Tag: General Motors Co.

UAW strike: Ford, GM, Stellantis record profits haven’t been shared fairly with workers, Biden says

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President Joe Biden on Friday offered his support to the United Auto Workers, as he addressed their strike aimed at the Big Three auto makers.

Auto companies have seen record profits because of the “extraordinary skill and sacrifices” of UAW workers, Biden said in a brief speech at the White House.

“Those record profits have not been shared fairly, in my view, with those workers,” the president added.

“The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW,” he also said.

Biden gave his remarks after about 12,700 workers went on strike early Friday as their union and the Big Three automakers failed to reach an agreement before a contract expired.

It’s a targeted strike at a Ford Motor
F,
-0.08%
plant in Michigan, a General Motors
GM,
+0.86%
plant in Missouri and a Stellantis NV
STLA,
+2.18%
plant in Ohio.

The UAW so far has not endorsed Biden’s re-election bid, even as the AFL-CIO and other big unions have lined up behind the Democratic incumbent.

The presidential race in 2024 could be a rematch of 2020’s contest between Biden and former President Donald Trump, who has won over some union households that historically have backed Democrats like Biden rather than Republicans.

See: Here are the Republicans running for president

Biden got more support than Trump from union households in the battleground states of Michigan and Wisconsin in 2020, but Trump got more support from such households in Ohio and Pennsylvania, according to Edison Research exit polls.

Trump has seized on concerns that the car industry’s shift toward electric vehicles
CARZ,
which the Biden administration has promoted, could hurt American workers. “The all Electric Car is a disaster for both the United Auto Workers and the American Consumer,” the former president said Friday in a post on his Truth Social platform.

On Friday, Biden said he hopes the UAW and car companies “can return to the negotiation table to forge a win-win agreement,” and he said he’s sending two administration officials to Detroit — Julie Su, the acting secretary of labor, and Gene Sperling, a senior adviser.

GM posted a 2022 net profit of $11.04 billion, up from $10.38 billion in 2021, while Ford recorded a 2022 net profit of $7.62 billion, up from $6.43 billion in the prior year. For Stellantis, the parent company for brands such as Chrysler, Dodge and Jeep, last year’s net profit was $17.83 billion, up from $15.12 billion.

UAW President Shawn Fain said in a statement after Biden’s speech that union members “agree with Joe Biden when he says ‘record profits mean record contracts.’”

Fain also said: “Working people are not afraid. You know who’s afraid? The corporate media is afraid. The White House is afraid. The companies are afraid.”

Now read: Tesla may be the winner of the Big Three labor woes

And see: Will the UAW strike push up car prices?

Plus: UAW strike to have limited impact on Big Three, Fitch says

Claudia Assis contributed.

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September 15, 2023
CNBC Daily Open: Arm’s surge lends helping hand to banks

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Arm Holdings CEO Rene Haas poses for a photo with members of leadership before the Nasdaq opening bell at the Nasdaq MarketSite on September 14, 2023 in New York City.

Michael M. Santiago | Getty Images News | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

The long reach of Arm
Arm shares surged almost 25% on its first day of trading on New York’s Nasdaq, and a further 6.8% in extended trading. The chip designer priced its shares at $51 a piece in its initial public offering. Shares of Arm began trading at $56.10 a share and ended the day at $63.59. That gives the company a fully diluted market cap of about $68 billion, and a price-to-earnings multiple higher than Nvidia’s.

Markets rebound
U.S. stocks rose Thursday, aided by Arm’s electrifying showing and promising economic data from the U.S. The Dow Jones Industrial Average, in particular, rallied 0.96% for its best day since August. Asia-Pacific markets rose Friday, cheered by China’s better-than-expected data. Japan’s Topix gained 1.25% to hit a 33-year high, as Softbank jumped around 2.7% after Arm’s impressive showing.

China’s economy picks up
Finally, some positive economic data from China. Retail sales in August grew 4.6% from a year ago, beating expectations for 3% growth. Industrial production rose 4.5%, also surpassing the forecast of 3.9%. However, fixed asset investment was still weighed down by the real estate sector, and came in at 3.2%, slightly below the expected growth of 3.3%.

Screeching to a halt
Thousands of members of the United Auto Workers went on strike after the union failed to reach a deal with General Motors, Ford Motor and Stellantis. Workers at three key U.S. assembly plants plan to cease work from Friday — those plants were targeted because they produce highly profitable vehicles that are still in high demand.

[PRO] Cash or stocks?
In recent weeks, U.S. Treasury yields have risen to their highest levels in decades. Meanwhile, major indexes lost ground in August. That has boosted the attractiveness of keeping cash holdings as opposed to investing in stocks. But will that trend hold true for the rest of the year? Analysts from big banks weigh in on the debate between cash and stocks.

The bottom line

When you have a toothache, your whole body feels the pain. In the same vein, when Arm experienced a flush of wellbeing, it radiated through markets’ entire body, giving them their best day in weeks.

“The successful IPO of Arm … instills some confidence that perhaps the capital markets window is going to open again after virtually being closed for the last 18 months,” said Art Hogan, chief market strategist at B. Riley Financial.

Big banks rallied on excitement that the sleepy IPO market for tech companies might finally be stirring. (More IPOs means more dealmaking — and higher revenue — for banks.) Shares of JPMorgan Chase rose almost 2%, Morgan Stanley gained 2.09% and Goldman Sachs popped 2.86%. Tech IPOs are particularly important to Goldman as the bank relies on investment banking more than its rivals. With Instacart and marketing firm Klaviyo set to list soon, Goldman — which has been struggling of late — might see a change in its fortunes.

Goldman and JPMorgan are big components of the Dow. That helped the blue-chip index rise 0.96%, its best day since Aug. 7, giving it a closing level above its 50-day moving average for the first time since Sept. 1. The S&P 500 advanced 0.84%, its best showing in around two weeks, and the Nasdaq Composite gained 0.81%.

Meanwhile, a tame core PPI reading for August assuaged worries after core consumer price index was higher than expected. But because CPI is a lagging indicator, while PPI is considered a leading indicator — that is, it predicts the future state of the economy — markets found solace in the idea that things aren’t as bad as consumer inflation appeared to portray.

And August retail sales jumped 0.6% against the 0.1% expected. Taken together with the PPI report, that suggests the U.S. economy, supported by an indefatigable consumer, might skirt a recession even as inflation gradually cools.

“You’ve got the perfect framework of inflation heading in the right direction, but the economy not falling apart,” Hogan said. “And that really paints the picture that the Fed has done the right thing and we may well be orchestrating that elusive soft landing.”

But the economy is infamously volatile. Hence Hogan’s all-important caveat: “At least that’s the impression we get this week.” Still, after markets ended in the red last week, any reprieve, however temporary, will be welcome.

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September 14, 2023
UAW members go on strike at three key auto plants after deal deadline passes

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Members of the United Auto Workers union hold a rally and practice picket near a Stellantis plant in Detroit, Aug. 23, 2023.

Michael Wayland / CNBC

DETROIT – Thousands of members of the United Auto Workers went on strike at three U.S. assembly plants of General Motors, Ford Motor and Stellantis, after the union and the automakers failed to reach a deal on a new labor contract Thursday night.

“The UAW Stand Up Strike begins at all three of the Big Three,” the union said in a post on X, the site formerly known as Twitter, just after midnight Friday.

The facilities are GM’s midsize truck and full-size van plant in Wentzville, Missouri; Ford’s Ranger midsize pickup and Bronco SUV plant in Wayne, Michigan; and Stellantis’ Jeep Wrangler and Gladiator plant in Toledo, Ohio. For Ford, UAW President Shawn Fain said only workers in paint and final assembly will be on strike.

“We got to do what we got to do to get our share of economic and social justice in this this strike,” Fain said outside the Ford facility in Wayne, minutes after the strike began. “We’re going to be out here until we get our share of economic justice. And it doesn’t matter how long it takes.”

The selected plants produce highly profitable vehicles for the automakers that largely continue to be in high-demand. About 12,700 workers – 5,800 at Stellantis, 3,600 at GM and 3,300 at Ford – will be on strike at the plants in total, the union said. The UAW represents about 146,000 workers across Ford, GM and Stellantis.

UAW President Shawn Fain, center, talks to reporters as union members strike outside a Ford plant in Wayne, Michigan, Sept. 15, 2023.

CNBC | Michael Wayland

“If they come to the pump and they take care of their workers, we’ll be back to work,” Fain said early Friday, referring to the automakers. “But if they don’t, we’ll keep amping it up.”

The union selected the plants as part of targeted strike plans initially announced Wednesday night by Fain, who has unconventionally been negotiating with all three automakers at once and has been reluctant to compromise much on the union’s demands.

Read more: General Motors sweetens its offer to include 20% wage increase

“For the first time in our history, we will strike all three of the ‘Big Three’ at once,” Fain said just after 10 p.m. Thursday in live remarks streamed on Facebook and YouTube. “We are using a new strategy, the ‘stand-up’ strike. We will call on select facilities, locals or units to stand up and go on strike.”

Fain has referred to the union’s plans as a “stand-up strike,” a nod to historic “sit-down” strikes by the UAW in the 1930s.

Key proposals from the union have included 40% hourly pay increases, a reduced 32-hour work week, a shift back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments (COLA), among other items on the table including enhanced retiree benefits and enhanced vacation and family leave benefits.

By late Thursday, it was clear there wouldn’t be a deal, even as President Joe Biden got involved. The White House said Biden, who boasts of his blue collar background and support for organized labor, talked with Fain and the leaders of the Detroit automakers.

Ford, in a statement Thursday night, said the UAW presented its “first substantive counterproposal” to four of the company’s offers, but it “showed little movement from the union’s initial demands.”

“If implemented, the proposal would more than double Ford’s current UAW-related labor costs, which are already significantly higher than the labor costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilize non-union-represented labor,” Ford said. “The union made clear that unless we agreed to its unsustainable terms, it plans a work stoppage at 11:59 p.m. eastern.”

The automakers have made record proposals that address some of the UAW’s ambitious demands but not all of them. Specifically, the companies have offered wage increases of roughly 20%, COLA, altered profit-sharing bonuses; and enhanced vacation and family leave enhancements that the union has found inadequate.

Targeted strikes typically focus on key plants that can then cause other plants to cease production due to a lack of parts. They are not unprecedented, but the way Fain plans to conduct the work stoppages is not typical. They include initiating targeted strikes at select plants and then potentially increasing the number of strikes based on the status of the negotiations. Selecting assembly plants for such strikes is also unique.

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September 14, 2023
UAW strike: 12,700 Ford, GM and Stellantis auto workers walk off the job

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Nearly 13,000 U.S. auto workers went on strike early Friday after the Big Three and the United Auto Workers failed to reach an agreement before their national contract expired just before midnight.

UAW President Shawn Fain called the targeted strike at a Ford Motor
F,
-0.16%
plant in Michigan, a General Motors
GM,

plant in Missouri and a Stellantis NV
STLA,
-0.58%
plant in Ohio. A strike at all three U.S. car makers is a break with tradition, as the union for many years has elected to center strike efforts at one company to protect its strike fund and picket-line firepower. Fain said the union could add more plants to strike as part of its strategy to keep the automakers guessing, and urged all 150,000 UAW members to be ready if and when they’re called to strike.

“This is our generation’s defining moment,” Fain said Thursday night as he addressed UAW workers by webcast two hours before the deadline. “The money is there. The cause is righteous.”

Fain said the union is committed to a contract that reflects the “incredible sacrifices and contributions” that its members have made for years. The union has said wages for auto workers who make the top rate have risen about 6% over the past four years, while the three automakers’ North American profits have increased about 65% during that time.

The union is asking for double-digit wage increases, an end to tiered wages and benefits, the restoration of pensions and cost-of-living adjustments, retiree pay increases and more.

A Stellantis spokesperson said the company is in contingency mode and sent the following statement: “We are extremely disappointed by the UAW leadership’s refusal to engage in a responsible manner to reach a fair agreement in the best interest of our employees, their families and our customers.”

A GM spokesperson said the company will continue to bargain with the union and that “we are disappointed by the UAW leadership’s actions, despite the unprecedented economic package GM put on the table, including historic wage increases and manufacturing commitments.”

Ford did not immediately comment after the strike began, but said in a statement earlier Thursday night that it was unhappy with the union’s counterproposal: “If implemented, the proposal would more than double Ford’s current UAW-related labor costs.”

GM’s Wentzville, Mo., plant, which the union said has about 3,600 UAW members, builds some of the car maker’s mid-size trucks and full-size vans, including the Chevy Colorado and the GMC Canyon. Ford’s plant in Wayne, Mich., makes Ford Broncos, and about 3,300 members who work in final assembly and paint would be striking. The Stellantis Toledo, Ohio, plant, which has about 5,800 UAW members, makes Jeep Gladiators and Wranglers.

UAW members join workers around the nation and across industries — such as Hollywood writers and actors, hotel staff and healthcare workers — who are on strike or are preparing to walk off their jobs. Fain reiterated to UAW members Thursday night that amid rising economic inequality, he looks at the auto workers’ strike as part of a larger battle between the haves and the have-nots.

Michelle Kaminski, associate professor in the School of HR and Labor Relations at Michigan State University, said in an interview with MarketWatch that “when the union president says this is a generational strike, I really agree with him.”

She added: “When I think about economic conditions, they are more favorable to the union now than [at any point] in the 30 years I’ve been in this field.” She said auto workers have “given up a lot” over the past couple of decades as the companies have needed both government help and worker concessions to survive.

Kaminski also cited the auto makers’ profit and financial position; the pandemic’s effect on the labor force and how workers’ commitments to their jobs have changed; and increasing inflation as factors in why she sees the timing as key. “The union’s window of opportunity is right now,” she said.

But CFRA analyst Garrett Nelson said in an interview with MarketWatch that the union “needs to be careful not to overplay their hand, as the balance sheets of the Detroit three are flush with cash and they can probably wait things out longer than the workers can.”

Automakers could weather a strike, although anything longer than about two weeks is viewed as more impactful and detrimental to the companies. GM has about $39 billion in cash and equivalents, while Ford has around $51 billion, according to a recent Moody’s Investors Service report. Stellantis’s cash and equivalent pile towers over the others, at $69 billion.

The union’s strike fund starts at $825 million, and striking workers will receive $500 a week. Fain said earlier this week that a targeted strike would help the union have flexibility and apply pressure to the companies as negotiations continue; analysts say it means the union wouldn’t deplete its strike fund so quickly.

See: Why United Auto Workers are fighting to end a two-tier system for wages and benefits

The effects of the strike could be far-reaching, both for the companies and workers who may not necessarily be on the picket lines.

Nelson said the union’s strategy of targeting specific plants could turn into a supply-chain “logistical nightmare” for the auto makers. They will have to adjust deliveries of specific parts to their assembly plants, and the average vehicle is made of more than 30,000 parts.

“The automotive supply chain is among the most complex of any industry,” Nelson said. “Not knowing which plants the UAW will target in advance could create a massive level of uncertainty and have a crippling impact on production. If the strike goes on for too long, we think auto suppliers could have to cut production and furlough workers at their plants, creating a ripple effect across the industry.”

Major suppliers’ balance sheets are not as strong, and GM, Ford and Stellantis together generally account for between 25% and 45% of their net sales, so the degradation of the supply chain is a major risk in the event of a prolonged strike.

The U.S. Chamber of Commerce this week warned about the potential widespread impact of a UAW strike. In a letter to President Joe Biden urging him to help the parties reach an agreement, the chamber said the “Detroit Three are critical to our economy.” More than 690,000 supplier jobs are tied to the auto makers, along with about 660,000 dealership jobs, the chamber said.

“A strike will quickly impact large segments of the economy, leading to layoffs and potentially even bankruptcies of U.S. businesses,” the chamber said.

See: Tesla may be the winner of Big Three-UAW labor talks

Also: Would a United Auto Workers strike push up used-car prices?

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September 14, 2023
UAW strike countdown: Union president says targeted strike possible at all Big Three automakers

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United Auto Workers President Shawn Fain said Wednesday that autoworkers and the Big Three automakers are still far apart, although negotiations continue, and that the union may strike all of the Big Three at once.

“We’re keeping all of our options open. An all-out strike is still a possibility,” Fain said during a webcast with members.

The UAW and Ford Motor Co.
F,
+1.53%,
General Motors Co.
GM,
+0.57%
and Stellantis NV
STLA,
-0.42%
have made progress during their talks but were still far apart on the union’s key priorities, though negotiations will continue until the deadline of 11:59 p.m. Eastern on Thursday, Fain said.

“For the first time in our history, we may strike all of the Big Three at once,” Fain said, adding that he looked at this time as “our defining moment.”

He said if no deal is reached, there’s also the possibility of doing “standup strikes” at certain plants, designed to keep the companies guessing. These could escalate and spread elsewhere in order to give the union leverage in bargaining. He told UAW members that they should not strike unless their local is called to do so.

A targeted strike helps the UAW avoid distributing strike pay, set recently at $500 a week per member, to all 150,000 of its members. But it could have a broader effect.

“It is possible for strikes at critical parts plants to have much wider implications,” Marick Masters, a business professor at Wayne State University in Detroit, said in an interview with MarketWatch on Wednesday.

He noted that the 1998 strike against GM, a work stoppage by 9,200 workers at two of that company’s plants in Flint, Mich., resulted in shutdowns that affected more than 150,000 workers.

See: These Ford, GM plants are the most likely strike targets

Jody Calemine, a senior fellow and director of labor and employment policy at the Century Foundation, a progressive think tank, said Wednesday that the union is employing an interesting strategy.

“It will turn the screws slowly and probe for weaknesses, and try to get as much movement out of companies as possible while keeping the options to escalate,” he said.

Calemine said Fain has done a “masterful job” of painting the fight as a “real showdown” between working families and the companies. But he added that “the principal danger for the union would be losing the narrative. Other places would continue to work, or get laid off or locked out.”

That’s reflected in some of the online comments by UAW members who watched Fain’s update. One worker said on Facebook: “Strike us all or none at all.”

The UAW president quoted scripture, repeated his calls for unity and said the “strike plan is driven by faith that together we can and will move mountains.”

Fain said the companies have revised some of their offers: On wages, Ford has put forward a 20% increase over the life of the four-year contract, up from its previous offer of 9%, while GM’s latest offer is 18% and Stellantis’s offer is 17.5%. That’s compared to a wage increase of 40% — or 46% when compounded annually — that the union sought originally and later revised to 36%.

“Their proposals don’t reflect the massive profits that we’ve generated for these companies,” Fain said.

The union has pointed out that while the Big Three’s profit has risen 65% over the past four years, and the pay of each of the companies’ chief executives have risen 40%, the UAW top wage rate has risen 6% over that time.

See: Why United Auto Workers are fighting to end a two-tier system for wages and benefits

A GM spokesperson said Wednesday that the company continues to bargain in good faith and sent a statement that reads in part: “We are making progress in key areas that we believe are most important to our represented team members. This includes historic guaranteed annual wage increases, investments in our U.S. manufacturing plants to provide opportunities for all, and shortening the time for in-progression employees to reach maximum wages.”

Ford and Stellantis did not immediately return a request for comment.

The most recent U.S. autoworkers’ strike was at GM in 2019, which lasted for nearly six weeks and involved about 50,000 workers.

See: Would a United Auto Workers strike provide an opportunity for Tesla — and push up used-car prices?

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September 13, 2023
VinFast loses more than $140 billion in market cap in two weeks after week-long nosedive for EV maker

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Electric-vehicle startup VinFast Auto Ltd. has seen its market capitalization fall more than $140 billion in less than two weeks, weighed down by a six-day losing streak for the company’s stock.

Shares of VinFast
VFS,
-2.72%
soared last month after the company went public through a special-purpose acquisition company deal, taking its market cap to an eye-watering $231.3 billion on Aug. 25 — easily surpassing established automakers such as Ford Motor Co.
F,
+0.57%
and General Motors Co.
GM,
+0.09%.

VinFast is on pace to extend its losing streak to seven days. Shares of the low-float company fell 26.3% Thursday, taking VinFast’s market cap to $85 billion, according to FactSet data. Ford’s market cap is $47.7 billion and GM’s is $44.5 billion, FactSet data show.

Related: This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

About 99% of VinFast shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The startup says the plant will eventually have the capacity to make 150,000 vehicles a year.

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September 7, 2023
UAW president says union has filed unfair labor practice charges against GM, Stellantis over contract talks

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UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

Michael Wayland / CNBC

DETROIT – The United Auto Workers has filed unfair labor practice charges against automakers General Motors and Stellantis to the National Labor Relations Board for not bargaining with the union in good faith or a timely manner, UAW President Shawn Fain said Thursday night.

The Thursday filings followed the companies not responding to the union’s demands in a timely matter, Fain said. The union did not file a complaint against Ford Motor, as Fain said the company responded to the UAW’s demands with a counterproposal.

However, Fain heavily criticized Ford’s proposal that he said included a 9% wage increase over the four-year term of the deal; one-time lump-sum bonuses; and unlimited use of temporary workers who are paid less and don’t have the same benefits. The company also rejected “all of the” union’s job security proposals and “quality of life proposals” such as additional paid holidays and a shorter work week, Fain said.

Spokespeople with the automakers did not immediately respond for comment. The union and NLRB also did not immediately respond for additional details of the filings.

This is breaking news. Please check back for additional updates.

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August 31, 2023
Stocks making the biggest moves midday: Best Buy, Big Lots, Coinbase, Nio and more

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Check out the companies making headlines in midday trading.

Best Buy — Shares popped nearly 6% after the retailer’s fiscal second-quarter earnings beat on both the top and bottom lines. Adjusted earnings per share came in at $1.22, versus the $1.06 expected from analysts polled by Refintiv. Revenue was $9.58 billion, topping the consensus estimate of $9.52 billion. However, Best Buy lowered the top end of its revenue outlook for the year.

Big Lots — The discount retailer surged 26.7% after its earnings report came in better than analysts expected. Big Lots lost $3.24 per share, on an adjusted basis, less than the $4.11 forecasted by analysts surveyed by FactSet. Revenue exceeded the consensus estimate of $1.1 billion, coming in at $1.14 billion.

Coinbase, Marathon Digital, Riot Platforms — Stocks tied to the cryptocurrency industry soared after a court ruled against the Securities and Exchange Commission in a lawsuit about spot bitcoin ETFs. Shares of Coinbase, which is named as a custodial partner in several proposed bitcoin ETFs, jumped 13%. Bitcoin mining stocks also rose, with Marathon Digital surging 24% and Riot Platforms climbing 15%.

3M — Shares gained 2.6% after the company agreed to settle lawsuits regarding potentially defective U.S. military earplugs for $6.01 billion. The deal had grown into the largest mass tort litigation in U.S. history.

Heico — The engine and aircraft part maker retreated 3.1%. Despite beating expectations for revenue in the quarter, the company said its operating margin fell when compared with the same quarter a year ago.

Nio — The Chinese electric vehicle maker slid 5.8% after posting a wider quarterly loss than anticipated. Industry giant Tesla climbed more than 5.4%.

Nvidia — The artificial intelligence stock rallied 4%, part of a broader ascent among technology stocks in Tuesday’s session. Morgan Stanley reiterated its overweight rating on the stock, noting its strong earnings report last week can be a positive signal for the AI supply chain.

PDD Holdings — U.S.-listed shares jumped 17.8%. The Chinese e-commerce company beat Wall Street expectations when reporting second-quarter earnings. It noted a positive shift in consumer sentiment during the quarter.

Oracle — Software giant Oracle climbed 2.9% following an upgrade from UBS to buy from neutral. UBS said the stock could have upside ahead due to tailwinds tied to artificial intelligence.

AT&T, Verizon — The telecommunication giants each added 2.3% on the back of a Citi upgrade to buy. The firm cited stabilization in the wireless environment and said the stocks’ valuations may be over-discounting potential costs tied to mitigating lead-covered cables.

Alphabet, General Motors — Google Cloud and General Motors said Tuesday they’re working together to explore artificial intelligence opportunities across the automaker’s business. Following the announcement, shares of Google Cloud’s parent company Alphabet and General Motors rose 3.5% and 0.6%, respectively, during midday trading.

Catalent — Catalent jumped more than 5% after the biotech company issued a solid revenue outlook and announced a deal with activist investor Elliott Investment Management. For fiscal 2024, Catalent forecasted revenue in the range of $4.30 billion to 4.50 billion, far above the $4.19 billion expected by analysts polled by FactSet. Additionally, Catalent agreed to name four new independent directors to its board, two of whom will be nominated by Elliott. It also agreed to a review of its business and strategy.

Ginkgo Bioworks — The biotechnology company’s stock popped more than 18% after announcing a five-year cloud and AI partnership with Google Cloud. As part of the deal, Ginkgo Bioworks will work to create new large language models for biology and biosecurity uses. Alphabet shares were last up more than 3%.

Rockwell Automation — The industrial stock gained nearly 2% after Wells Fargo upgraded the stock to equal weight from underweight. The Wall Street firm said it’s bullish on Rockwell’s earnings growth potential.

Airbnb — The vacation booking platform climbed 4.8%. Bernstein reiterated its outperform rating and said investors should buy the stock after a recent pullback in share prices.

Palantir – The software stock surged more than 5%. Bank of America reiterated its buy rating on Palantir, calling the company a “key player” in implementing secure AI despite the recent share pullback.

Splunk — Shares of the software company added 1.8% on Tuesday after Jefferies named the company a top pick in a Tuesday note. Jefferies said Splunk is now in position to deliver “mid-teens” increases in annual revenue after a management overhaul that began 18 months ago.

Futu Holdings — The Asian wealth management stock popped 10% following a double-upgrade to buy from underperform by Bank of America. The Wall Street bank said to expect more growth in overseas markets.

NextEra Energy Partners — The energy stock advanced 3.7% on the back of an upgrade from Raymond James to outperform from market perform. Raymond James said investors should buy the dip on the stock.

— CNBC’s Sarah Min, Samantha Subin, Yun Li, Hakyung Kim, Michelle Fox, Pia Singh and Jesse Pound contributed reporting

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August 29, 2023
This EV company has a bigger market cap than Ford or GM. But you may not have heard of it.

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Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.

Shares of low-float company VinFast
VFS,
+40.35%
rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
F,
+1.36%
market cap is $47 billion and GM’s
GM,
+0.21%
is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
RIVN,
+2.19%
has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
TSLA,
+3.72%
$730.2 billion market cap.

In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.

Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch

“What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”

Uncredited

In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.

“From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.

Related: Rivian, Lucid and XPeng make the list of 20 EV companies expected to grow sales most quickly through 2025

The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.

About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.

Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”

Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year

VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.

Claudia Assis contributed.

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August 25, 2023
Automaker Stellantis has discussed moving pickup truck production from the U.S. to Mexico, union leader says

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UAW Vice President Rich Boyer addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

Michael Wayland / CNBC

WARREN, Mich. – Automaker Stellantis has threatened to move production of the current Ram 1500 pickup truck from a factory in suburban Detroit to Mexico, a union leader said Sunday.

United Auto Workers Vice President Rich Boyer, who heads the union’s Stellantis unit, said the automaker has discussed the move during ongoing contract negotiations that are occurring simultaneously but separately between the UAW and General Motors, Stellantis and Ford Motor.

Boyer said the company’s plans would include producing a new all-electric Ram pickup truck at the Sterling Heights Assembly Plant, which currently produces most of the Ram light-duty pickups.

Such a move would likely receive some political pushback. It also would potentially impact the union’s membership, as EVs require fewer workers to produce them. There’s also no guarantee that an all-electric pickup would be as successful as the current internal combustion engine (ICE) model, meaning less job security for members.

Boyer, speaking to hundreds of union members during a “Sunday Solidarity” rally, didn’t hold back his displeasure about the potential plans, calling out Stellantis CEO Carlos Tavares for not caring about U.S. auto workers.

“He don’t give a s*** about the American auto worker,” Boyer said wearing a red UAW shirt with “UNITED WE STAND DIVIDED WE FALL.” “They have said they want to take the Ram 1500 ICE and send it to Mexico.”

Workers build 2019 Ram pickup trucks on ‘Vertical Adjusting Carriers’ at the Fiat Chrysler Automobiles (FCA) Sterling Heights Assembly Plant in Sterling Heights, Michigan, October 22, 2018.

Rebecca Cook | Reuters

Stellantis, which already produces some Ram pickups in Mexico, did not confirm nor deny the potential move, saying in a statement: “Product allocation for our U.S. plants will depend on the outcome of these negotiations as well as a plant’s ability to meet specific performance metrics including improving quality, reducing absenteeism and addressing overall cost.

“As these decisions are fluid and part of the discussions at the bargaining table, we will not comment further.”

UAW President Shawn Fain said he believes relocating the truck production would “be a huge mistake on the part of Stellantis to try it.”

“Those are our jobs and that’s our vehicle. We expect to keep that work,” he said.

Speaking with CNBC after the event, UAW’s Boyer described the ongoing negotiations with Stellantis as “slow and confrontational.”

Fain, who began leading the union earlier this year and has taken a more confrontational tone with the negotiations, said he would like to reach tentative agreements with the companies in the coming weeks ahead of the deals expiring at 11:59 p.m. ET, Sept. 14.

UAW President Shawn Fain addresses union members during a “Solidarity Sunday” rally on Aug. 20, 2023 in Warren, Mich.

Michael Wayland / CNBC

‘When Labor Day hits, we better have agreements. If we don’t, there’s going to be problems,” Fain said, declining to predict the likelihood of a strike against one or all three of the automakers. “We’re not married to anything right now.”

Fain earlier this month publicly threw a recent proposal from Stellantis into a trash bin during a Facebook Live event with members.

Contract talks between the union and automakers usually begin in earnest in July ahead of mid-September expirations of the previous four-year agreements. Typically, one of the three automakers is the lead, or target, company that the union selects to negotiate with first and the others extend their deadlines. However, Fain has said this year may be different, without going into specific details.

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August 20, 2023
Cruise will reduce robotaxi fleet by 50% in San Francisco while California DMV investigates ‘incidents’

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In an aerial view, Chevrolet Cruise autonomous vehicles sit parked in a staging area on June 08, 2023 in San Francisco, California. Autonomous vehicle companies Cruise and Waymo have been testing their vehicles throughout San Francisco and residents are not happy with the problems that the cars are bringing to the city.

Justin Sullivan | Getty Images News | Getty Images

Cruise will reduce its robotaxi fleet by 50% in San Francisco, the California Department of Motor Vehicles told CNBC.

The move comes after Cruise autonomous vehicles were involved in multiple crashes in San Francisco this week where the self-driving cars appeared to stall in intersections, including one on Thursday night when it collided with a fire truck.

The reduction is a setback for Cruise, a General Motors subsidiary, which started offering a paid robotaxi service in San Francisco after it and Alphabet’s Waymo received permission to expand driverless operations and carry paying passengers 24 hours a day all over San Francisco. Cruise is currently operating with a waitlist.

It also highlights the growing debate in San Francisco over driverless cars. Opponents say they are dangerous and interfere with firefighters and other first responders, while defenders say they are innovative and will make getting around the city cheaper and easier.

“The DMV is investigating recent concerning incidents involving Cruise vehicles in San Francisco,” a DMV spokesperson said in a statement. “The DMV is in contact with Cruise and law enforcement officials to determine the facts and requested Cruise to immediately reduce its active fleet of operating vehicles by 50% until the investigation is complete and Cruise takes appropriate corrective actions to improve road safety.”

The DMV said Cruise has agreed to the reduction and will have no more than 50 of its autonomous vehicles operating during the day and no more than 150 operating during the evening. Cruise said in August it was operating 300 cars during the night and 100 during the day.

A spokesperson for Cruise was not immediately available for comment outside of business hours.

In a blog post on Friday night, Cruises’ San Francisco general manager Greg Dietrerich wrote that the accident with a Cruise vehicle and firetruck on Thursday had “several factors” that contributed to the incident, including buildings at the intersection that are difficult to see around. He also said the firetruck was driving in the wrong lane to “bypass” a red light.

“We will continue to work in partnership with regulators and city departments on EMV interactions to reduce the likelihood of incidents like these happening again,” Dietrerich wrote.

Cruise’s fleet was involved in several incidents over the past week that drew media attention. In addition to the crash with a firetruck, one Cruise vehicle reportedly got stuck in concrete, and an autonomous vehicle with a passenger got hit by a driver. The other driver in that incident was running a red light, according to Cruise. Last weekend, a slew of Cruise vehicles stalled and slowed traffic outside an outdoor music festival.

— CNBC’s Lora Kolodny contributed to this story.

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August 19, 2023
California regulator probes crashes involving GM’s Cruise robotaxis

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A Cruise self-driving car, which is owned by General Motors Corp, is seen outside the company’s headquarters in San Francisco.

Heather Somerville | Reuters

California’s autos regulator said on Friday it is investigating “recent concerning incidents” involving autonomous vehicles operated by General Motors unit Cruise in San Francisco and asked the company to take half its robotaxis off the roads.

The statement from the California Department of Motor Vehicles (DMV) came after a Cruise robotaxi was involved in a crash with an emergency vehicle in San Francisco late on Thursday, the latest accident involving self-driving cars.

The regulator also said it has asked Cruise to immediately reduce its active fleet of vehicles by 50% until the investigation is complete and Cruise takes actions to improve road safety. Cruise has agreed to a 50% reduction, it added.

“The DMV reserves the right, following investigation of the facts, to suspend or revoke testing and/or deployment permits” if it is determined to be an unreasonable risk to public safety, the regulator said in a statement.

Cruise said one of its cars “entered the intersection on a green light and was struck by an emergency vehicle that appeared to be en route to an emergency scene” after 10 p.m. on Thursday (0500 GMT Friday).

The car “did identify the risk of a collision and initiated a braking maneuver, reducing its speed, but was ultimately unable to avoid the collision,” the company, which is investigating the incident, said in a statement on Friday.

Initial investigation shows the collision occurred when a fire truck was operating in an emergency with its forward-facing red lights and siren on, the San Francisco Police Department said in a statement to Reuters.

The police said the sole passenger in the autonomous vehicle (AV) was transported to a local hospital with non-life-threatening injuries.

The California Public Utilities Commission (CPUC) last week voted to allow robotaxis from Cruise and Alphabet’s Waymo to operate at all hours of the day throughout San Francisco and charge passengers for rides despite strong opposition from residents and city agencies.

The two have been running robotaxi tests limited by times and geographic areas within San Francisco.

City Attorney David Chiu asked the CPUC on Thursday to halt its decision while the city files for a re-hearing. “We have seen that this technology is not yet ready, and poor AV performance has interfered with the life-saving operations of first responders. San Francisco will suffer serious harms from this unfettered expansion,” he said in a statement.

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August 19, 2023
How much would a strike cost the Big Three automakers? Wall Street thinks it has an answer.

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Wall Street got busy Monday calculating the impact of a strike on the Big Three automakers amid increasingly fraught labor negotiations between union workers and companies, and a “greater likelihood” of a walkout next month.

Also on Monday, President Joe Biden weighed in, urging the United Auto Workers and Ford Motor Co.
F,
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General Motors Co.
GM,
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and Stellantis NV
STLA,

to “to work together to forge a fair agreement.”

Negotiations so far have been tense, and the contract expires in one month.

Citi analyst Itay Michaeli estimated that a strike at GM lasting about two weeks impacting roughly about 100,000 vehicles would result in an impact of around $1.3 billion before interest and taxes; a five-week one, impacting about 280,000 vehicles, would result in a $3.4 billion impact EBIT. That would be a similar hit as GM’s 2019 strike, he said.

Recent headlines are “pointing to increasingly challenging labor negotiations and a greater likelihood of a strike next month,” Michaeli said.

A longer stoppage would result in shrinking dealer inventory and possibly start to impact sales sometime during the second half of October.

For Ford, Michaeli calculated an impact of about $1.6 billion EBIT for a two-week strike affecting about 130,000 Ford vehicles, growing to $4 billion in the case of a five-week strike affecting 330,000 Ford cars and trucks. Like GM, sales would be hobbled roughly by mid-October in the case of a longer strike.

“For both companies, the exact volume impact will in part depend on the extent of any Canada/Mexico downtime, and to that, GM appears somewhat better positioned than Ford due to GM’s higher exposure to Mexico production (including for pickup trucks) and other supply-chain considerations,” the analyst said in his note Monday.

Both companies likely can keep their guidance intact in the case of a brief, one-week strike, but a strike beyond the two-week mark “likely triggers a [fiscal-year guidance] cut, though it would set 2024 up with reduced inventory and greater volume/price recovery prospects,” Michaeli said.

A big question is whether a strike targets one specific automaker, as it was the case with GM in 2019, or all three at the same time — with more industry volume loss but also potentially a shorter strike, Michaeli said.

“To that, Ford is generally viewed to be the least likely to be selected as a target,” he said.

Deutsche Bank analyst Emmanuel Rosner said in his note Monday that he estimates an impact on earnings of about $400 million to $500 million for every week of production for each automaker, for a total of about $1.4 billion.

GM’s 2019 strike lasted almost six weeks, with a loss of about $3.6 billion EBIT; GM North America lowered revenue estimates as nearly 300,000 fewer vehicles were delivered.

Extrapolating the same $13,000 per unit in EBIT hit, Ford, GM and Stellantis could see [$550 million, $480 million, and $400 million] in weekly profit impact, reaching that $1.4 billion-a-week estimate, Rosner said.

“In a bad-case scenario with 8 weeks of strike against all 3 automakers, which would bring the UAW strike fund to very low levels, this could cause $11.2 billion in lost profits for the [Detroit 3],” Rosner said. “While this is considerable, it would still be considerably less than the impact from the lifetime of the 4-year contract,” which would create “a permanent raise in the OEMs’ cost,” he said.

The analyst also quantified the cost of UAW’s demands, focusing on the union’s “higher-probability asks” such as converting temporary employees into full-time workers, the elimination of a tiered-wage system, and about 40% base wage increase over the four years of the life of the contract. He left out “unlikely” to be met demands around pensions and post-retirement healthcare benefits.

“Our analysis suggests accommodating these demands would likely constitute a large but not destructive headwind to OEMs’ earnings in year 1, with incremental costs stepping up even further in subsequent years,” Rosner said in the note.

If these demands are granted with cost-of-living raises on top, Rosner estimated costs to all three automakers around $3.6 billion in the first year of the contract, amounting to $23 billion in total for the four years, “with highest hit to Stellantis, followed by GM and then Ford.”

“Specifically, we estimate that the conversion of temporary employees to full-time workers would cost D3 a total of $1.4 billion, not yet factoring in wage increases, with the highest impact to Stellantis given the higher [percentage] of temporary employees used currently relative” to GM and Ford, the analyst said.

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August 14, 2023
Regulators open floodgates for driverless taxis in San Francisco, whether they’re wanted or not

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State regulators on Thursday opened the floodgates for more robotaxis on the streets of San Francisco.

After a contentious, seven-hour meeting, the California Public Utilities Commission — which oversees taxis and autonomous vehicles, among things — approved two resolutions to broadly expand driverless taxi service from Alphabet’s
GOOG,
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GOOGL,
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Waymo and GM’s
GM,
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Cruise.

On a pair of 3-1 votes, regulators approved allowing Waymo and Cruise to offer fared driverless rides across San Francisco, at all hours of the day, with an unlimited number of vehicles.

While the driverless vehicles are already ubiquitous on city streets, San Francisco is now set to become the first U.S. city with two fleets of robotaxis that will be able to fully compete with taxis and ride-hailing services.

“Today’s permit marks the true beginning of our commercial operations in San Francisco,” Tekedra Mawakana, co-CEO of Waymo, said in a blog post. “We’re incredibly grateful for this vote of confidence from the CPUC, and to the communities and riders who have supported our service.”

Waymo said it expects “incredibly high demand,” and will be expanding its robotaxi service incrementally.

Cruise CEO Kyle Vogt said he was “thrilled” by the votes. “It’s a huge milestone for the AV industry, but even more importantly a signal to the country that CA prioritizes progress over our tragic status quo,” he tweeted.

The expansion was opposed by San Francisco city officials, who say autonomous-driving technology is not ready for prime time, and that the companies need to be more transparent in how they operate. On Wednesday, the city’s fire department released details of 55 incidents so far this year where driverless cars interfered in emergency scenes.

Read more: Driverless cars are driving San Francisco crazy — ‘They are not ready for prime time’

That’s just the tip of the iceberg: Jeffrey Tumlin, the head of San Francisco’s transportation agency, told MarketWatch in July that the city was seeing “up to 90 incidents per month … of varying degrees, some are minor, some are major obstructions.” Those included instances of autonomous cars stopping in the middle of traffic, crashes and other driving hazards.

While acknowledging the positives of driverless technology — which its advocates say is much safer than human drivers — Tumlin said the city would like a more gradual expansion of autonomous cars, with limitations, like the next level of a “learner’s permit.”

Regulation of autonomous vehicles, however, is up to the state.

The PUC meeting had been delayed twice, and Thursday’s meeting featured public comment from more than 150 people voicing their opinions on both sides of the issue.

PUC Commissioner Genevieve Shiroma was the sole dissenter on Thursday’s votes, which were absent one member. She told the hearing that there was no rush to make a decision, and advocated delaying the vote again. She noted that Cruise and Waymo claim to have maintained a good safety record, but that there were discrepancies about the data submitted to regulators. “Passengers should not be endangered, first responders should not be prevented from doing their jobs,” she said.

Alice Reynolds, the president of the CPUC, argued that this was an incremental approval, echoing comments by Commissioner John Reynolds, a former managing counsel at Cruise who did not recuse himself from voting, that the California DMV has already given the companies a permit to operate.

“We do expect the autonomous-vehicle companies to engage with first responders,” Reynolds said. “In the meantime the resolutions before us to meet our requirements.”

Teamsters vice president Peter Finn blasted the decision, saying it was “irresponsible and shows a complete disregard for public safety.”

“Public safety decisions should not be made by regulatory bodies that are in the pocket of Big Tech,” Finn said in a statement, adding that the Teamsters support pending state legislation that would require a trained human operator in autonomous vehicles weighing over 10,000 pounds, which would include most trucks.

A number of companies have autonomous cars driving on San Francisco streets, but only Cruise and Waymo had been approved for taxi service, with limitations. Earlier this week, the two companies disclosed how many driverless vehicles they operate in San Francisco: Cruise runs 100 vehicles during the day and 300 at night, while Waymo has 250 robotaxis operating.

That number could soon grow significantly.

Cruise’s Vogt said in an earnings call last month that Cruise could add “several thousand” robotaxis to San Francisco in an effort to create a disruptive service resembling Uber.

Therese Poletti contributed to this report.

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August 10, 2023
Top Wall Street analysts are banking on these stocks for solid returns

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The Spotify logo on the New York Stock Exchange, April 3, 2018.

Lucas Jackson | Reuters

With markets facing pressure at least in the short term, investors should try to build a portfolio of stocks that can weather the storm and offer long-term growth potential.

Here are five stocks chosen by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Domino’s Pizza

Domino’s Pizza (DPZ) reported mixed results for the second quarter, with the company blaming a decline in its market-basket pricing to stores and lower order volumes for the shortfall in its revenue compared to analysts’ expectations.

Nonetheless, BTIG analyst Peter Saleh reiterated a buy rating on Domino’s with a price target of $465 and said that the stock remains his top pick. (See Domino’s Financial Statements on TipRanks)

In particular, Saleh expects the company’s Uber Eats partnership, changes in the rewards program, and the launch of its pepperoni Stuffed Cheesy Bread to boost the top line in the fourth quarter and into 2024.

The analyst noted that the pizza chain’s entire menu will become available to Uber Eats customers at regular menu prices, without any deals or coupons. Interestingly, the company is targeting the higher-income customers on Uber Eats and reserving the discounts and other benefits for its own ordering channels.

“We expect the improvement in delivery sales, coupled with declining commodities, to translate to healthier unit economics and accelerated domestic development next year and beyond,” said Saleh.

Saleh ranks No. 331 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.9%.

Meta Platforms

Next up is Meta Platforms (META). The social media platform recently delivered upbeat second-quarter results and issued better-than-anticipated guidance for the third quarter, signaling improved conditions in the digital ad market.

Following the print, Monness analyst Brian White raised his price target for Meta to $370 from $275 and maintained a buy rating, saying that the company’s second-quarter results reflected strong execution and its massive cost-improvement measures.

The analyst noted that management’s commentary during the earnings call reflected positive vibes, backed by an improving digital ad market and a compelling product roadmap. He highlighted the momentum in Meta’s short-video feature Reels, which is growing at a more than $10 billion annual revenue run rate across apps. He also mentioned the better-than-expected traction in Threads and the company’s significant investments in artificial intelligence.

White cautioned investors about regulatory risks and internal headwinds. However, he said that in the long run, “Meta will benefit from the digital ad trend, innovate with AI, and participate in the build-out of the metaverse.”

White holds the 27th position among more than 8,500 analysts on TipRanks. His ratings have been profitable 67% of the time, with each rating delivering an average return of 20.7%. (See Meta Platforms Stock Chart on TipRanks)

Spotify

White is also bullish on audio streaming company Spotify (SPOT). While Spotify’s second-quarter revenue and Q3 2023 guidance missed analysts’ expectations, the analyst contended that results were “respectable” with meaningful year-over-year growth of 27% in monthly active users (MAU) to 551 million.

Commenting on Spotify’s decision to increase the price of its subscription offerings, White noted that the price hikes will impact most subscribers beginning September, thus having a small impact on the third quarter but contributing meaningfully to the fourth-quarter performance.

While the analyst acknowledges an intense competitive backdrop, he said that “Spotify is riding a favorable long-term trend, enhancing its platform, tapping into a large digital ad market, expanding its audio offerings, and improving its cost structure.”

White raised his 2024 estimates and reiterated a buy rating while increasing the price target for SPOT stock to $175 from $160. (See Spotify Blogger Opinions & Sentiment on TipRanks)

Microsoft

Another tech giant in the week’s list is Microsoft (MSFT), which has been making headlines this year due to its generative AI advancements. The company’s fiscal fourth-quarter results topped Wall Street’s estimates. That said, the revenue outlook for the first quarter of fiscal 2024 fell short of expectations.

Nonetheless, Goldman Sachs analyst Kash Rangan, who ranks 459th among more than 8,500 analysts tracked on TipRanks, remains bullish on MSFT stock. (See Microsoft Hedge Fund Trading Activity on TipRanks)

The analyst thinks that in the short term, there might be concerns about when the company’s ramped-up capital investments will pay off. However, he observed that historically, whenever Microsoft increased its capital expenditure in the cloud market, Azure growth rate shot up meaningfully and margins rebounded, driving the stock price higher.

With a strong presence across all layers of the cloud stack, Rangan said that Microsoft is well positioned to capture opportunities in several long-term secular trends, including public cloud and SaaS adoption, digital transformation, generative AI and machine learning, analytics and DevOps.

In line with his bullish stance, Rangan reiterated a buy rating with a price target of $400. He has a success rate of 59% and each of his ratings has returned 10% on average.

General Motors

We now drive toward legacy automaker General Motors (GM), which impressed investors with robust growth in its second-quarter revenue and earnings. Additionally, the company raised its full-year outlook for the second time this year.

Recently, Tigress Financial Partners analyst Ivan Feinseth reaffirmed a buy rating on the stock with a price target of $86, noting the company’s strong execution and the ramp-up of new electric vehicle launches and production.

The analyst highlighted that the company continues to witness robust demand for its full-size SUVs and pickups, which is driving its revenue and cash flow higher and funding the transition and expansion of its EV production.

Feinseth called GM’s Ultium platform and supply chain for EV battery production its significant competitive advantage. The analyst is also positive about the company’s recent initiatives to expand its charging network.

“In addition to the ramp-up of EV production, GM’s ramp-up of high-value software and services as it plans to double company revenue to $275-315 billion by 2030 should drive significant increases in Return on Capital (ROC) and Economic Profit,” the analyst said.

Feinseth holds the 215th position among more than 8,500 analysts on TipRanks. His ratings have been successful 61% of the time, with each rating delivering an average return of 12.9%. (See General Motors Insider Trading Activity on TipRanks)

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August 6, 2023
UAW seeks double-digit pay hikes in Detroit Three auto contract talks

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UAW President Shawn Fain chairs the 2023 Special Elections Collective Bargaining Convention in Detroit, March 27, 2023.

Rebecca Cook | Reuters

United Auto Workers (UAW) President Shawn Fain said on Tuesday the union was seeking ambitious benefit increases in contract talks with the Detroit Three automakers, including double-digit pay rises and defined-benefit pensions for all workers.

The UAW presented its economic demands to Chrysler-parent Stellantis on Tuesday and will make presentations to General Motors (GM) Wednesday and Ford Thursday ahead of the Sept. 14 expiration of the current four-year contracts, Fain said.

They include proposing to make all temporary workers at the U.S. automakers permanent, placing new strict limits on the use of temporary workers and increasing paid time off.

Fain also wants increases in pension benefits for current retirees and to ensure all workers get defined-benefit pensions.

The union leader, in Facebook Live remarks, called the demands “the most audacious and ambitious list of proposals they’ve seen in decades.”

Fain said the CEOs of the Detroit Three saw their pay rise by 40% on average over the last four years.

He singled out GM CEO Mary Barra, who received $29 million of compensation in 2022, and said it would take an entry level worker at a GM joint venture battery plant 16 years to earn as much as she made in a week.

Fain listed numerous demands, including restoring retiree health care benefits and cost of living adjustments. He also said the UAW was proposing to have the right to strike over plant closures and to eliminate the two-tier wage system under which new hires earn 25% or more less than veteran employees.

He noted the Teamsters recently won an end to two-tiered wages in a new contract with UPS. “It’s wrong to make any worker a second class-worker. We can’t allow it any longer,” Fain said of the demand for the same at the Detroit Three.

Stellantis said it had a “very productive meeting” with Fain and the bargaining committee and would review the union requests to understand how they aligned with company proposals and where common ground could be found.

“We are not seeking a concessionary agreement,” Stellantis said.

GM said it would review the demands once they were received from the UAW on Wednesday.

Ford said it looked “forward to working with the UAW on creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.”

Fain also said the Detroit Three need to pay better wages for workers at battery joint venture plants and praised Democratic senators last week for urging the companies to include those workers under the master agreements.

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August 3, 2023
General Motors raises full-year guidance, announces deeper cost-cutting
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Mary Barra, CEO, GM at the NYSE, November 17, 2022.

Source: NYSE

DETROIT — General Motors is raising its 2023 guidance for a second time this year after the automaker reported second-quarter results Tuesday that were up sharply year over year.

The Detroit automaker also said it is increasing cost-cutting measures through next year and now plans to reduce $3 billion in expenditures compared with previous guidance of $2 billion.

GM CFO Paul Jacobson said the reductions will include sales and marketing spending, salary employment, and other costs.

GM shares were initially up in premarket trading following the results but were down nearly 3% just after the market opening.

Here’s what GM reported for its second quarter:

Adjusted earnings per share: $1.91. (This is not comparable to $1.85 analysts expected due to one-time items.)

Revenue: $44.75 billion vs. $42.64 billion expected, according to Refinitiv consensus estimates

GM’s earnings included an unexpected $792 million charge for new commercial agreements between GM and LG Electronics and LG Energy Solution. The cost is a result of the automaker sharing expenses with the companies for a recall of its Chevrolet Bolt EV models in recent years, which were previously expected to be paid by the LG companies.

Taking that charge into account, the company reported adjusted earnings before interest and taxes of $3.23 billion.

On an unadjusted basis, the company reported net income attributable to stockholders of $2.57 billion, or $1.83 per share, up nearly 52% from a year earlier when it earned $1.69 billion, or $1.14 per share.

Revenue during the quarter jumped 25% compared with $35.76 billion a year earlier.

For the full year, GM is raising its adjusted earnings expectations to a range of $12 billion to $14 billion, up from a previous range of $11 billion to $13 billion. GM also increased expectations for adjusted automotive free cash flow to a range of $7 billion to $9 billion, up from $5.5 billion to $7.5 billion, and for net income attributable to stockholders of $9.3 billion to $10.7 billion, compared with the previous outlook of $8.4 billion to $9.9 billion.

Jacobson said the raise is a result of stronger-than-expected pricing, demand and capital discipline.

However, the guidance increase is contingent on GM successfully negotiating new labor agreements with the United Auto Workers and the Canadian Unifor unions this year without a work stoppage or strike. The UAW has new leadership that has publicly been far more confrontational than prior union officers. The current contracts covering roughly 150,000 union workers for the Detroit automakers are set to expire Sept. 14.

“We have a long history of negotiating fair contracts with both unions that reward our employees and support the long-term success of our business. Our goal this time will be no different,” GM CEO Mary Barra said Tuesday in a shareholder letter. “That’s the best possible outcome for all our key stakeholders, including our team, plant communities, dealers, suppliers and investors.”

A work stoppage would add to the auto industry’s yearslong production problems resulting from the coronavirus pandemic and significant supply chain constraints such as semiconductor chips.

During the last round of bargaining in 2019, a breakdown in negotiations between the Detroit automakers and the UAW led to a national 40-day strike against GM. The automaker has said the strike cost it about $3.6 billion that year.

For GM specifically, a work stoppage could cost it hundreds of millions of dollars a week and delay the production ramp-up of its new electric vehicles, which the automaker has already been slow to produce. Jacobson said GM achieved North American production of 50,000 EVs during the first half of the year, however acknowledged “it’s been a little bit challenging.”

He said the automaker will disclose more about the slow production of its new EVs during an analyst call Tuesday.

Before reporting results Tuesday, GM’s earnings beat expectations 86% of the time, according to Bespoke. However, the stock only averages a 0.17% gain on earnings day.

Shares of GM are up roughly 16% this year. They closed Monday at $39.30 per share — off from a 52-week high of $43.63 per share, notched in February.
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July 25, 2023
Stocks making the biggest moves before the bell: General Motors, 3M, Spotify, Verizon and more

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Maplewood, Minnesota, 3M company global headquarters.

Michael Siluk | Universal Images Group | Getty Images

Check out the companies making headlines in premarket trading.

General Motors — Shares of General Motors rose more than 1% after the automaker raised its full-year guidance and reported second-quarter results that rose on a year-over-year basis.

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3M – Shares of the chemical manufacturer rose about 2% in premarket trading following the company’s latest earnings report. 3M posted $7.99 billion in revenue, beating analysts’ estimates of $7.87 billion, according to Refinitiv. The company also raised its full-year earnings guidance and reaffirmed its revenue guidance.

Xerox — The workplace technology provider advanced 3.6% after beating earnings expectations for the second quarter, posting 44 cents per share excluding items against a 32-cent forecast from analysts polled by FactSet. Quarterly revenue came in line with expectations at $1.75 billion. Xerox also said to expect free cash flow and the adjusted operating margin to be better than previously anticipated for the full year.

General Electric — Shares of the industrial giant jumped more than 4% in premarket trading after the company posted stronger-than-expected earnings for the second quarter. GE also boosted its full-year profit guidance on the back of strong demand from aerospace and record orders in its renewable energy business.

Danaher — Shares of the conglomerate slid 4.6%. Danaher said non-GAAP core revenue in the base business will be down in the current quarter compared with the same quarter a year ago and would be up less than previously expected for the full year. However, the company gave a strong quarterly report, posting second quarter earnings per share excluding items at $2.05 and revenue at $7.16 billion, while analysts polled by FactSet anticipated $2.01 per share on $7.12 billion in revenue.

Spotify — The music streaming platform dropped 6.1% after presenting a weak quarterly report and guidance. Spotify reported revenue of €3.18 billion, below a Refinitiv forecast of €3.21 billion. Full-year revenue guidance was also worse than analysts expected. The report follows Spotify’s announcement that it will raise prices for premium subscription plans.

Lilium — The electric helicopter stock added 5.6% after management released a letter to shareholders. In the letter, management said adjusted cash spend for the first half of 2023 was within budget and the company was successful in an audit from the European Union Aviation Safety Agency.

Alaska Air — Shares of the airline fell more than 4% even after Alaska beat estimates on the top and bottom lines for the second quarter. Alaska reported $3 in adjusted earnings per share on $2.84 billion in revenue. Analysts surveyed by Refinitiv were expecting $2.70 in earnings per share on $2.77 billion in revenue. The airline’s full-year earnings guidance of $5.50 to $7.50 per share was roughly in-line with the average analyst estimates of $6.65, according to FactSet.

RTX — Shares of the company formerly known as Raytheon slipped 3% despite a strong quarterly report. RTX ported $1.29 in earnings per share, excluding items, on $18.32 billion in revenue. Analysts polled by Refinitiv forecasted $1.18 per share and $17.68 billion. The company also raised its full-year expectations for both lines.

Verizon — The telecommunications giant traded 2.6% higher after reaffirming its full-year guidance. That came despite a mixed second quarter, with Verizon posting $1.21 in earnings per share, excluding items, on $32.6 billion in revenue. Analysts polled by Refinitiv estimated $1.17 earnings per share and revenue of $33.24 billion.

Walmart — Walmart rose more than 1% after Piper Sandler upgraded the big-box retailer Monday to overweight from neutral, and hiked its price target. Analyst Edward Yruma said Walmart could take greater market share in the grocery business as inflation eases.

— CNBC’s Samantha Subin, Yun Li, Jesse Pound, Sarah Min and Tanaya Macheel contributed reporting

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July 25, 2023
Morgan Stanley says stock picking will matter more in coming weeks so buy these quality stocks

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July 24, 2023
How EV range is determined and why the process is flawed

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Chevrolet Bolt at EPA’s National Fuel and Emissions Lab

How far an electric vehicle can drive on a single charge is one of the most closely watched numbers in the automotive world.

The official government process used to test and certify those ranges has potential flaws.

The U.S. Environmental Protection Agency has been testing vehicles since 1971, but only started testing EVs in 2012. EV technology is still quite new and is changing rapidly. EPA Engineers say these are exciting times, but it can also feel like the “wild west.”

The EPA only tests a small portion of the total vehicle fleet. The fact that it can test any vehicle at any time forces automakers to meet EPA standards.

Some in the auto industry say the EPA ratings are more accurate than those issued by other governmental bodies, at least for American roads. But independent groups have found that their own tests yield results that are different from official EPA range ratings.

Critics say the agency’s labels are inconsistent with those used for gas vehicles, in part because the tests don’t account for how people actually drive. Ranges on labels seem bigger than they are. Automakers can also use methods to inflate their range numbers.

Watch the video to learn more.

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July 22, 2023