Market movers: Stocks that saw action on Wednesday – and why

A survey of North American equities heading in both directions
Shopify Inc.’s (SHOP-T) stock price soared almost 18 per cent Wednesday after posting stronger-than-expected second quarter revenues and profits as well as a solid forecast for its next quarter.
The Ottawa e-commerce software giant generated US$2.045-billion in revenue, up 25 per cent year-over-year when factoring out the logistics business it sold in 2023. Revenue from both subscription fees for merchants to use its platform and merchant fees for other services including processing payments both exceeded analyst expectations, coming in at US$563-million and US$1.482-million, respectively.
The company’s gross profit of US$1.045-billion and US$333-million free cash flow were also ahead of expectations. Gross merchandise volume, representing the total amount of business flowing through its platform, was US$47.2-million, up 22 per cent. Analyst had expected that number to only reach US$65.7-billion.
“Our Q2 results make it clear: Shopify is rapidly strengthening its position as a leading enabler of global commerce and entrepreneurship,” president Harley Finkelstein said in a release.
The company’s stock had swooned by close to 20 per cent in May when it warned operating expenses would climb from the first quarter by an amount in the low to mid-single digit percentage range. But in Wednesday’s report, operating expenses actually fell by nearly 8 per cent from the first quarter, to US$804-million, while operating expenses as a share of revenue came in at 39.3 per cent, down from 43.5 per cent.
“Our results underscore our commitment to providing exceptional value to our merchants through focused operating execution and efficiency,” Shopify chief financial officer Jeff Hoffmeister said in the earnings release. “As a high-growth global technology leader in commerce, we remain committed to leveraging our core strengths and investing in opportunities to achieve sustainable growth and long-term profitability.”
– Sean Silcoff
Suncor Energy (SU-T) jumped 4.4 per cent after it beat analysts’ estimates for second-quarter profit on Tuesday, helped by higher oil prices and a rise in oil sands production.
Full reaction from the Street: Wednesday’s analyst upgrades and downgrades
On Wednesday, Suncor said it could exceed its 2024 guidance on oil production and refinery throughput, the company said on Wednesday after reporting better-than-expected second quarter profits.
Calgary-based Suncor is Canada’s second-largest oil producer with most of its production in northern Alberta’s oil sands region.
CEO Rich Kruger has been working to cut costs and improve operations after taking over in April 2023 following a series of worker fatalities on oil sands sites and share price underperformance.
On Tuesday, Suncor reported adjusted profit of $1.27 per share for the second quarter, compared with analysts’ average estimate of $1.08, according to LSEG data.
So far Suncor is tracking above the high end of its forecasts for 2024 oil production, refining throughout and refined product sales, Kruger told analysts on an earnings call. Suncor had said it expects to produce 770,000-810,000 barrels per day (bpd) of oil this year.
“The sun is shining on this company and we plan to make hay in the second half of the year,” Kruger said, adding that the company was focused on cutting costs and improving operational efficiency, particularly on maintenance turnarounds.
Every segment of Suncor’s business operated at lower absolute costs in the first half of 2024 versus the same period last year, Kruger said.
The quarter marks the third consecutive data point in tracking Suncor’s goals of improved reliability and competitive operating costs, BMO analyst Randy Ollenberger said in a note to clients.
“That said, the second half of the year may be a little bumpy as Suncor progresses with the Fort Hills mine pit transition and further Base Plant maintenance,” Mr. Ollenberger added.
Production at the 165,000-bpd Fort Hills oil sands mine is expected to be lower in the second half of 2024 as the company focuses on opening up another pit, Suncor Chief Financial Officer Kris Smith said.
The 350,000-bpd Base Plant will undergo maintenance that is expected to cut production by 25,000 bpd and 20,000 bpd in the third and fourth quarters respectively, according to company guidance.
U.S.-listed shares of Sony (SONY-N) gained 1.8 per cent after it reported a 10-per-cent rise in operating profit in the April-June quarter, beating analyst estimates, boosted by its image sensors and games businesses.
Profit at the Japanese tech and entertainment conglomerate was 279 billion yen (US$1.90-billion), compared with an average estimate of 275 billion yen from seven analysts polled by LSEG.
The impact from foreign exchange and higher sales helped profit at the image sensors business, a major supplier for smartphone makers, roughly triple to 36.6 billion yen.
A sprawling group encompassing music, movies, games and chips, Sony hiked its full-year profit forecast by 3 per cent to 1.3 trillion yen aided by foreign exchange rates.
Financial markets have been whipsawed in recent days following an interest rate hike by the Bank of Japan and weak labor data from the U.S. that stoked recession fears.
“We are extremely concerned about the sudden fluctuations in exchange rates and possibility of economic downturn, particularly in the United States,” Sony President Hiroki Totoki told an earnings briefing.
The rise in the yen has left investors reassessing the outlook for Japanese multinationals, as the weak currency had provided a cushion for many heavyweight exporters.
Sony’s assumed exchange rate for the year is approximately 145 yen to the dollar. On Wednesday, it was trading around 147, but it had been at 38-year lows near 162 at the start of July.
In the first quarter Sony sold 2.4 million PlayStation 5 (PS5) units, fewer than a year earlier, but booked a larger profit from its games business.
The group said in May it expects to sell 18 million PS5 units this fiscal year, compared to 20.8 million a year earlier.
The games industry is grappling with rising costs and weak pricing power. Sony-owned developer Bungie announced last week it is cutting almost a fifth of its workforce.
Profit at Sony’s music division grew 17 per cent to 85.9 billion yen but fell 29 per cent to 11.3 billion yen at its movies business.
Air Canada (AC-T) declined 1.4 per cent after it reported a lower second-quarter profit that came in ahead of analysts’ estimates on Wednesday, as excess capacity in certain markets and stiff competition on international routes softened fares.
North American carriers are struggling to protect their pricing power as a rush to cash in on booming demand for summer travel left them with excess capacity, forcing them to offer discounts to fill seats.
Last month, the carrier cut its full-year core profit forecast citing a lower yield environment and competition in international markets.
Nevertheless, Montreal-based Air Canada said it plans to increase its available seat mile (ASM) capacity during the third quarter between 4% and 4.5 per cent, compared with the same three months in 2023.
Airlines are also facing heightened costs associated with labor and aircraft maintenance.
Air Canada is yet to finalize a new contract with the union representing its pilots, which would generate additional cost pressures for Canada’s largest airline.
The carrier’s adjusted profit fell to $369-million or 98 cents adjusted earnings per diluted share, from $664-million, or $1.85 per share, a year earlier.
Analysts on average were estimating adjusted earnings per diluted share of 92 cents per share, according to LSEG data.
The Canadian carrier’s operating revenue rose 2 per cent to $5.52-billion in the quarter ended June 30, roughly in line with analysts’ estimates of $5.53-billion.
In a research note, Citi analyst Stephen Trent said: “Overall, the results look decent, including what appears to be the seventh consecutive quarter of positive free cash flow, with the carrier looking better positioned to capitalize on its technology investments and maintaining a very attractive financial leverage position vs. most other airlines. Assuming risk-neutral market conditions, these results could modestly support Buy-rated Air Canada’s shares on Wednesday morning.”
Winnipeg-based Great-West Lifeco Inc. (GWO-T) closed 2.7 per cent lower after saying its second-quarter earnings roughly doubled from last year as it benefited from interest rate movements and lower business expenses.
The insurer says it had net earnings of $1-billion, or $1.08 cents per share, up from $498-million or 53 cents per share last year.
Great-West says the gains reflect an improved market experience from interest rate movements and low expenses related to business transformation activities, as well as a $121 million loss last year from asset rebalancing in Europe.
Adjusted earnings, or what Great-West calls base earnings, came in at $1.04-billion, up from $978-million last year.
Great-West says it hit record base earnings in the second quarter as its U.S. growth surpasses expectations and is set to become the largest segment within the company’s portfolio this year.
The company reported a base return on equity of 17.2 per cent, up from 15.9 per cent last year.
“While we do have a positive view of GWO’s Q2 performance, our excitement is tempered by the messiness of this result,” said Scotia analyst Meny Grauman. “Beats from insurance experience, fee income, trading activity, and earnings on surplus more than offset a number of negatives including a miss on taxes (19.2 per cent versus guidance of 17-19 per cent), and unfavorable credit experience tied to two commercial mortgages in the U.S.. Although the boost to fee income from improved equity markets and a one-time $41-milllion pre-tax fee adjustment from the Prudential deal is easy enough to understand, favorable insurance experience of $44-million is harder to forecast going forward. We look for Management guidance on the call, but we suspect that when all is said and done this result slightly overstates GWO’s run-rate earnings power even if underlying performance is nevertheless quite solid.”
Nuvei Corp. (NVEI-T) was flat after saying it earned US$5.3-million in its second quarter, down from US$11.6-million a year earlier.
The Montreal-based company says revenues totalled US$345.5-million, up from US$307.0-million during the same quarter last year.
Diluted earnings per share were 2 US cents, down from 7 US cents
In June, Nuvei shareholders voted overwhelmingly in favour of a plan that will see the company bought by an American private equity firm and taken private at a US$6.3-billion valuation.
The company says the deal is expected to close in late 2024 or the first quarter of 2025.
Nuvei did not provide any financial outlook or growth targets in its earnings release due to its pending privatization.
Martinrea International Inc. (MRE-T) closed 0.4 per cent lower after saying it earned $41-million in its second quarter, down from $50-million in the same quarter last year.
Sales for the Toronto-based auto supplier were $1.3-billion, down from $1.4 billion a year earlier.
Net earnings per share worked out to 54 cents, down from 62 cents.
Martinrea says the decrease in sales was driven by its North America and Europe operating segments, but partially offset by operations in the rest of the world.
CEO Pat D’Eramo says the company is seeing supply constraints, inflationary pressures and tight labour markets improving.
He says Martinrea is mitigating the impact of these issues, as well as a “slower-than-expected ramp up in electric vehicle programs,” through commercial negotiations.
In a note reviewing the release, CIBC World Markets analyst Krista Friesen said: “Despite a challenging operating environment with global production forecasts coming down relative to the start of the year, MRE posted what we would call in-line earnings, and maintained its guidance for the year. With the stock trading at 2.7 times 2025 estimated EV/EBITDA, we do not believe the company is receiving credit for the operational and financial improvements it has made over the last year.”
Disney (DIS-N) slid 4.4 per cent despite returning to a profitable third quarter as its combined streaming business started making money for the first time and the movie Inside Out 2 did well in theaters.
Operating income for the entertainment segment nearly tripled to US$1.2-billion thanks to better performances from its direct-to-consumer and content sales/licensing and Other segments.
The Walt Disney Co. said Wednesday that its direct-to-consumer business, which includes Disney+ and Hulu, reported a quarterly operating loss of US$19-million, which was smaller than its loss of US$505-million a year earlier. Revenue climbed 15 per cent to US$5.81-billion.
For the period ended June 29, Disney earned US$2.62-billion, or US$1.43 per share. A year earlier it lost US$460-million, or 25 US cents per share.
Stripping out one-time gains, earnings were US$1.39 per share, easily topping the US$1.20 analysts polled by Zacks Investment Research expected.
Revenue for the Burbank, California, company rose 4 per cent to US$23.16-billion, beating Wall Street’s estimate of US$22.91-billion.
The company made US$254-million in operating income from content sales and licensing helped by the strong performance of Inside Out 2 at movie theaters, which is now the highest-grossing animated film of all time.
Disney said Wednesday that the original Inside Out, which came out in 2015, helped drive more than 1.3 million Disney+ sign-ups and generated over 100 million views worldwide since the first Inside Out 2 teaser trailer dropped.
The combined streaming businesses, which includes Disney+, Hulu and ESPN+, achieved profitability for the first time thanks to a strong three months for ESPN+ and a better-than-expected quarterly performance from the direct-to-consumer unit.
Disney said in May that it expected its overall streaming business to soften in the third quarter due to its platform in India, Disney+Hotstar. The company also said at the time that it anticipated its combined streaming businesses to be profitable in the fourth quarter, so the money-making quarter was a surprise.
Disney now anticipates full-year adjusted earnings per share growth of 30 per cent.
Shares of Airbnb (ABNB-Q) slumped 13.4 per cent on Wednesday after the online travel company forecast third-quarter revenue below estimates, citing slowing demand in the United States and shorter booking windows.
Domestic travel in the United States has been pressured since the start of the year as more Americans have grown cautious about travel spending on worries about the health of the economy.
Airbnb became the latest online travel company after Booking to warn it was experiencing shorter booking lead time globally which refers to the number of days between the reservation date and actual arrival.
A shorter booking window can indicate consumers are booking travel at the last minute due to increased uncertainty and caution in spending.
Airbnb Chief Financial Officer Elinor Mertz said on a call with analysts on Tuesday that softness in long booking lead times was a big factor in its forecast.
“While travel has been resilient for a long time coming out of the pandemic, trends observed by ABNB, along with what BKNG noted last week — i.e. softness in Europe, some trade down of travel in the U.S., and normalization of booking windows — should weaken investor sentiment around online travel broadly,” J.P. Morgan analysts wrote in a client note.
Jefferies analysts noted that Airbnb’s “disappointing” outlook for nights followed by Booking is “likely to heighten concern of slowing growth.”
The company said it expected moderating growth in nights booked in the third quarter.
According to Jefferies, Airbnb’s third-quarter outlook implied nights growth of 6-8 per cent year-on-year, which would be a deceleration from 8.7 per cent in the second quarter.
Baird Equity Research analysts said the brokerage remained “neutral” on Airbnb’s shares as more evidence emerged of consumers tightening their belts on travel, or at least delaying their travel planning.
Super Micro Computer (SMCI-Q) dropped over 20 per cent on Wednesday as concerns over the high cost of producing AI server chips weighing on its profit forecast, eclipsing upbeat sales forecasts.
The company’s fourth-quarter adjusted gross margin was 11.3 per cent, compared with analysts’ average estimate of 14.1 per cent, according to LSEG data, as Super Micro grappled with higher supply chain costs and a tight inventory of key components.
CEO Charles Liang, however, reassured investors that margins would return to a normal range before the end of fiscal 2025 and reiterated its gross margin target in the range of 14 per cent to 17 per cent.
The company forecast current-quarter profit below Wall Street targets but expects first-quarter and annual sales above estimates.
Rival Dell Technologies (DELL-N), which makes AI PCs and AI servers, also dropped.
Other chipmakers, however, were broadly higher after taking a hammering recently on concerns over their lofty valuation in a slowing economy. Nvidia (NVDA-Q) and Broadcom (AVGO-Q) rose .
Among the biggest beneficiaries of the AI boom, Super Micro’s shares have more than doubled in value in 2024, making it the best performing S&P 500 stock up to Tuesday’s close.
It trades 17.24 times its 12-months forward earnings estimates, compared to Dell’s 11.07 multiple.
Lyft (LYFT-Q) gave a soft forecast for the current quarter ending September on Wednesday, taking the sheen off strong second-quarter results and sending its shares down 17.2 per cent
Lyft and its larger rival Uber (UBER-N) are battling to service a boom in ride-share demand from summertime tourism and as people step out more frequently for work and leisure activities.
The company forecast gross bookings – the total value of transactions on the Lyft app excluding tips – between US$4.0-billion and US$4.1-billion, compared to analysts’ consensus estimates of US$4.13-billion from LSEG.
Adjusted core earnings guidance of US$90-million to US$95-million also came in below the street target of US$104.3-million.
Uber reported a strong quarter on Tuesday, but its gross bookings guidance also came in just shy of the street target for July to September, regarded as the peak tourist period.
Uber has a global footprint and diversified business, which includes food delivery and parcel services, while Lyft operates ride-hailing services in the U.S. and Canada.
For the second quarter, Lyft reported better-than-expected revenue and posted a net profit for the first time, driven in part by cost cuts last year.
Since CEO David Risher took charge last year, Lyft has cut hundreds of jobs, narrowed the firm’s losses and managed to keep fare increases in check. The early efforts fueled a 36-per-cent surge in Lyft stock in 2023.
In June, Lyft hosted its first-ever investor day and projected annual gross bookings to grow at a steady 15-per-cent rate through 2027. It has also made a big push in advertising, a high margin business, with US$50-million sales expected this year.
Revenue rose 41 per cent to US$1.44-billion in the quarter ended June 30, beating estimate of US$1.39-billion.
Net income was US$5.0-million, compared to a US$114.3-million net loss in the previous corresponding period when the company booked US$46.6-million in restructuring-related charges.
With files from staff and wires