TSX Top Performers, WeWork IPO, Immigrant Wage Gap
Canada: the land of diversity, inclusion, and multiculturalism. Right?
If there’s anything this past week has taught us, it’s that this country has a lot of work to do to become truly inclusive. And we now have (even more) economic stats to back that up.
In September, RBC Economics released a report detailing the ‘immigrant wage gap’, or the difference in wages that immigrant professionals are earning in comparison to their Canadian-born colleagues.* Despite the fact that immigrants make up 22% of the population, they earn around 10% less than non-immigrant professionals in the same occupation.
Even worse? The research shows that rather than decreasing, the immigrant wage gap has actually widened over the past three decades.
According to the study, it appears the Canadian labour market discounts foreign education and professional experience. The study noted that many immigrants to Canada have high levels of education – in 2016, among immigrants aged 25-54, 43% had a bachelor’s degree or higher, compared to 26% of people born in Canada.
Improving the way in which our immigration system recognizes foreign credentials (such as degrees or professional certifications) will go a long way to ensure immigrant workers are receiving fair compensation for their talents, education, and skills.
The study concludes that closing the immigrant wage gap has the potential to add $50 billion to our national Gross Domestic Product (GDP) – an important measure of economic strength. It’s pretty simple – the longer we wait to address the gap, the more our economy suffers.
WeWork CEO caught flying too close to the sun…
Last week we briefly touched on WeWork and their questionable IPO plans. This week, it is safe to say the the situation has reeeaally escalated, and the company is in a financial tailspin. We’re going to break down for everyone just what the hell happened.
For those who aren’t familiar: WeWork is a coworking start-up known for creating workspaces catered to millennial desires in prime real estate. They’re a global business that was founded by (now former) CEO Adam Neumann in 2010 and headquartered in New York. At present, they have 836 locations in 126 cities around the world.
The company – which was previously valued at $47 billion USD – was hailed as an innovative and leading start-ups. It was poised as a real cash cow, and investors anxiously awaited their IPO announcement to have a hand in its success. Aaaaand that’s where the problems started.
WeWork filed their S-1 papers, a set of financial documents detailing their plans for an IPO a few weeks back, and investors were NOT impressed. It contained “a bevy of conflicts of interest and mismanagement” on the part of Neumann, who was already well-known for his… “eccentric”, or “erratic” behaviour. Basically, the S-1 paperwork he submitted could have passed as an intimate love letter to himself. To give you an idea of how self-indulgent and baseless the proposal was, according to the Guardian, it mentioned “Adam” 169 times. In Apple’s S-1 papers, “Steve” was mentioned on just three separate occasions.
After the IPO flops of Uber, Lyft and Theranos this year, investors were not here for Neumann’s shenanigans, and began to seriously doubt the financial viability of the entire company. Their valuation subsequently dropped by more than 70% within weeks. OOF.
On top of all this, it turns out that WeWork also has a serious cash issue – they have quite nearly spent themselves into oblivion, and are now trying to sell off assets, including Neumann’s private jet (cue a sad song from the world’s tiniest violin). Oh yeah, and he’s also been booted from the company.
As it stands now, the name of the game for WeWork is survival. They flew WAY too close to the sun, their wings caught fire, and the are crashing spectacularly towards the ground.
Stocks you wish you invested in…
Despite reaching record highs earlier this month, analysts have expressed low confidence in the Toronto Stock Exchange (TSX) due to the lack of diversification in market exposures and lack of high growth stocks.
Basically, while American stock markets represent a wide range of sectors and a higher concentration of innovative and high growth stocks such as those in the tech sector, the TSX is dominated by three industries: financials (ie banks), energy (which is predominantly oil and gas, with some renewables), and materials (mining).
On the TSX, financials make up a whopping 32% of the index, whereas on the S&P 500, which is a comparable American index, financial stocks make up a more balanced 13%. Extractive industries like oil and mining, which are more cyclical and therefore less stable sources of growth, make up 27% of the TSX, while on the S&P 500, they comprise less than 8%.
However, there are some high-performing exceptions – as we can see from this list of the top 30 highest growth stocks, compiled by the TMX Group this week. The list was created using three years of share price appreciation data.
Topping the list is cannabis giant Canopy Growth Corporation, with an appreciation at 1,823%, followed by Canada’s tech darling, Shopify Inc. Cannabis stocks Village Farms International Inc., Aphria Inc., and Neptune Wellness Solutions also made the top 10 – last year’s legalization of marijuana was clearly a boon for pot stocks.
For those in need of a refresher, a stock is a share of ownership in a publicly traded company that entitles the owner to a portion of that company’s profits and assets. You can buy and sell them on various stock markets with the hopes of getting money on your investment. To learn more about how to get started on investing, stay tuned for an upcoming Sh*t You Should Know: Investing 101.