Home Business Shopify 70% plunge almost single-handedly dragged the TSX into the red

Shopify 70% plunge almost single-handedly dragged the TSX into the red

4 min read
Comments Off on Shopify 70% plunge almost single-handedly dragged the TSX into the red
0
26


Article content

Shopify Inc.’s 70 per cent plunge has almost single-handedly dragged the Canadian stock market into the red this year, taking the shine off what would otherwise be one of the world’s top-performing major equity benchmarks.

Article content

The e-commerce software provider has lost $161 billion in market value in 2022, causing a 978-point drag on the S&P/TSX composite index. Without it, the index would be down less than two per cent in Canadian dollars this year, rather than six per cent.

Article content

Shopify was down 0.2 per cent to $52.52 at 9:35 a.m. in Toronto on Monday. It ended last week on a six-day losing streak.

It’s not the first time a single tech stock has been a huge anchor on the key Canadian index. Nortel Networks Corp.’s collapse was a 353-point drag in 2001, the index’s inaugural year. BlackBerry Ltd., then called Research in Motion Ltd., was the S&P/TSX composite’s biggest negative contributor in 2008, pulling the index down more than 300 points.

Despite Shopify, Canadian stocks have outperformed the S&P 500 Index by more than 11 percentage points this year. Unlike some equity gauges in Europe and the United States, the S&P/TSX composite did not enter an official bear market this year: its peak-to-trough decline was 17.6 per cent.

Article content

For longer-term holders of index funds, Shopify has had a less meaningful impact. The stock has had almost no influence on the benchmark over a three-year period, as this year’s losses have essentially given back two years of big gains. The S&P/TSX composite is up 17.7 per cent over three years, with banks, commodities and railways having the biggest upside impact.

Some investors see the S&P/TSX composite outpacing the S&P 500 as long as higher rates continue to pressure technology shares.

“With Shopify being a smaller component, there’ll be more room to continue to outperform as long as we’re in a tightening cycle with rising interest rates,” Martin Pelletier, senior portfolio manager at TriVest Wealth Counsel Ltd., said

Bloomberg.com

If you liked this story, sign up for more in the FP Investor newsletter.



Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

Police Arrest Owner of South Florida Vac-Con Service For Second Time; Issue Civil Citations Totaling $10,500, Vehicle Seized

According to authorities, 51 year-old Julio Barreto, who approximately 7 months ago, repea…