The inflated equity and debt markets are triggering companies to raise money like crazy.
Shopify priced their offering at US$1,315 (about CAD$1,650/share), and total amount raised is about CAD$1.95 billion before fees.
While my capital wouldn’t go towards Shopify, I have to commend them for taking advantage of the situation – they are diluting their shares by about 1%, and in exchange they buffer their balance sheet.
In December 2019, they held $2.5 billion in cash and equivalents. In December 2020, they held $6.4 billion. After this offering, their cash balance will go higher.
Shopify is already in positive operating income territory, but the competition is red-hot so they will need to continue to build up a war chest which will give them further stability. I wouldn’t be shocked if they continued to raise financing – they should.
There are other corporations out there, less credible, which are also raising equity and debt capital. Good on them for striking while the iron is hot.
for what it’s worth I noted that Catherine Wood currently the much talked about ETF manager for ARK investments has been consistently buying Shopify in her ARKK etf.