Weekly Investment News and Analysis

NASDAQ hit a record close Thursday, then fell 1.6% Friday, ending the week down 0.45%. During the week, S&P 500 lost 1.55%, Dow Jones was down 2.4%. the CBOE Volatility index rose to 17.31 Friday, with a its 19.20 session peak, the highest since last fall. Ibotta Inc., a digital marketing software firm that counts Walmart Inc. as a backer, and shareholders are seeking to raise as much as US$472.5 million in an initial public offering. Tech stocks saw inflows of US$18.6 billion in Q1, the third largest quarterly inflow on record, Bank of America said. OpenAI has told some former employees they can sell shares in an extension of a recent tender offer that valued it at US$86 billion. Investors are seeking US$3 billion for Musk’s xAI at US$18 billion valuation. Intel, Meta and Google are releasing new chips. Adobe is buying videos for US$3 per minute to build AI models. Traders piled into shares of Rent the Runway on Thursday, sending the shares up by more than 220% after the apparel rental firm said it was betting on artificial intelligence tools to power its growth in the current year. Salesforce is in advanced talks to buy Informatica, according to the WSJ. Shares of Taiwan Semiconductor Manufacturing Company rose as much as 3.2% on Monday as President Joe Biden’s administration approved nearly US$12 billion in grants and loans. In Canada, Galaxy closed its upsized US$125 million bought deal financing. Sophic Client OneSoft announced the expansion of its operations to EMEA. The Company also presented at the AI & Technology Hybrid Investor Conference. Sophic Client, UGE International energized the largest rooftop community solar project in Maine. An independent third party valued the project at USD2.5 million, or US$2.62/Watt. The Canadian federal government committed $2.4 billion to AI compute, startups, and safety through Budget 2024.

Markets closed the week rebounding from intra week loses. For the week, Dow Jones lost 2.3%, S&P 500 fell 0.95%, Nasdaq composite declined 0.8%. Rubrik files to go public as tech companies see a thawing of IPO market. Chipmaker Cerebras Systems is targeting a listing in the second half of the year at the earliest, and may seek a valuation in the IPO that would value it above the US$4 billion figure achieved in its 2021 funding round. Tiger Global closed a US$2.2 billion fund, 63% lower than target. Tesla delivered fewer cars in the first quarter than it has in any quarter in more than a year, marking the end of an era of growth at the electric vehicle maker. Elon Musk said Tesla will present its new Robotaxi in August. Google is considering charging a fee for artificial intelligence features in its search results. Microsoft is working on an Xbox AI chatbot. The Company will also separate Office, Teams products globally as regulatory pressures mount. Apple exploring a ‘mobile robot’ that ‘follows users around their homes’. AT&T confirmed a data breach and reset millions of customer passcodes. Retail giant, Walmart, is investing tens of millions of dollars into community solar projects as part of its broader push to purchase clean electricity. In Canada, Sophic Capital client Legend Power Systems Inc. (LPS-TSXV, LPSIF-OTC) reported record purchase orders of over $2.5 million, sending the stock up over 45% for the week. Sophic Capital Xcyte Digital (XCYT-TSXV) purchased assets of A+ Conferencing. This first transaction from Xcyte’s deep M&A funnel, nearly doubles the Company’s revenue run-rate. Sophic Client OneSoft Solutions Inc. (OSS-TSXV, OSSIF-OTC) reported results for fiscal 2023 and reiterated fiscal 2024 guidance of ~44-54% y/y revenue growth. Dye & Durham (DND-TSX) announced pricing of its refinancing transactions. Toronto-based FinTech startup Brim Financial has secured $85 million in its Series C financing.

Thursday was the last trading day in Q1, which saw S&P 500 up 10.2%, its best Q1 since 2019. Dow Jones gained 5.7%, its strongest Q1 since 2021. Nasdaq was up 9.2%. For the week, S&P 500 was up 0.4%, setting an intraday all-time high Thursday. Dow Jones Industrial rose 0.8%, and set a record close Thursday. Nasdaq composite lost 0.3%, just below its peak. WSJ notes when S&P 500 gains over 8% in Q1, it has finished higher for the rest of the year 94% of the time, with an average gain of 9.7% for the final three quarters. Amazon on Wednesday said it would commit US$4 billion to Anthropic, capping the second-biggest fundraising by an AI startup in recent memory. Reddit stock’s stellar market debut has drawn significant bearish bets, data from analytics company Ortex on Wednesday showed. The most popular DWAC options eye a 95% plunge over next month. DraftKings shares slumped on news NCAA wants to ban college prop bets. Robinhood stock surged as much as 7% on Wednesday after the company launched a solid gold credit card that offers its users 3% cashback rewards. Elon Musk said Tesla Optimus robot should cost ‘less than half of a car’. Sophic Capital Client, ADM Endeavors, received final building permits for its new Texas facility. Once completed, the facility could increase production capacity by up to five times, significantly increasing current maximum in-house revenue capacity of US$7 million. Quisitive announced an agreement to sell BankCard USA, which could unlock shareholder value. Canadian pension fund PSP will co-lead a funding round in Toronto based Cohere at a US$5 billion valuation. Four school boards in Canada Wednesday filed lawsuits against Meta Platforms, Snap and TikTok parent ByteDance, claiming the social media platforms have harmed children’s mental health and disrupted the education systems.

The market had another strong week, buoyed by a dovish Fed, bullish AI prospects and a couple positive IPO debuts. Major indexes performed well, hitting record highs, and then backing off Thursday’s intraday highs. For the week, Dow Jones was up 2%, S&P 500 gained 2.3%, Nasdaq composite rose 2.85%. The IPO pop is back — Reddit ended its first day on the public markets up 48% from its offering price. Astera Labs, ended its Thursday above US$64, about a three-quarters rise from its IPO price two days ago. Walmart-backed Ibotta filed for an IPO. CoreWeave, a cloud computing provider that’s among the hottest startups in the artificial intelligence race, is in talks to raise equity capital in a transaction that would more than double its valuation to US$16 billion. Telegram raised US$330 million through a corporate bond issued last week. The government of Saudi Arabia plans to raise US$40 billion for a fund focused on artificial intelligence investments, partnering with Andreessen Horowitz. Nvidia on Monday unveiled its next artificial intelligence chips, Blackwell, during its annual conference for app developers. The Justice Department and several states filed an antitrust lawsuit against Apple on Thursday. In Canada, Sophic Client, Kraken Robotics, announced $2.4 million of sonar and subsea power contracts. Abaxx announced the upsizing of its Bought Deal financing to $16.25 million. Nuvei, is nearing a buyout deal. Private-equity firm Advent International is in advanced talks with Nuvei for a transaction that could be announced soon, according to the WSJ. Hamilton-based oncology firm Fusion Pharmaceuticals will be acquired by AstraZeneca for up to US$2.4 billion. Toronto based Cohere, is in advanced talks to raise US$500 million at a valuation of about US$5 billion. Cohere was valued at US$2.2 billion last June when it raised US$270 million.

Markets remain at a crossroads. After seemingly poised to set new highs Tuesday, major indexes pulled back Friday. Dow Jones closed the week marginally down, S&P 500 lost 0.1%, Nasdaq composite lost 0.7%. Telegram is nearing profitability and is considering a IPO, according to the company’s founder. Stripe is in “no rush” to go public after the US$65 billion payments company returned to positive cash flow and raised its private market valuation. Technology start-ups have slashed equity packages for new hires as they weather a prolonged downturn, according to new data from Carta. Nvidia could be worth US$6 trillion if it follows Cisco’s dot-com trajectory, says Jeremy Siegel. Salesforce invested in Nvidia server reseller, Together AI at a US$1.25 billion valuation. Bitcoin’s record high boosted Coinbase, Microstrategy shares, as short sellers have lost US$3.3 billion betting against MicroStrategy this year. Despite inflation headlines everywhere, Canadian tech companies appear to be on sale. Three take outs were announced just last week, highlighting a key issue capital markets participants have long articulated – a lack of innovation focused risk capital in the country. TrueContext announced a definitive agreement to be acquired by Battery Ventures in an all-cash transaction. mdf commerce entered a definitive agreement to be acquired by KKR, some investors suggested they may vote against the transaction based on valuation. Apple earlier this year acquired DarwinAI, a Canadian startup developing AI software to visually inspect components during manufacturing. Even though the stock of Sophic Capital client Kraken Robotics has surged over 150% in the past six months, it still appears undervalued when compared to its peers. We published a report highlighting if Kraken were to trade inline with defense technology peers, the stock would be worth $1.85 per share or 68% upside from the closing price on March 12, 2024, of $1.10.

Last week, Dow Jones fell 0.9%, S&P 500 lost 0.3% and Nasdaq Composite was down 1.2%, after reversing from record highs on Friday. Astera Labs said it plans to raise up to US$534 million from its IPO as the eight-year-old server component startup looks to benefit from investor interest in artificial intelligence companies. Reddit is planning to start trading on the NYSE on March 21, following a road show next week. The company is initially seeking a valuation between US$5.5 billion and US$6.5 billion, down from the US$10 billion at which it raised money in 2021. Andreessen Horowitz is close to raising US$6.9 billion in new funds, including a growth fund that comprises about half the total and two AI focused funds. Super Micro Computer is joining the S&P 500 following a historic rally in the stock that has pushed the company’s market cap past US$50 billion. Two Nvidia Corp. directors sold about US$180 million in shares of the chipmaker in recent days, becoming the latest insiders to cash in as the stock continues to push deeper into record territory. MicroStrategy slipped from 24-year high on a convertible note offering to buy more bitcoins. The European Commission fined Apple 1.8 billion euros, or US$1.95 billion, for alleged “abusive App store rules” affecting rival music streaming services. President Joe Biden told reporters on Friday that he would sign a bill that would force ByteDance to divest TikTok or ban the app in the United States if it passed Congress. Temu spent US$2 billion on Meta ads in 2023. Amazon Web Services is paying up to $650 million for a Pennsylvania data center campus next to a nuclear power plant, according to the seller, Talen Energy. In Canada, Sophic Client, Kraken signed a Cooperative Research & Development Agreement with the US Navy for next Generation Synthetic Aperture Sonar (SAS) Beamforming. Toronto-based AI chip startup Taalas has launched out of stealth with $50 million in funding.

Last week, Dow Jones lost ~10 bps, S&P 500 rose 0.9%, and NASDAQ Composite gained 1.7% and hit a record high on Friday. Klarna is considering a US$20 billion IPO this year. eToro is getting interest about a public market listing. Investing platform Webull will go public through a SPAC deal. Stripe struck a deal with investors that allows current and former employees to cash out some of their shares in an offering valuing the startup at US$65 billion. Hedge funds are reportedly dumping tech stocks at the quickest pace in seven months after piling in ahead of Nvidia’s wild earnings report. At the same time, options on Nvidia, accounted for 25 cents of every dollar of premium – the price of contracts – traded in U.S. single-stock options over the past month. Various companies including Apple, Fisker and Polestar signalled problems with the EV market. In Canada, Sophic Client, Kraken Robotics announced that its minehunting systems were operational with the Royal Danish Navy, under a 2020 contract. Sophic Client, UGE achieved a Notice to Proceed milestone for a second 1.4MW solar project in Texas. UGE had the project appraised by an independent third party for a fair market value of US$3.1 million or US$2.22/Watt. Sophic Client, Clear Blue provide a Q4 2023 corporate update, which bodes well for 2024 results and also announced product updates. Railtown AI closed the final tranche of its previously-disclosed non-brokered private placement. Collectively across all tranches of the Offering, aggregate gross proceeds of nearly $3 million was raised. Toronto startup ideogram raised $80 million for AI image generation, Andreessen Horowitz is leading the round.

Last week, Dow Jones rose 1.3%, S&P 500 gained 1.7%, as both indices reached new all-time highs. Nasdaq composite was up gained 1.4%, as it hit a fresh two-year high. The market value of Nvidia briefly touched US$2 trillion on Friday, two days after the chipmaker posted significant growth in its quarterly revenue. At the same time, Nvidia chips have become far easier to access than they were last year, and ChatGPT has seen declining web traffic in five of the past eight months and is currently down 11% from its May 2023 peak. Jeff Bezos, Nvidia, Microsoft and OpenAI are throwing serious cash at a human-like robot startup, Figure AI in US$675 million financing. Astera Labs, a startup that’s slated to be one of the first beneficiaries of the generative AI boom, filed documents to go public. Reddit filed to list its IPO on NYSE under the ticker RDDT. Nigeria, Africa’s most populous country, blocked access to crypto trading platforms including Binance. Electric vehicles seem to be encountering demand headwinds, according to recent data from Ford, Mercedes-Benz and the Chinese market. In Canada, Sophic Client OneSoft reported preliminary 2023 results, and provided guidance for 2024. 2023 revenue increased 51% y/y to $10.4 million, in line with previous guidance. OneSoft issued 2024 guidance for revenue of $15 million to $16 million, Adjusted EBITDA between $1.6 million to $1.9 million, and forecasted cash at the end of 2024 of between $4.7 to $5.0 million. The Company was also recognized as a top performer by the TSX Venture Exchange in the Technology sector. Sophic Client Legend Power Systems reported Q1 F2024 financial results. “While deals have taken longer to close than initially thought, we continue to advance all deals that have previously been communicated and have not lost a single opportunity,” said Randy Buchamer, Legend Power Systems CEO.

Last week, markets held up reasonably well despite hot inflation reports. Dow Jones was down 0.1%, S&P 500 lost 0.4% and Nasdaq fell 1.3%. As indices remain near highs, Nvidia’s earnings report Wednesday will be crucial. The Company surpassed Amazon in market capitalization on Tuesday. OpenAI completed a deal that values the company at US$80 billion or more, nearly tripling its valuation in less than 10 months. SoftBank founder Masayoshi Son is seeking as much as US$100 billion to bankroll a chip venture to compete with Nvidia and supply semiconductors essential for AI. Nvidia also blogged about a new AI model, Sora, that produces original video based on text descriptions of what people want to see. Google on Thursday announced an upgraded version of its flagship conversational artificial intelligence, Gemini. Apple plans to release an AI-powered coding assistant this year. Walmart is in talks to buy TV maker Vizio. Uber unveiled a US$7 billion stock buyback plan. In Canada, as Sophic Client Kraken Robotics’ stock is at fresh 52 week highs, the company provided positive updates for 2023 and a strong 2024 outlook. Kraken’s sales funnel pipeline at the end of December 2023 was over $900 million, and the company expects 2024 revenue between $90 to $100 million and Adj EBITDA in the $18 to $24 million range. Another Canadian small cap company is getting taken out, as Think Research entered into a definitive agreement to be acquired by Beedie Capital, for a 100% premium to the closing price of the Common Shares on February 15, 2024 and a 75% premium to the 30-day volume-weighted average trading price of the Common Shares. Shopify’s warned operating expenses would grow in Q1, sending its stock down more than 7% in trading Tuesday morning.

Last week, Dow Jones was up just fractionally while S&P 500 rose 1.4%, moving above the key 5,000 level. Nasdaq gained 2.3%, briefly exceeding the 16,000 level. OpenAI’s CEO Sam Altman has spoken with investors about raising trillions of dollars to fund an effort to expand the world’s manufacturing capacity to make semiconductors for artificial intelligence. The effort could require US$5 trillion to US$7 trillion and a sprawling partnership between OpenAI, chipmakers, power providers and governments. China’s leading chip manufacturer, Semiconductor Manufacturing International Corporation, is setting up production lines outside Shanghai to manufacture even more advanced chips as soon as this year. The news comes despite U.S. efforts to prevent China from advancing its chipmaking abilities through sanctions and blacklists. Nvidia is in talks with Microsoft, Meta, Amazon to develop custom AI chips. Arm shares soared as much as 41% after the chip designer gave a strong forecast. Palantir stock jumped 19% as AI demand drove a revenue beat. OpenAI is developing a form of agent software to automate complex tasks by effectively taking over a customer’s device. Google launched its GPT-4 rival, Gemini Ultra, for US$20 a month. Disney’s ESPN, Warner Bros. Discovery and Fox Corp. have announced a new streaming joint venture in the U.S. that would put all of their sports programming on a single app. In Canada, Sophic Client UGE achieved commercial operation for a rooftop community solar project in Queens, New York. UGE had the Queens project appraised by a third party for a fair market value of US$3.20/watt, with a project total of US$1.2 million. With the completion of this project, UGE’s operating portfolio now stands at 5.6MW, with an additional 17.7MW of projects currently in the construction and deployment phase of development.

On the back of risks we highlighted last week, markets struggled mid week, as Fed chief Powell largely ruled out a March rate cut, and Google results weighed on tech stocks. That said, Dow Jones and S&P 500 rose 1.4% last week as both set record highs. Nasdaq gained 1.1% to close at a two year high driven by gains on Thursday and Friday owing to Meta and Amazon results. US venture capitalists are reportedly sitting on US$311 billion in unspent cash, as they shy away from risky bets on Silicon Valley start-ups and concentrate on finding ways to return capital to their own backers. Rubrik, the cybersecurity software startup that Microsoft invested in at a US$4 billion valuation in 2021, plans to go public in New York as early as April, as it handles a U.S. fraud investigation into one of its former employees. Internet discussion forum Reddit is targeting a valuation of at least US$5 billion in its upcoming initial public offering, about half the price at which it last raised funds privately. Sierra Space Corp. is making preliminary plans to go public and exploring possible acquisitions as the company drives toward debuting its long-awaited cargo spaceplane, potentially by the summer. Jeff Bezos could sell up to US$8.5 billion in Amazon stock in next year. A Delaware judge voided the US$56 billion compensation package of Tesla CEO Elon Musk. Tesla’s share price slid about 3% in after-hours trading following news of the decision. In Canada, Sophic Client Kraken was mentioned as a recent buy by PenderFund Capital Management. Sophic Client Renoworks and Eagleview announced a new all-in-one virtual 3d design and measurement tool for exterior contractors. Railtown AI announced a $2.5 million non-brokered private placement. Recent Canadian tech financings appear to have been well received by investors, which bodes well for the space. Exro will acquire California-based SEA Electric in a $332-million EV-tech deal.

Last week, Dow Jones rose 0.65%, S&P 500 gained 1.1% and Nasdaq composite was up 0.9%. Investors could now pause to see big earnings and economic news, including a Fed meeting this coming week. While Wall Street cheers on Silicon Valley, tech companies are downsizing at an accelerating clip. So far in January, some 23,670 workers have been laid off from 85 tech companies. Chipmaker Cerebras systems is weighing an IPO as soon as 2024. ASML shares closed at a record high after an earnings beat, and orders pop. Elon Musk’s xAI is in talks to raise US$6 billion. The FTC started an inquiry of AI Deals involving Microsoft, OpenAI, Google, Amazon, Anthropic. Google launched a generative AI tool for search ad buyers. Figma will offer new equity packages to employees at a price that values the company at US$10 billion, 50% lower than the US$20 billion Adobe was willing to pay for the design startup in a since-scuttled deal. Tesla shares fell 10% as a vague outlook disappointed Wall Street. Some Apple Vision Pro deliveries were pushed to April, and demand remains unclear. In Canada, we are optimistic that we are beginning to see increased capital flowing into small cap innovation after nearly three years. Sophic clients, Kraken Robotics, OneSoft Solutions, and Renoworks Software are at or near their 52 week highs. Kneat upsized its previously announced bought deal public offering to $17.4 million. MediaValet will be acquired in an all-cash transaction, at a premium of 30% and 22% to the Company’s closing price and 20-day volume-weighted average price, respectively. EMERGE signed a definitive agreement to sell WholesalePet for US$9.25 million, and plans a major debt reduction. New Sophic Capital client, ADM Endeavors provided a corporate update, and expects consistent organic growth in 2024 and beyond. Renoworks announced the new Renoworks Pro Partner program and introduced Renoworks API Hub to fuel market growth.