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COVID-19 roundup: Shopify becomes Canada’s most valuable public company

Shopify CEO Tobi Lütke speaks at the Collision conference in Toronto in May 2019. Iain Sherriff-Scott for The Logic
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It’s day 57 since Canada’s 100th coronavirus case. The number of cases is 63,378 as of publication time, up 1,332 since yesterday—a 15 per cent decrease from the seven-day prior average of new cases. On their respective 57th day, U.S. daily new cases were down 16 per cent from the seven-day prior average; the U.K. jumped up 33 per cent in daily new cases from the seven-day prior; and in Italy, new cases were down 10 per cent.* 

SHOP ‘til you drop: Shopify surpassed RBC to take the top spot on the Toronto Stock Exchange Wednesday as its shares rose more than seven per cent following financial results that surpassed expectations. The e-commerce company reported revenues of US$470 million in the first quarter of 2020, up 47 per cent from the same period last year and ahead of US$443 million analysts’ consensus. The soaring stock made Shopify the third technology company ever to top the index, after Nortel and BlackBerry. It closed the day with a market cap of $121.6 billion.  

Small retailers and big brands alike are trying to sell more online as physical stores remain shut due to COVID-19, and many are using Shopify’s technology to do it. The company’s brick-and-mortar merchants saw a 71 per cent drop in gross merchandise volume (GMV)—which measures the value of the items sold via the platform including shipping costs and tax—through POS terminals between March 13 and April 24 compared to the previous six-week span. However, they made up 94 per cent of that with online sales. 

Shopify has also seen success in a new category: food. Consumer packaged goods giants Heinz and Lindt and grocers Loblaw and Farm Boy have all started using the e-commerce platform since the pandemic hit. The company reported the GMV of food, beverage and tobacco doubled across the combined last three weeks of March and first three weeks of April, compared to the period before. Discretionary categories like apparel and accessories, with which Shopify’s merchant base is more commonly associated, also recovered after a mid-March dip. Stock analysts told The Logic they’re encouraged by the diversification, and that the need to go online extends across product types.

CDAY, PYPL, LYFT, SONO: Toronto-run HR software company Ceridian reported US$222.7 million in first-quarter revenue, up 9.3 per cent year over year. Sales connected to its main platform, Dayforce, grew much faster, hitting US$168.8 million, a 27.1 per cent increase. But the company withdrew its 2020 guidance. “It is impossible to accurately predict the depth and duration of the COVID-19 crisis, and in particular, its impact on the employment levels at our customers,” it said. The firm also announced plans to acquire Singapore-based Excelity Global. 

PayPal reported net revenues of US$4.62 billion, below analyst expectations of US$4.72 billion. Things looked a bit better in April, where net new active accounts hit 7.4 million, compared with 3.9 million in March; net revenue was also up about 20 per cent in April, compared with five per cent in March.

Lyft shares rose 15 per cent after the bell Wednesday, after the firm reported a three per cent year-over-year increase in ridership, despite the pandemic. Its quarterly revenue beat Wall Street’s expectations, rising 23 per cent over the same period last year, while it reported net losses of US$398.1 million. 

Smart-speaker maker Sonos reported a 23 per cent revenue decline in March, but stabilized in April, with revenue down just five per cent year over year. Listening hours were up 48 per cent year over year in April, while its web sales jumped 400 per cent. 

In the markets: All major North American indices fluctuated between small gains and losses Wednesday as optimism that the lifting of stay-at-home orders will lead to economic recovery battled with concerns over the stalling price of oil. It fell to below US$30 a barrel, driving down the Canadian dollar, which dropped to 70.68 cents U.S. in late afternoon trading. The tech-heavy Nasdaq fared comparatively well, up 0.51 per cent at close, after online dating firm Match Group reported a “noticeable increase” in user activity and Netflix continued its rally. 

Wednesday was another day of near-universal negative macroeconomic indicators, with European Union officials predicting a “recession of historic proportions” and a growing number of temporary layoffs in the U.S. turning permanent. More people are trying to ride the volatile stock market, with finance apps seeing a 55 per cent increase in usage time; Schwab, Fidelity, E*Trade and TD Ameritrade reported record numbers of new users. Bitcoin is also surging, up to above US$9,000 from about US$6,000 a month ago. Single mothers and their children are among the most financially vulnerable during a brief period of joblessness, with 56 per cent at risk of not being able to make ends meet, according to Statistics Canada. When faced with two months without work and no government transfers, the most financially vulnerable families include those whose main income earner is under 35, an Indigenous person or a recent immigrant. The data comes ahead of Friday’s labour-force report, which is widely anticipated to show record-setting job losses, and as some people reach the midpoint of the 16-week period during which they receive the Canada Emergency Response Benefit (CERB) meant to offset lost income during the pandemic. At least 540,000 workers risk losing the CERB if they refuse to go back to their high-risk jobs as restrictions are lifted, according to an analysis by the Canadian Centre for Policy Alternatives.

Not on the market: Investment bankers and asset managers say there’s demand for more software stocks on Canadian public markets, but the COVID-19 pandemic could hold up promising startups’ plans to list for at least a few months. Volatile performance, the outbreak’s economic effects and the success of one of last year’s listings could encourage smaller offerings, and keep larger firms private for longer.

“How strange is tourism? In one year, you start to have concerns about how to manage so many tourists. And within a couple of months you have zero tours”: The ancient city of Petra, Jordan’s best-known tourist destination, remains closed, threatening the livelihoods of hundreds of thousands of local workers.

Trace me on my cellphone: Alberta’s contact-tracing app, ABTraceTogether, has been downloaded by more than 124,050 registered users, which amounts to less than three per cent of the province’s population of around 4.4 million. The province has not specified how many downloads would be needed for the app to be effective; an instructional video explains, “The more people who use the app, the safer everyone will be.” Dr. Deena Hinshaw, the province’s top medical officer, said Apple is fixing an aspect of the app’s software. B.C is examining Alberta’s app. 

Users of North and South Dakota’s contact-tracing app say it isn’t recording their locations properly. India is defending its app against criticism from privacy experts, claiming it was purposely designed to continuously collect a user’s location data in 15-minute intervals. Residents of one Indian city have been told they could face a fine or jail time if they don’t download the app. The U.K. has asked a team of Swiss software developers to “investigate” changing its app to the Apple-Google model. PwC has developed its own contact-tracing tool, which is currently being tested in its Shanghai office.

In the lab: Gilead Sciences is negotiating long-term voluntary licences with several generic drugmakers in India and Pakistan, looking to produce the potential COVID-19 drug remdesivir in Asia and Europe through 2022. Here’s how that could work. Experts say that the assumption a vaccine could be ready this year is unrealistic.

Cross-country checkup: Some teachers in Prince George, B.C. will return to work on May 11. School boards in the rest of the province are still drafting plans for when and how to reopen. Canada’s chief public health officer Dr. Theresa Tam said the spread of COVID-19 is slowing overall in the country, despite the number of deaths exceeding the projected 3,883 by May 5. Most of the 4,100-some deaths have been in long-term care facilities, 13 of which—mostly in the Montreal area—are now getting help from Canadian Armed Forces. The country is on track to run its millionth test for the virus within the next day, but Tam said Canada is still behind its daily target. New Brunswick reported its first new positive case since April 18. Manitoba public health officials are investigating a cluster of COVID-19 cases linked to an undisclosed workplace in the province. 

Bay Street to Main Street: Suncor CEO Mark Little predicted the Canadian energy sector won’t fully recover until at least 2022. The Calgary-based firm reported a first-quarter net loss of $3.5 billion and cut its dividend for the first time in 18 years. Suncor expects to get through the crisis and break even by 2021, but it’s only doing so by making a series of deep cuts, including $1 billion in operating costs and $1.9 billion from its capital spending plan. WestJet Airlines’ plan to make it through the pandemic also relies on austerity. CEO Ed Sims is predicting air travel demand, particularly for domestic travel, will recover in the fourth quarter of 2020, but that international travel will take longer. It was burning through about $25 million a day at the beginning of March, but is doing slightly better since, due to Ottawa’s 75 per cent wage subsidy. Sims said getting that subsidy extended past June is his top priority right now, and even if that comes through, his firm is looking at a bumpy ride. “We might not be our previous size for a long time, if ever,” said Sims. “We just might not get back there.”

  • Small businesses nationwide are receiving eviction warnings as many landlords say they won’t apply to the government’s rent relief program, which they say is flawed and unclear. Three in 10 qualifying entrepreneurs aren’t sure their landlord will participate in the program, according to a survey by the Canadian Federation of Independent Business.
  • Sun Life Financial, Canada’s second-largest insurer, reported a sharp first-quarter profit decline and warned that the insurance industry will be impacted by coronavirus for the rest of the year.
  • The Competition Bureau is warning businesses that falsely claim they can prevent or treat COVID-19 that they could face fines or jail time. 
  • Toronto startup Doorr, which provides a platform for digital mortgage approvals, raised $1.75 million in seed funding. 
  • Long-term lender Private Debt Partners, which intends to raise $750 million to back businesses rebuilding post-pandemic, launched today. The firm, founded by three Bay Street veterans, will lend between $10 million and $50 million to firms with 100 to 500 employees. 
  • Barrick Gold reported an almost 55 per cent rise in quarterly profit, and is looking to buy up copper and gold mines as investors rush to the safe haven of precious metals amid stock market volatility. 

Crowdsourcing the crisis: Think Research, a Canadian health-technology company, has created “Covid Trials Canada,” a hub for Canadians who have been infected with or recovered from the coronavirus to register to be part of active clinical trials across the country.  

Postcard from Edmonton: Majeda Fyith is used to having Ramadan, the Islamic month of fasting, be a certain way: big family meals, packed prayers, gift exchanges. “It’s quiet, much quieter than we’re used to,” she said. “There’s not that same sense of community with [COVID-19] going on.” Fyith is a senior HR adviser for Alberta Health Services, but is currently on maternity leave with her 14-month-old son and four-year-old daughter. With Ramadan almost halfway through, Fyith has had to be creative to recreate the communal Ramadan she grew up with for her children in a time of social distancing. She partnered with Saleme Fayad, a longtime friend who lives in London, Ont, to create Iftar From Afar, an Instagram page incentivizing people to drop food off on the porches and doorsteps of family members and share the act. “It’s a very small attempt to keep connected and have iftar done in a unique way in our unique circumstances,” Fyith said. 

Fyith has done this by supporting local restaurants around Edmonton that are trying to do more deliveries. Local Italian eatery Cafe Amore, for example, has created a “pay it forward” care package with all the ingredients needed to make fresh pasta, and let Fyith include a personalized message that explains her initiative. Sometimes, Fyith will make the food herself: oatmeal cookies (her mother’s recipe), with help from her daughter. “We ordered Amazon boxes that she decorated,” she said. In return, she has received many desserts, including homemade donuts with strawberries and whipped cream from her aunts. After a delivery, she’ll find time to Zoom or FaceTime with people: “This way, there’s something there to lift people’s spirits.”

Drinking from the firehose: Uber is laying off 14 per cent of its workforce, about 3,700 staff, as a precipitous drop in riders hamstrings the company. CEO Dara Khosrowshahi will forgo his pay for the rest of the year, as the company prepares to spend about US$20 million on severance packages and other benefits for ex-employees, according to a U.S. Securities and Exchange Commission filing. A spokesperson for Uber told The Logic the layoffs will affect employees across 46 countries, but would not say whether they would hit the firm’s Canadian workforce. 

Uber is the latest firm in the on-demand economy to announce deep cuts to its workforce as the COVID-19 pandemic wholly disrupts their business models. On Tuesday, Airbnb said it was laying off 25 per cent of its employees, citing revenue declines as travelling grinds to a halt, and Uber rival Lyft laid off 17 per cent of its staff in late April. The pandemic adds to challenges Uber was already facing around profitability. The firm’s stock saw steep declines in the months following its May 2019 IPO, and the last year has been punctuated by smaller layoffs and hiring freezes in both the U.S. and Canada. 

  • U.K. online grocer Ocado posted a 40 per cent quarterly jump in revenue; the firm is nonetheless suspending its annual guidance, citing lingering uncertainty around how the pandemic will affect consumer behaviour. Its first automated North American warehouse, a partnership with Sobeys, opened last week.
  • Fitbit pitched the U.S. government on how its devices could be used to track COVID-19 symptoms. 
  • Beyond Meat reported a 141 per cent rise in quarterly revenue, but expects growth to slow in the next quarter amid prolonged restaurant closures.
  • Disney’s earnings per share dropped by more than half in its first quarter, posting US$1.4 billion in lost profit, US$1 billion of which came from losses in its theme-park business. 
  • The intellectual property unit of U.S. Immigration and Customs Enforcement is working with Amazon, Pfizer and 3M to identify suspicious shipments of personal protective equipment and to remove online listings of counterfeit items.
  • Companies around the world spent an average of 34 per cent more on cloud computing in the first quarter compared to the same period last year. 
  • A 5,000-ton cheese surplus in France could be left to rot as restaurant closures and a slowdown in international trade has created a 60 per cent drop in sales. 

The grand reopening: Several Asia-Pacific regions are aiming to ease their lockdowns and kickstart their economies in the coming days, including South Korea, Australia and Hong Kong. Germany is easing some more restrictions—including allowing people from two households to meet and for professional soccer to resume—while extending social-distancing measures to June 5. Spain extended its state of emergency by two weeks. Denmark will allow malls and restaurants to open Monday—the second phase of its reopening plan. British Prime Minister Boris Johnson said some restrictions could be eased on Monday. Russia, which reported 10,000 new daily increases for the fourth consecutive day, plans to ease restrictions in three stages, starting with allowing people to go for walks outside. Taiwan is keeping its borders shut despite successfully curbing the virus. Students in Wuhan, the Chinese city where the pandemic began, returned to school for the first time: they wore masks, walked in single file past thermal scanners and sat at individual desks spaced 3.3 feet apart.

Around the world: U.K. Chancellor Rishi Sunak is planning to “wean” businesses and workers off the government furlough by cutting wage subsidies to 60 per cent, with employers encouraged to make up the difference. The scheme has paid 6.3 million workers at a cost of £8 billion. Here’s a guide to how the program works.

The pandemic is outlasting the 10 weeks of relief for which the U.S. stimulus package was planned. The hardest-hit U.S. states are receiving a smaller proportion of emergency small-business loans. U.S. President Donald Trump has reversed plans to wind down the White House coronavirus task force, saying the group will “continue on indefinitely” and focus on plans for reopening the economy. The IRS sent coronavirus relief payments to dead people. Eric Schmidt, the former Google chief executive, will chair a 15-member panel to “re-imagine New York,” unveiled today by Governor Andrew Cuomo; it will focus on subjects like telemedicine, remote learning and broadband. Cuomo has also partnered with the Bill & Melinda Gates Foundation to reimagine the school system. France announced a stimulus package for artists and filmmakers. Hundreds of Indian police have tested positive for the coronavirus. More than five per cent of the 323,000 foreign workers living in dormitories in Singapore have tested positive. Saudi Arabia will fine and imprison those found breaching quarantine rules. 

“Thank you for taking my letters and delivering them”: Emerson Weber, an 11-year-old in Sioux Falls, S.D., has started writing letters to postal service workers working in isolation across the country, and they’re writing back. 

* We’re emphasizing new cases, rather than running totals, because “flattening the curve” is when each day’s new cases are fewer than those of the previous day. The percentage increase is determined based on how today’s cases compare to a rolling seven-day prior average. Numbers may also vary based on countries’ individual testing capacity and reporting.

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