Weekly Investment News and Analysis

Viral Nation, announced an initial funding round of $250 million led by Eldridge, with participation from Maverix Private Equity, to fuel the company’s technology and market growth strategies. Founded as an influencer marketing agency in 2014, Viral Nation has evolved to meet the needs of an impressive roster of Global 500 clients. Bigg Digital Assets Inc. is reporting that its subsidiary, Netcoins, experienced a security breach that allegedly allowed a customer to fraudulently withdraw an estimated $1.58 million. The startup reported the software vulnerability was fixed within an hour. Canada has lost $154 million in cryptocurrency through three breaches and one fraud between 2011 and 2021, according to a report from Crystablockchain.com. As the Twitter – Elon Musk drama unfolds, including Elon Musk now being sued by former Twitter shareholders; Twitter Inc. announced on Friday that the company has adopted a shareholder rights plan, or “poison pill,” that will reduce the chances that a person or group will take control of the company. The announcement comes after Elon Musk’s offer of US$54.20 per share was made public on Thursday. Bucking the gloom of other tech equities, shares of Indonesian ride-hailing and e-commerce company GoTo rose as much as 23% after it raised US$1.1 billion in its domestic stock market debut. Oracle-backed server processor startup Ampere Computing said Monday that it plans to go public, filing initial confidential paperwork with the SEC. Epic Games said on Monday it had raised US$2 billion from Sony Group Corp and the family owned holding company behind the Lego Group, valuing the “Fortnite” creator at US$31.5 billion. Charlie Munger’s Daily Journal halved its Alibaba stake to 300,000 shares last quarter. The newspaper publisher nearly quadrupled its Alibaba holdings during the second half of 2021. Amazon is hitting its sellers with a 5% fee due to inflation and increased fuel costs, and there’s a good chance products will get more expensive as a result.

Sophic Client GameSquare Esports (GSQ-CSE, GMSQF-OTC, Sophic Client) announces US$3.0 million Private Placement led by Goff Capital and the Jones Family and a new strategic investor to further strengthen the Company’s shareholder base. In a recent report, we examine, Sophic Client, Edge Total Intelligence (CTRL-TSXV) offerings as edgeTI’s software provides enterprises a single point of control software enabling the rapid coordination and execution of informed decisions. This is a US$23 billion industry, and edgeTI is establishing itself to grow in this industry. Shopify told employees on Thursday that it will raise all employees’ base salaries, The Information has learned. The salary increases will come into effect starting in July, according to a person familiar with the matter. The move follows The Information’s report that Shopify was suffering from staff defections, even as Shopify’s stock plunge this year has reduced the value of recent stock grants. Canada Pension Plan Investment Board (CPP Investments) today announced that it has invested US$425 million in VerSe Innovation Private Limited, one of India’s leading content technology platform companies. PokerStars and FanDuel join forces to strike major partnership deal with Maple Leaf Sports & Entertainment. Gartner forecasts global tech spending to hit US$4.4 trillion this year, up 4%. Buffett’s Berkshire reveals stake in HP; shares surge almost 10%. Twitter shares surge after disclosure Elon Musk has taken stake. Amazon, Alphabet and others are quietly rolling out drone delivery across America. Cash App discloses security breach impacting over 8 million users. Apple Pay surpasses Venmo and PayPal as teens’ favorite payment app, shows Piper Sandler survey. Meta Platforms’ financial arm, Meta Financial Technologies, has been exploring the creation of a virtual currency for the metaverse, the Financial Times reported.

Vancouver blockchain tech startup, LayerZero Labs is the latest Canadian company to join the country’s growing group of unicorns, as it raised $135 million that values LayerZero at $1 billion. LayerZero’s financing was tri-led by notable venture capital firms Sequoia Capital, Andreessen Horowitz, and FTX Ventures, which is the fund launched by crypto exchange FTX. As Canadian VC seems more active in tumultuous public markets, Mogo (MOGO-TSX, MOGO-NASDAQ) announced the formation of Mogo Ventures to manage its $124 million investment portfolio. SoftBank founder Masayoshi Son has told the company’s top executives to slow down investments, as the Japanese investment giant tries to raise cash amid a global stock market turmoil, the Financial Times reported. OnlyFans, the subscription-based social platform, has spoken with several blank check companies known as SPACs about a merger to take it public, Axios reported. The SEC is taking aim at SPACs with proposed rules to make disclosures more like those in a traditional IPO. Apple is planning to cut production of some of its most popular products due to macroeconomic factors such as the war in Ukraine and rising inflation, which are impacting demand, Nikkei Asia reported. Huawei’s 2021 revenue was down 29% as U.S. sanctions hurt smartphone sales. A bug that exposed Facebook users to a swell of posts containing misinformation persisted for six months on the platform before it was fixed, The Verge reports. The DOJ backs a bill targeting business practices of Amazon, Apple and Google. The Justice Department threw its support behind bipartisan legislation forbidding large internet companies from favoring their own products and services over those from competitors, according to the Wall Street Journal. Singapore’s giant Sea said on Monday it is shutting down its e-commerce business, Shopee, in India, months after the firm began recruiting sellers in the country.

The New York Times published an interesting piece about Toronto’s booming tech sector last week. Toronto is now the third-largest tech hub in North America. It is home to more tech workers than Chicago, Los Angeles, Seattle and Washington, D.C., trailing only New York and Silicon Valley, according to CBRE, a real estate company that tracks tech hiring. Interestingly, last week, we counted ~$150 million of activity in the Canadian VC ecosystem, against a backdrop of high public market volatility. SoftBank seeking US$60 billion valuation for Arm, which would imply a far higher multiple of Arm’s revenue and profits than is common in the chip sector. GoTo Group, an Indonesian startup giant, raised about US$1.1 billion in one of the world’s largest initial public offerings announced since the Russian invasion of Ukraine. Private-equity firm Thoma Bravo LP has struck a deal to buy Anaplan Inc. for $10.7 billion, the latest in a recent string of big leveraged buyouts. Instacart Inc., a pandemic darling that’s now facing decelerating growth, is slashing its valuation by almost 40% to about US$24 billion, a move it says will help the company attract talent and adapt to market conditions. Uber stock gains after company strikes partnership with NYC taxis. Nikola stock price soars after it begins production on electric truck. Adobe slumps 11% as the software maker says halting sales in Russia will reduce yearly revenue. Shares of Okta dropped more than 7% Tuesday following reports of a data breach. Famed short-seller Jim Chanos revealed he’s betting against crypto exchange Coinbase. “Coinbase is what we would call a bubble stock,” he told CNBC’s Scott Waper on Friday. Late Thursday night in Brussels European lawmakers reached a tentative agreement after nearly two years of negotiations on rules restricting certain business practices of Google, Apple, Meta Platforms, Amazon, Microsoft and other tech companies. Nvidia is exploring using Intel’s manufacturing services.

With US$150 million in fresh funding, Montréal’s Talent.com is ready to take on Indeed worldwide. Calgary based, Oil and gas tech startup, Validere closes $55 million funding with BlackRock backing. Sophic Client, Edge Total Intelligence’s (CTRL-TSXV) CEO Jim Barrett, recently presented at the Investor Summit Q1 2022. Indonesian startup GoTo will raise up to US$1.1 billion in its IPO. SoftBank-backed Indian hotel startup Oyo is mulling a smaller IPO. GM is buying out Softbank’s stake in autonomous vehicle unit Cruise. SoftBank’s Arm will lay off up to 15% as it prepares for an IPO after Nvidia deal collapse. ConsenSys, the New York company operating a suite of blockchain products including popular crypto wallet MetaMask, raised US$450 million in a Series D funding round, that valued the company at more than US$7 billion, which included the new investment. Shenzhen iPhone production was forced to shutdown at two Foxconn facilities due to a new COVID-19 outbreak – but has now partially restarted. China is forcing Alibaba and Tencent to cut over 50,000 jobs. Tencent could be fined for anti-money laundering violations. Mark Zuckerberg said NFTs are coming to Instagram soon. US Lawmakers introduce bill that would let Nvidia, Qualcomm share in U.S. chip subsidies. Intel is building a new €17 billion semiconductor manufacturing hub in Germany.

In light of ongoing market volatility, last week was unsurprisingly quiet in Canadian public markets. That said, Portage Ventures closed $788.5 million for its third FinTech fund, which could now be one of the largest early-stage FinTech-focused venture funds in the world. A recent Washington Post piece called out some unsavory behavior by esports organizations, however, public traded companies that are involved in esports, such as Enthusiast Gaming (EGLX-TSX) and GameSquare Esports (Sophic Client, GSQ-CSE), have long had policies that address and curtail these issues. Sophic Client, Clear Blue Technologies’ (CBLU-TSXV) CEO recently returned from overseas customer, prospect, and investor meetings where conversations increasingly focused on how Clear Blue’s renewable, solar power solutions can resolve these issues. Investors seeking exposure to this secular theme should consider Clear Blue Technologies. In the US, Fidelity, T. Rowe mark down their Instacart stake by up to 18%, in light of ongoing market turbulence, we would not be surprised to see additional mark downs in private VC backed companies’ valuations. Amazon announced a US$10 billion share buyback, 20-for-1 stock split, sending the stock up 6% after hours on the announcement. WeWork reports 7.8% increase in revenue for Q4, however some investors question if the company will need to raise capital in H2 2022. Intel’s Mobileye self-driving unit ‘confidentially’ files for IPO. Uber issued an upbeat outlook for the first quarter, declaring in a securities filing that its ride hailing business was “bouncing back from Omicron much faster than we expected.” Rivian stock fell by more than 14% after hours Thursday after the electric vehicle maker said supply chain snags would hinder production this year and indicated it still had a long way to go to deliver on a much-hyped partnership with Amazon. The ‘Jedi Blue’ ad deal between Google and Facebook sparked new Antitrust probes in EU and UK.

CGI (GIB’A-TSX, GIB-NYSE) announced its intent to repurchase 3.97 million of its shares held by CDPQ for $100/sh, from our sell side analyst days, CGI has previously purchased back stock from BCE, and has typically bought back stock on the open market as well. Shopify (SHOP-NYSE, SHOP-TSX) platforms acquirer WeCommerce (WE-TSXV) is purchasing KnoCommerce for $2.6 million. Disco closed a $15 million Series A round from investors behind MasterClass, Coursera to scale its live learning platform. Alibaba-backed beauty tech firm Perfect Corporation will merge with US blank-cheque company in a deal worth US$1 billion. Shares of ride-hailing and food delivery app Grab, one of Southeast Asia’s largest internet companies, plunged 37% Thursday in New York after the firm reported worse-than-expected quarterly results. Sea Ltd., once the hottest stock in the world, has lost more than US$130 billion in market value from its peak last year after a disappointing earnings report that added to its woes. Disney confirms plans to launch ad-supported tier of Disney+. The federal judge presiding over the Federal Trade Commission’s antitrust lawsuit to force Facebook to sell of Instagram and WhatsApp likely won’t rule until 2025, some four years after the case was filed, six years after the investigation first kicked off, and 15 years after Facebook bought the popular photo sharing app. Shopify rival BigCommerce said its revenue growth will slow dramatically this year, in another sign that the pandemic-driven boost for e-commerce players is fading. Ford increased its electrification spend to US$50 billion in attempt to catch up to Tesla, and will split its EV and combustion units in major restructuring. Sony and Honda reveal plans to jointly make and sell electric vehicles. Panasonic aims to start mass production of a higher-capacity battery for Tesla by March 2024. Volvo is testing wireless EV charging tech in Sweden.

Public markets remain extremely volatile, as demonstrated by the 7%+ intra-day swing in the NASDAQ Composite on Thursday, February 24th. Against, this backdrop, Waterloo based eSentire will be valued at US$1.1 billion following $325 million deal. In addition, we counted ~$100 million of additional VC backed deals in Canada last week. Traction Guest, which was one of the first four companies to receive an investment from Salesforce’s $100 million Canadian-focused fund, will be acquired by Salesforce. Terms were not disclosed. Twitter Inc. said Wednesday it is offering US$1 billion of high-yield 8-year bonds in a private placement. Carvana, the online used car marketplace, has agreed to buy Kar Global’s Adesa U.S. auction subsidiary for $2.2 billion in cash. SoFi Technologies Inc. is buying banking-software maker Technisys SA for about US$1.1 billion, the latest in a string of deals designed to transform the lender into a one-stop financial shop. The SEC is investigating whether Tesla stock trades made by Elon Musk and his brother violated insider-trading rules, WSJ report says. Apple reportedly completed production tests for its AR/VR headset. Meta Platforms has broken up a group of more than 300 employees working on operating systems for its virtual and augmented reality devices, according to three people with knowledge of the situation. Meta Platforms is testing ad-revenue sharing on Facebook Reels with all creators in the U.S., Canada and Mexico. It will expand the test to more countries in the coming weeks. Alibaba reported its slowest-ever revenue growth for the quarter through December, as its core commerce business in China grew only 7% amid an economic slowdown.

Even as public markets remain choppy, we counted Canadian VC funding totaling almost $600 million in the past week. Public markets remain unforgiving, as evidenced by Shopify’s steep share price decline this past week. With fintech stocks down 40%, Chime delays its IPO. SoftBank is reportedly seeking a US$8 billion margin loan as part of Arm IPO. Banks are planning to pitch IPO valuations for Arm of upward of US$50 billion. Arm is likely worth US$25 billion to US$35 billion based on the industry’s valuation metrics and analysts’ early projections; Bloomberg reported this month. Crypto company Circle doubled its valuation to US$9 billion under new SPAC terms. Sequoia Capital is raising up to US$600 million for a new fund focused on cryptocurrency start-ups. The announcement marks the firm’s first-ever sector-focused investment fund, a sign of its long-term commitment to the exploding crypto sector. Epic says there are now more than 500 million Epic games accounts. Sea Ltd. lost more than US$16 billion of value in its biggest daily market drop after India abruptly banned its most popular mobile gaming title. Super Bowl ads boosted crypto app downloads by 279%, led by Coinbase, which had to briefly throttle traffic after its website crashed. Google is creating new privacy rules for its Android smartphone operating system to curb how users are tracked for advertising purposes, the company said Wednesday, following the path Apple forged with its App Tracking Transparency rules. Construction of Taiwan Semiconductor Manufacturing Co.’s first advanced chip plant in the U.S. is three to six months behind schedule, sources told Nikkei Asia, a sign that the world’s biggest contract chipmaker is finding it more challenging to expand overseas than at home.

Vancouver quantum computing startup D-Wave is going public on the New York Stock Exchange via a SPAC, which is anticipated to raise $431 million in gross proceeds. Meanwhile, Venture investment in Canada’s tech sector exploded in 2021, according to a new Silicon Valley Bank (SVB) report. Canadian tech startups saw over $16 billion in VC investment last year. This figure crushes the $6 billion the ecosystem saw in 2020, when venture funding sputtered due to the pandemic, and is more than double the country’s previous high of just under $8 billion in 2019. TerraZero Technologies announced a strategic ~$10 million investment from BIGG Digital Assets (BIGG-CSE). EMERGE (ECOM-TSXV) reported strong preliminary Q4 2021 results — Revenue is expected to be between $14.2 million and $14.8 million in Q4 2021, an increase of over 491%, compared to $2.4 million Q4 2020. Almost a decade after the term “unicorn” was coined to describe a rare breed of private company, about two new companies are joining the herd daily, as there now over 1,000 unicorns. Public markets continued to remain choppy with added geopolitical tensions going into the weekend, while there appears to be increased M&A chatter; not unsurprising in light of public markets dislocations. Affirm tumbled 10% after the Buy-Now-Pay-Later fintech’s Twitter blunder revealed details of it’s earnings early. Tesla logged a US$101 million impairment loss from Bitcoin in 2021 as the cryptocurrency’s value fluctuated. Nvidia expects to book US$1.36 billion charge in Q1 Fiscal 2023 due to termination of Arm deal with Softbank. Cisco made US$20 billion-plus takeover offer for Splunk. Binance, led by the world’s richest crypto billionaire, is taking a US$200 million stake in Forbes. OpenSea, the most dominant marketplace for non-fungible tokens (NFTs), launched a venture capital arm on Friday, becoming the latest privately held crypto startup to create a division backing other emerging Web3 startups. The biggest assembler of iPhones said component shortages that have plagued electronics production for more than a year are showing signs of easing, a potentially encouraging signal for manufacturers across industries.

This past week witnessed one of the most volatile stock reactions for multiple stocks on earnings we recall seeing. Amazon repurchased ~US$1.3 billion of its stock in January, the first buyback in a decade. After getting smashed earlier this year, Peloton stock shot up more than 30% after market on Friday after reports of Amazon’s acquisition interest. Facebook was set to shed about US$200 billion in market value, following its earnings report, in what would be one of the biggest one-day market capitalization wipeouts for any company on record. PayPal stock sank to a 21-month low Wednesday after the payments platform trimmed its financial forecast, citing the impact of inflation. On the flip side, The startup behind Bored Ape Yacht Club is reportedly in talks with Andreessen Horowitz for funding at a US$5 billion valuation. FTX, the third largest cryptocurrency exchange by trading volume, raised US$400 million in a new funding round that valued the company at US$32 billion, the company announced Monday. Wag Labs Inc., the developer of dog-walking app Wag!, has agreed to go public through a merger with a blank-check company. San Francisco-based Wag and CHW Acquisition Corp. will have a value of about US$350 million as a combined company, according to a Thursday announcement confirming a Bloomberg News report. In Canada, this week we counted nearly a billion dollars of VC funding announcements, including a US$6 million investment by Stack Capital Group (STCK-TSX) into Montreal based Canadian travel Unicorn, Hopper. While announcements can be made after a decent amount of time has elapsed since the funding – this level of VC activity is nonetheless impressive in light of public markets volatility.

Last week, at least four SPACs pulled their initial public offering plans, and Dutch file-sharing service WeTransfer abruptly canceled its IPO in Amsterdam, with its chief executive officer citing turbulent public markets. That said, Chinese fast fashion retailer Shein revived plans for IPO in the U.S. and delivery company Gopuff reportedly hired bankers for its IPO. Nvidia is reportedly preparing to abandon its US$40 billion takeover of Arm. UBS agreed to buy robo-adviser Wealthfront for US$1.4 billion. ESL, FACEIT acquired and merged by Saudi-owned Savvy Gaming Group for a reported US$1.5 billion, as esports gains global acceptance. Hedge fund manager Bill Ackman said his firm has purchased more than 3.1 million shares of Netflix, making it a top-20 holder. Activist investor Blackwells Capital wants the board of Peloton to fire CEO John Foley and pursue a sale of the company. Climate technology startups around the world raised close to US$40 billion in funding over more than 600 venture capital deals last year. In Canada, Exro announced an increase in its bought deal financing to $17.5 million. Eguana filed a final base shelf prospectus for an aggregate amount of up to $150 million during a 25-month period. HealthSpace Data Systems announced pricing of its overnight marketed financing. In mid-November, Gross Merchandise Sales (“GMS”) on EMERGE Commerce’s marketplaces exceeded $100 million. Founder and CEO, Ghassan Halazon, published a shareholder letter outlining progress and plans for EMERGE in 2022 and beyond. Over the years, investors gravitate towards, and anticipate annual shareholder letters, which offer unique/insightful commentary. We’re optimistic this could be the beginning of a similar series, offering insights on an interesting ecommerce capital allocation strategy from EMERGE. Unity’s recent Ziva acquisition, and Apple’s contactless payment announcement for iPhones (which sent Square stock down on Thursday), both leverage Canada’s technology ecosystem, which continues to go from strength to strength despite market turbulence.