Kyle Prevost, editor of Million Dollar Journey and founder of the Canadian Financial Summit, reviews the week’s financial headlines and puts the news into context for Canadian investors.
Don’t call Shopify a comeback—it’s been here for years
The U.S. Federal Reserve raised interest rates on November 2 by 0.75%, bringing the target range to 3.75%–4%—the highest level since January 2008. After months of focus on rate moves, the increase was largely in line with expectations and markets mostly absorbed the news. With U.S. rates dominating headlines, Canadian investors were watching domestic earnings, where Shopify surprised the market during a busy week for technology results.
Shopify’s shares jumped sharply after the company reported a narrower-than-expected loss. The company posted a loss of USD 0.02 per share versus analyst estimates closer to a USD 0.07 loss, while revenue rose about 22% year over year and slightly exceeded expectations. That combination of smaller losses and revenue growth suggested the worst-case scenario had already been priced in by the market, and investors reacted positively.
Founder and CEO Tobias Lütke showed confidence in the company’s trajectory by buying CAD 10 million of stock, and company leadership described 2022 as an “investment year” as they integrate the CAD 2.1 billion acquisition of Deliverr to strengthen Shopify’s logistics and fulfillment capabilities. Company president Harley Finkelstein emphasized that Shopify ultimately wants to be profitable, a message that reassured many investors.
The recent rally comes after a steep decline from 2021 highs, and commentary from market observers suggested that the outsized move reflected peak pessimism that had already been felt by investors in the Canadian software firm. In short: Shopify is far from dead. It remains a high-risk, high-reward business that continues to diversify its product set and invest in long-term growth.
Other Canadian tech names reported results with more muted market reactions. OpenText reported earnings per share roughly in line with forecasts and revenue close to estimates. Lightspeed also beat loss-per-share expectations slightly and posted revenue just above projections. These results reinforce that while Canadian tech faces headwinds, some companies are stabilizing or narrowing losses as they pursue path-to-profit strategies.
If Shopify can sustain improved margins and translate investments into durable profits, it could reward long-term shareholders. For Canadian investors, the episode was a reminder that market sentiment can swing quickly and that differentiated companies with credible plans can recover from sharp sell-offs.
Canada’s oil profits pour in
Canada’s large natural resource companies have helped cushion the broader market this year as commodity prices and global demand dynamics supported stronger quarterly results. Three major Canadian resource names reported solid quarters, with earnings and revenue largely beating expectations.
Canadian Natural Resources reported earnings per share above expectations and strong revenue, and the company also increased its dividend by 13%, reflecting management’s commitment to returning capital to shareholders. Suncor delivered higher-than-expected earnings and revenue while pursuing a strategic acquisition of additional oil sands properties, signaling a long-term commitment to bitumen production that investors have met with mixed reactions. Nutrien posted results that missed some expectations, surprising the market given prior forecasts about potash demand, and its shares were punished as a result, though the stock remains higher year to date.
Overall, resource companies that can translate higher commodity prices into shareholder returns—either via dividends, buybacks or reinvestment—have helped offset losses elsewhere in the Canadian market. For investors concerned about recession risk, the resilience of resource revenues provides a degree of protection relative to more rate-sensitive sectors.
Technical support issues for U.S. tech shares
U.S. technology stocks continued to show volatility even when earnings numbers were solid. High-multiple names are still adjusting to the reality of higher interest rates, and the market is wrestling with how to value future growth in this environment.
This week’s results were mixed. Airbnb beat earnings and revenue forecasts, while Uber reported a larger-than-expected loss but still saw a positive market response after management signaled improvement ahead. eBay posted modest beats on both earnings and revenue. Semiconductor companies like AMD and Qualcomm produced decent results but still experienced volatile trading following their reports. PayPal delivered slightly better-than-expected results, yet the overall theme remains uncertain: good earnings no longer guarantee an unambiguous bullish market reaction for growth and tech names.
The takeaway for investors is that volatility is likely to persist until the market gains more clarity about the pace of economic growth, consumer demand and the trajectory of interest rates. Earnings remain an important input, but sentiment and macro expectations are driving pricing more than they used to.
No support needed for non-tech stocks
By contrast, many traditional or “old economy” companies reported steady, predictable results this week. Insurers, consumer staples, healthcare and other established companies generally beat or met expectations and showed they can pass through cost increases or maintain margins in a challenging environment.
Examples included insurers and consumer-facing brands reporting stronger-than-expected earnings per share and revenue, along with retailers and healthcare firms delivering stable results. These companies benefited from durable demand and competitive positions that allow them to navigate higher input costs. For Canadian investors, the strength of natural resources combined with resilient non-tech corporate performance offers some insulation compared with markets dominated by purely growth-oriented technology stocks.
Markets are still re-pricing tech names, but solid results from non-tech companies and resource firms suggest the broader economy is not collapsing into the recession narrative some feared. If former market leaders in tech can find their footing, it would provide an additional boost to markets overall.
Kyle Prevost is a financial educator, author and speaker. When he’s not on a basketball court or in a boxing ring trying to recapture his youth, you can find him helping Canadians with their finances at MillionDollarJourney.com and through the Canadian Financial Summit.