Shopify replaced by RBC as most valuable company on weakened tech sector

·4 min read

TORONTO — Shopify Inc. lost its crown as Canada's most valuable company as its total market capitalization from all classes of shares fell below Royal Bank amid the continued pullback by the technology sector.

The Ottawa-based tech company moved to the top position last May as its share price began a phenomenal run, quadrupling its value. However, the shares have plunged nearly 30 per cent since their peak of $1,900.58 on Feb. 10.

Shopify's total value ended Thursday at $164.1 billion as its shares dropped 3.8 per cent to $1,337.52. Meanwhile, Royal Bank moved up to $165.7 billion after its shares inched up 0.29 per cent to $116.29.

The market value of Shopify's listed shares dipped below the value of Canada's largest bank earlier this month but has since fallen nearly nine per cent lower. Thursday's move reflects the total value of all classes of Shopify's shares.

The reversal in positions for the two companies is an indicator of the general market movement in the first three months of 2021, said Michael Currie, vice-president and investment adviser at TD Wealth.

"What we've really seen basically all of 2020 was the growth stocks did fantastic, the value stocks did nothing. And what we're seeing at the start of this year is almost just the opposite," he said in an interview.

High-valuation names like Shopify are declining the most whereas undervalued companies are enjoying nice increases amid a repositioning by investors.

Canada's tech sector was the biggest laggard on the day, joining materials lower.

Materials dropped on weakened metals prices as shares of Lundin Mining Corp. lost 4.6 per cent while Teck Resources Ltd. was down 2.6 per cent and First Quantum Minerals Ltd. decreased 2.2 per cent.

The April gold contract was down US$8.10 at US$1,725.10 an ounce and the May copper contract was down 8.6 cents at US$3.98 a pound.

Energy recovered some of its early losses to move higher on the day even though crude oil prices fell to partially offset Wednesday's big gain.

The May crude oil contract was down US$2.62 or 4.7 per cent at US$58.56 per barrel and the May natural gas contract was up 4.8 cents at nearly US$2.62 per mmBTU.

Shares of Canadian Natural Resources Ltd. increased 1.6 per cent.

Crude oil price decreases reflected demand concerns as COVID-19 infections rose in Europe and India, offsetting the boost received a day earlier from the grounding of a ship in the Suez Canal.

The day started with good economic data as the number of first-time U.S. unemployment claims dropped to 684,000 and GDP increased to 4.3 per cent in the final three months of 2020.

"By any measure strong numbers from both of those, but still a ways to go before we see the full recovery," said Currie.

Markets then fell after Federal Reserve chairman Jerome Powell hinted in an interview that one day he was going to start removing monetary stimulus.

"Everyone knows one day it will happen, but I guess that got people a little spooked," Currie said, pointing to the Dow dropping by nearly 350 points before recovering.

"I guess buyers are coming back into the market and taking advantage of a dip here."

The S&P/TSX composite index closed up 22.81 points at 18,651.10.

In New York, the Dow Jones industrial average climbed 199.42 points to 32,619.48. The S&P 500 index was up 20.38 points at 3,909.52, while the Nasdaq composite was up 15.79 points at 12,977.68.

Health care led the nine major sectors that moved higher on the TSX.

Consumer discretionary got a boost from BRP Inc., whose shares gained 3.3 per cent after reporting a strong quarter.

The heavyweight financials sector increased 0.6 per cent with the Bank of Montreal increasing 1.5 per cent.

The Canadian dollar traded for 79.33 cents US compared with 79.61 cents US on Wednesday.

This report by The Canadian Press was first published March 25, 2021.

Companies in this story: (TSX:RY, TSX:SHOP, TSX:DOO, TSX:CNQ, TSX:BMO, TSX:LUN, TSX:TECK.B, TSX:FM, TSX:GSPTSE, TSX:CADUSD

Ross Marowits, The Canadian Press