A roundup of some of the North American equities making moves in both directions today
On the rise
Tesla Inc. (TSLA-Q) climbed almost 11 per cent after shedding about US$80-billion of its market capitalization in the previous session following its surprise exclusion from the S&P 500.
The decision by S&P Dow Jones Indices is a blow to Tesla investors who widely expected the company to join the benchmark stock index after a blockbuster quarterly report in July cleared a major hurdle for its potential inclusion.
S&P Dow Jones Indices said in a statement it was adding online craft seller Etsy Inc. (ETSY-Q), semiconductor equipment maker Teradyne (TER-Q) and pharmaceutical technology company Catalent (CTLT-N) to the S&P 500, effective Sept. 21, and removing H&R Block (HRB-N), Coty (COTY-N) and Kohls (KSS-N).
The clinical stage immuno-oncology company, which is focused on developing therapies for the treatment of cancer, agreed to sell 2.3 million of its common shares at a price of $10.88 per share to the U.S. giant.
Trillium said it intends to use the net proceeds of the offering “to help fund its ongoing and planned clinical trials for its CD47 program, and for working capital and general corporate purposes.”
COO David Spyker was named interim CEO.
In a research note, Raymond James analyst Jeremy McCrea said: “While ‘effective immediately’ language is never very comforting, especially since no specific reason for the departure was listed in the press release, we wouldn’t be surprised that this announcement could cause some near-term weakness. That said, conversations with the other management point to a ‘change in long-term strategy’ as the reason for the change (vs. misappropriation as can sometimes be the case with vague press releases). In terms of long-term strategy, we potentially see either a possible separation from Rife Resources and the management structure, more M&A potentially and also greater ‘marketing’ of the company.While investors will no doubt want more clarity surrounding the reason for the departure (and ultimately the new long-term strategy), we believe the immediate direction or fundamentals of the Company have not been negatively changed.”
Hudbay Minerals Inc. (HBM-T) gained 3.3 per cent in the wake of announcing that it is offering US$500-million aggregate principal amount of senior notes. It said the interest rate and other terms of the new notes will be determined at pricing and are dependent upon market conditions and other factors.
Hudbay said it plans to use the net proceeds from the offering of the new notes to refinance all of its outstanding US$400-million aggregate principal amount of 7.25 per cent senior notes due 2023, as well as to pay any related premium, costs and expenses and for general corporate purposes.
“Kurt brings to Cronos Group more than three decades of experience leading and growing renowned global consumer packaged goods companies and their brands, including at Blue Buffalo Company Ltd., Nestlé S.A., Gerber and Kraft Foods,” it stated.
The company also announced that Mike Gorenstein has been appointed executive chairman after serving as chairman, president and CEO of Cronos Group since 2016.
On the decline
Yogawear maker Lululemon Athletica Inc. (LULU-Q) said late Tuesday it was “cautiously optimistic” about the holiday season and forecast current-quarter adjusted profit to fall as much as 20 per cent due to higher marketing expenses.
The company’s shares, which have risen more than 50 per cent this year, were down about 7.5 per cent.
Lululemon said it would ramp up marketing spending on Mirror, the at-home fitness company it bought for US$500-million earlier this year, to capitalize on booming demand for home workout classes spurred by the coronavirus and the opportunity to drive business during the holiday season.
The investment in Mirror, which is expected to generate US$150-million in 2020 revenue, comes at a time the yogawear maker was forced to halt its in-store yoga and fitness classes, a key marketing strategy that had brought in more shoppers to stores.
Lululemon said it was preparing for a number of scenarios and pulled forward its investments in the digital channel as the busy holiday season approaches.
“Our starting point is that the environment remains uncertain. COVID is not yet contained in many of the markets where we operate,” Chief Executive Officer Calvin McDonald told analysts.
Husky Energy Inc. (HSE-T) was down 1.3 per cent after it said on Wednesday it would undertake a review of its West White Rose Project in the country’s Atlantic region, following suspension of major construction in March due to the coronavirus outbreak.
A full review of the scope, schedule and cost of the project is critical, given the minimum one-year delay to first oil caused by the COVID-19 pandemic, the company said.
“Unfortunately, the delay caused by COVID-19 and continued market uncertainty leaves us no choice but to undertake a full review of the project and, by extension, our future operations in Atlantic Canada,” Chief Executive Officer Rob Peabody said in a statement.
The project is 60 per cent complete but all major construction remains on hold while the company determines a way forward, Husky added.
Husky, which is the operator of the field located off the coast of Newfoundland and Labrador, had approved the $2.2-billion project in 2017 after long delays.
The Montreal-based company said a total of 11,650,000 subordinate voting shares will be offered for sale under the offering. It will be priced in the context of the market with the price and total size of the offering to be determined at the time of entering into an underwriting agreement for the offering.
United Airlines Holdings (UAL-Q) slid 3.4 per cent in the wake of forecasting a bigger drop in third-quarter passenger revenue than its own expectations and saying it would look to cancel more flights until it sees a recovery in air travel.
United said it now expects an 85-per-cent drop in passenger revenue, a closely watched performance measure in the airline industry, down from its previous estimate of 83 per cent year-over-year.
The No.3 U.S. airline also expects third-quarter capacity to decrease about 70 per cent year-over-year, compared with its prior forecast of 65 per cent, despite seeing a moderate improvement in bookings for leisure travel in the United States and certain short-haul destinations in Latin America and the Caribbean in the two ended Sept. 7.
U.S. airlines have collectively been bleeding about US$5-billion a month as 30 per cent of the planes remain parked amidst the coronavirus pandemic that prompted passengers to cancel their flights and seek refunds rather than book new travel.
Delta Air Lines Inc. (DAL-N) declined 2.4 per cent after its chief financial officer said it has seen a moderate improvement in demand but continues to burn through around US$27-million of cash each day and warned that any COVID-19 vaccination process could take between six and 12 months.
“Vaccines don’t end pandemics, vaccinations do,” CFO Paul Jacobson said at the Cowen 2020 Global Transportation & Sustainable Mobility Conference on Wednesday, adding that the airline’s post-crisis focus would be on reducing debt.
Shares of U.S. jeweler Tiffany & Co. (TIF-N) fell almost 6.5 per cent after French luxury goods giant LVMH said it would walk away from its planned US$16-billion takeover in the most high-profile example of a deal to face collapse following the COVID-19 pandemic.
The stage is set for an acrimonious dispute; Tiffany said it was filing a lawsuit against LVMH to force it to complete the deal as agreed last year, accusing the French group of deliberately stalling completion of the takeover.
The deal, which would have been the biggest-ever in the luxury industry, was struck before the pandemic, which has hit the sector hard and raised questions about whether LVMH was overpaying.
LVMH said in a statement that its board had received a letter from the French foreign ministry asking it to delay the acquisition of Tiffany to beyond Jan. 6, 2021 given the threat of additional U.S. tariffs against French products.
The French group added that Tiffany had also asked it to postpone the closing of the deal to Dec. 31 of this year from an already extended deadline of Nov. 24.
The company said its board had decided to stick to the terms of the original merger agreement, which states that the deal must be completed by Nov. 24.
Slack Technologies Inc.’s (WORK-N) billing growth, a key indicator of future revenue, slowed in the second quarter and the workplace messaging app owner said it took a US$11-million hit in the first half due to the COVID-19 related concessions.
The company said it offered credits, payment in installments and billing duration of less than a year to help users tide over the economic downturn triggered by the health crisis, sending its shares down 13.9 per cent on Wednesday.
Slack had in the previous quarter signaled weak demand from worst-affected industries like retail and travel, prompting it to withdraw its full-year billings target.
“In Q2, growth in many of our customers contracted or flattened versus normal seasonal trends. In August, growth began to trend at more typical seasonal levels,” Chief Financial Officer Allen Shim said in a call with analysts.
Slack’s quarterly billings rose 25 per cent, but it fell short of the 38-per-cent growth it posted in the first quarter. Billings are an important metric for growth for a subscription-based platform like Slack.
With files from Brenda Bouw, staff and wires