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A look at North American equities heading in both directions

On the rise

Thinkific Labs Inc. (THNC-T) surged 13 per cent a day after it announced its second mass layoff of the past year, as the Toronto Stock Exchange-listed software company committed to reach operating profitability by the end of 2023.

The Vancouver-based firm, which provides an online platform for entrepreneurs and businesses to create and run online courses, said it was cutting 76 employees, or 21 per cent of its workforce. It affirmed its guidance for last year’s fourth-quarter revenue of around US$13.6-million and an adjusted operating loss of between US$5.1-million and US$5.7-million. The company reports year-end results on Feb. 22.

CEO and co-founder Greg Smith said in an interview the job cuts – which followed a 100-person layoff announced in late March, 2022 – are “fundamentally about achieving profitability and being responsible with our cash. We can very much make growth our absolute priority without distraction of constant cost cutting. This is the responsible decision we’ve made.”

Thinkific was one of an unprecedented crop of 20 Canadian technology companies that went public on the TSX during a 20-month stretch earlier in the pandemic, from July, 2020 to the end of 2021. Investor demand soared for digital companies, particularly those that were set to benefit from people sheltering at home, and Thinkific attracted $1-billion for orders when it set out to raise $160-million in its spring 2021 IPO. It went public at $13 a share that April and closed up 20 per cent on its first trading day, topping a $1-billion valuation.

- Sean Silcoff

Vancouver-based West Fraser Timber Co. Ltd. (WFG-T) erased early losses and finished 1.7 per cent higher after announcing late Tuesday it will indefinitely curtail its Perry Sawmill in Florida later this month due to high fibre costs and softening lumber markets.

The Vancouver-based company said in a press release that the indefinite curtailment will affect around 126 employees.

However, West Fraser says it will try to mitigate the effect on workers by providing work opportunities at other West Fraser operations.

It says the curtailment will reduce the company’s U.S. lumber production by 100 million board feet.

The company says high fibre costs and a low-price commodity environment have impaired its ability to operate the sawmill profitably.

It says it anticipates an impairment charge in the fourth quarter of 2022 associated with the curtailment.

Teck Resources Ltd. (TECK.B-T) rose after the Environment and Climate Change Canada announced subsidiary Teck Metals Ltd. has been ordered to pay $2.2-million in federal and provincial fines for an effluent spill into the Columbia River.

The government department says in a release that Teck earlier pleaded guilty to two charges laid under the federal Fisheries Act and one charge under British Columbia’s Environmental Management Act.

The charges stem from a February 2019 release of effluent into the Columbia River, which the government says was caused by a leak from the company’s fertilizer operations in Warfield, B.C.

The government says the low-pH effluent was harmful to fish.

Environment and Climate Change Canada investigated the spill and found that the 2.5-million-litre discharge resulted from numerous operational errors.

They say that Teck will be added to the Environmental Offenders Registry and the federal fine of $2-million will go to the government’s Environmental Damages Fund.

First Quantum Minerals Ltd. (FM-T) turned positive late in the trading day after Panama slammed it for allegedly misrepresenting the tenor of their talks, saying claims of progress made in recent weeks “do not reflect the reality of the situation.”

First Quantum and Panama had toiled for more than a year before talks broke down last month, with president Laurentino Cortizo ordering the giant Cobre Panama mine in the country to shut down.

Talks picked up again around Christmas, and First Quantum CEO Tristan Pascall in a conference call on Tuesday gave the impression that an agreement was within reach.

He said that there were not that many issues to fix, and that significant progress had been made in recent weeks.

“I don’t think we’re very far away,” Mr. Pascall said of the overall status of the talks.

But Panama’s Ministry of Commerce and Industries said in a statement that the two are nowhere near an agreement, further apart than ever

- Niall McGee

Tesla Inc. (TSLA-Q) was up on news it has applied to expand its gigafactory in Texas with an investment totaling US$775.7-million, government filings showed, marking one of its largest expansion drives since setting up the US$5.5-billion gigafactory in Germany last year.

On Wednesday before the bell, Bloomberg reported Tesla is also nearing a preliminary deal to build production facilities in Indonesia with a capacity of one million units.

The country’s investment minister confirmed talks with the world’s most valuable automaker, the report added.

It plans to add five new facilities at its Austin site, including a cell test lab and a unit named “Cathode,” according to the company’s filings on the Texas state department of licensing’s website on Monday and Tuesday.

The Austin expansion comes days after Reuters reported that Tesla promoted its China chief Tom Zhu to take direct oversight of the carmaker’s U.S. assembly plants as well as sales operations in North America and Europe.

The world’s most valuable automaker has been facing COVID-driven production and logistics snags at its key Shanghai hub, coupled with growing demand concerns.

Tesla’s fourth-quarter deliveries fell short of market estimates. The company is also running a reduced production schedule at its Shanghai plant through January, extending the reduced output it began in December, Reuters has reported.

The company is expected to host its investor day on March 1 at the Austin facility and will likely disclose plans for expansion and capital allocation.

Tesla also has a gigafactory in Nevada, and a production facility in Fremont, California.

Shares of Bed Bath & Beyond (BBBY-Q), popular among retail traders, jumped on Wednesday and extend their rebound from multi-decade lows hit last week following news of the company’s plans to seek bankruptcy protection.

Other popular stocks among retail traders also rose on Wednesday, with GameStop (GME-N) and AMC Entertainment (AMC-N) see gains.

Struggling U.S. home goods retailer Bed Bath & Beyond on Tuesday reported a much wider-than-expected quarterly loss and said it would lay off more employees in an attempt to reduce costs, days after it said it was exploring options including bankruptcy.

The potential bankruptcy news sent the company’s shares to their lowest level since early 1990s at US$1.27 on Friday.

“Speculation (that) Bed Bath & Beyond could be an M&A target for an opportunistic buyer, combined with its cost cutting measures have helped support the stock,” said Victoria Scholar, head of investment at Interactive Investor.

“However, the risk of bankruptcy remains and the stock is still down 60 per cent over the last 6 months.”

The company’s shares were among the top three most traded stocks on Fidelity’s retail platform on Tuesday.

Shares of U.S. airlines, such as United Airlines Holdings Corp. (UAL-Q), Delta Airlines Inc. (DAL-N) and American Airlines Group Inc. (AAL-Q), were not punished as a computer outage at the Federal Aviation Administration brought flights to a standstill across the U.S. early Wednesday, with thousands of delays quickly cascading through the system at airports nationwide.

Air Canada (AC-T), the foreign carrier with the most flights into the United States, was also higher despite saying its transborder operations would be affected by a U.S. system outage on Wednesday, but it was too early to determine the full impact.

Canada’s largest carrier said on Wednesday it will put in place a “goodwill policy” for affected customers to change their travel plans, after the Federal Aviation Administration (FAA) scrambled to fix a system outage overnight that forced a halt to all U.S. departing flights.

The world’s largest aircraft fleet was grounded for hours by a cascading outage in a government system that delayed or cancelled thousands of flights across the U.S. before it was lifted Wednesday morning.

The White House initially said that there was no evidence of a cyberattack behind the outage that ruined travel plans for millions of passengers. President Joe Biden said Wednesday morning that he’s directed the Department of Transportation to investigate.

Whatever the cause, the outage showed the world how dependent its largest economy is on air travel, and how dependent air travel is on an antiquated computer system called the Notice to Air Missions System, or NOTAM.

Before commencing a flight, pilots are required to consult NOTAMs, which list potential adverse impacts on flights, from runway construction to the potential for icing. The system used to be telephone-based, with pilots calling dedicated flight service stations for the information, but has moved online.

Nearly 5,000 flights were delayed and almost 900 had been cancelled by around 10 a.m.

Wells Fargo (WFC-N) gained 1 per cent after it said on Tuesday the bank would exit the correspondent business and reduce the size of its servicing portfolio to sharpen its focus on the mortgage business.

Mortgage lenders like Wells Fargo saw demand for mortgages and refinancing weaken as interest rates climbed and buying homes became costlier.

As a result, the fourth-largest U.S. lender cut thousands of jobs in the mortgage unit across the country last year after an aggressive expansion during the pandemic.

“We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus,” said Kleber Santos, chief executive officer of consumer lending.

The reorganization comes three days before the bank’s fourth-quarter results. Analysts expect Wells Fargo to report a lower profit of 62 US cents a share for the three months ended Dec. 31, compared to US$1.25 a year ago, according to data from Refinitiv.

The lender also plans to invest an additional US$100-million to advance racial equity in home ownership, it said.

On the decline

Shares of Barrick Gold Corp. (ABX-T) were lower after it said on Wednesday it signed new joint venture deals with Saudi Arabian Mining Co (Ma’aden), the Gulf’s largest miner, for two copper exploration projects.

The two prospective exploration projects would include the Jabal Sayid South and Umm Ad Damar license areas, the Canadian miner said.

The new JVs would expand Barrick’s exploration footprint in Saudi Arabia and open up potential synergies with the neighboring Jabal Sayid mine, an existing 50/50 JV between Barrick and Ma’aden.

The Jabal Sayid copper operation is located 350 km north-east of Jeddah, and the first shipment of copper concentrate occurred in December 2015, Barrick said.

The deals come at a time when demand for copper, considered an economic bellwether, is expected to grow because of the metal’s central role in energy transition.

Asset manager BlackRock Inc. (BLK-N) dipped on a report it is cutting up to 500 jobs.

he world’s largest asset manager had 19,900 employees as of Sept. 30, according to a filing with the U.S. Securities and Exchange Commission.

Earlier in the day, Goldman Sachs (GS-N) also began laying off staff in a sweeping cost-cutting drive, a source familiar with the matter told Reuters.

The Insider report comes a month after BlackRock Chief Financial Officer Gary Shedlin said the firm was freezing most hiring and reducing expenses due to short-term performance challenges.

The company is expected to post a 22.4-per-cent drop in fourth-quarter profit to $8.09 per share when it reports results on Friday, according to Refinitiv estimates.

New York-based BlackRock will be notifying staff on Wednesday about whether they were going to be laid off, after its human resources department alerted employees’ managers on Tuesday, the report said.

With files from staff and wires

Follow David Leeder on Twitter: @daveleederOpens in a new window

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