AnalytixInsight

M&A appears to have been a major theme this past week. At Sophic, we believe M&A could be a positive catalyst for small cap Canadian innovation stocks in the fall. Additionally, consensus expectations are for capital markets activity to accelerate in that period. In Canada, theScore, a pioneer in sports media and now the sports betting space, which we covered as equity analysts on the sell side, announced it was was being acquired for US$2 billion in a cash and stock deal. Sophic client, Nanotech Security Corp was acquired by Meta Materials for approximately $90 million, and HIRE Technologies, also a Sophic client announced it was acquiring, Leaders and Co., along with a loan facility and concurrent financing. In the USA, Square will acquire Australia’s Afterpay for US$29 billion, Marvell Technology will acquire Innovium in all-stock deal valued at US$1.1 billion. At the same time, U.K. is considering blocking Nvidia’s US$40 billion Arm deal on national security grounds.

Toronto based 1Password’s $125 million raise at a $2.5 billion valuation received a lot of interest this past week. While public markets saw a large number of tech companies report their Q2 financials. In the USA, popular trading app, Robinhood dropped 12% in its trading debut, while investor interest in fintech stocks has remained elevated these past few months. Regulatory overhangs on US listed Chinese stocks persisted, as SEC has stopped processing registrations of US IPOs and other sales of securities by Chinese companies. While Trevor Milton, the founder of electric truck maker Nikola, has been indicted on charges of making false and misleading statements to investors, the US Department of Justice said on Thursday. In Canada, Shopify (SHOP-NYSE, SHOP-TSX) now allows merchants to sell NFTs directly through their storefronts.

Last week saw a fair bit of news pertaining to Canadian VC activity, including a shout out from market intelligence firm CB Insights, indicating data indicates that Canadian startups this year have already raised more than double their 2020 totals. The same data set indicates that Canada’s venture capital results now rival those of the entire Latin American region. In the public markets small cap space, Kraken Robotics (Sophic Client, PNG-TSXV, KRKNF-OTC) signed definitive agreement to acquire PanGeo and announced a public offering of units for approximately $10 million and Body and Mind (Sophic Client, BAMM-CSE, BMMJ-OTC) closed a US$11.1 million debt financing. Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) CEO, Thomas Rosander investor update. In the USA, Robinhood plans to raise as much as US$2.3 billion in its upcoming stock-market debut. The popular investing app said it’s offering 55 million shares priced at between US$38 and US$42 each during its roadshow. At the top end of that range, Robinhood could have a market valuation of US$35 billion. Bitcoin mining firm Core Scientific is going public via SPAC in a US$4.3 billion deal. Lastly, with overhang on US listed Chinese equities increasing, the Nasdaq could rise 10%, according to investment firm Wedbush.

Canadian public capital markets appear to be in the seasonal summer lull, which most industry participants expect to be more pronounced than usual this year. That said, Sophic Client GameSquare Esports (GSQ-CSE) announced a second acquisition in a few weeks, as management executes on a disciplined M&A strategy. Wealthsimple has introduced fractional shares to make buying and selling large stocks more accessible for new retail investors. The move comes amid a recent rise in retail investing on trading platforms during COVID-19, which has benefitted Wealthsimple. For investors looking to play the retail investing trend, Sophic Client, AnalytixInsight (ALY-TSXV, ATIXF-OTC) could be an interesting stock to watch in the fall. In the USA, there was a decent level of IPO activity this past week, combined with potentially large M&A. At the same time, numerous news items allude to regulatory risk for large cap tech, including the US President & White House sparring with Facebook over the misinformation on the platform.