is at 30,000. For most 401(k) accounts, what matters much more is how the S&P 500 is performing. That’s because many, many more stock funds either directly mimic the S&P 500 or benchmark themselves against that index than the Dow.
Nearly $4.6 trillion in investments directly track the S&P 500, while another $6.65 trillion measure themselves against the index’s performance. That total of $11.24 trillion is roughly 360 times the $31.5 billion in investments that track or benchmark their performance against the Dow.
Tuesday’s rally also pushed the S&P 500 above its record high set on Nov. 16.
WHY PAY ANY ATTENTION TO THE DOW, THEN?
One thing the Dow’s final leap to 30,000 indicates is that it’s no longer just tech stocks driving the market.
Five Big Tech companies — Apple, Microsoft, Amazon, Facebook and Google’s parent company — alone account for nearly 22% of the S&P 500 by market value. That gives their movements incredible sway over the S&P 500. The Dow doesn’t even include Amazon, Facebook or Google’s parent company.
The dominance of Big Tech early in the market’s recovery is a big reason the S&P 500 returned to its pre-pandemic record in August compared to November for the Dow. More recently, with hopes rising that a vaccine or two may be arriving soon, the stock market’s gains have begun to broaden out.
The Dow is more heavily weighted toward stocks in the financial and industrial industries, which have done better than tech recently after earlier getting walloped by the pandemic.
NEXT STOP IS DOW 40,000, RIGHT?
Many strategists along Wall Street are optimistic that stocks can keep climbing in 2021, mainly because of the prospects for a vaccine. But the market is facing plenty of threats in the near term. Chief among them is the worsening pandemic, which is pushing governments around the world to bring back varying degrees of restrictions on businesses.
Bitter partisanship also means Congress is making little to no progress on delivering more financial support for the economy in the meantime. That sets the stage for a potentially bleak winter for both health and the economy.
So don’t be surprised if the Dow crosses back and forth over the 30,000 threshold a few more times.
Dow Average tops 30000, S&P 500 jumps to record – BNN
The Dow Jones Industrial Average topped 30,000 for the first time and investors piled into risk assets as a series of market-friendly developments unleashed animal spirits on Wall Street.
The S&P 500 Index hit a record, spurred by the formal start of President-elect Joe Biden’s transition, news that all but removed the threat of a contested transfer of power. Investors also woke up with a clear sense of what Biden’s Treasury Department will have in policy preferences after he nominated Janet Yellen to the post. A third promising vaccine candidate added to the euphoria, boosting bets that the economy can soar next year.
The rotation into risk assets was widespread. Small caps in the Russell 2000 added another 1.9 per cent, pushing its November rally past 20 per cent. Tesla Inc. tacked on another 6.4 per cent and is now worth US$500 billion. Carnival Corp. jumped 11 per cent, Planet Fitness Inc. rose 8 per cent and MGM Resorts International added 9 per cent. Four stocks rose for every one that fell in the S&P 500, while only three Dow companies dropped. Bitcoin rose to a three-year high, topping US$19,000 as it closed in on a record.
The record runs come in the face of more troubling news on the virus front, with cases rising and more states enacting restrictions ahead of the Thanksgiving holiday. Wednesday will also bring a flood of economic indicators, from jobless claims to readings on consumer confidence and personal income. Trading volumes have been elevated in what is normally a calm week. More than 12 billion shares changed hands yesterday, up 75 per cent from the Monday before last year’s holiday.
“There’s nothing else to buy. People have this excess cash and they’re buying into the market and they’re chasing it,” Gene Goldman, chief investment officer at Cetera Financial Group, said. “People are ignoring the short term and just jumping in and buying. All the short terms news is being ignored for long term optimism.”
Energy companies in the S&P 500 surged 4 per cent on the back of oil’s advance past US$45 for the first time since March. The dollar weakened versus major peers and Treasuries slipped. Gold fell toward US$1,800 an ounce.
The digital currency climbs above US$19,000 for the first time since December 2017
As the S&P 500 pushes its November surge past 11 per cent, a growing chorus is saying the rally can persist. Even after the latest advance, four of the 11 S&P 500 groups remain at least 8 per cent below when the index set a record on Feb. 19. Expectation is mounting that as investors grow confident the vaccine will spark an economic boom, cash will continue flooding into the likes of banks, utilities and energy companies that have underperformed.
“Everybody’s just ecstatic with the vaccine news,” said Jerry Braakman, chief investment officer of First American Trust, in Santa Ana, California, which manages around US$2 billion. “We had to slug through the election results, there’s a sense of relief that we didn’t decay into anarchy. That was definitely holding back the economy. We know how well stock markets do with recovery and its vision ahead. That’s normally the best time for markets.”
The rotation has been on display all month. Energy shares have surged almost 40 per cent, while financial firms have rallied about 20 per cent. Treasury yields have advanced and gold has stumbled.
“Even though we’ve seen this pretty sharp rotation into cyclical stocks, we think this could go on for much longer given how unbalanced many investors’ portfolios are when it comes to growth and value,” said Bill Callahan, investment strategist at Schroders. “Prior to the vaccine announcement the market wasn’t sure how long we would be in this state of economic limbo, but with the vaccine announcement it really doesn’t matter if the vaccine is distributed in the second quarter or third quarter next year, there is a light at the end of the tunnel.”
Here are some key events coming up:
- Minutes of the most recent Federal Open Market Committee meeting are due Wednesday.
- U.S. jobless claims, GDP and personal spending data come Wednesday.
- U.K. expected on Wednesday to deliver the government’s spending plans for next year.
- Thursday sees a policy decision and briefing from the Bank of Korea.
- U.S. celebrates the Thanksgiving holiday on Thursday.
- The week ends with Black Friday, the traditional start of the U.S. holiday shopping season.
These are the main moves in markets:
- The S&P 500 Index rose 1.6 per cent as of 4 p.m. New York time.
- The Dow average added 1.5 per cent to 30,045.
- The Stoxx Europe 600 Index rose 0.9 per cent.
- The MSCI Asia Pacific Index rose 0.9 per cent.
- The MSCI Emerging Market Index was little changed.
- The Bloomberg Dollar Spot Index fell 0.4 per cent.
- The euro climbed 0.4 per cent to US$1.1890.
- The British pound gained 0.3 per cent to US$1.3358.
- The Japanese yen was little changed at 104.54 per dollar.
- The yield on 10-year Treasuries jumped two basis points to 0.88 per cent.
- The yield on two-year Treasuries increased less than one basis point to 0.16 per cent.
- Germany’s 10-year yield gained three basis points to -0.56 per cent.
- Japan’s 10-year yield climbed one basis point to 0.025 per cent.
- West Texas Intermediate crude surged 4.2 per cent to US$44.84 a barrel.
- Brent crude climbed 3.9 per cent to US$47.87 a barrel.
- Gold futures weakened 1.8 per cent to US$1,811 an ounce.
–With assistance from Todd White.
1 Dividend King Stock That Will Rule Through a Market Crash – The Motley Fool Canada
Crashes or corrections are normal occurrences in the stock market. After a rally, new drivers will cause turbulence and lead to a meltdown. The coronavirus outbreak is the latest event that hinders a bull run. However, the market still declines with or without a pandemic.
No one gets advance notice of the date, nature, and magnitude of the next dip. Income investors understand that a crash is inevitable. Panic is not their reaction, but it presents a challenge. You must pick a dividend stock that will endure or rule through a market crash. When a meltdown comes, your income stream will continue.
The TSX is back to pre-coronavirus levels
Investing in the stock market is like riding a roller coaster. Risks are unpleasant and ever-present. But historically, there are longer up moments than down periods. For instance, the S&P/TSX Composite Index has almost recovered entirely from its COVID low. Canada’s primary stock market is down by only 0.26% year to date.
The TSX sunk to a low of 11,228.50 on March 23, 2020. It breached the 17,000 level for the first time in nine months on November 20, 2020. The climb was steep, but it doesn’t mean the rally can sustain.
The clear and present danger
COVID-19 remains a clear and present danger. Due to its second wave, the country could return to lockdowns. Four provinces reported single-day highs last weekend. Prime Minister Justin Trudeau and public health officials urge Canadians to stay home to control the rise in cases.
Market volatility might heighten again in the last week of November, and the situation could deteriorate in December. If Canadians will not take greater care and follow health protocols, the new modelling of the federal government suggests there could be up to 20,000 daily cases next month.
Another crash could wipe out the gains of the TSX. Countries pin their hopes on a working COVID-19 vaccine. While there are two reported promising vaccines, returning to normalcy will not be instant.
Dividend king to own
A dividend king that stands out during a market crash is Enbridge (TSX:ENB)(NYSE:ENB). Investing in this energy stock is not 100% safe, although its regulated business can mitigate the risks and nip your worries in the bud.
Whether you’re chasing after dividend safety, a recurring income stream, or doubling your money in eight-and-a-half years, Enbridge is the dividend stock for you. The $77.58 billion energy infrastructure company pays a generous 8.46% dividend.
Enbridge generates revenues and derives 98% of its earnings from regulated businesses. Likewise, the majority of contracts with investment-grade customers are long term. The stock belongs to the highly volatile energy industry, but it transports, not produces, oil and distributes natural gas.
Prepare if you must
The next COVID-induced market crash could be worse than in March. Prepare if you must and initiate a position in Enbridge. Over the last 20 years, the total return is 728.38%. The company also raised dividends by 10% for three consecutive years. Take comfort in the low-risk business model. In a worst-case scenario, resiliency wins it for Enbridge investors.
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