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Tesla’s shares fall 15 percent after S&P 500 snub – Ars Technica

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Aurich Lawson

Shares of Tesla opened at $356 on Tuesday morning—down about 15 percent from Friday’s closing price. The decline capped a rough week of trading for the carmaker. A week ago Tuesday, Tesla shares opened slightly above $500, a new record. They have been sliding ever since and are now down about 30 percent from last week’s highs.

To be fair, those losses have merely put Tesla’s stock back to the level it last reached in mid-August. Tesla stock soared in the second half of August after the company announced a five-for-one stock split on August 11. The value of Tesla’s shares is still about four times what it was on January 1.

Snubbed by the S&P 500

Several factors seem to be weighing on Tesla’s share price. One is the decision not to include Tesla in its influential S&P 500 index.

The S&P 500 is supposed to be an index of large companies, and Tesla’s market capitalization is now far higher than others included in the index. For example, Etsy was just added to the index despite having a value that’s about 25 times smaller than Tesla’s. The committee in charge of the S&P 500 has not explained why Tesla has been left out.

The snub matters because a lot of people have their savings invested in S&P 500 index funds that mirror the composition of the index. So when a company is added to the index, index funds have to buy shares in the company, putting upward pressure on the price. Markets may have been pricing in the likelihood of Tesla becoming part of the S&P 500, leading to a price decline when that didn’t materialize.

$5 billion in new Tesla shares

Another factor weighing on Tesla’s shares may be last week’s massive $5 billion stock offering. The offering was announced last Tuesday, and a new regulatory filing says that Tesla successfully completed it on Friday.

A flood of new shares sometimes causes a company’s stock price to fall. But not always. When Tesla raised $2 billion from the stock market in May 2019, Tesla’s stock ended the day up 4 percent. Investors might be enticed to buy more shares if they believe the new money will improve the company’s prospects for growth.

Ultimately, week-to-week fluctuations in Tesla’s stock price won’t matter very much for the company’s long-term future. The big challenge is to put Tesla’s freshly raised $5 billion to work designing new vehicles and building new factories.

If Tesla can dramatically boost output—and find buyers for all the new cars—it might be able to justify its soaring market valuation. In that case, the S&P 500 will need to include Tesla in its index sooner or later.

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Desperation sets in as CERB is set to end; these three Canadians are among the millions living on the bubble – Toronto Star

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Canadians who’ve been relying on the Canada Emergency Response Benefit (CERB) to make ends meet during COVID-19 say there’s a sense of desperation and panic as the program nears its end later this month.

Stephanie Cohen was receiving EI payments before the pandemic as a result of losing her job as a copywriter at a digital marketing agency in Montreal. She transitioned to CERB in May and the $2,000 has kept her going since then.

The money has helped her pay basic bills and assisted her mother in buying groceries and other home necessities. Even though it’s less than what she was making at her work, it provided a much-needed financial boost and a little bit of “peace of mind” during a difficult period. Having zero income “would have been devastating,” she said.

As others do, she knows very little about the new benefits that will be offered to jobless Canadians starting Sept. 27.

“It is a pretty big concern, considering I’m in the category of people who exhausted their previous EI benefits,” Cohen said.

She’s especially worried new recovery programs, which are just proposals at this point and won’t be solidified until after the government’s Speech from the Throne on Sept. 23, will ignore people such as she, who were job-hunting prior to COVID-19. The pandemic, she said, put her hunt on hold and the economic hit to business across a variety of sectors makes it hard to know when people will start hiring again.

“I haven’t been able to receive a clear answer as to how I move forward,” she said about the lack of information on the upcoming benefit programs. “If I am not eligible to re-apply for EI, I’ll have zero income coming in, which would be a hard blow for me financially.”

A recent analysis from the Canadian Centre for Policy Alternatives warned millions of Canadians who depended on CERB will be hard hit by the upcoming change.

CERB had been instrumental in helping Jordan Troy, a Guelph resident who had just completed college and was looking for a job as an elevator mechanic when the pandemic hit. The 23-year-old said he recently started working a few hours a week at local restaurants when they reopened, but still makes less than $1,000 per month.

“I’m worried, of course. I don’t know if I will qualify for EI or any of the new programs, and there is no information right now,” he said. “At least with CERB, you knew you weren’t going to go hungry or miss a rent payment. Now everything is up in the air.”

Nick Cunningham had been working in the live music industry at a Toronto talent agency, helping with the booking of venues and organizing tours for Canadian artists. For the first few months of the pandemic, his agency managed to keep a small group of employees at work as they helped artists run virtual concerts and drive-in shows. But he was laid off last month.

“Everything was so sudden. I was working one day and the next day I wasn’t,” said Cunningham. “These past six months have been incredibly stressful, with so much uncertainty and repeated work, it felt like groundhog day every day, until I lost my job.”

So far, Cunningham has collected the CERB just twice. While he said he’s grateful for the support, he is “scared” that the switch to EI and other programs could leave him short of what he needs to get by.

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“It’s already hard to survive in Toronto on $2,000, and I feel like it’s about to get even harder with these new changes,” said Cunningham, who says special support for people in the live music industry is needed.

“Our government is not doing anything to address this industry’s shutdown, and I am getting anxious. I have spent my entire life getting to where I am now, and unfortunately things feel bleak with the soon-to-be removal of CERB.”

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Nuvei’s Red-Hot IPO Marks Canada’s Largest Tech Offering – Bloomberg

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Payments company Nuvei Corp. jumped 31% in its trading debut on Thursday, riding the wave of demand for technology shares that has swept the globe in recent months.

Montreal-based Nuvei, which supplies payment technology to the retail, travel, gaming and other sectors, is among a cluster of firms benefiting from the shift to e-commerce during pandemic lockdowns. The deal raised $700 million, making it the biggest tech offering in the history of the Toronto Stock Exchange, the exchange said in a statement.

“The rebound in technology names is a good sign for the private tech companies with plans to publicly list their shares in the coming weeks,” CIBC analyst Stephanie Price wrote in a note. With tech IPOs such as Snowflake Inc. surging more than 100%, investor demand remains strong, she added.

Nuvei will take in proceeds $625 million before costs and fees, while $75 million goes to selling shareholders.

Information technology stocks are up 80% from their March 16 low on Canada’s largest exchange, compared to a 57% gain in the S&P 500 information tech index. Nuvei’s listing follows Dye & Durham Ltd.’s July offering, which raised C$172.5 million ($131 million). Another Montreal company in the merchant software business, Lightspeed POS Inc., raised C$276 million in an IPO last year.

Shares of Nuvei were priced at $26 but climbed as high as $35.04. They ended the day at C$45.05 ($34.12).

Backed by Caisse de Depot et Placement du Quebec and private equity firm Novacap Investments Inc., Nuvei has about 50,000 customers and supports transactions in nearly 150 currencies. The company connects business owners and customers “no matter where or how they do business,” Nuvei Chairman and Chief Executive Officer Philip Fayer said in an statement.

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The global mobile commerce and e-commerce market is expected to increase to $6.3 trillion by 2024 from $3.4 trillion in 2019, according to Nuvei’s prospectus, citing eMarketer, a market research company. Nuvei generated revenue of $245.8 million and adjusted Ebitda of $87.2 million for fiscal 2019, according to its prospectus.

Nuvei’s shares are trading on so-called “if-and-when-issued basis” until the offering closes on Sept. 22, according to a separate statement by the company.

(Updates market numbers in first paragraph and other details throughout the story.)

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    Bank of Canada's second-in-command to step down when her term ends next year – Financial Post

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    Article content continued

    Experience away from the central bank appears to have become a requirement for running it

    Experience away from the central bank appears to have become a requirement for running it. Wilkins, who broke one glass ceiling when she won the competition to become senior deputy governor, is still young enough to be governor. Macklem, 59, will have reached retirement age when his term ends in 2027.

    But that’s the future. Here in the present, Wilkins’ decision to leave will trigger a reshuffling of the Bank of Canada’s leadership group ahead of what promises to be an exceptional period in the central bank’s history.

    The central bank has already committed to doing its part to fight the COVID-19 recession by keeping interest rates near zero for at least a couple of years, evidence that the country’s biggest collection of PhD economists think the economy is extraordinarily weak.

    Canadian policy-makers for the first time have deployed quantitative easing, or QE, in which the central bank uses its unique power to create money in order to buy debt worth hundreds of billions of dollars. The experience of the U.S. Federal Reserve and other central banks suggests the aggressive strategy will work, but QE remains an experiment that must be closely watched.

    Wilkins’ mandate review, which could result in a decision to replace the Bank of Canada’s inflation target with a new approach to setting interest rates, also looms. All told, it won’t be a casual seven years for Macklem and his deputies.

    Like the governor, the senior deputy governor is a cabinet appointment, so Chrystia Freeland, who replaced Morneau last month as finance minister, will influence the decision. At the same time, convention grants the governor significant say over who serves as his top lieutenant. The independent directors of the Bank of Canada’s board will lead the search and recommend candidates to Freeland.

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