February 12, 2023: Major Indices On Pause As We Expected Last Week

Last week, the Dow Jones ended down 0.2%,S&P 500 fell 1.1%, and Nasdaq composite was 2.4%. At the same time, the 10-year Treasury yield was up 21 basis points to 3.74%. SoftBank Group reported a net loss of nearly US$6 billion for the three months through December, largely because of the Japanese company’s Vision Fund investments, which tumbled for a fourth straight quarter. Retail investors are piling into small-cap firms that employ artificial intelligence amid intensifying competition between tech titans. Alphabet slides 9% after a report the tech titan’s ad for its new Google AI chatbot Bard had inaccurate information. C3.ai extends its year-to-date rally to 176% after buzz around ChatGPT drives investor interest in artificial intelligence. Microsoft Activision acquisition provisionally blocked; might be forced to sell Call of Duty. Sumo Logic to be taken private by Francisco Partners in US$1.7 billion deal. Ford sells majority stake in Rivian after reporting US$7.3 billion write-down. Robinhood took a US$57 million hit after a glitch allowed its customers to short a surging meme stock. Amazon is adding a round-the-clock sports gambling channel to its ad-supported streaming service, FreeVee. Newly returned Disney CEO Bob Iger is cutting 7,000 jobs and reorganizing the company. In Canada, Edmonton-based Jobber, which provides operations management software for home service businesses, has secured US$100 million in Series D funding led by New York growth equity investor General Atlantic. A fight brews over Magnet Forensics’ proposed $1.8 billion acquisition by Thoma Bravo. Hut 8 Mining Corp will merge with rival US Bitcoin Corp. Converge increased its global revolving credit facility by $100 million to $600 million. Sophic Client Real Luck Group announces continued growth in 2023 as its registered player base now exceeds 250,000.

Sophic Client Real Luck Group (LUCK-TSXV, LUKEF-OTC) announces continued growth in 2023.

Total first time depositing players grew ~200% in January. Registered player base now exceeds 250,000. In January, the Company achieved over CAD$1.6 million in Global Betting Handle. Additionally, monthly revenue grew 110% and Total First Time Depositing Players grew by 182% since December. “This strong month-to-month growth was expected, and is simply a result of the collective experience that our team has acquired from driving growth at prior companies. We are currently only harnessing about a quarter of the player acquisition channels we have at our disposal, and are confident about our growth trajectory and ability to continue delivering favorable results. Independently from our B2C efforts, we are also looking ahead towards our planned B2B products. This would represent a completely new and additional line of business for Luckbox. We are eager to share more details about this new growth initiative later this year.” said Real Luck Group CEO Thomas Rosander. https://rb.gy/rylbuj

Fight brews over Magnet Forensics’ (MAGT-TSX) proposed $1.8 billion acquisition by Thoma Bravo.

Independent Magnet Forensics directors are pushing back after one of Magnet’s largest investors, Nellore Capital Management, came out against the company’s proposed sale to Thoma Bravo. Nellore announced on February 9 that it opposes the Canadian cybersecurity firm’s acquisition by American private equity giant Thoma Bravo on the grounds that the current price tag undervalues Magnet. In response, independent Magnet directors published their own statement this morning defending the deal, arguing that the acquisition as outlined comes at a quality price following a competitive process, and offers the best path forward for Magnet. Thoma Bravo struck a deal in January to buy Kitchener-Waterloo-based Magnet for $1.8 billion CAD, take the publicly-traded company private, and combine it with fellow digital forensics firm Grayshift. This disagreement regarding the acquisition comes ahead of a March shareholder vote on the transaction. Thoma Bravo has agreed to pay $44.25 per share to holders of Magnet’s subordinate voting stock, an amount that came at a more than 15 percent premium to Magnet’s January 19 closing price. Nellore owns 1.2 million subordinate voting shares in Magnet, approximately 10 percent of the class. As the Silicon Valley hedge fund noted in its statement, the firm plans to vote against the Thoma Bravo deal because the price is “simply too low.” https://t.ly/-VIy

Canada’s Hut 8 Mining (HUT-NASDAQ, HUT-TSX) to merge with US Bitcoin to weather crypto downturn.

Canada’s Hut 8 Mining Corp will merge with rival US Bitcoin Corp to create a crypto mining giant in North America, consolidating after a steep fall in valuations for the crypto sector that saw high-profile collapses in recent months. The companies said the combined entity will have a market capitalization of around US$990 million, and be equally owned by shareholders of both the companies. The merged entity, to be called Hut 8 Corp, will be listed on both the Toronto Stock Exchange and the Nasdaq after the all-stock deal. http://bit.ly/3Xftafe

Converge (CTS-TSX) increases global revolving credit facility by $100 million to $600 million under existing accordion feature.

Converge Technology Solutions has increased its $500 million global revolving credit facility (the “Global Credit Facility”) to $600 million under its accordion feature on its existing credit terms. J.P. Morgan and Canadian Imperial Bank of Commerce are joint lead arrangers, with the Bank of Nova Scotia, the Toronto-Dominion Bank, and the Bank of Montreal participating in the lender group. This increase will provide additional capacity to allow the Company to borrow under its multi-currency facility to fund Converge’s ongoing expansion globally. Generally, for U.S. dollar borrowings under the credit facility, the applicable interest rate will be based on SOFR rate plus applicable margin of 1.25% to 2.25%. https://t.ly/F6d-3

Tucows (TCX-NASDAQ, TC-TSX) announces $40 million stock buyback program.

The new $40 million buyback program will commence February 10, 2023 and will terminate on or before February 9, 2024. Purchases for the new buyback program will be made exclusively through the facilities of the Nasdaq Capital Market. The previously announced $40 million buyback program, which commenced February 11, 2022, has been terminated. The purchase will be funded from available working capital and existing credit facilities. As of February 8, 2023, Tucows had 10,824,963 common shares outstanding. https://t.ly/_ygz

Shopify (SHOP-NYSE, SHOP-TSX) revamps shopping app, heightens competition with Amazon.

Shopify announced a series of updates to its Shop app and launched a new “one-page” checkout Thursday, changes that put the e-commerce software giant in more direct competition  with Amazon’s marketplace. The Shop app originally launched in April 2020 as a package-tracking tool for shoppers who bought items from Shopify-hosted stores, but Shopify has been trying to make it into a place where shoppers browse and buy goods over the last year. On Thursday, it rolled out customization capabilities that let merchants add features like reviews in the app, as well as a cash-back rewards program that merchants can use to target shoppers with customized discounts. It also said it would automatically add Shop Promise, Shopify’s 2-day delivery guarantee, for merchants using Shopify’s fulfillment services as it looks to fend off a challenge from Amazon’s Buy With Prime, which allows brands to offer 2-day shipping on their own sites using Amazon’s fulfillment capabilities. Shopify also launched a more streamlined checkout page for merchants’ websites and opened it up to more customization by merchants. The changes add to moves Shopify has made this year to help boost its business as fewer new merchants sign up for its software. It also raised prices of its software subscriptions and launched services targeted at larger retailers as it seeks to expand beyond its small-business focus. Shopify is due to report earnings on Feb. 15. Its shares have rallied around 41% so far this year, but are still down 70% from a November 2021 peak. https://t.ly/Fjdm

Jobber closes US$100 million Series D amid strong demand for home services.

Edmonton-based Jobber, which provides operations management software for home service businesses, has secured US$100 million in Series D funding led by New York growth equity investor General Atlantic. Since closing US$60 million in Series C funding a couple of years ago, Jobber has roughly doubled the size of its customer base, tripled its revenue, and avoided layoffs, as many of the home service businesses the company serves have remained resilient during the downturn. Jobber’s Series D financing, which closed last month, consists of US$100 million in equity, primary capital. General Atlantic is a first-time investor in Jobber and the round also saw participation from existing Jobber backers Summit Partners, Version One Ventures, and Tech Pioneers Fund. It brings Jobber’s total funding to date to US$176 million, from a group that also includes OMERS Ventures. http://bit.ly/3lpjrFQ

Conquest Planning raises $24 million to expand AI financial advisor solution to US, UK markets.

Winnipeg-based startup Conquest Planning, which uses artificial intelligence (AI) to provide wealth management solutions, has raised $24 million in all-equity Series A funding from a group of financial market investors. The round closed in late 2022 and was led by Fidelity International Strategic Investors, which also invested in Conquest’s previous funding rounds. Also returning to invest in Conquest is Portage, joined by new investors BNY Mellon and the Royal Bank of Canada. Conquest has raised nearly $35 million in total funding to date, including the $3 million seed round it closed in 2020, as well as a $7.5 million investment round in 2021. http://bit.ly/3IfQYvk

Raven.ai aims to address supply chain issues following US$12 million Series A.

Ottawa-based startup Raven.ai is looking to lessen Canada’s supply chain issues by streamlining production lines, after having recently secured US$12 million in Series A equity financing. Raven’s round was led by Momenta Ventures and Chartline Capital Partners with participation from Celtic House Venture Partners and Export Development Canada. According to Raven, the startup has raised a total of US$16.5 million, including funding from prominent angel investors like Shopify CEO Tobi Lütke and Rob Ashe from Cognos and IBM analytics. Corporations are looking to invest heavily in Industry 4.0 solutions in the coming years, with reshoring efforts and spending on such technologies expected to increase from US$263 billion last year to more than US$1.1 trillion by 2028. http://bit.ly/3Ykw9V1

Following exit to Live Nation, Universe founders secure $10.8 million for online art marketplace Peggy.

After selling their social ticketing platform, Universe, to Live Nation Entertainment, serial entrepreneurs Craig Follett and Adam Meghji are back and targeting the art market with another Toronto-based startup. Peggy, an online social marketplace for contemporary art, has unveiled $10.8 million CAD (US$8 million) in equity seed funding and launched its platform, which aims to make buying and selling art more flexible. The round closed was led by Real Ventures, with participation from ZVC, Garage Capital, Portage, and Nomad Capital. The financing also saw participation from angel investors Robert J. Harding, former president of the Art Gallery of Ontario’s board of trustees, and David Marcus, executive VP of global music at Ticketmaster, among others. http://bit.ly/40N6ciA

Shark Tank’s Kevin O’Leary is in talks with ChatGPT creator OpenAI for an equity investment in the company.

Shark Tank star Kevin O’Leary is in talks to invest in ChatGPT creator OpenAI, the investor and market personality told Insider in an interview. He said that he was unable to share any details of the investment, such as the dollar amount, but noted that a deal was likely to close in the next 90 days. OpenAI last month secured a US$10 billion investment from Microsoft, a move O’Leary cheered as a shareholder in the tech giant. “I like to invest in the first-mover because they have a marketing advantage,” O’Leary said in a Tuesday call. http://bit.ly/3XmVpJ0

SoftBank’s Vision Fund posts loss for fourth straight quarter.

SoftBank Group reported a net loss of nearly US$6 billion for the three months through December, largely because of the Japanese company’s Vision Fund investments, which tumbled for a fourth straight quarter. Vision Fund, whose vast portfolio includes many publicly listed tech companies as well as unlisted startups, continued to suffer from a global weakness in tech stocks. The fund is the world’s largest investment firm led by founder and CEO Masayoshi Son. The declines are a stark contrast to last quarter, when SoftBank posted a profit of more than US$21 billion after it sold some of its shares in China’s Alibaba to offset hefty losses from its Vision Fund. SoftBank said it had switched to a “defensive” strategy for making investments after its portfolio plummeted. Son recently said he would skip speaking to analysts after earnings as he wanted to focus on Arm, a British chip company that SoftBank hopes to take public next year. https://t.ly/NlUZ

EV SPAC Canoo agrees to sell US$52 million in stock to stay alive.

Canoo has agreed to sell 50 million shares at a steeply discounted price as the cash-strapped EV company seeks the money it needs to keep its operations running. Canoo said Monday it would sell 50 million new shares to unnamed investors for US$1.05 per share, a 16% discount from its closing price last Friday. The shares will be sold together with warrants that give the investors an option to buy up to 50 million more. Each share comes with one warrant that can be exercised at US$1.30 per share. Canoo has repeatedly warned that it’s low on cash and will likely need to issue more shares to raise capital. Still, the move was snubbed by investors who reacted to the discounted price and that their current holdings would be diluted. The company has struggled to convert sales into deliveries. The past several quarters have shown a pre-revenue company burning through cash. http://bit.ly/3liRFuB

Retail investors are piling into small-cap firms that employ artificial intelligence amid intensifying competition between tech titans.

 Google parent Alphabet and Microsoft to secure leadership in the next big driver of growth. The viral success of ChatGPT has turned the spotlight on AI on Wall Street, reminiscent of the blockchain hype from a few years ago when shares of companies remotely associated with the technology surged. The US$3-billion AI software firm C3.ai was the fifth most actively traded on Fidelity’s platform for small investors on Monday, while drawing record daily retail inflows worth US$31.4 million, as per Vanda Research. The stock slipped 4.5% on Tuesday, but is up about 140% so far this year. Shares of SoundHound AI, which offers a voice AI platform services, and Thailand’s security firm Guardforce AI have more than doubled so far this year, while analytics firm BigBear.ai gained nine-fold in value. https://cutt.ly/c3cSB2C

Alphabet slides 9% after a report the tech titan’s ad for its new Google AI chatbot Bard had inaccurate information.

Alphabet shares tumbled Wednesday after a Reuters report said an advertisement for Google’s newly unveiled AI chatbot Bard contained an inaccurate answer to a question aimed at showing the newly unveiled tool’s capability. Shares of the company fell as much as 8.9% to US$98.04 the lowest price since January 31 and barely pared the decline heading into afternoon trade. Reuters reported the Google ad on Twitter offered an incorrect answer related to NASA’s James Webb Space Telescope. Alphabet is part of a race among tech companies to add chat-friendly AI features to their products, with the competition and investing frenzy ignited by the popular ChatGPT tool. Rival Microsoft unveiled its “new Bing” search engine on Tuesday created with OpenAI, the company behind ChatGPT. Chinese search heavyweight Baidu also this week said it is on track to introduce its ChatGPT competitor “ERNIE Bot” in March.  http://bit.ly/3RN9mi0

C3.ai extends its year-to-date rally to 176% after buzz around ChatGPT drives investor interest in artificial intelligence.

C3.ai stock soared as much as 19% on Monday, extending its year-to-date rally to 176% as investor demand for artificial intelligence stocks continues to grow. The surge has added US$1.9 billion to C3.ai’s market value, and the stock is up seven of the last nine trading days. Monday’s rally in C3.ai came despite a decline in the broader market and no company-specific news. Other big rallies in smaller AI companies SoundHound AI and BigBear.ai suggested demand for these type of stocks is still strong. The recent surge in C3.ai’s stock price has helped it reach levels not seen since January 2022. Despite the year-to-date surge, C3.ai is still down 83% from its record December 2020 high of US$183.90, currently trading at US$27.31. http://bit.ly/3x6voD7

Alibaba says it’s launching its own ChatGPT rival as the AI craze sends some stocks soaring.

Chinese e-commerce giant Alibaba is testing its own rival to ChatGPT, joining the tech race to tap into investors’ frenzy over artificial intelligence products. The multinational tech company said Wednesday that it has been working on its own AI chatbot currently being tested at its firm. Alibaba is one of the latest tech companies to start working on a rival to ChatGPT. Microsoft’s stock soared after it said it would invest an additional US$10 billion into OpenAI in January. Google parent Alphabet and Chinese search-engine giant Baidu are also taking part in this so-called AI arms race to the top. Alibaba’s shares listed on the Hong Stock exchange rose nearly 4% on Thursday to 107.60 HKD. http://bit.ly/3JYiSx8

Microsoft Activision acquisition provisionally blocked; might be forced to sell Call of Duty.

The planned Microsoft Activision acquisition has been provisionally blocked by the UK’s antitrust watchdog, the Competition and Markets Authority (CMA). Just over a year ago, Microsoft announced a US$68.7 billion deal to buy Activision, the gaming giant behind the Call of Duty franchise, and many other popular titles. The sheer scale of the planned purchase saw the CMA begin an investigation into whether it would be anticompetitive. The investigation began last September, with similar probes also taking place in the US and EU. The CMA is the same competition watchdog which concluded that Apple’s App Store policies were anticompetitive, with an appeal due to be heard next month. http://bit.ly/3HSu2k3

Amazon in talks to buy Indian streaming service MX Player.

Amazon is in talks to acquire Indian streaming service MX Player, TechCrunch reported Friday, signaling that the e-commerce and cloud giant is not giving up on a pricey international media expansion even as it looks to rein in costs. The terms of the deal have not been finalized and at least two other potential bidders including Zee-Sony are interested in MX Player, according to TechCrunch, which cited people familiar with the matter. MX Player is majority owned by Indian media conglomerate The Times Group and is one of the country’s largest internet video sites, competing with Amazon’s Prime Video by offering both on-demand video and ad-supported streaming channels. MX Player most recently scored a post-money valuation of $500 million during a 2019 fundraising round that included Tencent, TechCrunch reported. Amazon has poured billions of dollars into India over the past decade, including building out logistics infrastructure for e-commerce and spending heavily on local language content for Prime Video. But the company has struggled to turn a profit in India and faces competition in streaming from MX Player, Disney’s Hotstar and Google’s YouTube, among others. https://rb.gy/z1fbqr

Sumo Logic to be taken private by Francisco Partners in US$1.7 billion deal.

Sumo Logic Inc on Thursday agreed to be acquired by investment firm Francisco Partners in a deal that values the big data firm at about US$1.7 billion. Shareholders in Sumo Logic, which went public in 2020, will receive US$12.05 per share in cash, representing a premium of about 57% to the stock’s close before media reported last month about a possible deal. The deal, which the Wall Street Journal first reported on Wednesday, is expected to close in the second quarter of this year. Redwood City, California-based Sumo Logic’s cloud-based tools help crunch data on a massive scale. Francisco Partners raised roughly US$17 billion across two funds last year and has invested in more than 400 technology companies since it was launched over 20 years ago. https://rb.gy/pmyoe5

Ford sells majority stake in Rivian after reporting US$7.3 billion write-down.

Ford Motor Company has sold a majority of its Rivian shares, according to regulatory filings. Ford’s stake in the electric vehicle maker, which has been dropping steadily since May 2022, is now at 1.15%, or 10.5 million shares. The sell comes a week after Ford reported a US$7.3 billion write-down on its Rivian investment last year. Since February 2022, Rivian’s stock has plummeted almost 70%. Ford has followed this playbook with Rivian before: Report a write-down, then sell to recuperate some of the losses. Last April, Ford reported a US$5.4 billion “mark-to-market loss” on its investment in Rivian. The following month, Ford sold 15 million shares in two separate transactions, bringing its stake in the EV maker below 10%. Why are companies paying the price for investing in the promising, if not troubled, EV company? Recall that Rivian’s stock hit a high of US$179.47 per share before falling to the US$19.62 it is at today. http://bit.ly/3XjF5c0

Robinhood took a US$57 million hit after a glitch allowed its customers to short a surging meme stock.

Robinhood ended up down US$57 million in a single day after a glitch let its trading app customers temporarily short a meme stock, according to company executives. Robinhood covered the short using its cash the same day, incurring a US$57 million loss from the incident. Its users aren’t normally allowed to short stocks. Robinhood shares still rallied in premarket trading Thursday, climbing 5.6% to just over US$11 after it said it would buy back a stake held by disgraced FTX founder Sam Bankman-Fried. In addition, Robinhood executives will forgo around US$500 million in stock-based compensation to help it cut costs. Shares in the company are up just under 29% year-to-date, outperforming the Nasdaq Composite’s 14% gain. http://bit.ly/3S44JAB

Newly returned Disney CEO Bob Iger is cutting 7,000 jobs and reorganizing the company.

Disney CEO Bob Iger is looking to cut costs and reorganize the company, announcing sweeping layoffs on Wednesday. During the company’s quarterly earnings call on Wednesday, Iger said the company would cut 7,000 jobs. It’s part of an effort to target US$5.5 billion in cost savings this year, Iger said. Iger returned as CEO in November after leaving the role in early 2020. He replaced his successor, Bob Chapek. http://bit.ly/3x9RxAi

iPhone 14 discounts suggest lower than expected demand in China.

Two of China’s biggest smartphone retailers are offering iPhone 14 discounts equivalent to well over US$100 – a level of price cut usually restricted to older handsets. One analyst estimates that sales of the four iPhone 14 models were some 28% lower than those of the iPhone 13 line-up at the same point. Apple recently reported its holiday quarter revenue, which was down 5% year-on-year, with iPhone revenue some 9% lower than the previous year. Analysts had expected revenue to fall, but the size of the hit took them by surprise – though investors were reassured once they were offered insight into the numbers by CEO Tim Cook. Cook also said that iPhone 14 supply issues were now resolved, painting a more optimistic picture for earnings in the current quarter. http://bit.ly/3le29eI

Amazon adds sports gambling channel to free streaming service.

Amazon is adding a round-the-clock sports gambling channel to its ad-supported streaming service, FreeVee. The sports gambling network, SportsGrid, said it will be available for free through Amazon’s Prime Video app starting on Wednesday. With the rise of legalized sports betting, media companies including Disney’s ESPN have been making a push into gambling-related programming. SportsGrid, which is already available on platforms including YouTube and Roku, broadcasts 24/7 streams that focus on American fantasy sports and sports betting. The new channel will complement Amazon’s other sports content, which includes exclusive rights to the National Football League’s Thursday Night Football franchise, some European soccer matches and 60 hours per week of sports talk shows. Amazon has discussed creating a standalone Prime Video sports app to better highlight its sports offerings, The Information reported in December. https://rb.gy/nq58v3

Treasury warns of cloud computing’s risks to financial industry.

The US financial sector’s growing reliance on cloud computing services poses new risks that regulators will need to examine, the Treasury Department said on Wednesday. In a new report, the Treasury noted that banks, insurance companies, securities exchanges, and other companies are increasingly running their systems on infrastructure hosted by a small number of cloud companies, including Microsoft, Google, Amazon, and Oracle. While the Treasury noted benefits of cloud computing including resilience and security, the department also warned that the financial sector could be disrupted by cloud outages and said the small number of cloud providers could make it difficult for customers to negotiate fair contracts. The Treasury’s warning comes at a time when cloud growth is slowing across the board as firms try to save on software and IT spending amid the downturn. Financial institutions have shown signs of reluctance to move to the cloud — Amazon CFO Brian Olsavsky said during the company’s earnings call last week that lending firms and crypto trading companies were among the industries slowing down their cloud spending. The Treasury report recommended that regulators look into making cloud computing more transparent and secure for financial institutions. https://rb.gy/plvpeb

Binance to suspend U.S. Dollar bank transfers.

Global crypto exchange Binance is suspending bank transfers of U.S. dollars beginning on Feb. 8 and is “working hard to restart service as soon as possible,” a Binance spokesperson told The Information. Customers can still use bank transfers denominated in other currencies, as well as credit cards, debit cards, Google Pay and Apple Pay to buy and sell crypto, the Binance spokesperson said. Only 0.01% of the exchange’s monthly active users had been using U.S. dollar transfers, the spokesperson said. The suspension comes as some banks have been dialing back their services to crypto firms and scrutiny from U.S. regulators over relationships between banks and crypto companies has been mounting. Binance in late January said one of its banking partners, Signature Bank, would no longer let customers make bank transfers of less than US$100,000 to buy crypto. https://rb.gy/brrsry

Crypto exchange Kraken is embroiled in an SEC probe over whether it sold unregistered securities, report says.

Crypto exchange Kraken is under investigation by the Securities and Exchange Commission over whether it broke rules by selling unregistered securities to US customers, according to a Bloomberg report. The US markets regulator’s probe is at a late stage and a settlement with Kraken could arrive in the coming days, the Wednesday report said, citing a person familiar with the matter. It’s not clear which tokens or other offerings are under scrutiny.  The crypto industry is facing intensified scrutiny after the spectacular demise in November of major exchange FTX, whose founder and former CEO Sam Bankman-Fried has been charged with multiple criminal fraud charges. http://bit.ly/3DY8n9j

Hermès defeats MetaBirkins in the first NFT trademark trial. Luxury brand Hermès International SA won its lawsuit against the digital artist behind “MetaBirkin” nonfungible tokens after convincing a Manhattan federal jury that Mason Rothschild’s sale of the NFTs violated Hermès’ rights to the “Birkin” trademark. The nine-person jury returned a verdict on Wednesday, awarding Hermès US$133,000 in total damages. They also found Rothschild’s NFTs aren’t protected speech under the First Amendment. http://bit.ly/3DYaf1x