Ken Wong, the managing director at Oppenheimer & Co., shares his insights on how the market responded to Shopify’s fourth-quarter earnings.
Shopify Inc., a leading Canadian e-commerce company, has raised eyebrows after listing New York as a principal executive office in a recent US regulatory filing. This move has sparked speculation that the Ottawa-founded firm may be shifting its focus south of the border, adding to growing concerns over Canadian businesses relocating to the United States.
The revelation came through Shopify’s 10-K annual report, filed on February 11 with the US Securities and Exchange Commission (SEC). This marks a shift from its previous filings, where it used a foreign issuer 40-F form. The company also listed a US employer identification number, which analysts at TD Securities say is a crucial factor for its potential inclusion in major US stock indices, such as those managed by FTSE Russell.
Another notable change is how Shopify reported its segmented assets. The company has now classified the majority of its assets under the US instead of Canada. This reclassification aligns with the New York office listing, making Shopify eligible for inclusion in American indices during the next review in June.
Shopify’s Stance on the Filing Change
A spokesperson for Shopify addressed the speculation, stating that the company operates globally and chose to file certain SEC forms, such as the 10-K, to align its disclosures with other software firms that investors commonly track. Despite this, many experts believe the changes signal a deeper shift in Shopify’s operations.
Shopify has been one of the Toronto Stock Exchange’s top-performing stocks over the past decade and has always maintained a dual listing on the New York Stock Exchange (NYSE). However, trading activity is already higher in the US, raising concerns that the company could be positioning itself for a full-fledged American transition.
The shift was first reported by the Financial Post, and it comes at a time when Canada is experiencing an exodus of companies moving their legal headquarters to the US. President Donald Trump’s “America First” policies have intensified the debate about Canadian firms relocating for better access to capital and larger investor pools.
Canada Faces Business Migration Concerns
Shopify’s move is not an isolated incident. Other major Canadian companies, such as Allied Gold Corp. and Barrick Gold Corp., are also eyeing US stock listings. Montreal-based trucking giant TFI International Inc. recently reversed its decision to relocate to the US after facing strong shareholder backlash.
TD Securities analysts warn that this trend could become an existential crisis for Canada if the government does not take immediate action to retain its businesses. They argue that Canadian officials need to act fast to prevent further corporate migration, describing the situation as “Defcon 1” for the country.
This issue also influences Canada’s political landscape, with Prime Minister Justin Trudeau’s resignation in January adding further uncertainty. Mark Carney, a former central banker and a potential contender to lead the ruling Liberal Party, has already faced criticism for his role at Brookfield Asset Management Ltd., which recently announced plans to move its head office from Toronto to New York.
