Weekly Investment News and Analysis

WELL Health (WELL-TSX) announced a $65 million bought deal offering of convertible debentures, and CubicFarm (CUB-TSX) announced $20 million bought deal public offering of common shares. Sophic Client, Clear Blue Technologies (CBLU-TSXV) closed a convertible debenture financing for $4.4 million, exceeding the company’s funding goal. EMERGE Commerce (ECOM-TSXV) entered the B2B space with the purchase of WholesalePet.com for up to $31.2 million. Cboe Global Markets agrees to acquire NEO, strengthening global equities offering. Canadian SaaS funding in 2021 rebounded from a 2020 low, fuelled by influx of US investors. Affirm stock dropped after BNPL company announced plans for a convertible offering. MercardoLibre stock sinks after equity offering priced at a 5.1% discount. India’s Paytm dropped 26% in its first day of trading. Online mattress seller Casper Sleep agreed to a buyout offer from investment firm Durational Capital Management, ending Casper’s disastrous stint as a public company. Qualcomm stock hit a record high after it said it will grow without Apple. Alibaba Group slashed its revenue guidance for the full fiscal year, as the e-commerce giant grapples with China’s slowing economic growth and Beijing’s regulatory crackdown on the internet sector. Crypto-focused VC firm Paradigm said Monday that it had raised a US$2.5 billion venture fund, the industry’s largest to date. The new fund surpassed the US$2.2 billion crypto fund Andreeseen Horowitz announced in June. Apple now believes it can ship self-driving EV as soon as 2025, Bloomberg reports. Ford and Rivian have abandoned a plan they had to jointly develop an EV together.

This past week was notably busy in Canadian capital markets, witnessing lots of activity in VC and, public markets funding as well as M&A. Long time Canadian software behemoth, Open Text announced a US$1 billion debt financing, and a nearly half a billion US$ acquisition. Satellite communications company Telesat filed to go public on the TSX. Moving to small cap stocks, EMERGE (ECOM-TSXV) announced the refinancing of a term loan and upsizing of its credit facility to $25 million. Sophic Client UGE International (UGE-TSXV) announced the closing of a $2 million Convertible Debenture offering. SoftBank announces a US$8.8 billion share buyback after losses on Didi and Coupang. Sweetgreen’s IPO filing suggests tech enabled businesses could be valued at ~7-9x sales. Elon Musk sold US$5 billion in Tesla stock, but he made plans weeks before asking his Twitter followers whether he should sell 10% of his shares. Apple supplier Foxconn, forecast on Friday that a global chip shortage would run into the second half of 2022 and Sony cut its PlayStation 5 production on chips shortage. During an interview, Apple CEO Tim Cook said he owns cryptocurrency, and Apple ‘looking’ to add it for Apple Pay.

Last week saw a few high profile exits and an IPO delay in Canada. Ecobee is being acquired by US-based Generac for US$770 million. Quebec City-based artificial intelligence retail tech startup, Coveo filed to go public on the Toronto Stock Exchange under the ticker ‘CVO’. Montréal-based Sharethrough has postponed its IPO on the Toronto Stock Exchange. Sophic Client, GameSquare Esports (GSQ-CSE, Sophic Client) received mention in the Washington Post, referencing streamer TimTheTatman joining its Complexity unit. In the USA, Rivian plans to sell a portion of its US$60 billion IPO directly to SoFi users. Cloud software firm HashiCorp filed to go public and Cloud-based expense management software maker Expensify plans to raise up to US$242.5 million in an IPO. Zillow now looks to sell 7,000 homes for US$2.8 billion, and Cathie Wood’s Ark sold 3.9 million shares of Zillow on Wednesday as the company’s exit from home-flipping sent shares plunging. The US House passed a more than US$1 trillion bipartisan infrastructure bill late Friday. The Senate approved the revamp of transportation, utilities and broadband in August. Lastly, the global chip shortage ‘is far from over’ as wait times get longer.

We got additional colour last week around D2L and Hootsuite going public in the coming months — Canadian tech companies who’ve long been speculated to go public for a number of years. Voyager Digital (VOYG-TSX) secured a $75 million strategic investment from Alameda Research, and Mark Cuban’s Dallas Mavericks said they’ll give US$100 in bitcoin to people who download the Voyager Digital app this week. Shopify (SHOP-NYSE, SHOP-TSX) announced partnerships with Microsoft and Mailchimp. Sophic Client, Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA), closed a convertible debenture financing for $1.5 million. We published our second CEO interview with Sophic Client, HempFusion (CBD.U-TSXV). Toronto tech startups once again broke venture funding records, raising over $1.6 billion through 53 deals in Q3 2021. Per Hockeystick and briefed.in data, Toronto tech funding has soared to a new record in every quarter of 2021 so far. Outside Canada, GlobalFoundries and major shareholder Mubadala Investment Co. raised almost US$2.6 billion in an initial public offering, pricing the chipmaker’s shares at the top of a marketed range. Paytm seeks US$20 billion valuation in India’s biggest IPO. FaZe Clan to go public through acquisition by SPAC, valuing company at US$1 billion. Mastercard will allow US banks and millions of merchants to integrate crypto into their products, via a partnership with Bakkt, a digital asset platform. Shares of Bakkt soared as much as 94% to US$17.71 before paring the rise to 78%. In the semiconductor space, while Apple lost US$6 billion to chip shortages and manufacturing delays in Q4, Samsung reported record quarterly revenue on strong chip demand.

A few stocks we track at Sophic, have performed well recently, in addition, E Automotive, an online vehicle auction marketplace, is planning to go public on the Toronto Stock Exchange. Montreal based Sharethrough, announced the pricing of its TSX IPO, as the company is looking to raise approximately $75 million in gross proceeds. Investor relations software provider Q4 Inc. reportedly cut the size and pricing of its planned IPO on the TSX. Galaxy Digital (GLXY-TSX) announced that its affiliate, Galaxy Interactive, raised a fund with $325 million of committed capital, with participation from over 70 new LPs, including institutional investors, endowments, strategic investors, and family offices. WonderFi (WNDR-NEO) upsized its previously announced bought deal private placement. Rolling Stone Magazine gave a shoutout to Sophic Client GameSquare Esports (GSQ-CSE), while we published a note on potential benefits for GameSquare and milestones that investors can look forward to. We also highlighted that Sophic Client HempFusion (CBD.U-TSXV) continues to grow its direct-to-consumer, business-to-business, online, and white label channels and has expanded its number of retail doors. In the USA, a top ByteDance investor weighed a US$500 million stake sale, WeWork shares rose in their trading debut after its SPAC merger, and crypto exchange Bakkt slid in its debut after SPAC deal and Intel blamed chip shortages for its Q3 sales miss, sending its stock down 9% on the news.

Thinkific Labs Inc (THNC-TSX), filed a preliminary and short form base shelf prospectus for up to an aggregate of $300 million. D2L filed to go public on TSX, the company expects to raise a nine-figure sum at valuation of more than US$1 billion through its IPO. We attended the company’s investor day a few years ago – and it’s great to see another iconic Canadian tech company go public on the TSX. We counted well over $100 million in funding for private Canadian innovation companies last week, and saw announcements totalling nearly a billion dollars towards VC funds. We published on Clear Blue Technologies’ (Sophic Client, CBLU-TSXV, CBUTF-OTC, 0YA-FRA) ability to automate and digitize day-to-day operations for providing clean wireless power off-grid, while collecting data as a competitive advantage. With over 400 customers, including Orange and Telefonica, it’s Clear Blue sky for the Company. In the USA, venture capital-backed companies completed initial public offerings, reverse mergers and acquisitions worth a record US$582.5 billion so far this year, according to new data from PitchBook. This is the first time U.S. VC exit value has surpassed US$500 billion. Magic Leap, the troubled augmented reality company that underwent mass layoffs and a CEO change last year, has raised US$500 million at a valuation of close to US$2 billion. Stock chart website TradingView was valued at US$3 billion. GitLab jumped 35% in its Nasdaq debut after the code-sharing company priced IPO above expected range. Bitcoin once again hit record highs even as Coinbase wants SEC blocked from crypto and Jamie Dimon called bitcoin ‘worthless’, while Vladimir Putin sees value in cryptocurrencies – but says it’s too early to tell if they can settle oil trades and Stripe is building a crypto team.

SUMMARY: After a few weeks of public markets volatility dampened new public company transactions, last week saw a bit of an uptick. Nuvei (MEI-NASDAQ, NVEI-TSX) closed an upsized US$425 million initial public offering in the United States. Quarterhill (QTRH-TSX) announced the filing of a preliminary $200 million base shelf prospectus. Dye & Durham (DND-TSX) announced a recapitalization of its credit facilities totalling $1.8 billion, ending a strategic review process that commenced in May. Q4 Inc. announced the resumption of plans to go public on the TSX. At Sophic, we published a piece on Clear Blue Technologies’ (Sophic Client, CBLU-TSXV, CBUTF-OTC, 0YA-FRA) core business of providing clean, wireless power solutions serving the multi-billion dollar off-grid market. In the USA, there was positive movement towards public markets debuts by Rent the Runway, Udemy, GlobalFoundries, AvidXchange, HireRight, GitLab and Genesys. Year-to-date, penny stock trading volume hit a record US$548 billion, soaring past 2020 totals as retail investors poured into the market. NFT sales surged to US$10.7 billion in Q3 .Snapchat and Telegram benefited from Facebook’s long outage.

Last week, more than $2-billion was shaved off Lightspeed’s (LSPD-NYSE, LSPD-TSX) market cap in response to a short-seller report. Fintech Propel filed a preliminary prospectus for an IPO. Sophic client, HIRE Technologies (HIRE-TSXV) strengthened its balance sheet by closing a $2.8 million second tranche non-brokered private placement for a total of $4.8 million oversubscribed financing. The company has been growing at higher than market growth rates, a stronger balance sheet should help the company accelerate growth. Canadian tech talent scored another win as Stripe announced its first Canadian office in Toronto. In light of recent market turbulence Allvue Systems postponed its IPO in the USA. However, on Friday, electric vehicle maker Rivian filed for its IPO. Earlier in the week, EV company Polestar announced it would merge with Gores Guggenheim SPAC in a US$20 billion deal. Amazon unveiled a new robot, updated devices, and also revealed it was expanding into the fitness market, putting itself in competition with Apple more directly. TikTok reached 1 billion monthly active users, and also made its first foray into NFTs. The Fed has ‘no intention’ to ban cryptocurrencies, Jerome Powell told Congress. At Sophic Capital, we published notes on GameSquare Esports (GSQ-CSE) as Esports influencer TimTheTatman recently announced that he would join Complexity Gaming and GameSquare Esports and Body and Mind Inc. (BAMM-CSE, BMMJ-OTC), which has a strong brand presence in Nevada and could benefit in that state.

This past week was relatively quiet in Canadian capital markets, in the face of global market volatility, however there were multiple developments in various innovation sectors globally. In Canada, Shopify (SHOP-TSX, SHOP-NYSE) reportedly surpassed Amazon in online traffic. Vancouver-based Dapper Labs raised US$250 million led by Coatue. These two developments, once again highlight how the tech ecosystem, and investing opportunities in Canada have expanded in recent times. CEO of Sophic Client Clear Blue Technologies (CBLU-TSXV, CBUTF-OTC, 0YA-FRA), Miriam Tuerk, showed how Clear Blue’s power innovation for MNOs in Africa unleashes The Green New Deal that pays for itself in an interesting industry discussion. In the USA, Toast and Freshworks had strong public market debuts, and WeWork set Oct. 21 as the date of its public listing. DraftKings stock dropped after a CNBC report of a US$20 billion cash-and-stock buyout bid for U.K.’s Entain. China said all crypto-related transactions are illegal, and the SEC’s Gary Gensler criticizes stablecoins amid call for tougher crypto regulation.

Last week saw a complementary $600 million notes offering by (GIB.A-TSX, GIB-NYSE) following a US$1 billion notes offering the week before. Neo Financial is furthering its push to become a full-stack digital bank: the three-year-old startup closed a $64 million Series B round this summer led by Peter Thiel-backed Valar Ventures, which also led Neo’s Series A financing. We published a piece on Sophic client UGE (UGE-TSXV, UGEIF-OTC) highlighting that the company’s solar project backlog continues to be undervalued compared to mid scale project transactions. The stock is trading at an implied US$0.44/W, which represents about a 43% discount to the average US$0.77/W peer transactions, before accounting for any additional project wins. In the USA, Toast, GitLab, and Forge Global could be some interesting new listings to add to your screens. There was also a fair amount of news in the crypto space, with both bullish and bearish takeaways.

With a major unsecured notes offering announced by CGI (GIB.A-TSX, GIB-NYSE) seeking to raise US$1 billion, and funding for another couple hundred million dollars announced by private VC backed Canadian companies, September is of to a good start by the Canadian innovation sector in capital markets. In addition M&A, remains an active theme, with a major acquisition and exit announced in the space this past week. Stripe is discussing a 2022 public listing, which could be an interesting stock to look out for, as well as Sportradar, which could go public soon. SoftBank announced a Deutsche Telekom share swap deal, and in addition will borrow against its remaining T-Mobile stock, which could aid global VC funding as SoftBank’s Vision Fund 2 is trying to invest more in European tech companies. On the regulatory front, a judge just ruled a massive blow against Apple’s App Store business. With a Japanese acquisition, PayPal gains a buy now, pay later (BNPL) service platform, even as some US data suggested credit risk in this segment. In the ESG space, we saw ambitious long term US solar plans, per a NY Times article, which could move the US towards producing almost half of its electricity from the sun by 2050 and a major investment into car battery tech by Toyota.

While this past week was relatively quiet in Canadian public markets, EMERGE Commerce (ECOM-TSXV) announced a $24 million acquisition funded with cash on hand. Consensus expectations call for a busy fall, with regards to “risk-on” driving public capital markets activity in Canada. Private Canadian VC backed companies announced a couple hundred million dollars of funding last week, which appears to be lower than the past few weeks. In the USA, despite lower SPAC activity leading to fewer IPOS in Q2 2021, more companies continue on the path to being public. Last week, Allbirds, Reddit, Samsara, Binance, and NordicTrack were amongst companies that announced plans to go public. Intuit could be in talks to buy Mailchimp for more than US$10 billion, and Robinhood’s stock fell after Securities and Exchange Commission Chairman Gary Gensler told Barron’s that banning the controversial practice of payment for order flow is “on the table” and PayPal is exploring a stock-trading service for US customers amid a boom in retail investing, CNBC first reported Monday.