Shopify SHOP-T +1.23%increase has named a new U.S. executive office in securities filings for the first time, suggesting it could be positioning its shares to be included in major U.S. stock indexes, according to TD Securities.
While Shopify has not stated any intention to reclassify south of the border, it has made several changes to its reporting format, matching what is required of companies entering U.S. indexes, according to Peter Haynes, managing director and head of index and market structure research at TD Securities.
This includes adding a Manhattan-based executive office to its latest annual filing, adding a U.S. Employer Identification Number, adjusting how it reports its assets, and filing its annual report as a 10-K – a form typically used by domestic U.S. issuers – instead of as usual as a 40-F, used by foreign issuers.
This U.S. shift comes during a period of heightened political and market attention on Canadian companies as the country faces a looming trade war with the United States.
As a result of Shopify’s reporting changes, Mr. Haynes said he expects the company will be eligible for inclusion in U.S. indexes, including the Russell 1000 Index, at its next annual reviews. This could generate demand for the stock on the order of 52.2 million shares, worth $6-billion, he told investors.
In an e-mail, Shopify said the changes were made to more closely match the financial reports of its U.S. peers. The company did not say whether it had plans to be included in a U.S index.
“Shopify operates on the internet, everywhere – we’re a global company. We chose to voluntarily file certain SEC forms, such as a 10-K, in order to align our disclosures more closely with other software peers we believe our investors are familiar with,” said Shopify spokesperson Alex Lyons.
The company said there are no changes to operations.
Shopify already has executive leaders and staff operating out of New York, and across the U.S.
“While SHOP has not made any statement to our knowledge on the reasons for enhanced disclosure, the proof is in the pudding – or in this case the filings,” Mr. Haynes said, referring to the stock symbol.
He added that such corporate decisions are not about the “the heart strings” but rather the interest of shareholders. If an issuer can gain demand for its stock by switching headquarters to the U.S., he said, “such a move appears to be a no brainer.”
Almost half of Canadian businesses plan to shift more investments and operations to the U.S. to mitigate potential tariffs and maintain market access, according to a February report by accounting firm KPMG.
Some Canadian companies are expanding production south of the border to avoid tariffs or take advantage of tax benefits. Others are considering plans to redomicile to the U.S., though some of those plans have been walked back because of added concerns from investors around the effect on Canadian jobs and the economy.
Last fall, Brookfield Asset Management Ltd. BAM-T +0.70%increase confirmed plans to move its head office to New York as part of its effort to attract a broader array of shareholders.
Last week, Canadian trucking company TFI International Inc. TFII-T +1.86%increase announced its own plans to move its headquarters south, but reversed that plan Monday after pressure from investors.
Meanwhile, Barrick Gold’s ABX-T -0.04%decrease chief executive officer Mark Bristow recently mused about the possibility of moving from Canada to the U.S. – the second time in five years he has made such a suggestion, according to Mr. Haynes.
“This is likely only the beginning of the migration south. After all, there is limited downside to issuers to become headquartered in the U.S. But make no mistake, the move hurts Canada’s capital markets as it will shift a significant percentage of volume to the U.S.,” Mr. Haynes said.
In January, Shopify’s founder and chief executive Tobi Lütke criticized the federal government’s decision to impose retaliatory tariffs on the United States, saying the move is “simply the wrong choice” and that better options were available.
“Hitting back will not lead to anything good. America will shrug it off. Canada will decline,” Mr. Lütke posted to X.
