The Canadian Investor - Nike Crashes, Air Canada CEO Exit & GoEasy Finally Reports Earnings

Episode Date: April 2, 2026

In this episode, we break down a volatile week in the markets as the Nasdaq briefly entered correction territory before rebounding sharply, highlighting just how headline-driven markets have become amid geopolitical uncertainty. We discuss the growing divergence beneath the surface of major indices, with equal-weighted strategies outperforming as mega-cap tech names experience significant drawdowns. We also revisit the AI investment debate and how rising energy costs could impact the long-term economics of data center buildouts. On the earnings side, we dive into Nike’s disappointing results, including margin compression, declining sales in key regions like China, and a challenging turnaround strategy as the company pivots back toward wholesale. We also examine Air Canada’s leadership change, with CEO Michael Rousseau announcing his retirement amid rising fuel costs and what looks to be a difficult operating environment for airlines going forward. Finally, we close with a deep dive into GoEasy’s latest earnings release. While much of the damage was pre-announced, major concerns remain around LendCare, surging charge-offs, restated financials, and what this means for the company’s future. We break down what’s changed, what hasn’t, and whether this situation could worsen from here. Tickers of stocks discussed:Nike (NKE), Air Canada (AC.TO), GoEasy (GSY.TO), Shopify (SHOP.TO), Thomson Reuters (TRI.TO), Apple (AAPL), Microsoft (MSFT), Meta (META), Alphabet (GOOGL)   Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own cyclicals. Don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors. this has to be one of the biggest quarters I've seen from this company in quite some time.

Welcome back to the Canadian Investor Podcast. I'm Simone Belange. I'm here with Dan Kent. We're back for a news and earnings episode. Quite a bit to talk about. So we'll talk about the fact that the NASDAQ entered correction territory earlier this week or actually started last week. Now I've pulled out a bit of it a little bit. So I had to modify my notes before he got started because I did them.

yesterday morning and we are recording this on April 1st so we'll try to keep the April Fool jokes out of the way but maybe we'll have a few organic ones as we record so we'll talk about that we'll also talk about Nike that had a disastrous report I think just based on what I saw the headline so you'll go over that and then we'll also be talking about Air Canada's CEO that's set to retire and then we'll finish with Go Easy that actually really least its earnings yesterday and then had the call this morning. So we'll wrap this up with GoEasy. I know we've talked a lot about it. I know some people are really interested in it. Some people not so much. So we're keeping it till the end. If you want to listen to that, make sure you listen

until the end of the episode. So yeah, it should be a fun one. Yeah, I think Go Easy's quarter is kind of the, I mean, this whole situation seems like it's the April Fool's like a really bad April Fool's joke, I guess, but yeah, yeah, that's even if you don't follow the stock, I guess. I mean, just that area of the market and what is going on is, is kind of fascinating from like a lending perspective and a economic perspective. So yeah, it'll be a good segment. Yeah, exactly. So let's start off here with the NASDAQ entering correction. Now, like I said, when I first wrote this, it was down like 12% or so from its peaks. And now it's only down about 8% of course, a market.

It continues to be headline driven. Mostly, I think, being driven by what Trump is saying or not saying about the war. Who the hell knows? Because at this point, Trump says one thing. Iran says another. It's just been back and forth for what a couple weeks easily now. And it's just hard to know who to believe, right? Trump has lied plenty in the past.

I'm sure I'm not breaking anything to anyone listening to this. And I don't think we can trust the Iran regime either. So I think the truth is probably somewhere in between. But I still find it quite amazing that markets are kind of reacting to those headlines when there's really no way of knowing what's actually going on. No. I mean, it's kind of weird like when the question is, who are you going to trust a U.S. president or Iranian regime? But yeah, I mean, it's what did the NASDAG move? I think it was up 3% yesterday or something crazy.

Yeah, it's. Yeah, something like that, three and a half. Wild swings. Yeah. Yeah, volatility definitely continues. And make sure you tune in to our Monday episode that we did just this Monday. If you're looking for some ideas that should do well in this volatile environment, we did give some ETF ideas. So make sure you go back and listen to that one if you haven't done so already.

The S&P 500 did not quite hit corrections level. So it is down 6.5% from its peak. I was down close to 9% in terms of drawdown. So pretty close of correction territory. and the S&P TSC has actually done better than the two American indices. So it's down about 5% since its peak, of course, with the TSX being energy heavy. It's benefited from recent rise in oil prices. And for Canada, there's been two main sector dragging the TSX lower recently.

So that's financials where I think all the big banks are down, like are in drawdowns between around 5% and 10% from their peaks. and of course material. So if you're thinking here about just commodities in general, not only gold, silver, copper, all these materials are definitely a bit in a downturn. Again, having said that, that was more the case a few days ago. It's gold specifically is up quite a bit now in the last couple of days. But the miners are definitely struggling as well because the drop in precious metal. But the miners are actually getting hit a bit of a double whammy.

here. They're seeing the drop in prices, but they're also looking at higher operating costs because the price of diesel has gone way up. And clearly, if energy prices are higher, it's going to compress their margins. But having said that, I think the miners should do just fine because the price has gone up so much, especially for precious metals, that even if they do get some margin contraction, they should do pretty well, I think, for the foreseeable future. Yeah, and I think this is kind of a good Because we always talk about stuff that say like a Franco Nevada or a Wheaton wouldn't be exposed to, this would kind of be one of those elements there. They don't really have those input costs to get, you know, the metal out of the ground. Whereas these miners, lots of input costs and obviously gasoline, diesel, whatever it may be is, you know, when it goes up this quick is is not a good thing.

No, exactly. And Canada's big tech name also has not been spared by the route in tech that we've seen recently. So Shopify, it's in a 33% drawdown since I think October of last year, but it almost hit like the 40% mark just a few days ago. So definitely you can see why the TSX is down when you have some big names like Shopify, but also the banks that have been struggling a bit since their peaks as well. But, I mean, you've done well if you've owned banks going back to last year. So, you know, don't be too concerned.

but tech definitely remains the hardest hit sector. And if we shift to the U.S. here, and I know there's been a lot of talk about AI, but just showing here for the Joint TCI subscribers, you can really see the drawdown from big tech where it's essentially a drawdown that's ranging from about 11% for the Mag 7, the best name, which is Apple, all the way down to negative around like 30% if you're looking, at Microsoft and Meta. They're both in significant drawdowns below 30%. So some big drawdowns there and obviously the rest are everywhere in between. Even Google is looking at a 13% drawdown.

So definitely some a bit more bearishness when it comes to the Mag 7 and I think just the the hyperscalers when it comes to AI here. Anything you want to add before I talk just to double click on that AI theme here? I mean, I guess the only other one I think say on the TSX would be Thompson Reuters. I mean, they were, they were at one point a $100 billion company. They had to be in the top 10 market caps, maybe even higher than that. So 50% drawdown in terms of that. I mean, they're down 30% just this year. So that's definitely going to hit the TSX as well. TSX 60. Yeah. Yeah. And I mean, I think it's a good point just to make as well. When you're thinking about these indices that are market cap weighted, you really have to keep in

mind that when you have these really top heavy indices like the SNP 500, the NASDAG, the SNPTSX, when those big names get hit and in video, I'm just looking at it here, I think it's in a drawdown around 15%, I think 15, 16%, but it was it's such a big component of the SNP 500 and the NASDA that that's the risk that you're facing. Sure, it starts ripping the indices will do well when these names do well, but it cuts both ways. When these top heavy names are actually getting hit hard, it just pulls everything down. And it's actually quite amazing that the S&P 500 is not down more, which means that there's been a rotation and other sectors are doing much better than those. because you're talking about a big chunk of the SMP 500 is down double digit,

yet the index is still just down about 5, 6%. Well, that's kind of what, this was probably a month ago or so. I saw a chart on X that kind of mentioned that like the activity of companies, like the smaller companies in the S&P 500, like how much they had lost, they had to go back to like the last market crash to pretty much find stocks that were down that much on average or something like a it was something like a hundred and thirty some stocks and the s mp 500 were down a whole bunch while the index was like green on the year so you know now that the top side of things like the mag seven are starting to see it now you're starting

to see the index kind of get dragged down as well but yeah it's a heavy concentration obviously right now they've kind of fueled the run up and now they're kind of fueling the bit of a dip here yeah exactly and I'm wanting to check exactly. I'm curious to see what the, yeah, it's definitely the S&P 500, ticker RSP, so the ETF, the equal weighted, is definitely outperforming less of a drawdown if you're looking in the last six months compared to the SMP 500. And if you're looking at the returns year to date, let's just do total returns. It's significantly outperforming the SMP 500.

So it's actually slightly positive year to date. The ECOA weighted versus the SNP 500 being down about 5%, a bit less 4.5%. Yeah, I found the chart. So this was a while back, but it says when 115 or more stocks fell at least 7% in a single day across a rolling eight-day window, pretty much you'd have to go back to like 2008 and the COVID crash to ever find this. But then like when you look at when it happened recently on this chart and it's it's kind of on my discord. So I won't be able to share it. But you see the dot of when it happened last, which was obviously when this chart was made and the index hadn't budged.

So it's it's pretty crazy. Like the last time this had happened, the S&P 500 was down 20 plus percent. And now it's down. Well, at that time, it was down like 2%. And it happened. So yeah, it's this is one of the wildest like post-pandemic, one of the wildest. Periods. Like the last five years have just been bonkers. No, exactly. And it's just, I find it fascinating, just a debate around AI and whether the hundreds of billions of dollars being spent,

but especially by the hyperscaler, right? I think that took another twist here with the energy shock that we're seeing. So I think we can debate for days whether these investments will provide good or why. And we won't know until probably five to 10 years down the line, whether it was good spending or not. What the market is probably saying is that it's getting nervous for some of these big names that it may not, it may take a big hit on its earnings and they might not actually see a whole lot of ROI on those investments. So I think the market, at least right now, is kind of, that's what it's saying. But there's a new variable, I think, to just think about. And those higher energy prices, like how much of an impact will it have on the build out?

I don't think it's going to necessarily prevent companies from building out more per se, but it will likely increase the cost of operating these data centers because they need a whole lot of energy. Sure, some will have secured power purchase agreements with some prices increases embedded in those, but the price of natural gas will have a pretty big impact, especially since it's more localized given the regional differences. So that'll be really interesting on just keeping an eye on what kind of impact this has on the profitability of AI build out, the infrastructure behind it. And I think the other aspect to mention is it may actually make some parts of the world. And let's talk about North America. But if you think where you're from, Alberta, there's a lot of natural gas that's kind of trapped in Alberta because it just doesn't have the infrastructure to get it out, right?

what if you have these plan data centers that starts seeing opposition to be built in areas in the U.S. where the population doesn't really want it near, you know, not in their own backyard. And it's maybe much hotter than Alberta as well. And these hyperscalers are looking at this and saying, you know what? Why don't we look at other location? We had a plan to build one here. But why don't we look in Alberta? It's colder.

So it'll be easier to actually cool them down. It's abundant energy. The natural gas is cheap because it's trapped there. So we'll be able to capitalize on that. So it's definitely an interesting concept to think about that natural gas can actually see some tailwinds in North America for other reasons that we might actually expect, not because there's more infrastructure being built out, but because it is cheap and potentially trap because of that lack of infrastructure. Sure. Yeah, the only thing with that, I guess, is they tried that. Well, I mean, I guess they didn't try that in northern, like very northern Alberta, but they tried to put one in Olds, which, if anybody's from Alberta, it's kind of a town, like, right off the number two highway. They were going to build a mega data center there, and it actually just, I think it's just like two or three weeks ago, they nicks the whole thing. They rejected it. So it's not going to get built. I don't think a lot of people will want these in their areas. Like, I think if you're going to go build these things, you've got to build them. in some very remote.

Remote areas. Like it's just, it's kind of like, I mean, obviously it's not as, I guess, like, ill thought of as like, say, a landfill or something, but it's definitely a not in my backyard type thing. Like, yeah. Yeah. Yeah. Yeah. But I'm thinking, you know, those more remote areas in Alberta for example. Oh, there's tons of space.

Yeah. Yeah. And it's cold. And it's cold. And, you know, there's some gas supplies nearby. Like, it's not that far off. Just some food for thought here, but I just found that the whole energy shock is taking a little bit of a twist, and I think it would be false to say that it won't have an impact somehow on the AI buildout.

I'm not saying it will impact the actual buildout, but the profitability, I think that's a valid question to have. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for data. operations. That was our experience too until we switched to the new EQ bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up, quick and fully online, no branch visits because, let's be honest, no business.

owner has time for that. We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at EQBank.ca slash business. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for a over five years and the reason I stick with them is that they remove the friction of regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly

and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest, head over to Questrade.com, open and fund your account with code TCI and receive $50. Conditions apply. Calling all DIY, do-it-yourself investors.

Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me,

search me up, some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead. Blossom, social in the app store and I'll see you there. Let's move on here, get out of the AI space and go to Nike, which I'm sure they've talked about AI somehow in their earnings release. So you tell me. I mean, when I first looked at the quarter, like they beat estimates by quite a big margin,

but it's it's dumping now. I think it's down like 15%. After being down like what, like 70 plus percent. I think it's 75, 80 percent off 20, 21 highs. I think maybe it beat estimates because like the bar is set so low here, but guidance was was pretty bad. I'll go over guidance in a bit. I think that's what kind of is what is driving the stock downwards, but the quarter first revenue was flat, but on a constant currency basis basis, I believe it declined by 3%. Earnings are down more than 30%. Gross margins dip by another 130 basis points. And I think a while back, and I mean, you can correct me if I'm wrong, I don't really follow Nike all that much. I don't know if you do either. But they made like the decision to kind of go direct to consumer versus like wholesale partners.

So I mean, I think. Yeah, I remember that vaguely. But yeah, I follow it kind of a medium amount. So, but I do remember them doing that. So like this would kind of be like, you know, you could buy Nike and I don't know, let's say sport check. And they kind of went direct to consumer where you have to go to, you know, you buy them directly from Nike.

Yeah. Like whether it's online or I think they had like for a while like that must have been 10, 15 years ago. Yeah. They were really making a push for like they had those. Nike stores. I don't know if you remember. We had them around here. Yeah. Yeah. So they that is not working clearly. I mean, I think it was just it's a pure disaster. But the plan now is to get the company back on track and how they're doing that is just going back to wholesale. So it kind of

looks to be working on that front like wholesale revenue is up mid single digits. But the thing is like every other area of the business is struggling. So Nike direct, Nike digital, Nike stores. They all fell by mid to high single digits revenue wise. And I would imagine that's just kind of, I would imagine some of it's intended. Like if you're trying to get more wholesale revenue, you're probably not focusing much on the direct to consumer, but there's definitely going to be some pains there in the transition. North America grew by low single digits, EMEA, which would be Europe, Middle East, and Asia, I would imagine, declined six percent. China declined by seven percent. And quick look, it looks like China, this is like the two straight years almost of revenue declines for

China. So the company mentioned that tariffs are impacting it to the tune of $1.5 billion in product costs. So that hit margins by more than 3%. They mitigated some of this, but not all of it. I mean, I guess overall you could call the quarter fairly reasonable for like a turnaround company. I mean, if they're going to the wholesale portion, that's growing. So, I mean, I guess the objective is is being achieved here. But I think guidance, guidance was pretty ugly. So revenue is expected to be down low to mid single digits. Apparently estimates were for a 2% increase. China revenue is expected to decline by 20%. So this is, uh, oh my God. This is next, this is next quarter. So like, well, yeah, this is their next quarter guide.

So 20% declines in revenue in China. Gross margins will decline yet another 175 to 225 basis points. I believe gross margins are in the low 40% range. So you're looking at, I don't know, they might even go sub 40. And I mean, they just kind of mention that the turnaround is going to cause more headwinds. And like not only, like not only as revenue guidance bad, but even if it wasn't, I mean, you're constantly compressing margins to the point where like, You're just kind of killing profitability. Oh, well, it's down to drain, right?

That's what I'm showing is that you're looking at just net income and free cash flow. It's really dropped by pretty much like half over the last couple of years. Like it was consistently on a yearly basis, like consistently hitting like above 5,000, even 6,000, both on net income and free cash flow. And now it's dropped by half. Yeah. It's, I've heard like obviously this is all kind of like anecdotal from comments. was looking at, but apparently like the markdowns are crazy, like the store, they're just clearing out inventory, which obviously this, you know, this is going to happen. The margins are

going to get hit. Like a company like Eritzia went through that a few years ago, but you just kind of eventually. Maybe not to that extent. Not to this extent. No. Eritzia was like a mistiming of inventory issue that ended up hitting it. Like Nike, I don't know. I don't want to call it dead, but it's like there's a material shift in sentiment here where people just don't want to own Nike anymore. I mean, fashion is is very, very tough, obviously. I've always kind of said, like, you just don't fight the trend in this industry. Like, a lot of people were interested in, in companies like Lulu Lemon and Nike and, you know, same store sales are declining. They're, you know, complaining about product assortments and margins and are dipping. Meanwhile,

you have a company like a Ritzie who's growing same store sales at like a 20% pace. Like, I think it's just there's so many trends in this industry and I think the brand is kind of too big to be completely written off but it's kind of hard to see the light at the end of the tunnel. I mean, like I've owned plenty of turnaround projects. I mean, I can think of Starbucks as one of them, but I like I do not sit around and wait because management will just feed you. You know, they need a little more time, a little more time. And then the next year they'll say the exact same thing. And it would be one thing if sales were still like doing relatively well, like, slowly increasing and you'd see some traction there, but they were getting margin compression

because of things like tariffs and uncertainty. I think that would be a bit more understandable for a turnaround plate, but their margins are compressing and sales, I guess their products are just not resonating. So this is not that great of a recipe. Yeah, and like you can kind of point to the company saying, like they want to go back to wholesale. So they'll be like, hey, look at our wholesale revenue. Well, yeah, but every other element of the business is like in the gutter. So yeah.

It's difficult. I don't know. Like again, it's, it's really hard to see the light at the end of the tunnel. Obviously, profitability is absolutely tanked. This kind of shows like a tinier company like Eritzia, when tariffs kind of popped up, they had a ton of exposure to China. And they were able to pretty much get that down to, I think it's even in the single digits now. Yeah.

They're just, well, if you're smaller, it's easier to peeve it too, right? Whereas Nike is massive. And I think the vast majority of their production is like Vietnam, say, Bangladesh, China, anywhere. Like, and they just couldn't really do it. And now they're just getting crushed by tariffs and just like people just not buying the product. No. Okay. No, I mean, uh, it's not looking good.

I was looking at the drawdown. In the last five years, it's down 75%. Yeah. So it's tough. Yeah. Fashion is tough. So I think I made a bit of money with Lou Lemon over the years, but even me, I'm just very careful entering into fashion.

I think there is some easier money to be made in the stock market than betting on fashion plays. But if you're right, like Eritzia, you were definitely right. And I was wrong when it came to that. You can do extremely well with fashion plays. Well, and the thing is, I think I'm fairly bullish on Eritzia now, but I think Eritzia will eventually have its day. I mean, none of the.

these companies survive, like, can you think of like a single company that survived without having a massive drawdown like this in the fashion space? Nike before five years ago. Yeah, exactly. Like, that's what I mean. Like every one of these companies, I think, will have their day. It just, it just depends on when. No, that's a good point.

So before we get on to Go Easy, I wanted to talk about Air Canada. So the CEO announced just a couple days ago, Michael Russo, that he was going to be retiring by the end of the third quarter. Obviously, it made a whole lot of headlines because this comes after there was widespread criticism about the video he posted following the collision, the tragic collision at LaGuardia that killed the two Air Canada pilots. I think that was last week, if I remember correctly. And the criticism was mainly because the video was, I think almost entirely in English. And I'm sure that it's definitely part because of the reason, because obviously got to criticize a lot by Quebec politicians, Mark Carney as well. There was a lot of criticism,

but I'm going to forget about that for a second. And I think it's probably a very smart move for him to be retiring because look at this another way. So it's going to be a rough year for Air Canada business wise. Like forget about this tragic event. I just think it's going to be extremely challenging for Air Canada. That's because they'll be facing increased cost pressures for rising jet fuel prices. So in their Q4 management discussion analyst that came out, analysis that came out a few months ago with their earnings, they said they have 17% of their projected jet fuel consumption hedge in the first half of 2026. Now, it's, their jet fuel cost was $91 a $0.91 per barrel in Q4, sorry, per liter, so 0.91 per liter in Q4 and it's now trading above 1.15, so $115 per

per liter in North America. And obviously that is, it will vary depending on the location, but I use a North American price because they are domiciled here. And it will definitely hit margins directly the longer the oil chalk lasts. And even if they increase their hedging now, it's likely going to come at a much higher price than they had in place, which, it was a hedge at a price of 0.51, so 51 cents per liter. So I'm sure they'll try to mitigate that by increasing prices, but it is debatable by how much they can increase prices because are people really and businesses really going to be ponying up that much more money

for airfare if the economy is slowing, to me, especially with COVID, right? And we learn how to work remotely. I think companies will probably try to save some money by cutting these type of expenses. They could cancel routes that are not as profitable or become unprofitable because of the rising fuel costs and find other efficiencies. But at the end of the day, I think it's really hard to argue that it's not going to be a really tough year to navigate for airlines in general, but also Air Canada. So to me, I mean, obviously when you added the French controversy that happened and then

probably looking at this year being a pretty rough one for airlines in general. Probably a really smart move for him to announce his retirement right now. Yeah, very good timing, I would say. I mean, they already have a hard enough time getting people flying already. So I don't know if you, how much more you could raise prices. This would obviously impact every airline, but I don't know, like if you were to look at like a delta or something. I don't know how much fuel they would like the percentage they would have hedged. 17% seems low.

Yeah, it's pretty low and they actually could hedge much more. So they have in their financial statements like kind of limits to what they'll hedge to. And they could have a hedge a bit more. But it does seem like airlines may have gotten a bit complacent. You had Trump in the U.S. just saying drill, baby drill and just prices saying pretty low. I feel like you may have had companies that got pretty complacent. and then the oil shock happened with the Warren around. But I just wanted to look at it from another angle because you're seeing a lot of headlines that he's retiring or quitting after the whole video thing.

But to me, sure, I'm sure he's, it's probably part of the reason. But you can't rule out the fact that he probably saw the writing on the wall as well. And you know what? Like, I'm near retirement. I'm probably a multi-millar. Millionaire already. Do I really want to deal with all of this? And on top of like a probably struggling airline for most of this year and probably into next year, I'm going to say no. Yeah.

Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too until we switched to the new EQ Bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up quick and fully online, no branch visits because, let's be honest, no business owner has time for that.

We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at EQBank.ca slash business. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing

consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest? Head over to questray.com, open and fund your account with code TCI and receive $50. Conditions apply. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus.

and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked.

And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends. And there's other stuff like learning, duolingo style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me, search me up, some of the YouTubers and influencers

and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas, and using the analytics tools. So go ahead, Blossom Social in the App Store, and I'll see you there. Let's move on now to Go Easy. So we've both been texting quite a bit. I know you starting, you probably looked at it a little more, but I did listen to the call this morning. So I'll chime in a little bit too. Yeah.

So I did these last night. So I don't have any comments on the call. Just the, uh, the earnings. But yeah, I mean, I know we had spoke a lot about this company over the last probably like year or so. And I mean, even me going back to like 20, 24, but I like I did not think things would get this bad. Like I thought it would be, I thought it could struggle, but I, I didn't think it would get. this ugly. I mean, I think back then I was thinking, you know, if Go Easy got to $70 a share, things would be getting pretty ugly and we're sitting at what, probably

30 bucks a share, 35 bucks a share right now. You were texting me about that like, oh, if it gets a 70 before the whole update, you know, before one of its subsidiaries. Yeah, March 10th update. Completely blew up. But I mean, in the last month, we've had 180 million in charge us from LEN care, $160 million goodwill impairment on the acquisition. That was mentioned. in this quarter, obviously because it's, you know, Lentcare is probably not worth as much as they paid for prior. You have a dividend suspension, guidance withdrawal. They delayed their earnings. They didn't tech, well, they kind of did. They reported a month later and then they delayed their earnings yet another week and they reported pretty much, I believe, like maybe an hour or two before

they were, they had to. Yeah. And by, you know, we're 82% down in less than six months. And by the looks of it estimates were for losses of around $7.75 a share. The company reported losses of $8.93. And on an IFRS basis, they lost $20.50 a share. So yeah, ugly. So not good. Yeah, not good. The one thing I guess I will say, like, people might look at this quarter and be like, how is the company not down, I don't know, 20, 30, 40% on this quarter? Like, all of this was pretty much projected, like the month. They got ahead of it. Most of this stuff, yeah, like it did mostly align with what they had said in that special update on March 10. There's a couple of things, though, that do still raise some eyebrows. And we'll mention those that I think for me were a little bit unexpected still.

Yeah. So charge offs obviously skyrocketed 23.8%. So one year ago, they were 9.3%. And I mean, this is a company that pumped up best in class charge off rates for, for many years. It was in the pitch deck. It was in pretty much every quarterly call, whatever it may be. I mean, to me, this is, you know, somebody was, was lying clearly or at least using, you know, lower regulated nature of this industry to kind of kick the can down the road long enough to try and avoid facing reality. And obviously that short report had been saying it back in September and, you know, it ended up being the case. And, you know, Lendcare, which is kind of, of the merchant originated loan provider bought in 2021 is like this is where the issues lie. It's a complete disaster. And I don't know if this is 100% accurate, but I'm fairly sure from what I was reading is so

LENCare was merchant originate. So GoEasy had nothing to do with the underwriting or anything. It was all LNCare. You'd go into the dealer, whatever it may be, like a power sports dealer, an automobile dealer, whatever else they did. you get financing there go easy simply holds the loan it was a completely separate operational process because again like go easy's easy financial segment has performed very well for a very long time so the focus right now is definitely on the len care side of things so total net charges net charge

offs from a dollar's perspective hit 331 million and just give you an idea this company had 283 million in net income last year so like you're wiping out a year and a bit in terms of... Yeah, one thing... Yeah, go ahead. One thing that they kept saying on the call, they kept wanting to say... Well, they kept saying that, oh, this issue was only at land care that go-easy financial, personal secured and unsecured loans.

So loans that are just, you know, not backed by anything, but some that are backed by, you know, your property or whatever it is. But they're like, oh, go-easy is good. it's really just land care, the majority of our loans are go easy. And then you start looking through this slide deck and 43.4% of loans still are from land care. So it's like it's it's just an absolutely part like massive part of the business. And I feel like they're trying to sell this thing as to like, oh, the business is doing really great. But, you know, it's just there's so many questions left for this business.

and then something we were talking about, again, on the slide deck, okay, you see the net charge-offs going completely bonkers for lend care, so going from the below 10% of close to 40%, but somehow easy financial, unsecured and secured, these charge-off rates are still like flat to trending down. And this is what really scares me from them because they're saying this is excellent. They've always done well with these. This is the core of their business. And sure, but we're also entering an area where we're going into pretty uncertain in the economic times.

The job market seems to be turning in Canada, not doing particularly well. We're still in a trade war with the U.S. You're having these borrowers now having to deal with higher gas prices. I mean, these are some of the people that will have the hardest time to deal with higher prices at the pump and the Europol effects in the economy. So I do have a lot of questions like going forward even for the easy financial part of their loans. Like how can you really expect that these will stay this low? And this is what really scares me about this business going forward. Yeah. And the only thing, and again, I'm completely guessing here and I mentioned this before.

but the only thing I can see is, again, like, say that unsecured loan is probably like a, well, I mean, I guess on the secured line, it could be like a hellock and on the unsecured line. It could just be like a floating line of credit or whatever. It may be. And a lot of these allow you to pay interest only for a lot of the products. So whereas the automobiles or the snowmobiles or whatever, they typically have a set term, you got to pay interest and principal, like the payments are generally, you know, somebody could get by, with a line of credit paying interest, you know, for a very long time, whereas that automobile loan needs principal and interest. That's the only thing I can see why the chargeoffs aren't skyrocketing in the other areas as well is maybe people who have a $10,000 line of credit are just, you know, chucking in that $100 a month or whatever it may be in terms of interest and that keeps a loan current. But I mean, again, as you had mentioned, like that only lasts for so long until, you know, if things get bad enough, that'll kind of go sour too.

but I think it's probably, you know, maybe the last thing to go sour, but just back to kind of the issues. And this was a big one. And it was kind of announced, I think it was like a week before, but the company came to agreements on it on its debt covenants. And I think if it hadn't, I mean, it's not far fetch to say that, you know, a lot of these companies, like, they would go broke. Like, if you own this company, it did not think that this was kind of an existential threat.

it definitely was. If the lenders don't agree to new terms or if they really kind of, I don't know the word for it, but if they kind of really twist your arm or whatever and, you know, demand much higher rates, like you have a company with $5.5 billion in loans that can't really fund itself. So lenders who just all of a sudden. Yeah, they, they push back on that on the call. So they were saying that and you'll, you'll mention that for the covenants when they like the, the facilities will be available and it's not until Q2, Q3 and they have to meet certain requirements, but they said on the call that they'll have plenty of liquidity and that they generated a lot of cash flow because as the loans come, you know, are repaid and they're able to just reissue those for new loans and so on. So they say

that they have very sustainable cash flows. So they kept saying that on the call. Like they said they would be self-funded maybe or something like that along those lines? Like, well, they yeah, they basically, they generate enough cash flow to, you know, those loans maturing, the money coming in from these loan to be able to, yeah, survive without a lot. Survive without the extra liquidity, at least for that little while until, you know, their requirements are mean, and they get access to them. Yeah, I mean, I don't know. It's, they need, they need this funding.

Like, it's, yeah, it's, they need it. It's kind of like the core model of the business. I mean, they borrow, you know, and loan from their own balance sheet at, at higher rates. But in terms of like the conditions on those, so it looks like one of their credit facilities was cut from 1.4 billion to 1.2 billion. They increased rates on their borrowings by 100 basis points. And a bunch of the money is not available to go easy until as you had mentioned. Like I think it's a few quarters down the line. They're doing.

Yeah, Q2, Q3. Obviously these go through an audit, which you're currently doing as part of it. Yeah. These banks probably want to make sure there's nothing else under the surface that's going to blow up as well. and eventually, I think something like 700 million or something like that is not available for the next few quarters. So pretty reasonable for these institutions to want that. And I read an article, again, I read a few articles. None of them are from like sources that, you know, I don't really know any of them.

But like, apparently what was happening. And this is actually on the restated financial side of things. So Lendcare staff members were apparently like deliberately trying to. to pull payments out of schedule from delinquent customers to make the loans appear current again. So for example, if your payment is due on the 20th of each month, they would try to pass it on the 10th to kind of surprise the bore who might have money in their account, but they haven't been paying that loan because they'd rather not pay it and buy their groceries. Yes. That's kind of what I took from it. Like, again, I'm not 100% certain, but I, like the way I read it, that's kind of what it seems. Like these cause the borrowers go delinquent.

And then like typically there's something set out where they're going to try the payment again in X amount of days. And go easy or sorry, lend care, whatever, go easy, lend care. Like they hit them with that payment early. Because like in my eyes, the way I look at it is these are people who probably do not care about that payment anymore. They probably do not want to make it. So no, exactly. Go easy. You know, they try to have.

C-due and you know what I know I'm not making the payment I have to focus on other stuff you know pay my house whatever it is my rent you want that C-doo come and get it like I'm not paying for it exactly yeah so Lenncare tries to hit him with you know a kind of random payment now I don't know what I would say they're not allowed to do this like I can know yeah you think that this would be in your agreement but again I don't know but that this is kind of what saying was happening and then And if they couldn't do that, they'd just restructure them to make the loan look current again. So they'd kind of restructure the loan and it would look current again.

So if they couldn't get the payment. And again, I don't know, but the restated financials, GoEasy had mentioned that a lot of the stuff from Lentcare. The revenue that they had to pull back was revenue they were booking while it was in transit. So I don't know if that was, you know, revenue they were booking from this strategy that eventually did not work. out. I don't know. But again, it's, it's fishy, very fishy. And again, that type of accounting stuff, it's a big issue. I mean, some might say the company mentions it's not material. And I couldn't really, I looked at the 2024 financials compared to like the restated 2024 financials and I couldn't find anything really out of the ordinary. So it probably was immaterial. But I mean,

this company just wrote off an entire year's worth of profits in terms of charge. So when they say something isn't material, I mean, obviously it's, you know, that's up to whoever's reading it. And in terms of forward guidance, all they really said was that they'll promise to be better in the future. And that charge off rates will be in the mid to high teens for the first quarter of 2026 and then trend downward to the midteens by the end of year. So what this is pretty much saying is they're going to have charge off rates of, let's say, 18 and a half percent next quarter. In order to get it down to the mid teens, you're going to have to get back to charge off rates. of what like 12% probably for the rest of the year 12 13% to get it down to that point so pretty much what they're telling you is like nothing else is is going to happen that's material here

which again requires a lot of fade they did not really address the weakening economy either so in terms of the assumptions that would be baked into you know what they're projecting because these kind of companies they should have a base case a bearish scenario and an optimistic one so I was kind of surprised that they did not address that or any of the analysts actually asked that on the calls. But there were some pretty pointing questions. So I'll give that to analysts. I guess a lot of them have been made to look foolish in the last six months. So I think some of them weren't really kind of happy.

And you could tell by the tone of the questions. At the end of the day, too, this management team is asking shareholders or potential shareholders to trust them. Yeah. And I must say that, you know, I'm the kind of investor that I will say, okay, well, you show me how things go in the next two, three, four quarters, and then I'll decide whether I should give you a bit of trust. I'm not saying that I would even touch this company at this point or even three, four quarters down the line. But when a company really misleads you like that, even though they're saying they didn't know about it, I mean, you didn't know what about half of your freaking business? Yeah. Like that's gross negligence in terms of management.

So that's kind of the way I see it because they really tried to sell that off as being like, oh, go easy is great. It was just this like kind of other unit, but this other unit's half your business. So like you are doing a pretty shitty job if you don't know what's going on in your business. Yeah, I mean, that's kind of my take from it. I mean, they need to like I would not touch this thing unless they punted pretty much everybody who is involved. I mean, and just go back to kind of the. direct to consumer easy financial model and like get if you're going to continue running lanker like same operations same underwriting same and i think they did put that in their six step plan

or whatever that they're going to combine them because i mean yeah like merchant originated like go easy probably didn't really know a lot what was going on here and i mean the thing is if this is like the only kind of cockroach here the company will be fine i mean it's trading at a massive discount to book value right now. I think it's trading at like 0.5x book value eventually all Yeah. And I think like, you know, pre issues here, it typically traded at two and a half X book, I think. So if this is it, eventually the Lendcare damage will be absorbed and they can kind of get back on track. But I mean, I don't know. I think it's kind of a, it's kind of a harsh less than I guess for many to pay little to no attention to, you know, a lot of management commentary

unless you really, really, really trust them. I mean, if I heard commentary from Berkshire, I would probably take that at face value because, you know, but this, I mean, they're going to feed you whatever you want to buy the stock. I mean, you can look at, you know, they bragged about the best in class charge off rates and it's, you know, obviously that it will probably never come out as to whether or not they actually knew what was going on here. But if they did know what was going on, They were just kind of outright lying to you about this. And then, I mean, again, you go into the pitch deck and it kind of shows, you know, how many tough situations they've navigated before, et cetera.

And then, you know, under the surface, the numbers are being fabricated. So yeah, it's not a good look. The stock, like, if this is it, if this is the only, you know, big blow up this company has, like it looks cheap right now. But the market is definitely pricing in more issues, I would imagine. and we'll just see what ends up coming out of it. Yeah. No, I think that's a good way to end it.

We'll definitely keep an eye on what happens going forward with GoEasy if there's any special updates. Or if not, we'll see what they say once they report Q1, which should be, I don't know, relatively soon. Because they waited for, they waited so long. I guess the latest it could be, it would be June 30th. So we'll have to see. But hopefully you enjoyed this episode. If you've been following GoEasy because of the podcast, then hopefully. Hopefully you enjoyed this last segment.

We'll keep you posted, of course, on any new developments. And again, we appreciate all the support. If you haven't given us a review or if you've done so a while back, if you can give us a five-star review, always helps people finding us, discovering us, and make sure you subscribe to our YouTube channel. We are posting some more content there. We'll probably look at doing those Monday updates,

those live updates in the next couple weeks. So we just have to figure out when we'd start. but probably start lining that up when earning season picks up again. So I think probably starts picking up in a few weeks from now. So yeah, so stay tuned for that. Make sure you subscribe so you don't miss anything. And we will be back

with a regular episode on Monday, which we will be doing with Brayden. So the three amigos will be back on Monday. Make sure you tune in for that where we have some stocks on a radar that will do kind of a decent dive on. So it should be a fun one. The Canadian Investor Podcasts should not be construed as investment or financial advice.

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