Weekly Investment News and Analysis

Last week was very volatile for growth stocks, more capital markets activity was skewed towards acquisitions rather than public market financings. Aside from the public market volatility, we are very encouraged by a recent techcrunch piece highlighting Shopify’s former employees taking on founder and investor roles, which in our view is very positive for the Canadian tech ecosystem, as are Google’s plans to build a $735 million data centre in Québec. As the energy consumption of Bitcoin has gained a lot of attention in the past week, Canadian bitcoin ETF issuer Ninepoint Partners announced Monday that it is planning to “fully offset” its carbon footprint, as it seeks to reassure investors concerned about the negative environmental impacts of cryptocurrency mining. In the USA, we are anticipating the Bird’s SPAC, as well as Better’s public markets debut, and a potential IPO by Flipkart in India.

After a few quiet weeks, last week was once again very strong from a Canadian capital markets perspective. Nearly a billion dollars of Canadian VC funding was announced, with a lot of attention on Wealthsimple’s $750 million financing. Canadian innovation public markets have also been very robust, with recent IPOs by Thinkific, Magnet Forensics and listings by Taiga Motors, and InterCure. In the USA, the Apple – Epic lawsuit continues to reveal very interesting data points, while the global chip shortage continues to persist. Lastly, Bitcoin is expected to become available to customers of hundreds of banks in the US this year, as crypto custody firm NYDIG has teamed up with fintech company Fidelity National Information Services, in a move which could be very interesting for the cryptocurrency.

Last week, was full of corporate earnings, with plenty of high-profile companies reporting their quarterly results. Our favourite stock from our sell side equity research days, Shopify (SHOP-NYSE, SHOP-TSX), reported a monster quarter, in what is typically a seasonally soft period. We recently had a conversation with the Morning Brew on Shopify’s evolution and success during the COVID pandemic, as the company appears to be at a crossroads. Canadian VC backed firms, had an extraordinarily strong week with regards to fund raising, with news by Sonder, Vena, and Clio. Multiple Chinese tech giants seem to be coming under increasing government scrutiny, while Apple’s much anticipated iOS 14.5 was made available, which could cause some dislocation in the ad-tech ecosystem.

This past week was perhaps the most subdued in the past few months in Canadian tech and clean tech capital markets activity. After a few months of intense activity, we’re not too surprised. Within Sophic clients, AnalytixInsight (ALY-TSXV, ATIXF-OTC), made a very significant announcement of a product launch by its 49% owned unit, MarketWall, with Intesa Sanpaolo, a major European bank. As well, Sophic spoke with Ayre Group Ventures about Sophic Client, Mijem (private) and Bitcoin SV. New listings in the USA, were relatively quiet as well. Coinbase, according to some is being classified as a “broken IPO”, disregarding the reference price. We are intrigued by Discord, and Microsoft no longer being in M&A discussions, likely suggesting Discord go public.

Our Canadian capital markets and buy-side contacts are excited about upcoming Thinkific and Magnet Forensics IPOs. At the same time, investors remain somewhat cautious with regards to deploying capital towards smaller cap deals, as many strongly performing small cap stocks are down ~40-60% from highs set in mid-late February. Investor response to some highly anticipated US new listings, such as Coinbase and TuSimple was tepid as well. That said, shares of newly listed Esports Technologies Inc. have performed very well as investors continued to cheer the public debut of the Las Vegas-based online gambling company. The company provides esports wagering products and technology. Investors can also play this theme via Sophic Client LuckBox (LUCK-TSXV, LUKEF-OTC) and the adjacent esports community theme via soon to be publicly listed Sophic Client Swarmio.

After a few weeks of relatively muted capital markets activity, this past week witnessed a bit of on uptick in innovation sector related public market financings. That said, private markets activity was very robust as well, exceeding public market financings. We’re encouraged with the level of support Kneat (KSI-TSXV) has received from investors; a stock we covered for a few years as sell side equity analysts. Sophic Client, AnalytixInsight (ALY-TSXV), could benefit from anticipation of its MarketWall unit’s business-to-consumer user growth at Intesa Sanpaolo alone. We published a research piece highlighting our conservative estimate of what every 100,000 MarketWall users could add to AnalytixInsight’s share price. We also investigate how the stock could benefit when analyzing potential revenues generated by users. Another Sophic client, Mijem (private) announced an investment by noted technology entrepreneur Calvin Ayre, founder of venture capital firm Ayre Group Ventures and blockchain conglomerate CoinGeek. In the USA, Coinbase released monster Q1/21 metrics ahead of a highly anticipated direct listing this coming week. Following suit, cryptocurrency exchange Kraken, could go public as well. We are also looking forward to the public markets debut by Topps, Grab, and Didi.

The holiday shortened past week saw muted capital markets activity in public equity markets in Canada and the USA, on the heels of a turbulent few weeks. In Canada, Sophic Client, AnalytixInsight (ALY-TSXV, ATIXF-OTCQB) announced a transformative regulatory approval as an online financial broker by the Italian financial markets regulator. As a result, the platform will allow users to trade stocks, options, and derivatives in Italy and later in other European countries. Quisitive (QUIS-TSXV) announced a major acquisition in the financial services vertical. In the USA, we’re looking forward to Coinbase’s direct listing in mid-April. The Invesco Solar ETF (TAN-NYSE), had a strong finish to the week following Biden infrastructure plan, as did Sophic client, UGE International (UGE-TSXV, UGEIF-OTC).

After a few weeks of volatility in Canadian capital markets, last week saw a bit of an uptick in activity. That said, we’re hearing investors are pushing back on some richly valued new issues. We’re excited to see MDA (a Canadian company we’ve known as 15 years as sell side equity analysts) could be a public company once again. In the USA, Robinhood has filed confidentially for a US IPO. Both Robinhood & SoFi have indicated they will let retail investors buy into IPOs. We’re also watching Coursera’s IPO, as many influential investors COVID could forever change education. WeWork could go public via a SPAC. In the US too, recent IPO debuts by Vizio and DigitalOcean suggest investors could be more price sensitive with regards to new issues than in the past few months.

Given market volatility in the technology and growth sectors over the past few weeks, this last week saw a muted level of new growth sector equity financings in Canada once again. That said, new offering pipelines appear healthy, and our contacts at various investment banks suggest there could be up to ten newly minted tech companies in Canada relatively soon. Sophic client, AnalytixInsight (ALY-TSX), could be an interesting stock to watch over the next few weeks, as the company could benefit from increased retail investor trading globally – the company, last week, also announced a new ESG focused offering. In this regard, we are also watching eToro’s SPAC in the USA, as well as public debuts by Deliveroo, Coinbase, Stripe.

As market volatility continued early last week after tumultuous trading the previous week, our discussions with our capital markets contacts suggest new issue pipelines remain exceptionally busy, which, in our view, bodes well for public markets relating to Canadian tech and clean tech. In the Canadian small cap space, we were encouraged to witness Sophic Client Luckbox (LUCK-TSXV), and separately, EMERGE Commerce (ECOM-TSXV) both close recently announced upsized financings. We’re also eagerly anticipating Telehealth provider Dialogue’s IPO. With Bitcoin hitting US$60K over the weekend, we expect crypto to remain an active theme globally. In the USA, Roblox and Coupang, both had strong public market debuts last week, as generally expected.

After three successive weeks of extraordinarily strong capital markets activity by the Canadian technology and clean tech sectors, this past week was impacted by ongoing market volatility as we expected last week. Public markets equity raises were under $100 million by our count. We are keeping an eye out on the performance of TAAL (an interesting Bitcoin SV play) and General Pizza (our due diligence found the pies to be delicious!). In the USA, we’re eager to see public debuts by Coupang, Instacart, Rocket Lab and Cipher in coming weeks/months.

After two consecutive weeks of extraordinarily strong capital markets activity by the Canadian technology and clean tech sectors, with total public equity fundraising announcements of around $2.5 billion. That said, recent market volatility could temper upcoming near-term activity as investors digest recent new issues and grapple with increased market fluctuations. In the USA, we look forward to upcoming public market debuts by Coinbase, Robinhood, Roblox and Toast.