👀 Cineplex crashing, Shopify bigger than RBC & faster than Amazon

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Crazy developments are happening in Canada with Cineplex falling steeply and Shopify becoming bigger than the Canadian Banks. Here’s what might happen next.

Cineplex stock is seeing a steep decline in its stock. Currently, the company is at $8, which is a 77% drop from its most recent peak. It was once a company worth $3B at its all time highs in 2017 and now it's at $500M. Prior to the COVID-19 shutdown, the company was in process of being acquired by Cineworld, a UK-based theatre. They offered to buy Cineplex at $34 per share but that deal has long faded away since social distancing rules came into play immensely hurting the operations of both companies. Adding to pains is that Cineplex is expecting financial issues in the future with paying down debts due to so many months of being on pause, and theatre attendance already going downhill over the years with the trend of online movies platforms from Netflix, Youtube, Disney, Amazon and even Apple. Right now the company has around $2B in combined debt and lease obligations. The amount owed is 4x the company’s current worth of $500M. In a normal world without COVID, its debts would still be manageable with the money it generated from doing business, but having operations paused too much, little amounts of cash on hand and lines of credit almost fully drawn, it can be pretty difficult to keep going without additional financial resources.

Shopify, on a huge contrast, has become the fastest growing Canadian company this decade and is now the biggest company in Canada. With the ecommerce platform still seeing a lot of usage and new growth in various countries, there’s still a long runway for it to keep pushing forward.
As of today, Shopify is now larger than any of the Canadian Banks. Just comparing the market capitalizations of Shopify and the big 5 Canadian Banks, the company is 17% bigger than RBC, which is now the 2nd largest Canadian company, and at its size Shopify could take over the smaller 3 banks, combined. But when you compare the revenues or sales that each generates, it’s a stark difference. And although Shopify isn’t a bank, even though it does provide small loans to its platform users, it really speaks to how much investors care nowadays about what a company currently makes. But of course the stock market is forward thinking and loves growth potential. Simply the faster growing companies that can grow consistently are much more appreciated by investors, just so long as they can produce some evidence of profits.

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#Cineplex #Shopify #Canada
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This is crazy! I hope Cineplex gets saved.

goldfinger
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Great analysis. IMHO Shopify is overvalued. Not saying it's going to be another dot com bubble, but only 2B in revenues? In 2019 RBC paid out 5.8 billion in dividends to shareholders alone. Cloud companies without tangible assets are very vulnerable if another, better tech comes along to supplant it.

NorseAztec