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Shopify SHOP-T 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.
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.
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."
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