A roundup of some of the North American equities making moves in both directions today
On the rise
Shopify Inc. (SHOP-T) soared in afternoon trading after Alphabet Inc. (GOOGL-Q, GOOG-Q) announced it is introducing a new, simplified process that helps the Ottawa-based company’s 1.7 million merchants “feature their products across Google in just a few clicks.”
“This new collaboration with Shopify will enable merchants to become discoverable to high-intent consumers across Google Search, Shopping, YouTube, Google Images and more,” said Bill Ready, Alphabet’s President of Commerce and Payments.
Google on Tuesday unveiled updates across many services, including Maps and Docs, as the company showcases its role in a world that has become more digitally connected during the pandemic.
Google’s search, video-conferencing and other tools have been increasingly used in the past year as lockdowns and other pandemic restrictions forced people to shop and communicate online.
With in-person activities resuming, Google is out to make a case it can remain relevant and compete with services from Microsoft Corp, Apple Inc and others, including through features that foster hybrid working set-ups.
Chief Executive Sundar Pichai headlined a two-hour livestream on Tuesday as part of Google I/O, the company’s annual three-day developer conference. The forum was cancelled last year due to COVID-19 and has a mostly virtual audience this year.
Centerra Gold Inc. (CG-T) rose after Chief Executive Scott Perry said on Tuesday it is taking all measures possible to protect shareholder rights and is seeing good support from the Canadian and UK governments, a day after Kyrgyzstan seized control of the company’s Kumtor gold mine.
Kyrgyzstan’s parliament voted Monday to take over the gold mine, the country’s largest, after Centerra said it would take the government to an international court.
“Rest assured that we’re taking all measures possible to ensure that we’re protecting the rights of the organization and the rights of our shareholders,” Mr. Perry said on a conference call with analysts.
A Kyrgyzstan court this month imposed a $3.1-billion fine on Centerra’s Kumtor Gold Company after ruling that it had breached environmental laws by placing waste rock on glaciers. Centerra disputes the charges.
Walmart Inc. (WMT-N) raised its full-year earnings forecast after shoppers armed with government stimulus cheques ventured back into stores, driving demand that is expected to continue through the year as Covid-19 restrictions ease.
Shares in the world’s biggest retailer were up after it reported a strong quarterly sales beat and said it expects fiscal 2022 earnings to increase by high single digits. It had previously forecast a slight decline in profit for the year.
Walmart has had a bumper year bolstered by a big push into e-commerce and delivery. While this trend towards shopping online is expected to continue, people are also making their way back to brick-and-mortar stores as vaccinations become more widely available.
Visits to Walmart stores around the country grew by 21.7 per cent in April, according to data firm Placer.ai.
On Friday, Walmart began allowing fully-vaccinated people to shop without wearing masks, making it the first major retailer to walk back its mandatory mask policy.
“My optimism is higher than it was at the beginning of the year,” Chief Executive Officer Doug McMillon said on a post-earnings call. “In the U.S., economic stimulus is clearly having an impact, but we also see encouraging signs that our customers want to get out and shop.”
Walmart executives added that with savings rates at an all-time high, there will likely be enough appetite later this year to help sustain demand after the stimulus money dries up.
Shares of Amazon (AMZN-Q) were up following a report it is in talks to acquire the iconic U.S. movie studio MGM.
The status of Amazon’s discussions with MGM is unclear and it is possible no deal may result, the report from The Information said.
The movie studio behind the “James Bond” franchise, also owns the Epix cable channel and makes TV shows, including popular shows like The Handmaid’s Tale, Fargo, Vikings and Shark Tank.
Amazon declined to comment on the report, saying it “doesn’t comment on rumors or speculation”.
In December, Reuters reported that the movie studio was exploring a sale and had tapped investment banks Morgan Stanley and LionTree LLC and started a formal sale process.
Scion Asset Management said in a regulatory filing on Monday that it had bearish put options on 800,100 shares in Tesla as of the end of the first quarter that were worth US$534-million.
Put options give investors the right to sell shares at certain price in the future.
One of the investors profiled in the book The Big Short and the film of the same name for betting more than a billion dollars against the U.S. housing bubble, Mr. Burry has been skeptical of Tesla’s sky-high valuations.
On the decline
Canadian National Railway Co. (CNR-T) closed down after billionaire hedge fund manager Chris Hohn on Tuesday urging it to abandon its US$33.6-billion bid for Kansas City Southern (KSU-N) unless the railroad operator changed its agreement to drop a key feature that could invite more regulatory scrutiny.
Hohn’s TCI Fund Management, which has a 2.93-per-cent stake in CN, said the company should not go ahead with its plan to create a voting trust structure for the takeover.
“CN regularly engages with and welcomes constructive input from its shareholders. CN’s board believes its pro-competitive combination with Kansas City Southern is in the best interest of CN’s shareholders,” a spokesperson for CN in a statement.
CN and Canadian Pacific Railway are seeking to buy U.S. railroad Kansas City Southern to create a North American railway spanning the United States, Mexico and Canada.
Kansas City last week accepted CN’s US$33.6-billion acquisition offer, upending a US$29 billion-deal with Canadian Pacific.
“We think it is negligent and hugely irresponsible for the CN board to commit C$2 billion of shareholders’ money on whether the STB will approve the voting trust for the CN-KCS transaction,” TCI said in a letter to CN Chairman Robert Pace.
On Monday, U.S. regulators dealt CN a procedural blow.
The U.S. Surface Transportation Board rejected Canadian National’s plan to set up a voting trust that would acquire Kansas City Southern and own the railroad while regulators review the deal. The STB said it couldn’t review Canadian National’s plan now because it doesn’t include a detailed merger agreement.
Canadian National described the decision as a minor setback. It said it will now resubmit the plan along with the merger agreement it finalized last week.
Gran Tierra Energy Inc. (GTE-T) was lower after announcing it has temporarily reduced oil production at its operations in Columbia due to road blockages in the Putumayo Basin and the Middle Magdalena Valley Basin stemming from ongoing national protests.
“The protests initially did not impact the Colombian operations of Gran Tierra and other energy companies. However, in the last few days, blockades of key roads have started to cause the temporary shut-in of some oil wells and oil fields throughout Colombia and are now affecting almost all energy companies in the country,” it said in a release.
As of Sunday, the Calgary-based company has shut-in production of approximately 5,250 barrels of oil per day, leaving its total current production at approximately 24,350 bopd. Prior to the blockades, it was averaging about 29,600 bopd.
Home Depot Inc. (HD-N) on Tuesday reported a bigger-than-expected 31-per-cent jump in quarterly same-store sales, allaying concerns that the top U.S. home improvement chain would see pandemic-fueled demand easing as vaccinations gather steam.
The company’s stock closed down, adding to a nearly 33-per-cent gain from the last 12 months when sales surged due to stuck-at-home Americans spending more to upgrade their living spaces.
Home Depot also benefited from builders and contractors rushing back to stores to get through a backlog of projects put on pause during the pandemic, as well as consumer confidence in the strength of the U.S. housing market.
The median existing house price surged a record 17.2 per cent in March, while U.S. homebuilding jumped to nearly a 15-year high.
“Given the heady performance of last quarter it would have been tempting to say that Home Depot had reached its peak. However, as this morning’s numbers show, Home Depot is still climbing,” said Neil Saunders, managing director of GlobalData.
Mr. Saunders said a fresh round of government stimulus was “the icing on the cake” for the quarter, but warned this level of growth is unlikely to repeat in the second quarter as consumer spending turns to other activities such as travel.
Same-store sales growth was expected to slow in the first quarter to 19.9 per cent from 24.5 per cent in the prior three-month period, as more Americans get inoculated, virus restrictions ease and outdoor activities resume.
Overall net sales jumped 32.7 per cent to US$37.50-billion, beating estimates of US$34.96-billion, according to IBES data from Refinitiv.
The company’s net earnings of US$3.86 per share, topping estimates of US$3.08.
Shares of rival Lowe’s Cos Inc. (LOW-N), scheduled to report first-quarter results on Wednesday, were up.
Wells Fargo & Co. (WFC-N) was down on news Berkshire Hathaway Inc. (BRK.B-N, BRK.A-N) has sold nearly all of its holdings, as Warren Buffett abandoned a more than 31-year-old investment that had been among his most successful before the bank was felled by scandals for mistreating customers.
In a regulatory filing on Monday, Berkshire said it owned just US$26.4 -million of shares in the fourth-largest U.S. bank as of March 31, down from around US$32-billion in January 2018.
Berkshire began investing in San Francisco-based Wells Fargo in 1989, and spent at least US$12.7-billion on its shares, building a 10-per-cent stake.
The bank’s reputation was shattered by revelations that employees facing aggressive sales goals opened millions of unwanted accounts, charged unnecessary mortgage fees and forced drivers to buy car insurance they did not need.
The conduct grew out of Wells Fargo’s longstanding strategy of selling more products per customer, or cross-selling.
Buffett, who is Berkshire’s chief executive, told CNBC in February 2020 that Wells Fargo had a “dumb” incentive system and was slow to make things right.
“The big thing is they ignored it when they found out about it,” he said. “You absolutely have to attack a problem as soon as it occurs, and you know about it. And if that had happened, Wells Fargo shareholders would be a lot better off.”
Macy’s Inc. (M-N) raised its annual sales and profit forecasts, as speedy vaccinations encourage Americans to return to its stores to upgrade their wardrobes after being stuck at home for more than a year.
The New York-based retailer’s shares slid after a surprise first-quarter profit and comparable sales that beat Wall Street estimates.
“As the weather warms up and vaccines are more readily available, customers are feeling increasingly confident to get dressed up and venture outside. They’re also starting to attend events again,” Chief Executive Officer Jeff Gennette told analysts.
Consumers, flush with cash from additional stimulus, are also splurging on expensive fragrances, shoes, fine jewelry and dresses, Macy’s said, as pajamas and t-shirts give way to more formal wear.
With more Americans readying to travel as restrictions also ease, summer travel essentials including sandals, swimsuits and luggage are also in demand.
Macy’s forecast adjusted earnings per share between US$1.71 and US$2.12 for 2021, compared with its earlier outlook of 40 US cents to 90 US cents.
It expects sales between US$21.73-billion and US$22.23-billion, much higher than the US$19.75-billion to US$20.75 billion it forecast earlier.
“We don’t see this as a short-term pop. There are pent-up demand opportunities,” Mr. Gennette said.
For the first quarter, on an adjusted basis, it earned 39 US cents per share, compared with a loss of 41 US cents forecast by analysts.
China’s Baidu Inc. (BIDU-Q) erased early gains after it reported quarterly revenue that beat Wall Street estimates on Tuesday, as the company beefed up its cloud and artificial intelligence services to fend off competition in the advertising business.
The Beijing-based tech giant has diversified its revenue sources by expanding its cloud services, artificial intelligence, and smart transport technology footprint as competition for advertising sales heats up from local internet giants Alibaba and ByteDance.
The company, which obtained a secondary listing in Hong Kong in March, said total revenue rose 25 per cent to 28.13 billion yuan (US$4.38-billion) in the first quarter, boosted partly by the 70-per-cent year-on-year growth of its non-advertising revenue, which includes the fast-growing cloud business.
Analysts on average had expected revenue of 27.25 billion yuan, according to IBES data from Refinitiv.
Baidu’s online ad revenue hit 16.3 billion yuan, a 27-per-cent increase compared with the same period a year earlier, when Baidu swung to an operating loss due to Covid lockdowns in the country.
The company’s flagship mobile Baidu App accumulated 558 million monthly active users as of March.
Baidu’s results also come amid a regulatory clampdown on China’s internet giants to keep a check on the country’s big techs’ monopolistic practices.
With files from staff and wires