Amid wider economic uncertainty, some analysts have said that businesses are at a “no-hire, no fire” standstill. That’s caused many to limit new work to only a few specific roles, if not pause openings entirely. At the same time, sizable layoffs have continued to pile up — raising worker anxieties across sectors.
Some companies have pointed to rising operational costs spanning from President Donald Trump’s barrage of new tariffs and shifts in consumer spending. Others cite corporate restructuring more broadly — or, as seen with big names like Amazon, are redirecting money to artificial intelligence.
Federal employees have encountered additional doses of uncertainty, impacting worker sentiment around the job market overall. Shortly after Trump returned to office at the start of the year, federal jobs were cut by the thousands. And the record 43-day government shutdown also left many to work without paychecks.
The impasse put key economic data on hold, too. In a delayed report released Thursday, the Labor Department said U.S. employers added a surprising 119,000 jobs in September. But unemployment rose to 4.4% — and other troubling details emerged, including revisions showing the economy actually lost 4,000 jobs in August. There’s also growing gender and racial disparities. The National Women’s Law Center notes women only accounted for 21,000 of September’s added jobs — and that Black women over the age of 20, in particular, saw unemployment climb to 7.5% for the month.
The shutdown has left holes in more recent hiring numbers. The government says it won’t release a full jobs report for October.
Here are some of the largest job cuts announced recently:
Verizon
In November, Verizon began laying off more than 13,000 employees. In a staff memo announcing the cuts, CEO Dan Schulman said that the telecommunications giant needed to simplify operations and “reorient” the entire company.
General Motors
General Motors moved to lay off about 1,700 workers across manufacturing sites in Michigan and Ohio in late October, as the auto giant adjusts to slowing demand for electric vehicles. Hundreds of additional employees are reportedly slated for “temporary layoffs” at the start of next year.
Paramount
In long-awaited cuts just months after completing its $8 billion merger with Skydance, Paramount plans to lay off about 2,000 employees — about 10% of its workforce. Paramount initiated roughly 1,000 of those layoffs in late October, according to a source familiar with the matter.
In November, Paramount also announced plans to eliminate 1,600 positions as part of divestitures of Televisión Federal in Argentina and Chilevision in Chile. And the company said another 600 employees had chosen voluntary severance packages as part of a coming push to return to the office full-time.
Amazon
Amazon said last month that it will cut about 14,000 corporate jobs, close to 4% of its workforce, as the online retail giant ramps up spending on AI while trimming costs elsewhere. A letter to employees said most workers would be given 90 days to look for a new position internally.
UPS
United Parcel Service has disclosed about 48,000 job cuts this year as part of turnaround efforts, which arrive amid wider shifts in the company’s shipping outputs. UPS also closed daily operations at 93 leased and owned buildings during the first nine months of this year.
Target
Target in October moved to eliminate about 1,800 corporate positions, or about 8% of its corporate workforce globally. The retailer said the cuts were part of wider streamlining efforts.
Nestlé
In mid-October, Nestlé said it would be cutting 16,000 jobs globally — as part of wider cost cutting aimed at reviving its financial performance amid headwinds like rising commodity costs and U.S. imposed tariffs. The Swiss food giant said the layoffs would take place over the next two years.
Lufthansa Group
In September, Lufthansa Group said it would shed 4,000 jobs by 2030 — pointing to the adoption of artificial intelligence, digitalization and consolidating work among member airlines.
Novo Nordisk
Also in September, Danish pharmaceutical company Novo Nordisk said it would cut 9,000 jobs, about 11% of its workforce. The company — which makes drugs like Ozempic and Wegovy — said the layoffs were part of wider restructuring, as it works to sell more obesity and diabetes medications amid rising competition.
ConocoPhillips
Oil giant ConocoPhillips announced plans in September to lay off up to a quarter of its workforce, as part of broader efforts from the company to cut costs. Between 2,600 and 3,250 workers were expected to be impacted, with most layoffs set to take place before the end of 2025.
Intel
Intel has moved to shed thousands of jobs — with the struggling chipmaker working to revive its business. In July, CEO Lip-Bu Tan said Intel expected to end the year with 75,000 “core” workers, excluding subsidiaries, through layoffs and attrition. That’s down from 99,500 core employees reported the end of last year. The company previously announced a 15% workforce reduction.
Microsoft
In May, Microsoft began laying off about 6,000 workers across its workforce. And just months later, the tech giant said it would be cutting 9,000 positions — marking its biggest round of layoffs seen in more than two years. The company has cited “organizational changes,” but the labor reductions also arrive as the company spends heavily on AI.
Procter & Gamble
In June, Procter & Gamble said it would cut up to 7,000 jobs over the next two years, 6% of the company’s global workforce. The maker of Tide detergent and Pampers diapers said the cuts were part of a wider restructuring — also arriving amid tariff pressures.
While driving to a new restaurant, your car’s satellite navigation system tracks your location and guides you to the destination. Onboard cameras constantly track your face and eye movements. When another car veers into your path, forcing you to slam on the brakes, sensors are assisting and recording. Waiting at a stoplight, the car notices when you unbuckle your seat belt to grab your sunglasses in the backseat.
Modern cars are computers on wheels that are becoming increasingly connected, enabling innovative new features that make driving safer and more convenient. But these systems are also collecting reams of data on our driving habits and other personal information, raising concerns about data privacy.
Here is what to know about how your car spies on you and how you can minimize it:
How cars collect data
It’s hard to figure out exactly how much data a modern car is collecting on you, according to the Mozilla Foundation, which analyzed privacy practices at 25 auto brands in 2023. It declared that cars were the worst product category that the group had ever reviewed for privacy.
AP AUDIO: One Tech Tip: Modern cars are spying on you. Here’s what you can do about it
Modern cars are spying on you. AP’s Kelvin Chan reports.
The data points include all your normal interactions with the car — such as turning the steering wheel or unlocking doors — but also data from connected onboard services, like satellite radio, GPS navigation systems, connected devices, telematics systems as well as data from sensors or cameras.
Vehicle telematics systems started to become commonplace about a decade ago, and the practice of automotive data collection took off about five years ago.
The problem is not just that data is being collected but who it’s provided to, including insurers, marketing companies and shadowy data brokers. The issue surfaced earlier this year when General Motors was banned for five years from disclosing data collected from drivers to consumer reporting agencies.
The Federal Trade Commission accused GM of not getting consent before sharing the data, which included every instance when a driver was speeding or driving late at night. It was ultimately provided to insurance companies that used it to set their rates.
Be aware
The first thing drivers should do is be aware of what data their car is collecting, said Andrea Amico, founder of Privacy4Cars, an automotive privacy company.
In an ideal world, drivers would read through the instruction manuals and documentation that comes with their cars, and quiz the dealership about what’s being collected.
But it’s not always practical to do this, and manufacturers don’t always make it easy to find out, while dealership staff aren’t always the best informed, Amico said.
Privacy4Cars offers a free auto privacy labeling service at vehicleprivacyreport.com that can summarize what your car could be tracking.
Owners can punch in their car’s Vehicle Identification Number, which then pulls up the automaker’s data privacy practices, such as whether the car collects location data and whether it’s given to insurers, data brokers or law enforcement.
Tweak your settings
Data collection and tracking start as soon as you drive a new car off the dealership lot, with drivers unwittingly consenting when they’re confronted with warning menus on dashboard touch screens.
Experts say that some of the data collection is baked into the system, you can revoke your consent by going back into the menus.
“There are permissions in your settings that you can make choices about,” said Lauren Hendry Parsons of Mozilla. “Go through on a granular level and look at those settings where you can.”
For example, Toyota says on its website that drivers can decline what it calls “Master Data Consent” through the Toyota app. Ford says owners can opt to stop sharing vehicle data with the company by going through the dashboard settings menu or on the FordPass app.
BMW says privacy settings can be adjusted through the infotainment system, “on a spectrum between” allowing all services including analysis data and none at all.
You can opt out
…
Drivers in the U.S. can ask carmakers to restrict what they do with their data.
Under state privacy laws, some carmakers allow owners across the United States to submit requests to limit the use of their personal data, opt out of sharing it, or delete it, Consumer Reports says. Other auto companies limit the requests to people in states with applicable privacy laws, the publication says.
You can file a request either through an online form or the carmaker’s mobile app.
You can also go through Privacy4Cars, which provides a free online service that streamlines the process. It can either point car owners to their automaker’s request portal or file a submission on behalf of owners in the U.S., Canada, the European Union, Britain and Australia.
… but there will be trade-offs
Experts warn that there’s usually a trade-off if you decide to switch off data collection.
Most people, for example, have switched to satellite navigation systems over paper maps because it’s “worth the convenience of being able to get from point A to point B really easily,” said Hendry Parsons.
Turning off location tracking could also halt features like roadside assistance or disable smartphone app features like remote door locking, Consumer Reports says.
BMW advises that if an owner opts to have no data shared at all, “their vehicle will behave like a smartphone in flight mode and will not transmit any data to the BMW back end.”
When selling your car
When the time comes to sell your car or trade it in for a newer model, it’s no longer as simple as handing over the keys and signing over some paperwork.
If you’ve got a newer car, experts say you should always do a factory reset to wipe all the data, which will also include removing any smartphone connections.
And don’t forget to notify the manufacturer about the change of ownership.
Amico said that’s important because if you trade in your vehicle, you don’t want insurers to associate it with your profile if the dealer is letting customers take it for test drives.
“Now your record may be affected by somebody else’s driving — a complete stranger that you have no relationship with.”
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Is there a tech topic that you think needs explaining? Write to us at [email protected] with your suggestions for future editions of One Tech Tip.
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This story has been corrected to show that the Mozilla representative’s first name is Lauren, not Laura.
NEW YORK (AP) — It’s a tough time for the job market.
Amid wider economic uncertainty, some analysts have said that businesses are at a “no-hire, no fire” standstill. That’s caused many to limit new work to only a few specific roles, if not pause openings entirely. At the same time, some sizeable layoffs have continued to pile up — raising worker anxieties across sectors.
Some companies have pointed to rising operational costs spanning from President Donald Trump’s barrage of new tariffs and shifts in consumer spending. Others cite corporate restructuring more broadly — or, as seen with big names like Amazon, are redirecting money to artificial intelligence.
Federal employees have encountered additional doses of uncertainty, impacting worker sentiment around the job market overall. Shortly after Trump returned to office at the start of the year, federal jobs were cut by the thousands. And many workers are now going without pay as the U.S. government shutdown nears its fourth week.
“A lot of people are looking around, scanning the job environment, scanning the opportunities that are available to them — whether it’s in the public or private sector,” said Jason Schloetzer, professor business administration at Georgetown University’s McDonough School. “And I think there’s a question mark around the long-term stability everywhere.”
Government hiring data is on hold during the shutdown, but earlier this month a survey by payroll company ADP showed that the private sector lost 32,000 jobs in September.
Here are some companies that have moved to cut jobs recently.
General Motors
General Motors moved to lay off about 1,700 workers across manufacturing sites in Michigan and Ohio on Wednesday, as the auto giant adjusts to slowing demand for electric vehicles.
Hundreds of additional employees are reportedly slated for “temporary layoffs.” And GM has recently moved to downsize other parts of its workforce, too — including 200 layoffs mostly impacting engineers in Detroit, and other 300 job cuts at a Georgia IT Innovation Center, which it is also shuttering.
Paramount
In long-awaited cuts just months after completing its $8 billion merger with Skydance, Paramount is going to lay off about 2,000 employees — about 10% of its workforce.
Paramount initiated roughly 1,000 of those layoffs on Wednesday, according to a source familiar with the matter, who spoke on the condition of anonymity. The rest of the cuts will be made at a later date.
Amazon
Amazon will cut about 14,000 corporate jobs as the online retail giant ramps up spending on artificial intelligence.
Amazon said Tuesday that it will cut about 14,000 corporate jobs, close to 4% of its workforce, as the online retail giant ramps up spending on AI while trimming costs elsewhere. A letter to employees said most workers would be given 90 days to look for a new position internally.
CEO Andy Jassy previously said he anticipated generative AI would reduce Amazon’s corporate workforce in the coming years. And he has worked to aggressively cut costs overall since 2021.
UPS
United Parcel Service has disclosed about 48,000 job cuts this year as part of turnaround efforts, which arrive amid wider shifts in the company’s shipping outputs.
In a Tuesday regulatory filing, UPS said it’s cut about 34,000 operational positions — and the company announced another 14,000 role reductions, mostly within management. Combined, that’s much higher than the roughly 20,000 cuts UPS forecast earlier this year.
Target said the cuts were part of wider streamlining efforts — with Chief Operating Officer Michael Fiddelke noting that “too many layers and overlapping work have slowed decisions.” The retailer is also looking to rebuild its customer base. Target reported flat or declining comparable sales in nine of the past eleven quarters.
Nestlé
In mid-October, Nestlé said it would be cutting 16,000 jobs globally — as part of wider cost cutting aimed at reviving its financial performance.
The Swiss food giant said the layoffs would take place over the next two years. The cuts arrive as Nestlé and others face headwinds like rising commodity costs and U.S. imposed tariffs. The company announced price hikes over the summer to offset higher coffee and cocoa costs.
Lufthansa Group
In September, Lufthansa Group said it would shed 4,000 jobs by 2030 — pointing to the adoption of artificial intelligence, digitalization and consolidating work among member airlines.
Most of the lost jobs would be in Germany, and the focus would be on administrative rather than operational roles, the company said. The layoff plans arrived even as the company reported strong demand for air travel and predicted stronger profits in years ahead.
Novo Nordisk
Also in September, Danish pharmaceutical company Novo Nordisk said it would cut 9,000 jobs, about 11% of its workforce.
Novo Nordisk — which makes drugs like Ozempic and Wegovy — said the layoffs were part of wider restructuring as the company works to sell more obesity and diabetes medications amid rising competition.
A spokesperson for ConocoPhillips confirmed the layoffs on Sept. 3, noting that 20% to 25% of the company’s employees and contractors would be impacted worldwide. At the time, ConocoPhillips had a total headcount of about 13,000 — or between 2,600 and 3,250 workers. Most reductions were expected to take place before the end of 2025.
Intel
Intel has moved to shed thousands of jobs — with the struggling chipmaker working to revive its business as it lags behind rivals like Nvidia and Advanced Micro Devices.
In a July memo to employees, CEO Lip-Bu Tan said Intel expected to end the year with 75,000 “core” workers, excluding subsidiaries, through layoffs and attrition. That’s down from 99,500 core employees reported the end of last year. The company previously announced a 15% workforce reduction.
The latest job cuts hit Microsoft’s Xbox video game business and other divisions. The company has cited “organizational changes,” with many executives characterizing the layoffs as part of a push to trim management layers. But the labor reductions also arrive as the company spends heavily on AI.
Procter & Gamble
In June, Procter & Gamble said it would cut up to 7,000 jobs over the next two years, 6% of the company’s global workforce.
The maker of Tide detergent and Pampers diapers said the cuts were part of a wider restructuring — also arriving amid tariff pressures. In July, P&G said it would hike prices on about a quarter of its products due to the newly-imposed import taxes, although it’s since said it expects to take less of a hit than previously anticipated for the 2026 fiscal year.
SAN FRANCISCO (AP) — President Donald Trump wants the U.S. government to own a piece of Intel, less than two weeks after demanding the Silicon Valley pioneer dump the CEO that was hired to turn around the slumping chipmaker. If the goal is realized, the investment would deepen the Trump administration’s involvement in the computer industry as the president ramps up the pressure for more U.S. companies to manufacture products domestically instead of relying on overseas suppliers.
What’s happening?
The Trump administration is in talks to secure a 10% stake in Intel in exchange for converting government grants that were pledged to Intel under President Joe Biden. If the deal is completed, the U.S. government would become one of Intel’s largest shareholders and blur the traditional lines separating the public sector and private sector in a country that remains the world’s largest economy.
Why would Trump do this?
In his second term, Trump has been leveraging his power to reprogram the operations of major computer chip companies. The administration is requiring Nvidia and Advanced Micro Devices, two companies whose chips are helping to power the craze around artificial intelligence, to pay a 15% commission on their sales of chips in China in exchange for export licenses.
Trump’s interest in Intel is also being driven by his desire to boost chip production in the U.S., which has been a focal point of the trade war that he has been waging throughout the world. By lessening the country’s dependence on chips manufactured overseas, the president believes the U.S. will be better positioned to maintain its technological lead on China in the race to create artificial intelligence.
Didn’t Trump want Intel’s CEO to quit?
That’s what the president said August 7 in an unequivocal post calling for Intel CEO Lip-Bu Tan to resign less than five months after the Santa Clara, California, company hired him. The demand was triggered by reports raising national security concerns about Tan’s past investments in Chinese tech companies while he was a venture capitalist. But Trump backed off after Tan professed his allegiance to the U.S. in a public letter to Intel employees and went to the White House to meet with the president, who applauded the Intel CEO for having an “amazing story.”
Why would Intel do a deal?
The company isn’t commenting about the possibility of the U.S. government becoming a major shareholder, but Intel may have little choice because it is currently dealing from a position of weakness. After enjoying decades of growth while its processors powered the personal computer boom, the company fell into a slump after missing the shift to the mobile computing era unleashed by the iPhone’s 2007 debut.
Intel has fallen even farther behind in recent years during an artificial intelligence craze that has been a boon for Nvidia and AMD. The company lost nearly $19 billion last year and another $3.7 billion in the first six months of this year, prompting Tan to undertake a cost-cutting spree. By the end of this year, Tan expects Intel to have about 75,000 workers, a 25% reduction from the end of last year.
Would this deal be unusual?
Although rare, it’s not unprecedented for the U.S. government to become a significant shareholder in a prominent company. One of the most notable instances occurred during the Great Recession in 2008 when the government injected nearly $50 billion into General Motors in return for a roughly 60% stake in the automaker at a time it was on the verge of bankruptcy. The government ended up with a roughly $10 billion loss after it sold its stock in GM.
Would the government run Intel?
U.S. Commerce Secretary Howard Lutnick told CNBC during a Tuesday interview that the government has no intention of meddling in Intel’s business, and will have its hands tied by holding non-voting shares in the company. But some analysts wonder if the Trump administration’s financial ties to Intel might prod more companies looking to curry favor with the president to increase their orders for the company’s chips.
What government grants does Intel receive?
Intel was among the biggest beneficiaries of the Biden administration’s CHIPS and Science Act, but it hasn’t been able to revive its fortunes while falling behind on construction projects spawned by the program.
The company has received about $2.2 billion of the $7.8 billion pledged under the incentives program — money that Lutnick derided as a “giveaway” that would better serve U.S. taxpayers if it’s turned into Intel stock. “We think America should get the benefit of the bargain,” Lutnick told CNBC. “It’s obvious that it’s the right move to make.”
NEW YORK (AP) — With deep knowledge of Stephen King’s books and curiosity about their inspirations, writer Sharon Kitchens began a journey around Maine. As she learned about the real-life settings and people behind such fiction as “IT” and “Salem’s Lot,” she arranged them into an online map and story she called “Stephen King’s Maine.”
“It was amateur hour, in a way,” she says. “But after around 27,000 people visited the site one of my friends said to me, ‘You should do something more with this.’”
Published in 2024, the resulting book-length edition of “Stephen King’s Maine” is among hundreds released each year by The History Press. Now part of Arcadia Publishing, the 20-year-old imprint is dedicated to regional, statewide and locally focused works, found for sale in bookstores, museums, hotels and other tourist destinations. The mission of The History Press is to explore and unearth “the story of America, one town or community at a time.”
The King book stands out if only for its focus on an international celebrity. Most History Press releases arise out of more obscure passions and expertise, whether Michael C. Gabriele’s “The History of Diners in New Jersey,” Thomas Dresser’s “African Americans of Martha’s Vineyard” or Clem C. Pellett’s “Murder on Montana’s Hi-Line,” the author’s probe into the fatal shooting of his grandfather.
A home for history buffs
Like Kitchens, History Press authors tend to be regional or local specialists — history lovers, academics, retirees and hobbyists. Kitchens’ background includes writing movie press releases, blogging for the Portland Press Herald and contributing to the Huffington Post. Pellett is a onetime surgeon who was so compelled by his grandfather’s murder that he switched careers and became a private investigator. In Boulder, Colorado, Nancy K. Williams is a self-described “Western history writer” whose books include “Buffalo Soldiers on the Colorado Frontier” and “Haunted Hotels of Southern Colorado.”
The History Press publishes highly specific works such as Jerry Harrington’s tribute to a Pulitzer Prize-winning editor from the 1930s, “Crusading Iowa Journalist Verne Marshall.” It also issues various series, notably “Haunted” guides that publishing director Kate Jenkins calls a “highly localized version” of the ghost story genre. History Press has long recruited potential authors through a team of field representatives, but now writers such as Kitchens are as likely to be brought to the publisher’s attention through a national network of writers who have worked with it before.
“Our ideal author isn’t someone with national reach,” Jenkins says, “but someone who’s a member of their community, whether that’s an ethnic community or a local community, and is passionate about preserving that community’s history. We’re the partners who help make that history accessible to a wide audience.”
The History Press is a prolific, low-cost operation. The books tend to be brief — under 200 pages — and illustrated with photos drawn from local archives or taken by the authors themselves. The print runs are small, and authors are usually paid through royalties from sales rather than advances up front. History Press books rarely are major hits, but they can still attract substantial attention for works tailored to specific areas, and they tend to keep selling over time. Editions selling 15,000 copies or more include “Long-Ago Stories of the Eastern Cherokee,” by Lloyd Arneach, Alphonso Brown’s “A Gullah Guide to Charleston” and Gayle Soucek’s “Marshall Field’s,” a tribute to the Chicago department store.
The King guide, which has sold around 8,500 copies so far, received an unexpected lift — an endorsement by its subject, who was shown the book at Maine’s Bridgton Books and posted an Instagram of himself giving it a thumbs-up.
“I was genuinely shocked in the best possible way,” Kitchens says, adding that she saw the book as a kind of thank-you note to King. “Every choice I made while writing the book, I made with him in mind.”
Getting the story right
History Press authors say they like the chance to tell stories that they believe haven’t been heard, or were told incorrectly.
Rory O’Neill Schmitt is an Arizona-based researcher, lecturer and writer who feels her native New Orleans is often “portrayed in way that feels false or highlights a touristy element,” like a “caricature.” She has responded with such books as “The Haunted Guide to New Orleans” and “Kate Chopin in New Orleans.”
Brianne Turczynski is a freelance writer and self-described “perpetual seeker of the human condition” who lives outside of Detroit and has an acknowledged obsession with “Poletown,” a Polish ethnic community uprooted and dismantled in the 1980s after General Motors decided to build a new plant there and successfully asserted eminent domain. In 2021, The History Press released Turczynski’s “Detroit’s Lost Poletown: The Little Neighborhood That Touched a Nation.”
“All of the journalist work that followed the story seemed to lack a sense of closure for the people who suffered,” she said. “So my book is a love letter to that community, an attempt for closure.”
Kitchens has followed her King book with the story of an unsolved homicide, “The Murder of Dorothy Milliken, Cold Case in Maine.” One of her early boosters, Michelle Souliere, is the owner of the Green Hand Bookstore in Portland and herself a History Press writer. A lifelong aficionado of Maine history, her publishing career, like Kitchens’, began with an online posting. She had been maintaining a blog of local lore, “Strange Maine,” when The History Press contacted her and suggested she expand her writing into a book.
“Strange Maine: True Tales from the Pine Tree State” was published in 2010.
“My blog had been going for about 4 years, and had grown from brief speculative and expressive posts to longer original research articles,” she wrote in an email. “I often wonder how I did it at all — I wrote the book just as I was opening up the Green Hand Bookshop. Madness!!! Or a lot of coffee. Or both!!!”
LOS ANGELES (AP) — Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, though fans of the electric vehicle maker will have to wait until at least 2026 before they are available.
CEO Elon Musk pulled up to a stage at the Warner Bros. studio lot in one of the company’s “Cybercabs,” telling the crowd that the sleek, AI-powered vehicles don’t have steering wheels or pedals. He also expressed confidence in the progress the company has made on autonomous driving technology that makes it possible for vehicles to drive without human intervention.
“We’ll move from supervised Full Self-Driving to unsupervised Full Self-Driving. where you can fall asleep and wake up at your destination,” he said. “It’s going to be a glorious future.”
Tesla expects the Cybercabs to cost under $30,000, Musk said. He estimated that the vehicles would become available in 2026, then added “before 2027.”
The company also expects to make the Full Self-Driving technology available on its popular Model 3 and Model Y vehicles in Texas and California next year.
“If they’re going to eventually get to robotaxis, they first need to have success with the unsupervised FSD at the current lineup,” said Seth Goldstein, equity strategist at Morningstar Research. “Tonight’s event showed that they’re ready to take that step forward.”
When Tesla will actually take that step, however, has led to more than a little anxiety for investors who see other automakers deploying similar technology right now. Shares of Tesla Inc. tumbled 9% at the opening bell Friday.
Waymo, the autonomous vehicle unit of Alphabet Inc., is carrying passengers in vehicles without human safety drivers in Phoenix and other areas. General Motors’ Cruise self-driving unit had been running robotaxis in San Francisco until a crash last year involving one of its vehicles.
Also, Aurora Innovation said it will start hauling freight in fully autonomous semis on Texas freeways by year’s end. Another autonomous semi company, Gatik, plans to haul freight autonomously by the end of 2025.
“Tesla yet again claimed it is a year or two away from actual automated driving — just as the company has been claiming for a decade. Indeed, Tesla’s whole event had a 2014 vibe, except that in 2014 there were no automated vehicles actually deployed on public roads,” Bryant Walker Smith, a University of South Carolina law professor who studies automated vehicles, told The Associated Press in an email. “Now there are real AVs carrying real people on real roads, but none of those vehicles are Teslas. Tonight did not change this reality; it only made the irony more glaring.”
Tesla had 20 or so Cybercabs on hand and offered event attendees the opportunity to take rides inside the movie studio lot — not on Los Angeles’ roads.
At the presentation, which was dubbed “We, Robot” and was streamed live on Tesla’s website and X, Musk also revealed a sleek minibus-looking vehicle that, like the Cybercab, would be self-driving and can carry up to 20 passengers.
The company also trotted out several of its black and white Optimus humanoid robots, which walked a few feet from the attendees before showing off dance moves in a futuristic-looking gazebo.
Musk estimated that the robots would cost between $28,000-$30,000 and would be able to babysit, mow lawns, fetch groceries, among other tasks.
“Whatever you can think of, it will do,” he said.
The unveiling of the Cybercab comes as Musk tries to persuade investors that his company is more about artificial intelligence and robotics as it labors to sell its core products, an aging lineup of electric vehicles.
Tesla’s model lineup is struggling and isn’t likely to be refreshed until late next year at the earliest, TD Cowen analyst Jeff Osborne wrote in a research note last week.
Osborne also noted that, in TD Cowen’s view, the “politicization of Elon” is tarnishing the Tesla brand among Democrat buyers in the U.S.
Musk has endorsed Republican presidential candidate Donald Trump and has pushed many conservative causes. Last weekend he joined Trump at a Pennsylvania rally.
Musk has been saying for more than five years that a fleet of robotaxis is near, allowing Tesla owners to make money by having their cars carry passengers while they’re not in use by the owners. Musk said that Tesla owners will be able to put their cars into service on a company robotaxi network.
In addition, the U.S. National Highway Traffic Safety Administration forced Tesla to recall Full Self-Driving in February because it allowed speeding and violated other traffic laws, especially near intersections. Tesla was to fix the problems with an online software update.
Last April in Snohomish County, Washington, near Seattle, a Tesla using Full Self-Driving hit and killed a motorcyclist, authorities said. The Tesla driver told authorities that he was using the system while looking at his phone when the car rear-ended the motorcyclist. The motorcyclist was pronounced dead at the scene, authorities said.
NHTSA says it’s evaluating information on the fatal crash from Tesla and law enforcement officials.
A worker unloads a new Tesla Model 3 from a truck at a logistics drop zone in Seattle, Washington, US, on Thursday, Aug. 22, 2024.
Bloomberg | Bloomberg | Getty Images
Tesla posted its third-quarter vehicle production and deliveries report on Wednesday. The stock fell about 3.5% in premarket trading after the report.
Here are the key numbers:
Total deliveries Q3 2024: 462,890
Total production Q3 2024: 469,796
Analysts were expecting deliveries of 463,310 in the period ending Sept. 30, according to estimates compiled by FactSet StreetAccount.
Deliveries are not defined in Tesla’s financial disclosures, but are the closest approximation to units sold reported by the company. It’s one of the most closely-watched metrics on Wall Street.
In the year-ago period, Tesla reported 435,059 deliveries and production of 430,488 EVs. Last quarter, the company reported 443,956 deliveries, and production of 410,831 vehicles.
Tesla is facing increased competitive pressure, especially in China, from companies like BYD and Geely, along with a new generation of automakers, including Li Auto and Nio.
In the U.S., EV competitors like Rivian are maturing, while legacy automakers Ford and General Motors are selling more electric vehicles after walking back more ambitious goals for electrification.
GM this week reported a roughly 60% increase in EV sales for the third quarter from a year earlier. Still, its electric business is tiny compared to Tesla’s, with just 32,100 units sold in the latest period, accounting for 4.9% of the company’s total sales.
Ford plans to report results on Wednesday.
Tesla hasn’t issued specific guidance for 2024 deliveries, but executives have said they expect a lower delivery growth rate this year versus last despite the company having added a new vehicle, the angular stainless steel Cybertruck, to their lineup.
The company also said on Wednesday that it deployed 6.9 GWh of energy storage products in the quarter.
Shares of Tesla climbed 32% in the third quarter, erasing their loss for the year in the process. The stock is now up almost 4% in 2024, trailing the Nasdaq, which has gained 19%.
Tesla’s brand has been under pressure in the U.S. due in part to the antics of CEO Elon Musk, who, in addition to endorsing former President Donald Trump, has shared what the White House called “racist hate,” and false claims about immigrants and election fraud on X, his social media app.
But Tesla still sells more battery electric vehicles in the U.S. than any other automaker, with Hyundai a distant second.
In its third-quarter earnings report later this month, investors will be particularly focused on profit margins.
Tesla has continued to offer attractive financing options and an array of incentives to drive sales volume in recent months in China as well as in the U.S. Prior to earnings, Tesla will host a marketing event on Oct. 10, and is expected to show off the design of “dedicated robotaxi.”
Musk has promised Tesla self-driving cars for years, but the company has yet to deliver. Meanwhile competitors like Waymo and Pony.ai have begun operating commercial robotaxi services.
DETROIT – General Motors is folding its all-electric BrightDrop commercial vans into the Chevrolet brand in an attempt to increase sales, accessibility and recognition of the vehicles.
The change is expected to expand the selling and service points from a handful of dealers to Chevrolet’s large network of North American dealers, including more than 500 commercial-focused stores in the U.S., according to Sandor Piszar, vice president of the GM Envolve fleet business in North America.
“It’s got that strength of the Chevrolet brand behind it,” he told CNBC. “It’s absolutely going to drive volume. It helps our customers that choose to go into EVs to easily do so working with the Chevrolet dealer they know and trust now for their other fleet needs.”
The number of new dealers will be based on the amount that decide to opt in to selling and servicing the vans. To sell commercial EVs, dealers must have specific vehicle lifts, service bays and employee training, among other things.
GM declined to disclose the average cost for a dealer to become certified to sell the BrightDrop products, citing expenses will vary based on the store.
BrightDrop currently sells two all-electric commercial vans, called the Zevo 400 and Zevo 600, which are used for things such as package delivery. Starting later this year with the 2025 model year, those vans will be rebranded as Chevrolet BrightDrop 400 and 600 vans.
“Chevy’s our top-selling fleet brand for General Motors.” Piszar said. “This makes absolute perfect sense for GM Envolve and Chevrolet.”
The Thursday announcement is the latest change for BrightDrop, which GM launched in 2021 as a fully owned subsidiary before folding it into the company’s fleet business last year.
GM had high expectations of making BrightDrop into a new, lucrative growth business for the automaker, but sales and revenue are not believed to have met the company’s initial expectations.
BrightDrop was expected to generate $1 billion in revenue in 2023. GM declined to disclose BrightDrop’s revenue, but it’s highly unlikely the target was achieved.
The automaker only sold about 500 BrightDrop vans in 2023. GM reports BrightDrop’s sales through the first six months of 2024 were 746 units.
The vans are produced at GM’s CAMI Assembly plant in Ingersoll, Ontario.
DETROIT — A once “dirty” word, and business, in the automotive industry has become a multibillion-dollar battleground for U.S. automakers, led by Ford Motor.
The Dearborn, Michigan-based automaker has turned its fleet business, which includes sales to commercial, government and rental customers, into an earnings powerhouse. And Ford’s crosstown rivals General Motors and Chrysler parent Stellantis have taken notice, restructuring their operations as well.
“There’s much more of an emphasis now on profitability and how fleet can help that,” said Mark Hazel, S&P Global Mobility associate director of commercial vehicle reporting. “[Automakers] are looking at how they strategically go about this. It’s been a very targeted approach with how they deal with fleets.”
Many fleet sales, especially daily rentals, have historically been viewed as a negative for auto companies. They are traditionally less profitable than sales to retail customers and are used by automakers at times as a dumping ground to unload excess vehicle inventories and boost sales.
But Ford has proven that’s not always the case by breaking out financial results for its “Ford Pro” fleet business. The operations have raked in about $18.7 billion in adjusted earnings and $184.5 billion in revenue since 2021.
Such results have led Wall Street to praise the business, as analysts have called it a “hidden gem” and Ford’s “Ferrari,” referring to the highly profitable Italian sports car manufacturer.
“No other company has Ford Pro. We intend to fully press that advantage,” Ford CEO Jim Farley said July 24 during the company’s second-quarter earnings call, in which Ford Pro was the dominant performer.
Fleet sales typically account for 18% to 20% of annual industrywide U.S. light-duty vehicle sales, which exclude some larger trucks and vans, according to J.D. Power.
Part of the opportunity in fleet sales comes from the aging vehicles on U.S. roadways. The average age of the 25 million fleet and commercial vehicles on American roads was 17.5 years last year, according to S&P. That compares with light-duty passenger vehicles at 12.4 years in 2023.
While commercial sales, which are viewed as the best fleet sales, are estimated to be slightly lower this year compared with 2023, both GM and Stellantis have recently redesigned and doubled down on such operations. However, neither reports such results out separately.
“Breaking apart the fleet channel, we see that Commercial sales have been the weakest. And zooming in further, there are just two [original equipment manufacturers] that appear especially challenged: STLA and, to a lesser extent, GM,” Wolfe Research said in an investor note Wednesday.
Meanwhile, Ford’s commercial volumes have increased a “strong” 7% this year compared with 2023, Wolfe said.
While fleet sales data isn’t as available as retail, Wolfe Research estimates Ford is by far the leader in such earnings at a forecast of $9.5 billion this year. That compares with North American operations at GM at $5.5 billion and Stellantis around $3.5 billion, Wolfe estimates.
S&P Global Mobility reports Ford has been the fleet leader for some time. Since 2021, Ford’s market share of new fleet vehicle registrations (categorized by businesses with 10 or more vehicles weighing under 26,000 pounds) has been about 30%. GM, meanwhile, had around 21%-22% during that time, and Stellantis about 9%.
GM, citing third-party data, claims it outsold Ford last year in a segment of fleet sales: commercial vehicles sold exclusively to businesses (with five or more vehicles) and not individual buyers.
Ford, meanwhile, said it counts “all customers who register their full-size, Class 1-7 truck or van under their business,” not just those with five or more vehicles.
Ford claims to lead sales of commercial vehicles, categorized as Class 1-7 trucks and vans, with a roughly 43% share of U.S. registrations through May of this year. That’s up 2.3 percentage points compared with a year earlier, the company said.
The Ford Pro business is led by sales of the automaker’s Super Duty trucks, which are part of its F-Series truck lineup with the Ford F-150, and range from large pickups to commercial trucks and chassis cabs.
It also covers sales of Transit vans in North America and Europe, all sales of the Ranger midsize pickup in Europe, and service parts, accessories and services for commercial, government and rental customers.
Ford Super Duty trucks are seen at the Kentucky Truck assembly plant in Louisville, Kentucky, on April 27, 2023.
Joe White | Reuters
But automakers, including Ford, also see fleet operations as a key driver in other ways, including for electric vehicle sales, as well as reoccurring revenue options such as software and logistical services.
“This revenue has gross margins of 50-plus-percent which drives significant operating leverage and improved capital efficiency,” Farley said during the quarterly call. “The major part of this new software business is actually Ford Pro.”
Ford is aiming to achieve $1 billion in sales of software and services in 2025, led by its fleet and commercial business.
“Ford Pro is core to Ford, and there is potential upside on volumes as well as in software and service,” BofA’s John Murphy said Thursday in an investor note. “On software, Ford Pro accounts for ~80% of Ford’s software subscriptions with an attach rate of only 12%, which is projected to grow to 35%+ over the next few years.”
As Ford touts its fleet business, its closest rivals have amped up their operations.
Chrysler parent Stellantis is relaunching its “Ram Professional” unit this year with goals of achieving record profitability in 2025 and, eventually, becoming the No. 1 seller of light-duty commercial vehicles, which exclude some larger vehicles.
Christine Feuell, CEO of Stellantis’ Ram brand, declined to disclose a time frame for achieving that target but said the automaker believes it can do so after completely revamping its operations to focus on better mainstreaming operations for customers and earnings growth through sales and new services.
“It’s a highly profitable business. Not only on the product side, but on the services side,” she told CNBC during a media event last week. “Software and connected services are really a significant growth opportunity for us as well.
“We’re a little bit behind Ford in launching those services, but we definitely expect to see similar kinds of growth and revenues generated from those connected services.”
Ram makes up about 80% of Stellantis’ U.S. fleet and commercial business. It has a new or revamped lineup of trucks and vans coming to market, plus a host of connected and telematics products to assist fleet customers. It also increased the availability of financing and lending for commercial customers.
“This year truly begins our commercial offensive,” Ken Kayser, vice president of Stellantis North American commercial vehicle operations, said during the media event. “2024 is a foundational year for our brand, as we look to build momentum into 2025.”
GM isn’t sitting idle either. It has revamped its fleet and commercial business. It launched “GM Envolve” last year, its overhauled fleet and commercial business focused on fleet sales, digital telematics and logistics for commercial customers.
Sandor Piszar, vice president of GM Envolve in North America, said the Detroit automaker views the business as a competitive advantage not just to sell vehicles but to create reoccurring revenue and relationships with businesses.
2021 GMC Sierra HD pickup
GM
GM Envolve, formerly known as GM Fleet, reorganized the automaker’s business to be a one-stop shop for fleet customers — from sales and financing to fleet management, logistics and maintenance.
“GM Envolve is a critically important piece of General Motors business. It’s a profitable business,” he told CNBC earlier this year. “We think it is a competitive advantage in the approach we’re taking in this consultative approach of a single point of contact and coordinating the full portfolio that General Motors has to offer.”
GM and Stellantis declined to disclose the earnings and profitability of their fleet businesses.
GM Envolve includes the company’s EV commercial business BrightDrop, which was folded back into the automaker last year instead of it acting as a subsidiary. It didn’t accomplish the growth GM had expected, but EVs have an opening for automakers’ fleet and commercial sales.
“BrightDrop is a great opportunity for General Motors and for GM Envolve,” Piszar said, citing all-electric vans specifically for last-mile deliveries as well as small local businesses. “There’s a lot of use cases and as we ramp up production and get customers to try the vehicle that’s a key piece of our model.”
Unlike retail customers, many fleet and commercial customers have predefined routes or schedules that could accommodate EVs well because they drive locally in a region and could charge overnight when electricity costs are lower.
Brightdrop EV600 van
Source: Brightdrop
S&P Global reports EV startup Rivian Automotive led the U.S. in all-electric cargo van registrations last year, roughly doubling Ford, its closest competitor, at No. 2.
While the upfront investment is high, automakers have argued the eventual payback could be worthwhile for some businesses.
All three of the legacy Detroit automakers are touting such advantages to their fleet customers, while still offering traditional vehicles with internal combustion engines.
Stellantis and Ford also have started highlighting their portfolios of different powertrains such as hybrids and plug-in hybrid electric vehicles as adoption of EVs has not occurred as quickly as many had expected.
Ford last month announced plans valued at about $3 billion to expand Super Duty production, including to “electrify” Super Duty trucks.
“We’ve gone to, on all of our commercial vehicles, a multi-energy platform so we will offer customers the choice that we think no other competitor will have,” Farley said during the earnings call. “We believe we will be a first mover, if not the first mover, in multi-energy Super Duty.”
Natasha Craft, a 25-year-old FedEx driver from Mishawaka, Indiana. She has been locked out of her Yotta banking account since May 11.
Courtesy: Natasha Craft
When Natasha Craft first got a Yotta banking account in 2021, she loved using it so much she told her friends to sign up.
The app made saving money fun and easy, and Craft, a now 25-year-old FedEx driver from Mishawaka, Indiana, was busy getting her financial life in order and planning a wedding. Craft had her wages deposited directly into a Yotta account and used the startup’s debit card to pay for all her expenses.
The app — which gamifies personal finance with weekly sweepstakes and other flashy features — even occasionally covered some of her transactions.
“There were times I would go buy something and get that purchase for free,” Craft told CNBC.
Today, her entire life savings — $7,006 — is locked up in a complicated dispute playing out in bankruptcy court, online forums like Reddit and regulatory channels. And Yotta, an array of other startups and their banks have been caught in a moment of reckoning for the fintech industry.
For customers, fintech promised the best of both worlds: The innovation, ease of use and fun of the newest apps combined with the safety of government-backed accounts held at real banks.
The startups prominently displayed protections afforded by the Federal Deposit Insurance Corp., lending credibility to their novel offerings. After all, since its 1934 inception, no depositor “has ever lost a penny of FDIC-insured deposits,” according to the agency’s website.
But the widening fallout over the collapse of a fintech middleman called Synapse has revealed that promise of safety as a mirage.
Starting May 11, more than 100,000 Americans with $265 million in deposits were locked out of their accounts. Roughly 85,000 of those customers were at Yotta alone, according to the startup’s co-founder, Adam Moelis.
CNBC reached out to fintech customers whose lives have been upended by the Synapse debacle.
They come from all walks and stages of life, from Craft, the Indiana FedEx driver; to the owner of a chain of preschools in Oakland, California; a talent analyst for Disney living in New York City; and a computer engineer in Santa Barbara, California. A high school teacher in Maryland. A parent in Bristol, Connecticut, who opened an account for his daughter. A social worker in Seattle saving up for dental work after Adderall abuse ruined her teeth.
Since Yotta, like most popular fintech apps, wasn’t itself a bank, it relied on partner institutions including Tennessee-based Evolve Bank & Trust to offer checking accounts and debit cards. In between Yotta and Evolve was a crucial middleman, Synapse, keeping track of balances and monitoring fraud.
Founded in 2014 by a first-time entrepreneur named Sankaet Pathak, Synapse was a player in the “banking-as-a-service” segment alongside companies like Unit and Synctera. Synapse helped customer-facing startups like Yotta quickly access the rails of the regulated banking industry.
It had contracts with 100 fintech companies and 10 million end users, according to an April court filing.
Until recently, the BaaS model was a growth engine that seemed to benefit everybody. Instead of spending years and millions of dollars trying to acquire or become banks, startups got quick access to essential services they needed to offer. The small banks that catered to them got a source of deposits in a time dominated by giants like JPMorgan Chase.
But in May, Synapse, in the throes of bankruptcy, turned off a critical system that Yotta’s bank used to process transactions. In doing so, it threw thousands of Americans into financial limbo, and a growing segment of the fintech industry into turmoil.
“There is a reckoning underway that involves questions about the banking-as-a-service model,” said Michele Alt, a former lawyer for the Office of the Comptroller of the Currency and a current partner at consulting firm Klaros Group. She believes the Synapse failure will prove to be an “aberration,” she added.
The most popular finance apps in the country, including Block’s Cash App, PayPal and Chime, partner with banks instead of owning them. They account for 60% of all new fintech account openings, according to data provider Curinos. Block and PayPal are publicly traded; Chime is expected to launch an IPO next year.
Block, PayPal and Chime didn’t provide comment for this article.
While industry experts say those firms have far more robust ledgering and daily reconciliation abilities than Synapse, they may still be riskier than direct bank relationships, especially for those relying on them as a primary account.
“If it’s your spending money, you need to be dealing directly with a bank,” Scott Sanborn, CEO of LendingClub, told CNBC. “Otherwise, how do you, as a consumer, know if the conditions are met to get FDIC coverage?”
Sanborn knows both sides of the fintech divide: LendingClub started as a fintech lender that partnered with banks until it bought Boston-based Radius in early 2020 for $185 million, eventually becoming a fully regulated bank.
Scott Sanborn, LendingClub CEO
Getty Images
Sanborn said acquiring Radius Bank opened his eyes to the risks of the “banking-as-a-service” space. Regulators focus not on Synapse and other middlemen, but on the banks they partner with, expecting them to monitor risks and prevent fraud and money laundering, he said.
But many of the tiny banks running BaaS businesses like Radius simply don’t have the personnel or resources to do the job properly, Sanborn said. He shuttered most of the lender’s fintech business as soon as he could, he says.
“We are one of those people who said, ‘Something bad is going to happen,’” Sanborn said.
A spokeswoman for the Financial Technology Association, a Washington, D.C.-based trade group representing large players including Block, PayPal and Chime, said in a statement that it is “inaccurate to claim that banks are the only trusted actors in financial services.”
“Consumers and small businesses trust fintech companies to better meet their needs and provide more accessible, affordable, and secure services than incumbent providers,” the spokeswoman said.
“Established fintech companies are well-regulated and work with partner banks to build strong compliance programs that protect consumer funds,” she said. Furthermore, regulators ought to take a “risk-based approach” to supervising fintech-bank partnerships, she added.
The implications of the Synapse disaster may be far-reaching. Regulators have already been moving to punish the banks that provide services to fintechs, and that will undoubtedly continue. Evolve itself was reprimanded by the Federal Reserve last month for failing to properly manage its fintech partnerships.
In a post-Synapse update, the FDIC made it clear that the failure of nonbanks won’t trigger FDIC insurance, and that even when fintechs partner with banks, customers may not have their deposits covered.
The FDIC’s exact language about whether fintech customers are eligible for coverage: “The short answer is: it depends.”
While their circumstances all differed vastly, each of the customers CNBC spoke to for this story had one thing in common: They thought the FDIC backing of Evolve meant that their funds were safe.
“For us, it just felt like they were a bank,” the Oakland preschool owner said of her fintech provider, a tuition processor called Curacubby. “You’d tell them what to bill, they bill it. They’d communicate with parents, and we get the money.”
The 62-year-old business owner, who asked CNBC to withhold her name because she didn’t want to alarm employees and parents of her schools, said she’s taken out loans and tapped credit lines after $236,287 in tuition was frozen in May.
Now, the prospect of selling her business and retiring in a few years seems much further out.
“I’m assuming I probably won’t see that money,” she said, “And if I do, how long is it going to take?”
When Rick Davies, a 46-year-old lead engineer for a men’s clothing company that owns online brands including Taylor Stitch, signed up for an account with crypto app Juno, he says he “distinctly remembers” being comforted by seeing the FDIC logo of Evolve.
“It was front and center on their website,” Davies said. “They made it clear that it was Evolve doing the banking, which I knew as a fintech provider. The whole package seemed legit to me.”
He’s now had roughly $10,000 frozen for weeks, and says he’s become enraged that the FDIC hasn’t helped customers yet.
For Davies, the situation is even more baffling after regulators swiftly took action to seize Silicon Valley Bank last year, protecting uninsured depositors including tech investors and wealthy families in the process. His employer banked with SVB, which collapsed after clients withdrew deposits en masse, so he saw how fast action by regulators can head off distress.
“The dichotomy between the FDIC stepping in extremely quickly for San Francisco-based tech companies and their impotence in the face of this similar, more consumer-oriented situation is infuriating,” Davies said.
The key difference with SVB is that none of the banks linked with Synapse have failed, and because of that, the regulator hasn’t moved to help impacted users.
Consumers can be forgiven for not understanding the nuance of FDIC protection, said Alt, the former OCC lawyer.
“What consumers understood was, ‘This is as safe as money in the bank,’” Alt said. “But the FDIC insurance isn’t a pot of money to generally make people whole, it is there to make depositors of a failed bank whole.”
For the customers involved in the Synapse mess, the worst-case scenario is playing out.
While some customers have had funds released in recent weeks, most are still waiting. Those later in line may never see a full payout: There is a shortfall of up to $96 million in funds that are owed to customers, according to the court-appointed bankruptcy trustee.
That’s because of Synapse’s shoddy ledgers and its system of pooling users’ money across a network of banks in ways that make it difficult to reconstruct who is owed what, according to court filings.
The situation is so tangled that Jelena McWilliams, a former FDIC chairman now acting as trustee over the Synapse bankruptcy, has said that finding all the customer money may be impossible.
Despite weeks of work, there appears to be little progress toward fixing the hardest part of the Synapse mess: Users whose funds were pooled in “for benefit of,” or FBO, accounts. The technique has been used by brokerages for decades to give wealth management customers FDIC coverage on their cash, but its use in fintech is more novel.
“If it’s in an FBO account, you don’t even know who the end customer is, you just have this giant account,” said LendingClub’s Sanborn. “You’re trusting the fintech to do the work.”
While McWilliams has floated a partial payment to end users weeks ago, an idea that has support from Yotta co-founder Moelis and others, that hasn’t happened yet. Getting consensus from the banks has proven difficult, and the bankruptcy judge has openly mused about which regulator or body of government can force them to act.
The case is “uncharted territory,” Judge Martin Barash said, and because depositors’ funds aren’t the property of the Synapse estate, Barash said it wasn’t clear what his court could do.
Evolve has said in filings that it has “great pause” about making any payments until a full reconciliation happens. It has further said that Synapse ledgers show that nearly all of the deposits held for Yotta were missing, while Synapse has said that Evolve holds the funds.
“I don’t know who’s right or who’s wrong,” Moelis told CNBC. “We know how much money came into the system, and we are certain that that’s the correct number. The money doesn’t just disappear; it has to be somewhere.”
In the meantime, the former Synapse CEO and Evolve have had an eventful few weeks.
Pathak, who dialed into early bankruptcy hearings while in Santorini, Greece, has since been attempting to raise funds for a new robotics startup, using marketing materials with misleading claims about its ties with automaker General Motors.
And only days after being censured by the Federal Reserve about its management of technology partners, Evolve was attacked by Russian hackers who posted user data from an array of fintech firms, including Social Security numbers, to a dark web forum for criminals.
For customers, it’s mostly been a waiting game.
Craft, the Indiana FexEx driver, said she had to borrow money from her mother and grandmother for expenses. She worries about how she’ll pay for catering at her upcoming wedding.
“We were led to believe that our money was FDIC-insured at Yotta, as it was plastered all over the website,” Craft said. “Finding out that what FDIC really means, that was the biggest punch to the gut.”
She now has an account at Chase, the largest and most profitable American bank in history.
A humanoid robotics startup cofounded by the CEO of bankrupt fintech firm Synapse has canvassed Silicon Valley investors for funds by claiming close ties and an imminent investment from General Motors — claims rejected by the automaker.
The company, called Foundation Robotics Labs, is seeking the last $1 million in funds for an $11 million seed round, according to documents obtained by CNBC. The investor pitch claimed GM had already committed to an investment, along with the Menlo Park-based VC firm Tribe Capital.
“Foundation is building humanoid robots to take over work that humans do in factories, warehouses and eventually homes,” the startup declared.
On top of the seed investment, the fundraising document said GM was set to be Foundation’s first customer, with a targeted $300 million purchase order, and had also provided access to its factories to help them train its robots.
“GM agreed to let us collect the ground truth data in their factories,” Foundation said in the document. “Our team is in their Mexico factory this week to start the collection process. We would probably be the only company in this space with a dataset like this.”
But, according to GM and one of the startup’s founders, most of Foundation’s claims related to the automaker are exaggerated or untrue.
While GM met with Foundation executives a few times, it hasn’t allowed data collection from its factories, has no agreements for robot orders and isn’t planning an investment, according to a GM spokesman.
“GM has never invested in Foundation Robotics and has no plans to do so,” spokesman Darryll Harrison said in an emailed statement. “In fact, GM has never had an agreement of any kind with the company. Any claims to the contrary are fabricated.”
In a phone interview with CNBC, one of Foundation’s cofounders, Mike LeBlanc, confirmed GM’s points and said he was embarrassed that marketing materials existed that overstated their relationship.
“The engineering stuff we’ve done is really incredible, and it’s the bedrock of what this company will be,” LeBlanc said. “That, to me is what Foundation Robotics is.”
Foundation was started in April by Synapse CEO Sankaet Pathak, Tribe Capital CEO Arjun Sethi, and LeBlanc, cofounder of Cobalt Robotics, a maker of autonomous security guards, according to the company’s fundraising pitch.
It’s raising money at a time when American corporations look to automate more of their labor: 25% of capital spending by industrial companies in the coming years will be on automated systems, according to McKinsey.
The misleading fundraising pitch was shared in an email group with about 1,500 startup executives and investors this month, according to one of the recipients. The contents of the document were confirmed by someone with direct knowledge of Tribe Capital.
Tribe Capital and its cofounder Sethi declined to comment, while Pathak didn’t respond to messages seeking comment.
The robotics startup finds itself in the spotlight after the implosion of Pathak’s other company, Synapse, which enabled fintech brands like Mercury and Dave to offer banking services by connecting them to FDIC-backed banks.
Cofounded by Pathak in 2014, Synapse went bankrupt earlier this year after some of its largest clients, including Mercury, left its platform. Mercury, which instead pursued a direct relationship with Evolve, later had disagreements with Synapse over contract issues.
The mess has left more than 100,000 Americans with a combined $265 million in deposits locked out of their accounts for more than a month, according to a trustee appointed to oversee the firm’s bankruptcy proceedings.
Making matters worse, there is an $85 million shortfall between what partner banks of Synapse are holding and what depositors are owed, and no answers yet on what happened to the missing funds, according to the trustee.
Pathak’s move to his next venture, coming on the heels of the still-ongoing Synapse failure, has raised eyebrows among some founders and investors in the startup community.
United Auto Workers (UAW) members and supporters on a picket line outside the ZF Chassis Systems plant in Tuscaloosa, Alabama, US, on Wednesday, Sept. 20, 2023.
Andi Rice | Bloomberg | Getty Images
Mercedes-Benz workers in Alabama have voted against union representation by the United Auto Workers, the National Labor Relations Board said Friday.
The results are a blow to the UAW’s organizing efforts a month after the Detroit union won an organizing drive of roughly 4,330 Volkswagen plant workers in Tennessee. Voting started Monday and ended Friday.
Union organizing failed with 56% of the vote, or 2,642 workers, casting ballots against the UAW, according to the NLRB, which oversaw the election. More than 90% of the 5,075 eligible Mercedes-Benz workers voted in the election, according to the results.
The NLRB said 51 ballots were challenged and not counted, but they aren’t determinative to the outcome of the election. There were five void ballots.
The union and company have five business days to file objections to the election, including any alleged interference, according to the NLRB. If no objections are filed, the election result will be certified, and the union will have to wait one year to file for a union election for a similar bargaining unit.
Mercedes-Benz in a statement said company officials “look forward to continuing to work directly with our Team Members to ensure [Mercedes-Benz US International] is not only their employer of choice, but a place they would recommend to friends and family.”
United Auto Workers President Shawn Fain (right) and UAW Secretary-Treasurer Margaret Mock (left) lead a march outside Stellantis’ Ram 1500 plant in Sterling Heights, Michigan after the union called a strike at the plant on Oct. 23, 2023.
Michael Wayland / CNBC
The loss is expected to hurt the UAW in an unprecedented organizing drive launched late last year of 13 non-union automakers in the U.S. after securing record contracts with Detroit automakers Ford Motor,General Motors and Stellantis. Those agreements included significant wage increase, reinstatement of cost-of-living adjustments and other benefits.
UAW President Shawn Fain said while the Mercedes-Benz vote was obviously not the result the union wanted, it was a valiant effort, adding the vote “isn’t a failure” but a “bump in the road.”
“While this loss stings, I’ll tell you this, we’re going to keep our heads up, keep our heads up high. These workers have nothing to do but be proud in the effort they put forth and what they’ve done,” he said Friday during a media conference. “We fought the good fight and we’re going to continue on, continue forward. Ultimately, these workers here are going to win.”
The Mercedes-Benz vote was expected to be more challenging for the union than the Volkswagen plant in Tennessee, where the union had already established a presence after two failed organizing drives in the past decade and where it faced less opposition from the automaker.
Stephen Silvia, author of “The UAW’s Southern Gamble: Organizing Workers at Foreign-Owned Vehicle Plants,” noted Mercedes-Benz replaced the plant’s leader weeks ahead of the election. He said companies routinely do this, promising workers changes at their facilities in an effort to stave of organizing.
“Companies do anti-union campaigns because they can be effective, and I think this one was effective,” said Silvia, a professor at American University in Washington, D.C. “A common piece of an anti-union campaign is firing the plant manager … That seems to have persuaded enough of the workers to vote against the union.”
Alabama Gov. Kay Ivey, who was one of six Republican governors to condemn the union’s organizing drive, hailed the outcome of the vote.
“The workers in Vance have spoken, and they have spoken clearly! Alabama is not Michigan, and we are not the Sweet Home to the UAW. We urge the UAW to respect the results of this secret ballot election,” she said.
Workers at Mercedes-Benz’s Tuscaloosa plant, located about 60 miles southwest of Birmingham, have produced more than 4 million vehicles since the plant opened in 1997, including 295,000 vehicles in 2023, according to the plant’s website.
The Alabama plant currently produces vehicles such as the gas-powered GLE and GLS Maybach SUVs as well as the all-electric EQS and EQE SUVs.
The NLRB last week said it continues to process and investigate open unfair labor practice charges filed by the UAW against automakers, including six unfair labor practice charges against Mercedes-Benz since March.
Fain said Friday the union would continue to move forward with those charges. He declined to say whether the union plans to challenge the election results, saying he’d “leave that” to the union’s legal team.
The charges allege that Mercedes-Benz has “disciplined employees for discussing unionization at work, prohibited distribution of union materials and paraphernalia, surveilled employees, discharged union supporters, forced employees to attend captive audience meetings, and made statements suggesting that union activity is futile,” the NLRB said.
CNBC’s Jim Cramer on Tuesday praised Goldman Sachs for its ability to course-correct after making mistakes, citing a new report about a possible exit of a challenged business. Goldman Sachs is in discussions to sell its credit card partnership with General Motors to Barclays, according to The Wall Street Journal. A move in this direction would be part of the bank’s multiyear effort to step away from consumer banking. Last year, the Journal reported Apple and Goldman were winding down their credit card relationship. GS YTD mountain GS year to date performance. “I continue to like the stock of Goldman Sachs because … they make mistakes and then they change,” Cramer said on ” Squawk on the Street .” Shares of Goldman, where Cramer worked early in his Wall Street career, were modestly lower Tuesday. “If Goldman comes down [more], you buy the stock because when you get out of these things that are not your core competence, your stock’s going to go higher,” he said. Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, doesn’t own Goldman but does own Morgan Stanley and Wells Fargo . The Trust also has a position in Apple.
Passengers ride in an electric Waymo full self-driving technology in Santa Monica
Allen J. Schaben | Los Angeles Times | Getty Images
Alphabet’s Waymo robotaxi unit won approval from the California Public Utilities Commission to expand service to parts of Los Angeles and the Bay Area, according to a notice posted to the regulator’s website on Friday.
“Waymo may begin fared driverless passenger service operations in the specified areas of Los Angeles and the San Francisco Peninsula, effective today,” the release said.
In mid-February, Waymo initiated a voluntary recall filing notice with the National Highway Traffic Safety Administration, saying it would fix software issues. The recall followed two previously undisclosed incidents that occurred in Phoenix on Dec. 11, in which unmanned Waymo vehicles crashed into the same towed pickup truck within minutes of each other.
The collisions added to existing concerns about autonomous vehicle use in California. Competing taxi and transit service providers and labor activists are worried about the loss of drivers’ jobs, while safety advocates wrote letters to regulators and politicians asking them to thwart Waymo’s expansion in the state.
The CPUC in February had suspended Waymo’s expansion efforts for up to 120 days to provide for added review time.
In its letter on Friday, the regulator said it was approving the new proposal, due in part to “Waymo’s updated Passenger Safety Plan (PSP), submitted in connection with its expanded operational design domain (ODD) for deployment,” which was also approved by the California Department of Motor Vehicles.
“We’re grateful to the CPUC for this vote of confidence in our operations, which paves the way for the deployment of our commercial Waymo One service in Los Angeles and the San Francisco Peninsula,” a Waymo spokesperson said in a statement.
Waymo’s progress in California comes after General Motors-owned Cruise and Apple bowed out of the autonomous vehicle business in California, while Elon Musk’s Tesla has yet to develop an autonomous vehicle that can safely operate without a human driver at the controls.
California regulators halted operations of self-driving Cruise robotaxis in October after a series of incidents, including one that resulted in a robotaxi rolling over a pedestrian who had first been hit by a human-driven car and was then pulled forward about 20 feet by the Cruise vehicle.
Waymo’s new approvals allow the company’s robotaxis to operate close to Tesla’s Palo Alto engineering headquarters in San Mateo County.
The latest notice applies to the commercial ride-sharing service Waymo One. The company has deployed testing vehicles in those areas for several years.
U.S. President Joe Biden answers questions from reporters after driving a Jeep Wrangler Rubicon Xe around the White House driveway following remarks during an event on the South Lawn of the White House August 5, 2021 in Washington, DC. Biden delivered remarks on the administrationâs efforts to strengthen American leadership on clean cars and trucks.
Win Mcnamee | Getty Images News | Getty Images
U.S. President Joe Biden’s administration intends to relax limits on tailpipe emissions that are designed to get Americans to move from gas-powered cars to electric vehicles, the New York Times reported, citing people familiar with the plan.
The administration would give car manufacturers more time instead of requiring them to rapidly ramp up sales of electric vehicles over the next few years, the report said, adding that the new rule could be published by early spring.
The shift would mean that EV sales would not need to rise sharply until after 2030.
John Bozzella, president and CEO of auto industry trade group the Alliance for Automotive Innovation (AAI), said on Sunday that the next three or four years are critical for the development of the EV market.
“Give the market and supply chains a chance to catch up, maintain a customer’s ability to choose, let more public charging come online, let the industrial credits and Inflation Reduction Act do their thing and impact the industrial shift,” Bozzella said.
Reuters previously reported that the White House could enact proposed Environmental Protection Agency regulations as soon as March that would mandate dramatic reductions in tailpipe emissions. The administration proposal would require boosting U.S. EV market share to 67% by 2032 from less than 8% in 2023.
General Motors, Ford, and Stellantis â the European parent of U.S.-based Ram and Jeep â have warned they cannot profitably transition their truck-heavy U.S. fleets that quickly, according to a Reuters analysis of automakers’ sales data and a review of comments to regulators.
Automakers and the AAI have urged the Biden administration to slow the proposed ramp-up in EV sales. They have said EV technology is still too costly for many mainstream U.S. consumers, and more time is needed to develop the charging infrastructure.
As consumers watch their wallets, companies have felt pressure from investors to do the same. Executives have sought to show shareholders that they’re adjusting to consumer demand as it returns to typical patterns or even softens, as well as aggressively countering higher expenses.
Airlines, automakers, media companies and package giant UPS are all digesting new labor contracts that gave raises to tens of thousands of workers and drove costs higher.
Companies in years past could get away with passing on higher costs to customers who were willing to splurge on everything from new appliances to beach vacations. But businesses’ pricing power has waned, so executives are looking for other ways to manage the budget â or squeeze out more profits, said Gregory Daco, chief economist for EY.
“You are in an environment where cost fatigue is very much part of the equation for consumers and business leaders,” Daco said. “The cost of most everything is much higher than it was before the pandemic, whether it’s goods, inputs, equipment, labor, even interest rates.”
There are some exceptions to the recent cost-cutting wave: Walmart, for example, said last month that it would build or convert more than 150 stores over the next five years, along with a more than $9 billion investment to modernize many of its current stores.
And some companies, such as banks, already made deep cuts. Five of the largest banks, including Wells Fargo and Goldman Sachs, together eliminated more than 20,000 jobs in 2023. Now, they’re awaiting interest rate cuts by the Federal Reserve that would free up cash for pent-up mergers and acquisitions.
But cost reductions unveiled in even just the first few weeks of the year amount to tens of thousands of jobs and billions of dollars. In January, U.S. companies announced 82,307 job cuts, more than double the number in December, while still down 20% from a year ago, according to Challenger, Gray and Christmas.
And the tightening of months prior is already showing up in financial reports.
So far this earnings season, results have indicated that companies have focused on driving profits higher without the tailwind of big price increases and sales growth.
As of mid-February, more than three-quarters of the S&P 500 had reported fourth-quarter results, with far more earnings beats than revenue beats. The quarter’s earnings, measured by a composite of S&P 500 companies, are on pace to rise nearly 10%. Revenues, however, are up a more modest 3.4%.
And the layoffs haven’t been contained to tech. UPS said it was axing 12,000 jobs, saving the company $1 billion, CEO Carol Tome said late last month, citing softer demand. Many of the largest retail, media and entertainment companies have also announced workforce reductions, in addition to other cuts.
Warner Bros. Discovery has slashed content spending and headcount as part of $4 billion in total cost savings from the merger of Discovery and WarnerMedia. Disney initially promised $5.5 billion in cost reductions in 2023, fueled by 7,000 layoffs. The company has since increased its savings promise to $7.5 billion, and executives suggested in its Feb. 7 quarterly earnings report that it may exceed that target.
JetBlue Airways, which hasn’t posted an annual profit since before the pandemic, is deferring about $2.5 billion in capital expenditures on new Airbus planes to the end of the decade, culling unprofitable routes and redeploying aircraft in addition to the worker buyouts.
Some cuts are even making their way to the front of the cabin. United Airlines, which also posted a profit in 2023, at the start of this year said it would serve first-class meals only on flights more than 900 miles, up from 800 miles previously. “On flights that are 301 to 900 miles, United First customers can expect an offering from the premium snack basket,” according to an internal post.
Several of the country’s largest automakers, such as General Motors and Ford Motor, have lowered spending by billions of dollars through reduced or delayed investments on all-electric vehicles. The U.S.-based companies as well as others, such as Netherlands-based Stellantis, have recently reduced headcount and payroll through voluntary buyouts or layoffs.
Even Chipotle, which reported more foot traffic and sales at its restaurants in the most recently reported quarter, is chasing higher productivity by testing an avocado-scooping robot called the Autocado that shortens the time it takes to make guacamole. It’s also testing another robot that can put together burrito bowls and salads. The robots, if expanded to other stores, could help cut costs by minimizing food waste or reducing the number of workers needed for those tasks.
Industry experts have chalked up some recent cuts to companies catching their breath â and taking a hard look at how they operate â after an unusual four-year stretch caused by the pandemic and its fallout.
EY’s Daco said the past few years have been marked by a mismatch in supply and demand when it comes to goods, services and even workers.
Customers went on shopping sprees, fueled by government stimulus and less experience-related spending. Airlines saw demand disappear and then skyrocket. Companies furloughed workers in the early pandemic and then struggled to fill jobs.
He said he expects companies this year to “search for an equilibrium.”
“You’re seeing a rebalancing happening in the labor markets, in the capital markets,” he said. “And that rebalancing is still going to play out and gradually lead to a more sustainable environment of lower inflation and lower interest rates, and perhaps a little bit slower growth.”
The auto industry, for example, faced a supply issue during much of the Covid pandemic but is now facing a potential demand problem. Inventories of new vehicles are rising â surpassing 2.5 million units and 71 days’ supply toward the end of 2023, up 57% year over year, according to Cox Automotive â forcing automakers to extend more discounts in an effort to move cars and trucks off dealer lots.
Automakers have also been contending with slower-than-expected adoption of EVs.
David Silverman, a retail analyst at Fitch Ratings, said companies are “feeling a bit heavy as sales growth moderates and maybe even declines.”
Cost cuts at UPS, Hasbro and Levi all followed sales declines in the most recent fiscal quarter. Macy’s, which reports earnings later this month, has said it expects same-store sales to drop, and there’s early evidence that may come to bear: Consumers pulled back on spending in January, with retail sales falling 0.8%, more than economists expected, according to the latest federal data.
Most major retailers, including Walmart, Target and Home Depot, will report earnings in the coming weeks.
Credit ratings agency Fitch said it doesn’t expect the U.S. economy to tip into recession, but it does anticipate a continued pullback in discretionary spending.
“Part of companies’ decision to lower their expense structure is in line with their views that 2024 may not be a fantastic year from a top-line-growth standpoint,” Silverman said.
Plus, he added, companies have had to find cash to fund investments in newer technology such as infrastructure that supports e-commerce, a resilient supply chain or investments in artificial intelligence.
Companies may have another reason to cut costs now, too. As they see other companies shrinking the size of their workforces or budgets, there’s safety in numbers.
Or as Silverman noted, “layoffs beget layoffs.”
“As companies have started to announce them it becomes normalized,” he said. “There’s less of a stigma.”
Even with rolling layoffs, the labor market remains strong, which may help explain why Wall Street has by and large rewarded those companies that have found areas to save and returned profits to shareholders.
Shares of Meta, for example, almost tripled in price in 2023 in that “year of efficiency,” making the stock the second-best gainer in the S&P 500, behind only Nvidia. After laying off more than 20,000 workers in 2023, Meta on Feb. 2 announced its first-ever dividend and said it expanded its share buyback authorization by $50 billion.
UPS, fresh from job cuts, said it would raise its quarterly dividend by a penny.
Overall, dividends paid by companies in the S&P 500 rose 5.05% last year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, and he estimated they will likely increase nearly 5.3% this year.
â CNBC’s Michael Wayland, Alex Sherman, Robert Hum, Amelia Lucas and Jonathan Vanian contributed to this story.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) A legacy automaker and a major semiconductor maker were in focus among analysts Thursday. Morgan Stanley raised its price target on General Motors. Meanwhile, Qualcomm got a downgrade from Citi, citing concern that the chipmaker may not be able to beat earnings expectations and raise its guidance for much longer. Check out the latest calls and chatter below. All times ET. 6:14 a.m.: Morgan Stanley steps to the sidelines on Zoom ZoomInfo Technologies is “unlikely to zoom into a recovery,” according to Morgan Stanley. A new round of layoffs in the tech industry and slower job postings weighs upon the future growth outlook for ZoomInfo, according to analyst Elizabeth Porter. She also cited increasing competition in her downgrade on shares to equal weight from overweight. “ZoomInfo is a leader in providing B2B company and contact data, which becomes increasingly important as companies look to drive efficiency in sales teams. However, with ~35% of revenue from customers in the software vertical, headcount and cost reductions at this core customer base has significantly impacted demand,” Porter said in a Thursday note. “We moderate our outlook on the growth improvement in 2025 and beyond, and move to the sidelines with an Equal-weight view as catalysts for a material growth re-acceleration and stock re-rating are pushed out, in our view,” she added. Porter also reduced her price target to $20 from $24, implying around 25% upside potential from Wednesday’s close. Shares slipped more than 2% Thursday during premarket trading. ZI 1D mountain ZI falls — Hakyung Kim 6:06 a.m.: JPMorgan upgrades AT & T to overweight JPMorgan is becoming bullish on the investment case for AT & T . Analyst Richard Choe raised his rating on shares to overweight from neutral. He also lifted his target by $3 to $21, suggesting shares could add nearly 19% from Wednesday’s close. “The company has been able to show consistent execution in its wireless and broadband businesses and we see solid long-term growth for both segments, especially in broadband with its ongoing fiber build along with incremental opportunities in and out of existing markets,” Choe said in a note on Thursday. AT & T is also expected to have “steady” free cash flow generation to support dividend payments, Choe added. Shares of the telecom giant are up 5.4% year to date. Over the past six months, the stock has jumped 23.7%. — Hakyung Kim 5:49 a.m.: Jefferies, RBC lower ratings on New York Community Bancorp New York Community Bancorp’s fourth quarter results contained “several negative surprises,” according to RBC. The firm downgraded shares to sector perform from outperform in a Thursday note. This came a day after the stock fell more than 37%, its worst-ever trading day since it went public in 1993. NYCB previously managed to weather the regional bank crisis in 2023, and took over the failed Signature Bank during that time. “Despite the negative results, it is important to emphasize management’s statement that the dividend cut was not tied to the credit quality outlook. Rather, we believe that management became cognizant of the need to maintain peer-like reserve levels and a CET1 ratio closer to peer levels now that they are over $100 billion in assets and a Category IV bank,” analyst Jon Arfstrom wrote in a client note. Category IV refers to banking standards for U.S. banks with total assets of $100 billion or more. Nonetheless, he is moving to the sidelines, citing “growing points from being a larger pain” that will likely weigh on earnings in the near- to medium-term. Arfstrom slashed his price target to $7 from $13, suggesting 8.2% upside potential from Wednesday’s close. Jefferies also cited an “unexpectedly faster regulatory mandate” to Category IV bank compliance for NYCB in its downgrade to hold from buy. The firm also lowered its price target to $7 from $12. — Hakyung Kim 5:40 a.m.: Qualcomm’s ‘beat and raise party may be over,’ says Citi Citi is stepping to the sidelines on chipmaker Qualcomm . The firm downgraded shares to neutral from buy following Qualcomm’s fiscal first quarter results . Although the company managed to beat on top and bottom lines, its lower-than-expected guidance for the current quarter disappointed Citi. “When we upgraded the stock to Buy, we believed Qualcomm would gain share at Samsung and the stock should trade at a higher valuation given our belief in a beat and raise cycle and we were wrong,” analyst Christopher Danely wrote in a Thursday note. He added, “QCOM is within 10% of our price target and it appears the beat and raise cycle is ending so we are downgrading from Buy to Neutral.” Danely kept his price target of $160 on shares, suggesting shares could gain 7.7% from Wednesday’s close. Bank of America and JPMorgan were slightly more optimistic on the stock, reiterating their buy and overweight ratings, respectively. Bank of America’s Tal Liani said “guidance was somewhat lackluster,” but believes Qualcomm should benefit from AI trends and a global handset market recovery in 2024. Liani also reiterated his $173 price target. “While revenue upsides are limited by the countercurrents outlined above, the stronger upside is stemming from margins which benefited from better gross margins as well as tighter cost control,” JPMorgan’s Samik Chatterjee wrote in a Wednesday note. “The margin strength is expected to have a better flow-through to the future quarters than the revenue drivers, and is one of the primary drivers of the raise to our FY24 EPS estimates even though we are lowering our FY24 revenue estimates,” he added. Chatterjee lowered his price target by $3 to $170. — Hakyung Kim 5:40 a.m.: Morgan Stanley raises GM price target A focus shift back to internal combustion engine vehicles can give General Motors another jolt higher, according to Morgan Stanley. Analyst Adam Jonas raised his price target on the stock to $43 from $40, implying upside of 10.8% from Wednesday’s close. Shares have already gained 8% in 2024. GM YTD mountain GM year to date “hen the company said their first priority was to take advantage of opportunities within their internal combustion portfolio… we had to look twice. Is this the same GM that in the fall of 2021 said it would no longer sell internal combustion engine vehicles after 2035?” Jonas wrote. “In our view, ICE will decline, but at a slower pace than market believes, producing substantial cash flows in the process,” he said. “GM has some highly cash flow generative businesses (ICE) but needs to re-calibrate their EV/AV strategies to address cash consumption. We are not in position to ascribe non-zero valuations to these businesses.” The note comes after GM reported stronger-than-expected fourth-quarter results earlier this week. — Fred Imbert
Elon Musk, chief executive officer of Tesla Inc and X (formerly Twitter) Ceo speaks at the Atreju political convention organized by Fratelli d’Italia (Brothers of Italy), on December 15, 2023 in Rome, Italy.
Antonio Masiello | Getty Images
Tesla reported revenue and profit for the fourth quarter that missed analysts’ estimates as auto sales increased just 1% from a year earlier. The stock slid in extended trading.
Here are the key numbers:
Earnings: 71 cents per share, adjusted, vs. 74 cents per share expected by LSEG, formerly known as Refinitiv.
Revenue: $25.17 billion vs. $25.6 billion expected by LSEG.
Total revenue increased 3% from $24.3 billion a year earlier. Operating margin for the quarter came in at 8.2%, down from the year-ago quarter’s figure of 16% and slightly higher than 7.6% in the prior quarter.
While other U.S. automakers struggled to make and sell a high volume of fully electric vehicles last year, Tesla reported 484,507 deliveries in the fourth quarter and more than 1.8 million for 2023. Hefty price cuts helped Tesla achieve that number, which was a record for the company.
Net income for the quarter more than doubled to $7.9 billion from $3.7 billion a year earlier.
During the quarter, Tesla began selling Cybertrucks to customers. The company said in its investor presentation that, “We expect the ramp of Cybertruck to be longer than other models given its manufacturing complexity.” Tesla said it now has the capacity to build more than 125,000 Cybertruck vehicles in a year.
Tesla’s labor costs are rising in the U.S.. In order to make its wages competitive versus automakers like General Motors, Ford and Stellantis, where employees are represented by the United Auto Workers, Tesla recently rolled out pay increases for many of its hourly factory employees in the U.S.
Brandywine Global portfolio manager Patrick Kaser said his firm is positioning itself for a recession next year and eyeing defensive equities as a result. “We’re in the camp that a recession is much more likely than not,” Kaser told CNBC. “And so we’re really emphasizing … less economically sensitive sectors with attractive valuations.” The December CNBC Fed Survey showed respondents growing more optimistic about the probability of a “soft landing” in the U.S. economy in 2024. They also expect the central bank will begin cutting benchmark interest rates by the middle of next year. In a bid to tame inflation, the Federal Reserve has held its overnight borrowing rate at its highest level in more than 22 years. “We expect, based on history, some stress in the market over the next six months at some point, and we’ll be viewing that as an opportunity to redeploy out of these defensive areas,” he said. Kaser highlighted sectors that his firm remains overweight rated on including health care, consumer staples, utilities and telecommunications. Stocks have shown steady momentum as Wall Street nears the end of 2023, with all three major indexes riding an eight-week winning streak into the year’s final trading sessions. “Based on history, some stress in the market over the next six months, at some point, and, we’ll be viewing that as an opportunity to redeploy out of these defensive areas,” he said. However, Kaser expects 2024 to bring a market realignment to the forefront, which necessitates a defensive approach. Here’s a look at the portfolio manager’s top stock picks for 2024 to play an expected economic slowdown. In health care, Kaser highlighted CVS Health as a stock trading at a discount due to low expectations from investors, which makes it attractive. CVS YTD mountain CVS stock has fallen 15% from the start of the year. “[CVS is] still really trading at roughly nine times earnings [with] really low expectations, [and] people are skeptical of their ability to execute. So not only do you not have the economic sensitivity, but also it’s really kind of an execution within their control story,” he said. The company recently announced plans to redesign its prescription drug pricing model to change how its pharmacies are reimbursed beginning in 2025. Shares of CVS have fallen more than 15% since the start of 2023. Also on Brandywine’s list is supermarket chain Kroger , which Kaser says can benefit from the potential finalization of its merger with peer Albertsons . Although Kroger is the largest dedicated grocery chain in the U.S., its business combined with that of Albertsons’ would still rank behind the size of Walmart’s heft. Still, some U.S. lawmakers have objected to the merger, which comes at a time when consumers have seen huge food inflation at the checkout aisle. Kaser said Kroger can announce a large stock buyback if the Albertsons deal falls apart, and similarly boost its stock. Kroger shares have gained only 1.5% in 2023. KR YTD mountain Kroger stock has added nearly 2% from the start of the year. “So [there’s] not a lot being priced into the valuation,” Kaser said. “People seem to have more fear, but there’s really a win-win outcome in terms of the stock.” Aerospace company AerCap also ranks among Kaser’s picks as it’s expected to benefit from tight aircraft demand and higher lease rates. AerCap CEO Aengus Kelly recently echoed a similar outlook for the industry on CNBC earlier this month. AER YTD mountain AerCap stock has rise nearly 28% from the start of 2023. “AerCap is a really cheap stock with favorable industry dynamics for probably several years to come,” Kaser added. AerCap shares have seen bigger gains heading into the year-end, with a 27% increase in its stock year to date. On the spectrum of companies that have more exposure to macroeconomic conditions, Kaser pointed to General Motors as a stock that has already priced in the expectation of a recession and can benefit from the resolution of the United Auto Workers strike and a strong forecast for next year. “[GM] has a really positive backdrop,” he said. “I think people are skeptical about autos heading into an economic slowdown, but we think [GM] is already pricing that in.” UBS is also bullish on GM and named the legacy automaker stock a top idea for 2024. GM shares are up less than 8% year to date. GM YTD mountain General Motors stock has gained 8% in 2023. Kaser also lauded payment processing company Global Payments given its low valuation compared with its peers. He expects the company could emerge as more of a defensive play next year. GPN YTD mountain Global Payments stock has risen 27% year to date. Global Payments stock hit a 52-week high earlier this month and is up 27% for the year. “We think Global Payments [has] much more of a moat around its business than people seem to be fearing,” Kaser said.
Grocery items are offered for sale at a supermarket on August 09, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
When Kyle Connolly looks back at 2023, she sees it as a year defined by changes and challenges.
The newly single parent reentered the workforce, only to be laid off from her job at a custom home-building company in November. At the same time, Connolly has seen prices climb for everything from her Aldi’s grocery basket to her condo’s utility costs.
In turn, she’s cut back on everyday luxuries like eating out or going to the movies. Christmas will look pared down for her three kids compared to years prior.
“I’ve trimmed everything that I possibly can,” said the 41-year-old. “It sucks having to tell my kids no. It sucks when they ask for a little something extra when we’re checking out at the grocery store and having to tell them, ‘No, I’m sorry, we can’t.’”
Economic woes have seemed more apparent within her community in Florida’s panhandle. Connolly has noticed fewer 2022 Chevy Suburbans on the road, replaced by older Toyota Camry models. The waters typically filled with boats have been eerily quiet as owners either sold them or tried to cut back on gas costs. Fellow parents have taken to Facebook groups to discuss ways to better conserve money or rake in extra income.
The struggles among Connolly and her neighbors highlight a key conundrum puzzling economists: Why does the average American feel so bad about an economy that’s otherwise considered strong?
By many accounts, it has been a good year on this front. The annualized rate of price growth is sliding closer to a level preferred by the Federal Reserve, while the labor market has remained strong. There’s rising hope that monetary policymakers have successfully cooled inflation without tipping the economy into a recession.
Yet closely watched survey data from the University of Michigan shows consumer sentiment, while improving, is a far cry from pre-pandemic levels. December’s index reading showed sentiment improved by almost 17% from a year prior, but was still nearly 30% off from where it sat during the same month in 2019.
“The main issue is that high prices really hurt,” said Joanne Hsu, Michigan’s director of consumer surveys. “Americans are still trying to come to grips with the idea that we’re not going back to the extended period of low inflation, low interest rates that we had in the 2010s. And that reality is not the current reality.”
Still, Hsu sees reason for optimism when zooming in. Sentiment has largely improved from its all-time low seen in June 2022 — the same month the consumer price index rose 9.1% from a year earlier — as people started noticing inflationary pressures recede, she said.
One notable caveat was the drop in sentiment this past May, which she tied to the U.S. debt ceiling negotiations. The 2024 presidential election has added to feelings of economic uncertainty for some, Hsu said.
Continued strength in the labor market is something economists expected to sweeten everyday Americans’ views of the economy. But because consumers independently decide how they feel, jobs may hold less importance in their mental calculations than inflation.
There are still more job openings than there are unemployed people, according to the latest data from the Bureau of Labor Statistics. Average hourly pay has continued rising — albeit at a slower rate than during the pandemic — and was about 20% higher in November than it was in the same month four years ago, seasonally adjusted Labor Department figures show.
That’s helped boost another widely followed indicator of vibes: the Conference Board’s consumer confidence index. Its preliminary December reading was around 14% lower than the same month in 2019, meaning it has rebounded far more than the Michigan index.
While the Michigan index compiles questions focused on financial conditions and purchasing power, the Conference Board’s more closely gauges one’s feelings about the job market. That puts the latter more in line with data painting a rosier picture of the economy, according to Camelia Kuhnen, a finance professor at the University of North Carolina.
“You think that they’re talking about different countries,” Kuhnen said of the two measures. “They look different because they focus on different aspects of what people would consider as part of their economic reality.”
A hot job market can be a double-edged sword for sentiment, Michigan’s Hsu noted. Yes, it allows workers to clinch better roles or higher pay, she said. But when those same workers put on their consumer hats, a tight market means shorter hours or limited availability at their repair company or veterinarian’s office.
Other reasons why consumers feel positively about the economy this year can only be true for certain — and often wealthier — groups, economists say.
UNC’s Kuhnen said Americans would be pleased if they are homeowners seeing price appreciation. Another reason for optimism: If they had investments during 2023’s stock market rebound.
Without those cushions, people on the lower end of the income spectrum may feel more of a pinch as higher costs bite into any leftover savings from pandemic stimulus, Kuhnen said. Elsewhere, the resumption of student loan payments this year likely also caused discontent for those with outstanding dues, according to Karen Dynan, a Harvard professor and former chief economist for the U.S. Treasury Department.
Marissa Lyda moved with her husband and two kids to Phoenix from Portland earlier this year, in part due to lower housing costs. With profits from the value gained on the property she bought in 2019, her family was able to get a nicer house in the Grand Canyon state.
Yet she’s had to contend with an interest rate that’s more than double what she was paying on her old home. Though Arizona’s lower income tax has fattened her family’s wallet, Lyda has found herself allocating a sizable chunk of that money to her rising grocery bill.
The stay-at-home mom has switched her go-to grocer from Kroger to Walmart as value became increasingly important. She’s also found herself searching harder in the aisles for store-brand food and hunting for recipes with fewer ingredients.
Her family’s financial situation certainly doesn’t feel like it reflects the economy she hears experts talking about, Lyda said. It’s more akin to the videos she sees on TikTok and chatter among friends about how inflation is still pinching pocketbooks.
“I look at the news and see how they’re like, ‘Oh, best earnings, there’s been great growth,’” the 29-year-old said. “And I’m like, ‘Where’s that been?’”
Economists wonder if social media discourse and discussion about a potential recession have made Americans think they should feel worse about the economy than they actually do. That would help explain why consumer spending remains strong, despite the fact that people typically tighten their belts when they foresee financial turmoil.
There’s also a feeling of whiplash from the runaway inflation that snapped a long period of low-to-normal price growth, said Harvard’s Dynan. Now, even as the annual rate of inflation has cooled to more acceptable levels, consumers remain on edge as prices continue to creep higher.
“People are still angry about the inflation we saw in 2021 and, in particular, 2022,” Dynan said. “There’s something about the salience of … the bill for lunch that you see every single day that just maybe resonates in your brain, relative to the pay increase you get once a year.”
Federal Reserve Board Chairman Jerome Powell speaks during a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, U.S., December 13, 2023.
Kevin Lamarque | Reuters
Another potential problem: The average person may not completely understand that some inflation is considered normal. In fact, the Federal Reserve, which sets U.S. monetary policy, aims for a 2% increase in prices each year. Deflation, which is when prices decrease, is actually seen as bad for the economy.
Despite these quandaries, economists are optimistic for the new year as it appears increasingly likely that a recession has been avoided and the Fed can lower the cost of borrowing money. For everyday Americans like Connolly and Lyda, inflation and their financial standing will remain top of mind.
Lyda has cut treats like weekly Starbucks lattes out of the budget to ensure her family can afford a memorable first holiday season in their new home. In 2024, she’ll be watching to see if the Fed cuts interest rates, potentially creating an opportunity to refinance the loan on that house.
“You just have to realize that every season of life may not be this huge financial season,” Lyda said. “Sometimes you’re in a season where you’re just trying to hold on. And I feel like that’s what it’s been like for most Americans.”
