Shopify CEO Tobias Lutke, second from left, speaks during a question and answer session following the company's Annual General Meeting of Shareholders in Ottawa on Wednesday, May 29, 2019. (THE CANADIAN PRESS/Justin Tang)

Shopify makes it to the top of Canada’s financial mountain…for now

It’s been a while–2015 to be exact--since a Canadian company has managed to dethrone a bank to claim the title as the most valuable enterprise in the country.

The challengers have come and gone.

You may remember some of the names — the fallen tech giant Nortel, Research in Motion (better known as BlackBerry), energy firm EnCana, fertilizer giant PotashCorp, and the drug company Valeant, the last to pull it off.

“Those are now names that don’t either exist anymore or [were] very much cut off at the knees,” Barry Schwartz, chief investment officer at Baskin Wealth in Toronto, told the CBC’s Pete Evans in a story published Wednesday.

“When you challenge the market cap of the Canadian banks in Canada, it’s never worked out very well.”

We will now see how it works out this time, because on Wednesday, Shopify, an e-commerce business created in 2004 by three Ottawa snowboarders, moved to the top of the Canadian financial heap.

Shares in Shopify gained almost seven per cent on the Toronto Stock Exchange, to close at C$1,034 a share.

Shopify CEO Tobias Lutke participates in the company’s Annual General Meeting of Shareholders in Ottawa on Wednesday, May 29, 2019. (THE CANADIAN PRESS/Justin Tang)

That brought the company’s worth to over C$121.3 billion — enough to make it the most valuable company in Canada — just ahead of the long-time title holder, the Royal Bank of Canada, which dropped 26 cents on Wednesday to close at C$84.62 a share, for a total stock market value of C$120.5 billion.

Shopify, which is based in Ottawa, has been hot.

On Wednesday it said it took in US$470 million in revenue in the first three months of 2020. 

That’s up from US$320 million in the same period a year ago.

Evans writes that analysts who cover the company, which has doubled in value since the beginning of April, were expecting revenue to come in at around US$442 million

Shopify says its sales are booming right now because more and more people are shopping online and more businesses are selling online because of the  COVID-19 pandemic.

Employees work at Shopify’s headquarters in Ottawa on October 22, 2018. (REUTERS/Chris Wattie)

CEO Tobias Lutke says Shopify is doing everything it can to help online businesses stay afloat.

“The spread of COVID-19 is going to be a tough time for all entrepreneurs,” Lutke said in a statement. 

“We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality.”

Canada’s Prime Minister Justin Trudeau (right), and Shopify CEO, Tobias Lutke, have a fireside chat Tuesday, May 8, 2018, in Toronto at Shopify’s annual partner conference. (The Canadian Press Images/Shopify Inc.)

As noted above, the last company to surpass Royal Bank’s market capitalization was drugmaker Valeant Pharmaceuticals International.

That was in July 2015, but just months later, the company’s value plunged amid controversies over business practices, accounting and drug pricing. 

Valeant, now named Bausch Health Companies,  has new management and a different ticker symbol.

Prior to Valeant, Research in Motion, aka BlackBerry Ltd., the inventor of the smartphone, briefly topped Royal Bank in value in 2007. 

After holding the top spot for about five months in 2008, it fell victim to Apple’s iPhone and other handset makers who won the market.

Nortel Networks, which dominated the Canadian business scene at the end of the last century, briefly lost the title in 2001 before falling into permanent disrepute and bankruptcy.

The winner that day?

The Royal Bank of Canada.

Proving — once again — that you can never keep a good bank down, eh?

Stay tuned.

With files from CBC News (Pete Evans)

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