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.
Tesla clocks worst week of the year Tesla shares dropped more than 15% last week to close at $211.99 on Friday, marking the worst weekly performance for the stock this year as CEO Elon Musk sounded pessimistic about macroeconomic issues on a recent earnings call. Shares of the electric automaker are still up 96% year-to-date.
Big earnings week Investors will be watching out for an action-packed week of earnings as companies including Microsoft, Meta Platforms, Amazon, Alphabet, General Motors and Ford among others gear up to post their quarterly results. The carmakers will be under the radar this week amid ongoing strikes and contract negotiations with the United Auto Workers union.
X to launch new subscription tiers Owner Elon Musk said X, the social media service formerly known as Twitter, will launch two new tiers of subscriptions for users. One tier will be “lower cost with all features, but no reduction in ads,” while the other is “more expensive, but has no ads,” Musk said.
[PRO] Earnings playbook Big Tech takes center stage in what could be a make-or-break week for S&P 500 earnings. About 150 S&P 500 companies are slated to report, including Microsoft, Meta Platforms, Amazon and Alphabet. Those results come during a tough time for Wall Street, as higher rates and conflict in the Middle East rattle investor sentiment. Here’s how to trade a busy week of earnings.
Rising Treasury yields, looming interest rate hikes to fight inflation and the heightening conflict in the Middle East drove investors away from risky assets last week.
The yield on the benchmark 10-year Treasury crossed 5% for the first time since 2007 on Thursday, a level perceived by markets as a potential drag on the U.S. economy as it could translate to higher rates on mortgages, credit cards, auto loans and more.
A move into safe-haven gold seemed like a sensible bet, given the worsening crisis in the Middle East. Gold was up 2.5% last week, recording its second consecutive weekly rise after adding 5.22% in the prior week.
Investors are now bracing for a heavy week of earnings as Big Tech companies including Alphabet, Amazon, Meta and Microsoft will take centerstage.
“We’re hopefully going to see some continued positive strength there on the economy and what they see going forward,” said Ryan Detrick, chief market strategist at Carson Group. “The headlines are scary, for sure. But the fundamentals to us are pretty strong. We’re still seeing earnings season that’s going to come in better than expected.”
This will arrive after a mixed batch of earnings from behemoths like Tesla and Netflix last week. Tesla marked its biggest weekly decline after Elon Musk shared his pessimistic view on the macroeconomic landscape, while Netflix shares soared as markets cheered its new ad-tier subscription plan.
Given the huge role advertisers and subscriptions play for the bottom lines of such firms, it was no surprise that Musk turned his attention to improving the usability of social media platform X, formerly known as Twitter.
Musk said. X is gearing up to launch two new tiers of subscriptions for users, in hopes that it could improve the company’s finances and open new revenue streams. Musk’s sweeping changes across the company, including firing most of its employees and reinstating previously banned accounts, scared advertisers away.
Paddy Cosgrave, the CEO and co-founder of annual tech conference Web Summit, has resigned from his post after coming under fire for his comments on the Israel-Hamas war, leading Big Tech guests like Alphabet, Meta and Amazon to cancel their attendance.
“Unfortunately, my personal comments have become a distraction from the event, and our team, our sponsors, our startups and the people who attend,” Cosgrave said in a statement on Saturday.
At the beginning of the week, Cosgrave took to social media to express his personal opposition to Israel’s counterattacks in Gaza.
“To repeat: War crimes are war crimes even when committed by allies & should be called out for what they are,” Cosgrave said in a Monday post on X, formerly known as Twitter. “I will not relent.”
His remarks triggered a flurry of cancellations from high-profile attendees like Meta, Alphabet, Amazon and others. This year’s conference is scheduled for Nov. 13 to Nov. 16 and is set to take place in Lisbon, Portugal.
The day after he posted on X, Cosgrave issued an apology on Web Summit’s blog, saying he understood that the timing of his comments “caused profound hurt.”
“What is needed at this time is compassion, and I did not convey that,” Cosgrave said in the apology.
Google headquarters in Mountain View, California, on Jan. 30, 2023.
Marlena Sloss | Bloomberg | Getty Images
Google cut dozens of jobs in its news division this week, CNBC has learned, downsizing at a particularly sensitive time for online platforms and publishers.
An estimated 40 to 45 workers in Google News have lost their jobs, according to an Alphabet Workers Union spokesperson, who didn’t know the exact number.
A Google spokesperson confirmed the cuts but didn’t provide a number, and said there are still hundreds of people working on the news product.
“We’re deeply committed to a vibrant information ecosystem, and news is a part of that long-term investment,” the spokesperson said. “We’ve made some internal changes to streamline our organization. A small number of employees were impacted. We’re supporting everyone with a transition period, outplacement services and severance as they look for new opportunities at Google and beyond.”
Google News presents links to articles from thousands of publishers and magazines. It’s a popular tab for people who use Google search, allowing them to find top-ranked stories on a particular topic.
The layoffs come amid a war between Israel and Hamas that has claimed thousands of lives in both Israel and Gaza since Oct. 7, and 20 months after Russia invaded Ukraine. Both wars have spawned a surge in the spread of misinformation across the web, heightening the importance of Google and other sites that users count on to find up-to-date news.
Sen. Michael Bennet, D-Colo., on Tuesday asked for information on how Google; X, formerly known as Twitter; Meta; and TikTok were trying to stop the spread of false and misleading content about the Israel-Hamas conflict on their platforms.
European Union industry chief Thierry Breton demanded that companies, including Google, take stricter steps to battle disinformation as the conflict escalates. Breton specifically addressed letters to Google CEO Sundar Pichai and YouTube CEO Neal Mohan, reminding them of the content moderation requirements under the EU’s Digital Services Act.
Google’s spokesperson said, “These internal changes have no impact on our misinformation and information quality work in News.”
Some tech companies said they’ve staffed up on content moderators as they scramble to battle misinformation.
Meanwhile, Canada and other countries are eyeing laws that would force tech platforms to compensate publishers for their work.
The cuts in Google News follow widespread layoffs across many parts of the company this year. In January, Google announced it was cutting 12,000 jobs, affecting roughly 6% of the full-time workforce. Last month, the company eliminated hundreds of positions from its recruiting organization.
A staff engineer at Google News wrote a post on LinkedIn on Tuesday regarding the layoffs.
“These are some of the best and brightest people I’ve ever worked with,” the person wrote. “We’re definitely worse off without them.”
Meta founder and CEO Mark Zuckerberg speaks during Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.
Josh Edelson | AFP | Getty Images
At Meta’s annual Connect conference last month, virtual reality enthusiasts gathered to hear about Mark Zuckerberg’s multibillion-dollar bet on the metaverse, the technology that’s supposed to define the company’s future.
But at this year’s event, VR developers were inundated with panel discussions about a topic that’s quickly becoming less about tomorrow and more about the present: artificial intelligence.
“Don’t tell Mark, but it feels less mixed reality and more AI these days,” joked Joseph Spisak, who joined the company as director of product development for generative AI two months earlier, during his session at Connect. “It kind of feels like an AI conference, which is kind of in my wheelhouse.”
Sandwiched between panels about Meta’s latest Quest 3 VR headset and augmented reality developer software were several sessions dedicated to Llama, Meta’s large language model (LLM) that’s gained popularity since OpenAI’s ChatGPT chatbot exploded onto the scene in November, sparking a sprint by leading tech companies to bring competitive offerings to market.
Zuckerberg, who changed Facebook’s name to Meta in late 2021 to signal his commitment to the metaverse, reminded Connect attendees that Llama was the power supply to the company’s latest digital assistants unveiled at the conference.
While Zuckerberg still views the growth of the nascent metaverse as critical to his company’s success, AI has emerged as the market he’s trying to win today. Meta views Llama and its family of generative AI software as the open source alternative to GPT, the LLM from Microsoft-backed OpenAI, and Google’s PaLM 2, which powers the search company’s Bard AI technology.
Industry experts compare Llama’s positioning in generative AI to that of Linux, the open source rival to Microsoft Windows, in the PC operating system market. Just as Linux software made its way into corporate servers worldwide and became a key piece of the modern internet, Meta sees Llama as the potential digital scaffolding supporting the next generation of AI apps.
Andrew Bosworth, Chief Technology Officer of Facebook, speaks during Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.
Josh Edelson | AFP | Getty Images
On Wall Street, Llama is hard to value and, for many investors, hard to understand. Because AI researchers are at a premium and the infrastructure required to build and run models requires massive costs, Meta is investing heavily to build Llama, the updated Llama 2 that was introduced in July, and related generative AI software.
After the July announcement, Yann LeCun, the AI researcher Zuckerberg hired in 2013 to lead Facebook’s new AI research group, wrote on Twitter that, “This is going to change the landscape of the LLM market.”
But open source means Meta is giving away the software for free to developers, a dramatically different approach to the traditional software license and subscription models and far afield from the highly lucrative digital ad business that turned Facebook into an internet powerhouse.
In announcing Llama 2, Meta said the new version would have a commercial license that allows companies to integrate it into their products. The company has said it isn’t focused on monetizing Llama 2 directly, but it does earn an undisclosed amount of money from cloud-computing companies like Microsoft and Amazon, which offer access to Llama 2 as part of their own generative AI enterprise services.
Zuckerberg said on the company’s second-quarter earnings call that he doesn’t expect Llama 2 to generate “a large amount of revenue in the near term, but over the long term, hopefully that can be something.”
Meta is looking to benefit from Llama in other ways.
Zuckerberg told analysts in July that improvements made to Llama by third-party developers could result in “efficiency gains,” making it cheaper for Meta to run its AI software. Meta said it expects capital expenditures for 2023 to be in the range of $27 billion to $30 billion, down from $32 billion last year. Finance chief Susan Li said the figure will likely grow in 2024, driven in part by data center-and AI-related investments.
Influence brings its own advantages. If the world’s leading AI researchers use Llama, Meta could have an easier time hiring skilled technologists who understand the company’s approach to development. Facebook has a history of using open source projects, such as its PyTorch coding framework for machine learning apps, as a recruiting tool, luring technologists who want to work on cutting-edge software projects.
Spisak helped oversee PyTorch and other open source AI projects when he worked at Meta from 2018 until January 2023. He left the company for a brief stint at Google and returned to Meta in July.
Meta is also betting that third-party developers will steadily improve Llama 2 and related AI software so that it runs more efficiently, a way of outsourcing research and development to an army of volunteers.
Cai GoGwilt, chief architect of legal tech startup Ironclad, said the open source community worked on the first version of Llama to “make it faster and make it run on a mobile phone.” GoGwilt said his company is waiting to see how enthusiastic developers will bolster Llama 2.
“Part of the reason we’re not immediately using it is because the bigger interest for us is what the open source community is going to do with it,” GoGwilt said.
Meta debuted the original Llama LLM in February, offering it in several different variants ranging from 7 billion parameters to 65 billion parameters, which are essentially variables that influence the size of the model and how much data it processes. In general, more parameters means a more powerful model, with the tradeoff being the cost of running and training the AI software.
Like OpenAI’s GPT and other LLMs, Llama is an example of a transformer neural network, the AI software developed by a team of Google researchers that’s become the foundation for generative AI, which generates smart responses and clever images based on simple text prompts.
To help with the computationally intensive process of training gigantic AI models like Llama, Meta has been using its own Research SuperCluster supercomputer, built to incorporate a whopping 16,000 Nvidia A100 GPUs, the AI industry’s “workhorse” computer chips.
Although Llama was originally incubated inside Meta’s Fundamental AI Research team (FAIR), it’s since moved to the company’s generative AI organization led by Ahmad Al-Dahle, who previously spent over 16 years at Apple. Zuckerberg announcedthe group in late February.
Meta said it took six months to train Llama 2, starting in January and ending in July, using a mix of “publicly available online data,” which doesn’t contain any Facebook user information. It’s unclear whether Meta plans to incorporate user data into the forthcoming Llama 3.
As Zuckerberg strives for efficiency, he’s got his eyes on Nvidia, which is generating billions of dollars in quarterly profits for its AI chips. Meta is one of its biggest customers. Jim Fan, a senior AI science at Nvidia, said in a post on X that it likely cost Meta $20 million to train Llama 2, considerably more than the estimated $2.4 million it took to train its predecessor.
Mainstream adoption of Llama 2 could influence Nvidia to ensure its graphics processing units (GPUs) work well with Meta-sanctioned software, lowering the company’s AI training and computing costs.
Meanwhile, Meta has its own internal AI chip projects, giving it a potential alternative to Nvidia’s processors.
“It gives them some price negotiating room,” said Arjun Bansal, CEO of enterprise startup Log10 and a former AI chip executive. “Nvidia wants to charge a lot and they can be like, ‘Hey, we got our own thing.'”
Nvidia President and CEO Jensen Huang speaks at the COMPUTEX forum in Taiwan, May 28, 2023.
Sopa Images | Lightrocket | Getty Images
Nathan Lambert remembers the energy emanating from his colleagues at AI startup Hugging Face the weekend Meta debuted its much-anticipated Llama 2.
Lambert and his teammates worked overtime to ensure the company’s infrastructure was ready to handle the influx of coders looking to take Llama 2 for a test drive.
Along with cloud-computing engines Microsoft Azure and Amazon Web Services, Hugging Face was one of Meta’s chosen launch partners for Llama 2, but arguably the most important. Developers, AI researchers and thousands of companies use Hugging Face’s platform to share code, data sets and models, making it one of the industry’s biggest communities.
Although a number of open source LLMs are available, Lambert said Llama 2 is by far the most popular.
“It’s the model that most people are playing with and that most startups are playing with,” said Lambert, who announced on Oct. 4 that he’s leaving Hugging Face though he didn’t say where he’s going.
As with all things Zuckerberg, the project is not without controversy. Some in the industry consider Meta’s licensing agreement to use Llama 2 as limiting, conflicting with the spirit of collaborative development and innovation.
For instance, third-party developers must request approval from Meta to use Llama 2 if they incorporate the software into any products or services that had “greater than 700 million monthly active users” in the month prior to its July release. Critics have said this clause was a way to keep rivals like Snap or TikTok from using Llama 2 for their own services.
“It’s pretty restrictive,” said Umesh Padval, a venture partner at Thomvest Ventures and investor in AI startup Cohere, which builds proprietary LLMs. “It looks like Meta wants all the benefits of open source for their business while keeping the competition away.”
Lambert said Meta could do itself a favor with the open source community and release more details about the specific, underlying datasets used to train Llama 2 so developers could better understand the training process. Open source adherents and privacy experts have pushed for more transparency into what kinds of data has been used to train LLMs, but companies have so far revealed few details.
“We believe in open innovation, and we do not want to place undue restrictions on how others can use our model,” a Meta spokesperson said in a statement. “However, we do want people to use it responsibly. This is a bespoke commercial license that balances open access to the models with responsibility and protections in place to help address potential misuse.”
Despite some detractors, Meta’s model is seeing plenty of early uptake. The company disclosed at Connect that there have been “more than 30 million downloads of Llama-based models through Hugging Face and over 10 million of these in the last 30 days alone.”
Nvidia’s Fan noted in his X post that Llama 2’s new commercial license could lure more companies to experiment with the language model compared to the original Llama.
“AI researchers from big companies were wary of Llama-1 due to licensing issues, but now I think many of them will jump on the ship and contribute their firepower,” Fan wrote.
As of today, businesses investing in AI prefer to use commercially available LLMs, according to a recent TC Cowen survey of 680 firms in cloud computing. The survey found that 32% of respondents have used or plan to use commercially packaged LLMs like OpenAI’s GPT-4 software while 28% were focused on open source LLMs like Llama and Falcon, developed in the United Arab Emirates. Only 12% of respondents planned on using in-house LLMs.
At the U.S. Government Accountability Office, Taka Ariga studies how bleeding-edge technologies like LLMs could help the agency better conduct audits and investigations through its Innovation Lab.
By the end of the year, Ariga’s team is planning to finish its first experiment investigating how LLMs can potentially be used to summarize numerous GAO reports and materials on a particular topic, and then combine those files with various other potentially relevant documentation from other agencies.
“The general public or a member of congress might say, ‘What has the GAO done in the area of nuclear safety?'” Ariga said, regarding the LLM project. “Of course, we have done a lot of work, but that’s sort of report-by-report basis; you can’t do that kind of sort of topical search.”
The GAO is currently using AWS’ Bedrock generative AI service to help the agency experiment with various popular LLMs, including proprietary models offered by startups like Cohere and Anthropic.
While AWS recently said Bedrock will soon support Llama 2, Ariga said the GAO is first testing Anthropic’s Claude LLM and will likely pass on using Llama 2 because of Meta’s poor reputation in Washington.
Meta has earned the ire of lawmakers over the years due to a host of issues, including data privacy scandals, antitrust investigations and allegations that Facebook censors conservative voices, Ariga noted, likening Zuckerberg to Elon Musk, the CEO of Tesla and owner of X.
“Mark Zuckerberg is, just like Elon, a bit of a lightning rod when it comes to political technology,” Ariga said.
“We know that while AI has brought huge advances to society, it also comes with risk,” Meta’s spokesperson said. “Meta is committed to building responsibly and we are providing a number of resources like our responsible use guide to help those who use Llama 2 do so.”
Even among prospective customers that are unconcerned about reputational issues, Meta has to prove that it has superior LLM technology.
Nur Hamdan, a product manager at AI startup aiXplain, said OpenAI’s GPT-4 is better than Llama 2 at understanding context over long, extended conversations. That means GPT-4 would likely produce conversations in a way that feel more lifelike, Hamadan said.
Tests comparing GPT-4, Llama 2 and other LLMs are becoming routine. In one such test, researchers discovered that GPT-4 was able to generate better software code than Llama 2. Meta has since released a version of Llama 2 specifically for creating code.
Sam Altman, CEO of OpenAI, at an event in Seoul, South Korea, on June 9, 2023.
Bloomberg | Bloomberg | Getty Images
In today’s land grab, Meta is competing against Amazon, Google and heavily funded startups like OpenAI and Cohere. They’re each aiming to be the cornerstone of next-generation apps. Meta sees open source as a key advantage, versus other companies that are selling the technology and packaging it with other services.
“Somebody like Google or Microsoft, they may all be a little bit conflicted there,” said longtime infrastructure technology executive Guido Appenzeller, who held senior roles at VMware and Intel. “Facebook was not and that’s sort of how they move forward and democratizing this, giving sort of broad access to open source. I think it’s something incredibly powerful.”
A Microsoft spokesperson said in an emailed statement that the company will provide customers with options and let them choose what model they prefer, whether it’s “proprietary, open source, or both.”
“Each foundational model has unique benefits and we hope to make it easy for customers to select, fine-tune, and deploy them responsibly to maximize the outcome from these tools,” Microsoft said.
Representatives from Amazon and Google didn’t respond to requests for comment.
Llama’s impact on the technology industry could rival that of Kubernetes, the open source data center infrastructure software that Google released in 2014, experts said. In giving away Kubernetes, Google dramatically impacted the business models of once hot startups like Docker and CoreOS, which Red Hat acquired in 2018.
Meta is deploying a Kubernetes-like strategy with Llama 2, but in a market that’s expected to be much bigger.
“I’m a fan of Facebook, I understand what Mark has done,” Thomvest’s Padval said. “They’re reinventing the company.”
However, open source doesn’t always win, and Padval acknowledged that “in this case, I don’t know how it’s going to evolve.”
Days after the Israel-Hamas war erupted last weekend, social media platforms like Meta, TikTok and X (formerly Twitter) received a stark warning from a top European regulator to stay vigilant about disinformation and violent posts related to the conflict.
The messages, from European Commissioner for the internal market Thierry Breton, included a warning about how failure to comply with the region’s rules about illegal online posts under the Digital Services Act could impact their businesses.
“I remind you that following the opening of a potential investigation and a finding of non-compliance, penalties can be imposed,” Breton wrote to X owner Elon Musk, for example.
The warning goes beyond the kind that would likely be possible in the U.S., where the First Amendment protects many kinds of abhorrent speech and bars the government from stifling it. In fact, the U.S. government’s efforts to get platforms to moderate misinformation about elections and Covid-19 is the subject of a current legal battle brought by Republican state attorneys general.
In that case, the AGs argued that the Biden administration was overly coercive in its suggestions to social media companies that they remove such posts. An appeals court ruled last month that the White House, the Surgeon General’s office and the Federal Bureau of Investigation likely violated the First Amendment by coercing content moderation. The Biden administration now waits for the Supreme Court to weigh in on whether the restrictions on its contact with online platforms granted by the lower court will go through.
Based on that case, Electronic Frontier Foundation Civil Liberties Director David Greene said, “I don’t think the U.S. government could constitutionally send a letter like that,” referring to Breton’s messages.
The U.S. does not have a legal definition of hate speech or disinformation because they’re not punishable under the constitution, said Kevin Goldberg, First Amendment specialist at the Freedom Forum.
“What we do have are very narrow exemptions from the First Amendment for things that may involve what people identify as hate speech or misinformation,” Goldberg said. For example, some statements one might consider to be hate speech might fall under a First Amendment exemption for “incitement to imminent lawless violence,” Goldberg said. And some forms of misinformation may be punished when they break laws about fraud or defamation.
But the First Amendment makes it so some of the provisions of the Digital Services Act likely wouldn’t be viable in the U.S.
In the U.S., “we can’t have government officials leaning on social media platforms and telling them, ‘You really should be looking at this more closely. You really should be taking action in this area,’ like the EU regulators are doing right now in this Israel-Hamas conflict,” Goldberg said. “Because too much coercion is itself a form of regulation, even if they don’t specifically say, ‘we will punish you.'”
Christoph Schmon, international policy director at EFF, said he sees Breton’s calls as “a warning signal for platforms that European Commission is looking quite closely about what’s going on.”
Under the DSA, large online platforms must have robust procedures for removing hate speech and disinformation, though they must be balanced against free expression concerns. Companies that fail to comply with the rules can be fined up to 6% of their global annual revenues.
In the U.S., a threat of a penalty by the government could be risky.
“Governments need to be mindful when they make the request to be very explicit that this is just a request, and that there’s not some type of threat of enforcement action or a penalty behind it,” Greene said.
A series of letters from New York AG Letitia James to several social media sites on Thursday exemplifies how U.S. officials may try to walk that line.
James asked Google, Meta, X, TikTok, Reddit and Rumble for information on how they’re identifying and removing calls for violence and terrorist acts. James pointed to “reports of growing antisemitism and Islamophobia” following “the horrific terrorist attacks in Israel.”
But notably, unlike the letters from Breton, they do not threaten penalties for a failure to remove such posts.
It’s not yet clear exactly how the new rules and warnings from Europe will impact how tech platforms approach content moderation both in the region and worldwide.
Goldberg noted that social media companies have already dealt with restrictions on the kinds of speech they can host in different countries, so it’s possible they will choose to contain any new policies to Europe. Still, the tech industry in the past has applied policies like the EU’s General Data Privacy Regulation (GDPR) more broadly.
It’s understandable if individual users want to change their settings to exclude certain kinds of posts they’d rather not be exposed to, Goldberg said. But, he added, that should be up to each individual user.
With a history as complicated as that of the Middle East, Goldberg said, people “should have access to as much content as they want and need to figure it out for themselves, not the content that the government thinks is appropriate for them to know and not know.”
My top 10 things to watch Friday, Oct. 13 1. U.S. stocks edge up in premarket trading Friday, with the S & P 500 rising 0.3% and the Nasdaq Composite inching up 0.7%, keeping both indices on track for weekly gains. Bond yields pull back slightly, with that of the 10-year Treasury just below 4.6%. Oil prices, meanwhile, surge by more than 4%, as West Texas Intermediate crude reaches for $87 a barrel. 2. Bank of America reiterates Club holding Nvidia (NVDA) as a “top pick” following a product-line update around its graphics processing unit (GPU) accelerator. The firm also reiterates a $650-per-share price target and buy rating on Nvidia shares. 3. KeyBanc raises its price target on Club name Palo Alto Networks (PANW) to $315 a share, up from $300, while maintaining an overweight rating on the stock. The firm cites the cyber company’s ability to be a “long-term consolidator of security.” 4. KeyBanc also raises its price target on Club holding Alphabet (GOOGL) to $155 a share, up from $145, while maintaining an overweight rating on shares. The firm notes a slight improvement in the ad market moving into the fourth quarter, along with strength in retail and e-commerce. 5. Club name Wells Fargo ( WFC) on Friday delivers a third-quarter beat , as earnings season gets underway . The bank “benefited from higher rates and the investments we are making in our businesses,” according to Wells Fargo CEO Charlie Scharf. 6. JPMorgan Chase ‘s (JPM) third-quarter profit surges 35% year-over-year, to $13.15 billion, as the bank beats analysts’ expectations on earnings and revenue. The firm generates more interest income than expected, while credit costs come in lower than expected. 7. Barclays lowers its price target on General Motors (GM) to $42 a share, down from $46, while maintaining a hold-equivalent rating on shares. The firm cites weak investor sentiment, saying third-quarter results for automakers “could be a buy-the-news quarter.” 8. Wolfe Research downgrades Netflix (NFLX) to a neutral-equivalent rating, from outperform, without a price target. The firm predicts a future shortfall in gross ads. 9. Mizuho says it likes the risk-reward on Club name Meta Platforms ( META) going into earnings season, with the tech giant’s advertising-revenue growth tracking ahead of consensus. The firm reiterates a buy rating on Meta stock and a $400-per-share price target. 10. JPMorgan initiates coverage on Post Holdings (POST) with an overweight rating and $100-per-share price target. The bank says the maker of cereal and pet foods generates strong cash flow that could help it reduce debt and buy back stock over the next two years. Sign up for my Top 10 Morning Thoughts on the Market email newsletter for free . (See here for a full list of the stocks at Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
1. U.S. stocks edge up in premarket trading Friday, with the S&P 500 rising 0.3% and the Nasdaq Composite inching up 0.7%, keeping both indices on track for weekly gains. Bond yields pull back slightly, with that of the 10-year Treasury just below 4.6%. Oil prices, meanwhile, surge by more than 4%, as West Texas Intermediate crude reaches for $87 a barrel.
2. Bank of America reiterates Club holding Nvidia (NVDA) as a “top pick” following a product-line update around its graphics processing unit (GPU) accelerator. The firm also reiterates a $650-per-share price target and buy rating on Nvidia shares.
3. KeyBanc raises its price target on Club name Palo Alto Networks (PANW) to $315 a share, up from $300, while maintaining an overweight rating on the stock. The firm cites the cyber company’s ability to be a “long-term consolidator of security.”
4. KeyBanc also raises its price target on Club holding Alphabet (GOOGL) to $155 a share, up from $145, while maintaining an overweight rating on shares. The firm notes a slight improvement in the ad market moving into the fourth quarter, along with strength in retail and e-commerce.
5. Club name Wells Fargo (WFC) on Friday delivers a third-quarter beat, as earnings season gets underway. The bank “benefited from higher rates and the investments we are making in our businesses,” according to Wells Fargo CEO Charlie Scharf.
6. JPMorgan Chase‘s (JPM) third-quarter profit surges 35% year-over-year, to $13.15 billion, as the bank beats analysts’ expectations on earnings and revenue. The firm generates more interest income than expected, while credit costs come in lower than expected.
7. Barclays lowers its price target on General Motors (GM) to $42 a share, down from $46, while maintaining a hold-equivalent rating on shares. The firm cites weak investor sentiment, saying third-quarter results for automakers “could be a buy-the-news quarter.”
8. Wolfe Research downgrades Netflix (NFLX) to a neutral-equivalent rating, from outperform, without a price target. The firm predicts a future shortfall in gross ads.
9. Mizuho says it likes the risk-reward on Club name Meta Platforms (META) going into earnings season, with the tech giant’s advertising-revenue growth tracking ahead of consensus. The firm reiterates a buy rating on Meta stock and a $400-per-share price target.
10. JPMorgan initiates coverage on Post Holdings (POST) with an overweight rating and $100-per-share price target. The bank says the maker of cereal and pet foods generates strong cash flow that could help it reduce debt and buy back stock over the next two years.
(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.
THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Smartphones with displays capable of repairing themselves could start appearing on the market by 2028, according to analyst firm CCS Insight.
In its roundup of top tech predictions for 2024 and beyond, CCS Insight said that it expects smartphone makers to begin producing phones with “self-healing” displays within five years. The way this could work is by incorporating a “nano coating” on the surface of the display that, if scratched, creates a new material that reacts when exposed to air and fills in the imperfection.
“This is not in the realms of science fiction, it can be done,” Wood told CNBC on a call earlier this week. “I think the biggest challenge with this is setting expectations correctly.”
Companies have been talking about smartphone display technology that can be self-repaired for several years now.
LG, the South Korean consumer electronics giant, was touting self-healing technology in its smartphones as far back as 2013. The company released a smartphone called the G Flex which featured a vertically curved screen and a “self-healing” coating on the back cover. It didn’t explain how exactly the technology worked at the time.
“There’s some new technologies that people are working on right now that looks as though this could become something that people have another go with. We’re not talking about smashed screens miraculously coming back. This is all just little cosmetic scratches,” Wood told CNBC.
A few other phone makers have touted self-healing materials in smartphones. In 2017, Motorola filed a patent for a screen made from a “shape memory polymer” which, when cracked, repairs itself. The idea is that, when heat is applied to the material, it heals over the cracks.
Meanwhile, Apple also previously secured a patent for a folding iPhone with a display cover that would fix itself when damaged.
Still, the technology is yet to be found in a commercially successful handset. And there are a few barriers to launching such phones at a mass scale.
For one, companies require lots of investment in research and development to ensure they can identify new innovations in smartphone screens. Cash is also required to market and sell the phones in big volumes — and ensure consumers are actually properly informed about what level of damage in the phones can be fixed without any manual intervention.
Wood jokingly said he fears that tech tear-down enthusiasts like the popular YouTuber JerryRigsEverything will take a knife to test their self-healing capabilities. This, he says, isn’t the point of self-healing devices. Rather, it’s about technology that can make minimal repairs to the surface of its own accord.
Phone makers are getting more and more inventive when it comes to display technology. At the Mobile World Congress in Barcelona, Motorola released a rollable concept smartphone that extends vertically when pushed upward.
Samsung is pretty far along in the journey toward commercial smartphones with more advanced displays, with its folding Galaxy Z Fold 5 and Z Flip 5 phones now capable of folding hundreds of thousands of times over their lifetime.
Separately, CCS Insight also predicted that Taiwanese tech giant HTC will bow out of the virtual reality industry by 2026.
HTC was a pioneer in the smartphone market, responsible for several models which broke the mould in terms of design, performance and functionality. The company’s HTC Hero, HTC Legend, HTC Desire and HTC One were among some of the leading Android phones.
But in 2017, HTC more or less exited the smartphone market and sold its handset business to Google, which has since gone on to aggressively expand its drive into consumer hardware with its Pixel range of devices and Nest smart home products.
HTC has largely staked its future on the merging of virtual and physical worlds. In January, the company launched its Vive XR Elite device, a lightweight headset focused on gaming, fitness and productivity, at a $1,099 price point.
CCS Insight thinks that the firm will quit the VR space due to dwindling revenues and growing competition from Meta, Sony, and, more recently, Apple.
“HTC was one of the pioneers of VR, they’ve done a lot there,” CCS Insight’s Wood said. “But they have kind of struggled to compete, because they haven’t gone for the race to the bottom on price, whereas Meta, with Quest, have been prepared to take very aggressive pricing — almost just above cost pricing — to drive adoption.”
HTC “may get a little bit of an uptick with Apple coming into the space as it’s kind of renewed interest in the category,” Wood continued. “But, ultimately, we think it’s hard for them to stay in it. So we’re predicting that by 2026, they’ll exit the market, and they’ll sell their IP [intellectual property] to some of the other players who are bigger in the space.”
CCS Insight also predicted that Apple will seek to gain more direct control over the second-hand smartphone market to avoid the growing popularity of second-hand devices denting sales of new iPhones.
Apple may do this by encouraging customers to trade in their phones with the company directly, rather than relying on third-party marketplaces like PCS Wireless; or by incentivizing carriers to give in their old phones to get credits to offset the cost of buying a new iPhone, the firm’s analysts said.
Apple could also start focusing on a “verified” system for grading refurbished iPhones, in order to encourage quality secondhand devices, according to CCS Insight — reinforcing the move in the technology industry toward more “circular” products that can be repaired and resold to avoid electronic waste.
CCS Insight estimates iPhone accounts for around 80% of the organized secondary smartphone market.
CNBC’s Jim Cramer said Wednesday he sees conditions that could spur a stock market rally, following a challenging few weeks on Wall Street. The biggest factor in this, he said, arrives Friday with the government’s official September jobs report.
“We certainly have plenty of tinder for a rally — there are some Kingsfords lying around, maybe even a Duraflame or two,” he said. “You get a weak payroll number on Friday, then I think we can get a narrow repeat of the rebound we saw in March.”
To Cramer, Friday’s nonfarm payroll report is the only set of government data with “true staying power.” If the figures show more layoffs than expected, he said, the Federal Reserve may be less inclined to raise interest rates, which would likely please the market. However, he added that this potential economic weakness could hurt plenty of sectors, including retailers, banks and housing.
Cramer suggested recent market conditions may end up being similar to those in February and March, where stocks sold off due to concerns about the Fed’s aggressive rate hikes and the collapse of multiple regional banks. But this weakness soon gave way to a tech-fueled rally, he said.
He added that he’s not sure whether the “uniform negativity” on Wall Street — especially talk of declining bond prices — means a bottom, but to him, it’s a possibility.
“Maybe all that needs to happen is for the frantic bond sellers to slow the pace of their sales — they don’t even have to stop, they just have to be less desperate,” he said. “Once that happens, we can finally focus on the myriad stocks that’ve been crushed for weeks now, many of which don’t deserve it. No need to jump the gun, though. We’ll find out soon enough.”
Jim Cramer’s Guide to Investing
Click here to downloadJim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.
Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.
Disclaimer The CNBC Investing Club Charitable Trust holds shares of Apple, Amazon, Alphabet, Microsoft, Nvidia and Meta.
McCormick spices are displayed on a shelf at a supermarket on March 28, 2023 in San Anselmo, California. Spice Maker McCormick reported better-than-expected first quarter earnings with revenues of $1.57 billion compared to $1.52 billion one year ago.
Check out the companies making headlines in midday trading.
Warby Parker — The eyewear maker popped 6% after Evercore ISI upgraded shares to outperform from in line. The firm said 2024 should be a “fundamental inflection year” for Warby Parker.
Trex — Shares of the wood-alternative decking manufacturer declined by 3.9% even after Goldman Sachs initiated Trex with a buy rating. The bank said the company is “well-positioned” to drive growth and profitability.
Eli Lilly, Point Biopharma — Eli Lilly shares slumped 3.7% after the pharmaceutical giant announced plans to purchase cancer therapy developer Point Biopharma for $12.50 a share in cash, or about $1.4 billion. Point Biopharma shares surged more than 85%.
Rivian Automotive — Shares of the electric vehicle maker lost 5%, even though Rivian’s deliveries topped estimates and showed sustained demand. Morgan Stanley earlier reiterated the company as overweight, saying the Rivian’s FY23 production guide of 52,000 units supports the firm’s delivery forecast of 48,000 units. Concerns remain about softening demand for EVs in the U.S. due to higher borrowing costs.
Airbnb — The short-term vacation rental company fell more than 5% after KeyBanc downgraded the stock to sector weight from overweight. KeyBanc said that AirBnb’s margins will be squeezed as post-pandemic travel demand eases.
McCormick — Shares of the spice maker slipped 9% after McCormick reported earnings of 65 cents per share, excluding items, for the recent quarter on revenues of $1.68 billion. That came in roughly in line with the earning-per-share of 65 cents and $1.7 billion in revenue expected by analysts polled by StreetAccount.
Meta — Shares of the social media behemoth slipped more than 2% following news that the company is considering charging European Union Facebook and Instagram users a $14 monthly fee to access both platforms without ads.
Fiverr International — Shares gained 2% after Roth MKM upgraded the company to buy from neutral. The Wall Street firm is “incremental positive” on the stock, citing a freelancer survey that supports Fiverr’s leading position among gig workers.
Andrew Bosworth, Chief Technology Officer of Facebook, speaks during Meta Connect event at Meta headquarters in Menlo Park, California on September 27, 2023.
Josh Edelson | AFP | Getty Images
At Meta’s annual Connect conference this week focused on virtual reality and the metaverse, one word was on everyone’s lips: Apple.
Meta CEO Mark Zuckerberg was enthusiastic in debuting his company’s Quest 3 VR headset, which starts at $499 and will begin shipping in October. His company touted the growth of its VR app store — Quest Store — which has generated $2 billion in sales since its debut in 2019, up from the $1.5 billion the company announced last year during the conference.
The big difference this year from the event in 2022 is that attendees have a much clearer picture of Apple’s upcoming entry into the VR market.
The iPhone maker in June announced its Vision Pro mixed-reality headset at an eyepopping price of $3,499 when it goes on sale next year. While it’s Apple’s first major foray into VR, the company’s longtime dominance in premium consumer devices and its winning reputation in hardware has created a buzz that was missing from Meta’s prior industry events.
VR and mixed reality are expected to remain niche markets for years to come, but conversations with nearly a dozen attendees who gathered at Meta’s Menlo Park, California, headquarters this week show the tone is changing for developers and VR companies regarding the potential for an expanding industry.
“There’s curiosity for sure with Apple entering the market,” said Tom Symonds, CEO of the UK-based VR firm Immerse. “Apple has always been able to marry the hardware and the software in a seamless way.”
Prior to Apple’s Vision Pro announcement, the VR industry was going through a bit of an identity crisis, with venture capitalists pulling back their investments alongside the drop-off in Web3 and related crypto projects. Meanwhile, Meta has been losing billions of dollars a quarter building its vision of a metaverse, and Zuckerberg has shown no interest in slowing down, frustrating many Wall Street investors who see only mounting costs.
Apple CEO Tim Cook stands next to the new Apple Vision Pro headset.
Even though Apple’s product won’t go on sale for months and it’s unclear how many people will want it or be able to buy it, the company’s entry has given a sense of legitimacy to some of Meta’s efforts.
In addition to showing off its latest headset this week, Meta debuted the newest version of its Ray-Ban smart glasses, developed with EssilorLuxottica. The new glasses, which will cost $299 when they’re available to purchase on Oct. 17, use Meta’s artificial intelligence software via a smartphone so people can identify landmarks or translate signs when looking at various objects.
It would have been a “big loss of confidence” if Meta stopped investing heavily to push the VR market forward, said Aneesh Kulkarni, chief technology officer of the VR training firm Strivr.
“Meta is pushing the bar, and who has the money to push the bar?” Kulkarni said.
He added that while $2 billion of app store sales “may not sound like a lot compared to the Apple store,” it’s a big and important number. Apple has a giant marketplace — $1.1 trillion in developer billings and sales in 2022 — because of the popularity of iPhone and iPad apps.
Josette Seitz, a mixed-reality developer for the social impact company Baltu Technologies, said Apple could have an advantage courting businesses that already use its products, like those that employ iPads to help conduct maintenance and other related services. A company that currently supplies field workers with iPads for inspections or similar tasks could conceivably make the easy transition to the more immersive Vision Pro because of the devices’ interoperability, she said.
At its high price point, the Vision Pro will likely be more of a product for businesses, Seitz said. Regardless, it’s important to have more entrants in the market.
“There shouldn’t just be one company,” she said. “We can’t have this be a monopoly system.”
Gaspar Ferreiro, a developer with the VR firm Coal Car Studios, called the Vision Pro’s price “insane” and said Apple is taking a “big gamble.”
“Enterprises will absolutely take the gamble,” Ferreiro said, noting some businesses will splurge on Apple devices because of the company’s reputation and prestige.
Meta still faces its own challenges. The company has struggled to bring VR into the mainstream despite a yearslong head start, and Ferreiro isn’t sure that the Quest 3’s improvements over the Quest 2, which is $200 cheaper, will be enough to win new customers who aren’t industry insiders or developers.
“The general consumer is probably going to be faced with a conundrum, do I spend another $200 on this other device?” Ferreiro said.
One of the Quest 3’s biggest improvements over the previous version is its so-called “passthrough” feature, which converts a person’s field of vision into a digital format, thus allowing computer visuals to be overlaid on to the physical world. Looking at physical surroundings using the Quest 2 proved to be a blurry experience that lacked color, but with the Quest 3 it’s much clearer and should be more enjoyable to use.
For developers, Ferreiro said, that translates into the ability to create more compelling content and visually attractive experiences that integrate the physical and digital worlds.
Jeffrey Morin, CEO of the Litesport VR fitness service, said the Quest 3 is priced “just outside of my comfort zone for, like, me buying my kid a Christmas gift.”
But he agrees that improved passthrough is very valuable and was crucial for the company’s upcoming mixed-reality app it created for Xponential Fitness that will let users work out with real personal trainers who can be virtually beamed into their living rooms.
As far as working with Apple, Morin said Litesport will look for ways to develop for the Vision Pro as it evolves and the price potentially drops to between $1,000 to $1,500 in the future. Initially, the price is too high and the Vision Pro will require users to wear a battery pack, creating an added nuisance during a workout.
The advantage Apple offers is a base of customers who “are going to be way more likely to pay for a subscription,” providing a recurring source of revenue, he said. Based on Morin’s experience thus far, most current Quest users are gamers who are more accustomed to making one-time app purchases.
Morin said that even though Apple’s product isn’t out yet, he noticed an increase in the number of people using Litesports’ VR fitness apps once it was announced, underscoring the VR community’s overall excitement.
“They fired up their headsets and they’re, like, let me see what’s out there again,” Morin said.
Ultimately, Apple’s move into VR is proof that it’s not just an ambitious Facebook side project.
“It’s not like Mark’s little toy anymore,” Morin said. “Now it’s everyone’s.”
Republican presidential hopeful Vivek Ramaswamy took aim at social-media companies during the second GOP presidential debate, saying Wednesday night that he would aim to ban anyone age 16 or under from using those companies’ platforms.
“If you’re 16 years old or under, you should not be using an addictive social-media product — period,” said Ramaswamy, an entrepreneur who ranks fourth in GOP primary polls, according a RealClearPolitics average.
He said this move would help with improving mental health and stopping the fentanyl epidemic. Earlier, Ramaswamy had talked about a mom and dad in Iowa whose son died after the teen bought Percocet laced with fentanyl through Snapchat.
That type of ban would hit companies such as Meta Platforms META, -0.41%,
the parent of Instagram and Facebook; Snap SNAP, +1.80%,
the parent of Snapchat; X, formerly known as Twitter; and ByteDance, the Chinese parent of TikTok.
Ramaswamy has started using TikTok in his White House campaign, and another GOP presidential candidate, former U.N. Ambassador Nikki Haley, attacked him over that at another point in the debate.
“TikTok is one of the most dangerous social-media apps we could have,” she said. “Honestly, every time I hear you, I feel a little bit dumber.”
WhatsApp said on Wednesday that it will offer credit card payments and services from rival digital payment providers within its app in India, the latest bet by the Meta-owned service to boost commerce offerings in its biggest market.
WhatsApp has more than 500 million users in India, though regulators there have capped its in-app WhatsApp Pay service to only 100 million people.
People shopping on WhatsApp could also pay using popular services like Alphabet Inc’s Google Pay, Paytm and Walmart’s PhonePe but only after being redirected outside WhatsApp.
Payments via those rival services -— and any others that run on India’s instant money transfer system UPI — will now be possible directly within WhatsApp, Meta said in a blog post. New in-app options for credit and debit cards will also be offered.
The additions bolster Meta CEO Mark Zuckerberg’s plan for business messaging to become the “next major pillar” of the company’s sales growth, an agenda that has assumed greater urgency as Meta’s core ads business and metaverse project have come under pressure.
While WhatsApp Pay users will remain capped in India, there is no such limit on the number of users permitted to transact with businesses on WhatsApp using the other methods, a Meta spokesperson said.
With some 300 million people spending about $180 billion via India’s UPI each month, the new transaction options could serve as a powerful lure to attract businesses to pay Meta for access to WhatsApp users.
To date, WhatsApp has limited its end-to-end shopping experiences in India to pilot programs like that with online grocery service JioMart, run by India’s richest person, billionaire Mukesh Ambani, and the metro systems in the cities of Chennai and Bengaluru.
Moving forward, the new payment tools will be available to any company in India that uses WhatsApp’s business platform, which mainly serves large companies, according to the blog post.
Meta is also expanding its Meta Verified subscription program to businesses globally, giving companies a mechanism to validate authenticity and elevate their content in users’ feeds, a separate blog post said.
Monthly subscriptions will be available on Instagram and Facebook in a handful of countries to start and will expand to WhatsApp at a later date, costing $21.99 per Facebook page or Instagram account or $34.99 for both, according to the post.
Nordstrom department store display of Birkenstock sandals at the Shops at Merrick Park, Miami.
Jeff Greenberg | Universal Images Group | Getty Images
Birkenstock, the iconic sandal maker founded in 1774, filed its paperwork for an initial public offering on Tuesday, and warned investors of the risks posed by counterfeit brands that use social media to promote their products.
The footwear company, which was started in Germany and is now based in London, plans to go public on the New York Stock Exchange, under ticker symbol “BIRK.”
Birkenstock has long struggled to protect its intellectual property, as copycats have taken advantage of the brand’s popularity and premium prices to try and undercut the company with cheaper alternatives. In its prospectus, Birkenstock says that some of the competition comes from “private label offerings” from retailers, but there are also “knock-off products” that are stealing its IP and trying to convince people on Facebook and elsewhere on the web that the items are authentic.
“In the past, third parties have established websites to target users on Facebook or other social media platforms with ‘look alike’ websites intended to trick users into believing that they were purchasing Birkenstock products at a steep discount,” the filing said. “Should counterfeit products be successfully sold on e-commerce platforms managed by third parties, our brands and reputation could be damaged.”
Birkenstock doesn’t name Amazon anywhere in the 206-page — plus footnotes — filing, but it does say that it has “refrained, and we may in the future refrain, from using certain third-party websites to distribute our products due to the selling of counterfeit products on such platforms.”
Seven years ago, Birkenstock publicly quit Amazon in the U.S. due to an eruption of counterfeit and unauthorized sales on the site. The company also said at the time that it would no longer allow authorized Birkenstock merchants to sell on Amazon.
“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” then-Birkenstock USA CEO David Kahan wrote in a memo on July 5, 2016, addressed to “our valued Birkenstock partners.”
Kahan, whose title is now President Americas, went on to say that “policing this activity internally and in partnership with Amazon.com has proven impossible.”
Prior to its departure from Amazon, legions of Chinese sellers had been promoting Birkenstock’s flagship Arizona sandal for $79.99, or $20 below the retail price, according to CNBC’s reporting at the time.
Since 2016, according to the prospectus, Birkenstock has “significantly expanded” its direct-to-consumer efforts in e-commerce in the U.S. For the fiscal year ending Sept. 30, 2022, that channel represented 38% of revenue, the company said, adding that “one of our strategies is to continue to increase the proportion of our revenues from e-commerce.”
Subsequent to the Amazon clash, Birkenstock sold a majority stake in the company to LVMH-backed private equity firm L Catterton in February 2021. After the IPO, L Catterton will continue to own a majority of Birkenstock, according to the filing.
“We see ourselves as the oldest start-up on earth,” the company said in the filing. “We are a brand backed by a family tradition of a quarter of a millennium with the resilience, timeless relevance, and credibility of a multigenerational business.”
Facebook parent Meta is well aware of the efforts taken by counterfeiters on its platform. In 2021, Facebook and luxury brand Gucci filed a joint lawsuit in California, alleging that a user of Facebook’s U.S. sites was using the platform to sell fake Gucci products.
The companies said in a statement that over a million “pieces of content were removed from Facebook and Instagram in the first half of 2020, based on thousands of reports of counterfeit content from brand owners, including Gucci.”
In the six months ending March 31, Birkenstock’s revenue climbed 19% to 644.2 million euros, or $693.2 million. Net income over that stretch dropped 45%, largely due to a foreign exchange loss.
Meta CEO Mark Zuckerberg demonstrates an Oculus Rift virtual reality (VR) headset and Oculus Touch controllers during the Oculus Connect 3 event in San Jose, California, U.S., on Thursday, Oct. 6, 2016.
David Paul Morris | Bloomberg | Getty Images
Just days before assisting in his first major shoulder-replacement surgery last year, Dr. Jake Shine strapped on a virtual reality headset and got to work.
As a third-year orthopedics resident at Kettering Health Dayton in Ohio, Shine was standing in the medical center’s designated VR lab with his attending physician, who would oversee the procedure.
Both doctors were wearing Meta Quest 2 headsets as they walked through a 3D simulation of the surgery. The procedure, called a reverse total shoulder arthroplasty, can last around two hours and requires surgeons to carefully navigate around neurovascular structures and the lungs.
After the mock procedure, Shine took his headset home to practice. He did so roughly twice a day before the surgery.
“You can really fine-tune and learn what to do, but also what definitely not to do, with zero risk to the patient,” Shine told CNBC in an interview.
Ultimately, there were no complications in the procedure and the patient made a full recovery, he said.
“Anecdotally, I think it went smoother and quicker than it would have,” Shine said, than if the attending physician “was having to walk me through every step in the case the same way that he did in the VR.”
While consumer VR remains a niche product and a massive money-burning venture for Meta CEO Mark Zuckerberg, the technology is proving to be valuable in certain corners of health care. Kettering Health Dayton is one of dozens of health systems in the U.S. working with emerging technologies like VR as one tool for helping doctors to train on and treat patients.
The broad category of “extended reality” includes fully immersive VR headsets like the Quest 2, and augmented reality (AR) devices, where the user can see a digital overlay on top of real-world surroundings.
Whether the nascent technology can ever be cost-effective across the medical industry is very much an open question, but early tests are showing the potential utility of VR in helping to improve health outcomes.
Meta, then known as Facebook, entered the market with the purchase of Oculus in 2014. Three years later, the company introduced its first stand-alone headset. In 2021, Facebook rebranded as Meta, and Zuckerberg committed to spending billions, betting the metaverse would be “the next chapter for the internet.” Since the beginning of last year, Meta’s Reality Labs unit, which develops the company’s VR and AR, has lost over $21 billion.
Apple is preparing to enter the VR market, going after the higher-end user with the $3,500 Vision Pro that’s expected to debut early next year. Meta is slated to release the Meta Quest 3 as soon as next month.
An Apple spokesperson didn’t provide a comment on potential uses in health care and directed CNBC to an announcement in June regarding Vision Pro’s software developer kit. In that announcement, Jan Herzhoff, Elsevier Health’s president, is quoted as saying that her company’s Complete HeartX mixed reality offering “will help prepare medical students for clinical practice by using hyper-realistic 3D models and animations that help them understand and visualize medical issues, such as ventricular fibrillation, and how to apply their knowledge with patients.”
Meta Quest 3 VR headset.
Meta
Extended reality as treatment for patients
To date, one of the primary applications of VR in health care has been targeted at pain treatment.
“It’s very hard to keep track of pain when you’re in a fantastical cyberdelic world,” said Dr. Brennan Spiegel, director of health services research at Cedars-Sinai in Los Angeles.
Spiegel said that when someone is injured, there is both a physical and an emotional component to their pain. Those signals are sent to two different parts of the brain, and VR can serve to tamp down the signals in both regions.
“It’s training people how to modify their spotlight of attention so they can swing it away from the painful experiences,” Spiegel said. “Not just the physical, but the emotional experiences.”
Spiegel said Cedars-Sinai is preparing to launch a virtual platform to help people with gastrointestinal issues like Crohn’s disease, celiac disease or acid reflux, as well as others for anxiety, addiction and perimenopausal health.
The technology has also attracted the attention of the U.S. Department of Veterans Affairs, which is using extended reality at more than 160 facilities to help patients with pain management, behavioral therapy and both physical and cognitive rehabilitation.
Caitlin Rawlins, the immersive program manager at the VA, said there are currently more than 40 separate use cases for the technology across the agency’s different sites. The VA first introduced extended reality in a limited capacity around 2015, and has found more opportunities to put it to use as the technology has improved.
“I’ve seen it change a whole lot,” Rawlins told CNBC in an interview. “The first virtual reality headset that I used was this big clunky headset that had all these wires it had to be connected to a laptop to function.”
Rawlins said what drew her to extended reality was seeing the immediate response from patients. She recalled the first time she watched a patient use VR. He was a man in his 80s who had just undergone knee replacement surgery. The pain was so severe that opioids didn’t help, Rawlins said.
After mere minutes in VR, he told Rawlins he couldn’t feel the pain in his leg anymore.
“Just using that for a simple 30-minute session can mean the difference between excruciating pain, unable to do the exercises and the ambulation that they need to, to actually get up and move and get ready to go home,” she said.
Rawlins described another patient as a “surly” wheelchair-bound Army veteran who was experiencing some cognitive decline. The VA had the patient try VR to see if it could lessen the need for antipsychotic medications.
With the headset on, Rawlins had the patient navigate through a virtual nature scene, walking through the woods, climbing rocks and interacting with birds and deer. Rawlins said the patient was smiling and laughing and was transformed into a “completely different person.”
“To see a patient who has been wheelchair-bound for like 15 years getting to walk through the woods and interact with animals again, it was a pretty powerful moment,” Rawlins said. “Those are the sort of experiences that we keep seeing over and over and over again.”
Both Spiegel and Rawlins said their organizations are hardware agnostic, meaning they can use headsets made by Meta, Apple or any other company as long as they can support the right software.
Spiegel said there’s “potentially millions and millions of people who might be willing to actually buy a headset” but who see them as a gaming and entertainment devices and have no idea about the health applications.
Meta has loosely identified health care as a target market. The company has released case studies and promoted short videos depicting futuristic surgeons in training.
However, it doesn’t appear to be as much a priority as gaming and entertainment. For example, while Cedars-Sinai can technically make its software available in the Meta Quest Store, users would have to go to a section of the store called the App Lab to access it. Software in the App Lab is not marketed traditionally or as easily discoverable via search.
Meta didn’t provide a comment, directing CNBC to a post on Sept. 7, about uses of metaverse technology. The post says: “Training for surgery is just one of the many industries being transformed in ways that are positively impacting lives.”
‘Together in the virtual world’
Doctors at Kettering Health Dayton practice with VR headsets.
Source: Kettering Health Dayton
The technology is also becoming a fixture in many medical schools and residency programs.
At Kettering Health Dayton, VR recently became a mandatory component of the curriculum for first-year orthopedics residents. In July, the new doctors completed a monthlong “boot camp,” where they carried out clinical services in the mornings and practiced in VR in the afternoons. They now have to complete at least three modules a week in VR with a score of over 70%.
For more senior level residents like Shine, VR training is not yet mandatory, but Kettering Health Dayton is actively working to build it into each level of the program.
“The way I trained in the late 80s, I mean, basically you read the books,” said Dr. Brent Bamberger, the director of the orthopedic surgery residency program at Kettering Health Dayton. “We didn’t have the videos at that time. You may go to a lecture, you may get lucky and have a specimen lab or some type of lab to do it, but you were learning by watching.”
Dr. Reem Daboul, a first-year resident at the hospital, said headsets can’t replicate the physical feeling of a procedure. But she’s found them very useful in important ways. She can already use a headset to walk through the steps of an anterior hip replacement, which many orthopedic surgeons don’t learn until their third year of residency or later.
“Being able to have something help me and see what I’m supposed to be doing and be able to walk through the steps, it’s been super helpful for me,” Daboul said in an interview.
For its orthopedics program, Kettering Health Dayton uses software developed by PrecisionOS, a company that builds VR modules for training surgeons, medical residents and medical device representatives. PrecisionOS co-founder and CEO, Dr. Danny Goel, said the company has nearly 80 customers across the globe.
Orthopedics residents at the University of Rochester also use PrecisionOS. Dr. Richard Miller, a retired professor at the university, said the software is “sophisticated” and “very realistic,” especially as a way to learn the steps of a procedure. He finds it so compelling that he’s been actively helping the orthopedics department implement the technology even though he retired three years ago.
Miller said the VR is a useful way for residents to hone their skills without having to immediately deal with operating room pressures. They can also practice at home.
“I can be at home in my study at night, and they can be in their dorm at night, and we can do a procedure together in the virtual world,” Miller said.
Despite VR’s advantages, Miller said the software has to be able to update frequently to stay current with standards of care, best practices and surgery techniques.
“Next year, they may change the procedure a little bit, now you have other tools and things are a little bit different. Who’s going to change that? Who’s going to bring it up to date?” Miller said.
Those are important questions for quality of care. They’re also important because hospitals generally have to work on tight budgets, and the costs aren’t always clear.
“I can’t get straight answers from anybody, really, as to exactly how much it costs and who does what,” Miller said. “It’s got to be a hurdle.”
PrecisionOS declined to share specific pricing information with CNBC. Goel said costs of using the company’s software vary based on the institution and the partnership.
Kettering’s Bamberger said that in addition to the software challenges, the hardware is still rather “clunky.” Others in his field also see the limitations.
Dr. Rafael Grossmann, a surgeon at Portsmouth Regional Hospital in New Hampshire, has spent much of his career educating people about health-care applications for emerging technologies like extended reality.
In 2013, Grossmann became the first person to use the infamous Google Glass during a surgery as a way to stream the procedure, with the patient’s consent, into a room of students. Google had built a lightweight AR device that displayed tiny bits of information on a transparent screen in the user’s field of view. It was first sold to developers and early adopters in 2013 for $1,500, and quickly captured the imagination of tech enthusiasts.
Ten years later, Grossmann said he now sees a substantial market for the technology, particularly within health care. He said headsets have improved dramatically, even if they’re still bulky and not entirely functional for doctors.
“The interface is better than it was three years ago, but it’s certainly not ideal for really any sort of health-care setting,” Grossmann said.
A gallery assistant wearing an Oculus Quest 2 virtual reality (VR) headset to view the House of Fine Art (HOFA) Metaverse gallery stands in front of digital artwork “Agoria, _{Compend-AI-M}_ 2022 #16” during a preview in Mayfair, London, UK, on Thursday, Nov. 10, 2022.
Hollie Adams | Bloomberg | Getty Images
A growing area of research
As with all technology in health care, extended reality is going to have to clear regulatory hurdles.
The U.S. Food and Drug Administration has a small team of researchers that are responsible for carrying out “regulatory science” around the technology.
Ryan Beams, a physicist at the FDA, conducts this research alongside a team, consulting with a range of experts about emerging AR, VR and mixed reality devices. As a result, Beams said the FDA is able to help establish general best practices for how to test promising devices and bring them to market safely.
“We can say these are the tests we need done, these are the kinds of ways you should do the tests, and then we can help the companies get through those,” Beams told CNBC. “What you don’t want is a device that potentially could help someone getting delayed because there’s uncertainty about how to go about doing the testing.”
Spiegel of Cedars-Sinai also helped co-found a new medical society called the American Medical Extended Reality Association in late 2022. He said it was created as a way for physicians, clinicians and other health-care professionals to help guide the future of the field.
The society currently has about 300 paying members, a number Spiegel hopes will reach into the thousands in the coming years. It’s also gearing up to launch its first official peer-reviewed journal called the Journal of Medical Extended Reality.
“This is not fringe science anymore. This is now mainstream,” Spiegel said. “There’s still a lot of work to do. It’s not like this is a done deal, cake’s not baked, but we’ve seen massive advances on many levels that make this a real science now.”
“Super apps” have never truly existed in the United States, and it is apparent at this point that they never will.
That isn’t stopping some executives and investment analysts from still dreaming of becoming one-stop shops for their users’ needs, something only a small handful of apps in Asia have managed to do. The most prominent is Elon Musk, the Tesla Inc. TSLAchief executive who purchased Twitter last year and has proclaimed that he will turn it into an “everything app” called X that resembles super apps in China.
That’s because many U.S. startup investors have already retreated from China, after years of political mudslinging between the world’s two largest economies led to increased sanctions and trade restrictions.
But with the door to the Chinese tech market closing, VCs are seeing new opportunities on their home turf. The U.S. government is actively promoting investments in semiconductors and broader industrial development, and investors are finding a widening talent pool invigorated to take on tough challenges in light of world events, with an explicit focus on protecting U.S. values.
“VCs are saying, ‘Where’s the most stable places to invest? And quite frankly, where’s the talent?'” said Gilman Louie, co-founder of venture firm Alsop-Louie Partners. He’s also CEO of America’s Frontier Fund, which says in its mission statement that it’s “committed to reinvigorating our nation’s innovation and manufacturing prowess in critical frontier technology sectors.”
“In uncertain times, when there’s unpredictability and global stress, whether you’re a U.S. investor or a foreign investor, you want to come to America to invest,” Louie said.
Once seen as a vast market of opportunity for U.S. tech companies and investors, China is now filled with more risk than reward and is increasingly viewed as a rival in developing key technologies, including advanced artificial intelligence and quantum computing, that will drive global markets in the decades to come.
Last year, the U.S. announced export controls aimed at limiting Beijing’s ability to produce advanced military systems, and more recently the Biden administration restricted the ability for U.S. investors to back critical tech in China.
Meanwhile, lawmakers passed the Chips and Science Act, which promised to pump tens of billions of dollars into semiconductor manufacturing in the U.S. The goal is to reduce international dependence on chips that are key to development of electronics, cars and medical equipment and are becoming more important to national security with the rapid evolution of AI.
Lindsay Gorman, senior fellow for emerging technologies at the German Marshall Fund’s Alliance for Securing Democracy, said she’s seen a “new crop of venture capitalists” in the last few years that prioritize U.S. tech competition with China and U.S. national security.
“Ten, 15 years ago, these geopolitical lines were not part of the equation,” Gorman said.
Louie added that he doesn’t “know of a single major fund out there that isn’t thinking about disruptive tech investing in the U.S., investing in defense tech, investing in microelectronics and AI in the next generation and next iteration.”
In Torrance, California, just south of Los Angeles, Hadrian Automation is building efficient factories to help space and defense companies get parts faster and cheaper. CEO Chris Power, who started the company in 2020, said he’s seeing increased interest from large growth funds that have typically invested in software.
“Everyone’s kind of standing up their own their own practices to support the market,” Power said. Hadrian’s early backers include Lux Capital and Peter Thiel’s Founders Fund, which have longer histories of investing in manufacturing and deep science.
Palmer Luckey, Founder @ Oculus VR Andutil Industries, during day two of Collision 2019 at Enercare Center in Toronto, Canada.
Stephen McCarthy | Sportsfile | Getty Images
VC funding in aerospace and defense tech has shot up in recent years, according to data compiled by PitchBook for CNBC. In 2019, 69 companies in the sector raised a total of $1.7 billion in value. In 2021, that jumped to 119 deals worth $6.4 billion. Last year, which was the worst for tech stocks since 2008, saw a slight slippage in the space to $5.6 billion, though the number of deals was the same as 2022, according to PitchBook.
The posterchild for U.S.-focused defense tech is Anduril Industries, co-founded in 2017 by Oculus Rift designer Palmer Luckey. The company, which ranked seventh on the latest CNBC Disruptor 50 List and has been valued at $8.4 billion by private investors, develops autonomous technology for national security and warfare.
On Thursday, Anduril announced the acquisition of Blue Force Technologies, which develops autonomous aircraft for defense and commercial customers.
While Anduril started with a focus on military contracts, other startups have navigated their way there.
Saildrone, which makes unmanned ships, was originally focused on monitoring environmental data for fisheries and agencies like the National Oceanic and Atmospheric Administration.
It later became clear to CEO Richard Jenkins that the company needed to expand its aperture to bring in more revenue, since the government wasn’t spending enough on science to make the business work. Bilal Zuberi, a partner at early investor Lux, asked the company if it would consider selling its products to the Navy or Coast Guard.
Zuberi said Jenkins came to him with a key concern. He was unsure how his team would react if the environmental company they joined began selling to the defense sector. Zuberi talked about how he sees the opportunity differently. Saildrone’s technology can help prevent greater human casualty by, for example, learning of certain precise moves by the Chinese government in advance so the U.S. could send a warning signal and avoid a greater conflict.
Jenkins decided to make the pitch to his team. He told staffers he had a “pretty firm line on not weaponizing the platforms,” and keeping the focus on data collection tools. He also said the company wasn’t foregoing its climate work.
Saildrone didn’t lose any employees as a result of the shift.
Saildrone autonomous boats rove the seas, collecting data about weather, ships, fish and more.
“There was a perception that the technology industry doesn’t understand the importance of national security and what it takes to protect our democracy,” Zuberi said. “And then the military doesn’t care about the technology that we’re developing. I think that perception has somewhat been shattered.”
Zuberi said that for industry leaders it doesn’t have to be about patriotism. They can just look at the untapped potential in defense tech.
“It’s not like the last five years, suddenly investors woke up more patriotic than they used to be,” Zuberi said. “I think they just realized that there’s a big business opportunity here that they want to access.”
Paul Kwan, managing director of venture firm General Catalyst, had a similar observation.
“What’s changed around tech the last few years is people want to work on stuff that makes a difference and has a bigger impact on the world,” said Kwan, who has written about the firm’s “renewed” focus on “modern defense and intelligence.”
While tech workers at companies including Google and Salesforce have made headlines in the past for protesting their employers’ defense contracts, the topic is more nuanced now in the startup world.
“As a technologist, to work in defense was certainly taboo,” said Kyle Harrison, general partner of Contrary Capital. “I think the conversation has been more open. I think there’s still people that feel very strongly about it, for and against. But it used to be nobody really talked about it, where now people are acknowledging that it’s really difficult to protect a lot of the values that you think are important if your defense apparatus is from the ’80s.”
Part of the movement is driven by an awareness of the Russian war in Ukraine, several VCs said, which has highlighted the role defense can play in protecting values of democracy.
US President Joe Biden arrives to speak on rebuilding US manufacturing through the CHIPS and Science Act at the groundbreaking of the new Intel semiconductor manufacturing facility near New Albany, Ohio, on September 9, 2022.
Saul Loeb | AFP | Getty Images
“You have an aggressor nation, taking land and causing death and destruction to civilians,” said Raj Shah, managing partner of Shield Capital, adding that tech workers “want to do something to help and they want to have meaning in their lives. And photo-sharing apps are only so important.”
As Lux co-founder Josh Wolfe said, “Do you want to build software that has people clicking on ads, or do you want to do things that have a lasting impact on the safety and security of the American people and helping to reduce human suffering around the world?”
It’s not just shifting sentiment within the tech community. There’s also a growing openness from the U.S. defense community to procuring technology from newer players.
“The government’s becoming a better customer,” said Shah, who previously served as managing partner of the Defense Department’s Defense Innovation Unit (DIU), which seeks to accelerate the use of emerging technologies. “It actually makes business sense to solve important security problems.”
Power, the CEO of Hadrian, said the narrative of “Silicon Valley hates the government and the government hates Silicon Valley” is gone, even though he says “I don’t think it was ever true.”
“People are viewing selling software to the government as a real market opportunity versus something that may or may not happen or would take them ten years,” Power said.
One area where the shift in mindset has become abundantly clear in the past year or two, Power said, is in recruiting. In the past, some potential prospects expressed little interest in manufacturing, but now Power said he finds many more people who are compelled to solve these problems.
Wolfe said that trend permeates throughout his portfolio.
“Money follows talent,” Wolfe said. “And talent is going into hard tech.”
Former U.S. President and Republican candidate Donald Trump makes a keynote speech at a Republican fundraising dinner in Columbia, South Carolina, U.S. August 5, 2023.
Sam Wolfe | Reuters
Ever since Meta lifted its two-year ban on former President Donald Trump earlier this year, its Facebook and Instagram platforms have emerged as a key element of Trump’s presidential campaign fundraising plan, according to data from Meta’s archives and interviews with campaign strategists and Trump advisors.
Meta’s platforms offer Trump a vital resource that he can’t get from his own social media site, Truth Social, or via his countless mass emails: Access to millions of potential donors who may not be part of his traditional political base of supporters.
A big audience
Meta boasts 202 million daily active users on Facebook in the U.S. and Canada, according to its latest quarterly report. That’s a lot of eyeballs for a catchy political ad.
Starting in April, when it was announced Trump was first indicted in New York City, the number of overall impressions that Trump’s campaign ads rack up via his Facebook and Instagram accounts has skyrocketed, according to company data.
Trump’s Aug. 24 mugshot in Georgia, the first ever for a former president, has been a top draw in his recent posts.
The photo is used in at least 18 different versions of the same ad, spots that together racked up over 1 million impressions in the past week, according to the archive’s data.
The ads allow viewers to click a link to a fundraising page for the Trump Save America Joint Fundraising Committee that helps raise money for the Trump campaign and a leadership political action committee called Save America that’s spending millions of dollars on the former president’s legal fees.
The Trump camp has said that it’s raised over $9 million since he was booked in Georgia.
The Trump campaign did not say how much of the fundraising was through Facebook, but a Trump digital fundraiser told CNBC that the boost is likely due at least in part to the former president’s renewed efforts to raise money on the Meta-owned platforms. This person declined to be named in order to speak freely about internal campaign strategy.
Social media impressions are considered one of the most important metrics, especially for digital ad buyers, since it counts as “the number of times any content from your page or about your page entered a person’s screen,” according to Facebook.
Andrew Arenge, the director of operations for the University of Pennsylvania’s program on opinion research and election studies, told CNBC that higher impressions can be a key factor in helping bring in waves of campaign cash. Arenge’s team studies digital ad spending for both Democrats and Republicans.
“The value of running fundraising ads on digital versus say television, is that there is less friction between when an individual sees the fundraising appeal and when they can actually donate the money,” Arenge said in a message to CNBC over X, formerly known as Twitter. “So getting an ad in front of more eyeballs should provide more opportunity for the campaign to see more people click on the ad thus an opportunity to raise more money.”
Return on investment
Trump’s Facebook ad impressions have come with very little cost to his political operation, making it a cheap way for the former president to raise money for both his campaign and legal defense efforts.
Trump’s team only spent just over $77,000 on Facebook and Instagram ads the week he was charged in Georgia, according to data from digital ad tracker FWIW. The Meta ad archive shows that since early June, the Trump Save America Joint Fundraising Committee spent more than $500,000 on digital Meta ads.
There is no public data showing how much the Meta ads have directly raised for the Trump campaign.
Political strategists say that Trump’s regaining access to Facebook is key to him raising money through online donations and acts as a lifeline to his 2024 campaign, regardless of his legal struggles.
“Online donations are the lifeblood of Trump’s campaign. Without access to those donors, he’d struggle to raise sufficient resources,” Alex Conant, a partner at Firehouse Strategies and former advisor to Sen. Marco Rubio, R-Fla., recently told CNBC when asked about Trump’s resurgence on the platform.
Trump’s campaign outraised all of his Republican primary opponents in the second quarter, according to Federal Election Commission records.
And while many of his rivals struggled to collect donations from 40,000 people in order to qualify for the first Republican debate, Trump has booked online contributions from 10 times that many individuals — at least 400,000 donors — from the launch of his campaign last year through June, according to NBC News.
Brad Parscale, who was Trump’s initial 2020 campaign manager and a key architect of the former president’s digital fundraising platform during their successful 2016 White House run, told CNBC that many of his company’s clients saw major digital fundraising success post the mugshot becoming public.
Parscale founded and is now a partner at digital fundraising firm Campaign Nucleus, which has recently counted the Trump campaign and Make America Great Again Inc., a super PAC backing Trump’s run for president, as clients, according to FEC records.
“Since President Trump posted his mugshot, Campaign Nucleus has witnessed substantially increased activity, and many of our clients have seen an increase of up to 3x their normal fundraising,” Parscale said.
In the months since Trump regained access to his personal Facebook and Instagram accounts, he has steadily ramped up his presence as his legal troubles mount.
Trump and 18 other co-conspirators were indicted in Georgia in August for alleged illegal efforts in overturning the 2020 election in the state. In New York, Trump faces criminal charges of falsifying business records tied to a scheme that directed hush money payments to two women.
Special counsel Jack Smith has charged Trump in two federal cases: One over his handling of classified government records after he left office and another case charging him with trying to overturn President Joe Biden‘s win in the 2020 election.
Christian Ferry, a veteran Republican strategist who used to work for the late Republican Sen. John McCain and Trump ally Sen. Lindsey Graham, R-S.C., said that Trump’s Facebook ads represent a “desperate need” to raise money both for his campaign and legal fees.
“Trump is in desperate need of small-dollar donations to feed both his campaign and growing legal fees, so the more platforms the better,” Ferry said. “But impressions do not equal contributions and his polarizing nature ensures his posts get impressions from and detractors alike.”
Different Facebook, same Trump
The content of the ads has changed very little since his last presidential campaign in 2020 and the deadly, pro-Trump riot at the U.S. Capitol on Jan. 6, 2021, that initially prompted his ban from Meta’s sites.
While he was banned, Trump’s political team kept advertising on the platform through at least August 2021, as evidenced by the archived ads.
Facebook’s 2019 decision allowing political ads that have false information to remain on the platform without any repercussions has given Trump the ability to freely use falsehoods in his posts.
Some of the recent Trump ads falsely claim, for instance, that Fulton County District Attorney Fani Willis, “lets violent murderers and TRUE criminals run wild in her city.” Willis is leading the case against Trump for his alleged illegal efforts to overturn the 2020 election in the state.
The Atlanta Journal-Constitution reported that violent crime in Atlanta is down 20% compared with this time last year.
A representative for Trump’s campaign did not return a request for comment. A spokesman for Meta declined to comment on Monday when asked about the Trump advertisements on its platforms.
Trump’s return to Meta platforms will put his messaging in front of a changing landscape of users, as more kids are using Instagram, according to recent polling.
About 62% of teens from the ages of 13 and 17 are turning to use Instagram, according to Pew Research polling conducted in 2022. Facebook’s use by that age group, on the other hand, has dropped to 32% just last year, according to the poll.
Facebook’s age demographic has started to grow in recent years, according to research done by Insider Intelligence. The data firm expects by 2026 only about 28% of Facebook’s users will be between the ages 18 and 34 years old.
Cash-strapped political network
Trump’s return toward utilizing Meta as one of his digital fundraising platforms comes as his overall political network has, at times, struggled to raise enough funds to cover both his run for president and coinciding legal fees.
Trump’s leadership PAC, Save America, raised more than $15 million and spent over $20 million on legal fees in the first half of the year, according to FEC records. Save America was down to only $3 million on hand going into the second half of the year.
The Trump Save America Joint Fundraising Committee, which represents the bulk of the Meta ad spending for Trump, raised more than $53 million over that same time period and transferred over $31 million to affiliated committees, including Save America.
The joint fundraising committee went into the second half of the year with just over $5 million on hand.
The logos of Google, Apple, Facebook, Amazon and Microsoft displayed on a mobile phone with an EU flag shown in the background.
Justin Tallis | AFP via Getty Images
The European Commission on Wednesday said it designated six tech giants as “gatekeepers” under its new Digital Markets Act — a strict set of rules set to shake up the business models’ of large digital platforms.
The Commission said that it deems Amazon, Apple, Alphabet, Meta, Microsoft and China’s ByteDance as “gatekeepers.” The term refers to massive internet platforms which the EU views are restricting access to core platform services, such as online search, advertising, and messaging and communications.
This is a breaking news story and will be updated shortly.
The U.S. Labor Day holiday will mark another milestone in the marathon to bring workers back to the office, but it won’t be a quick fix for landlords, according to Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.
“A lot of companies are saying that after Labor Day, ‘We expect more out of you,” LaSalvia said, referring to days in the office. Still, office attendance, he argues, likely only stages a fuller comeback if a job or promotion is on the line.
That could prove difficult, with Friday’s U.S. jobs report for August expected to show U.S. unemployment at a scant 3.5%, near the lowest levels since the late 1960s, even if hiring has been slowing. The labor market, so far, appears unfazed by the Federal Reserve’s benchmark rate reaching a 22-year high.
It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers.
As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. The trend can be traced in leasing data since 2021, with Class A properties in central business districts (blue line) showing a big advantage over less desirable buildings in the heart of cities (orange line).
Return to office isn’t going to save the entire office property market
Moody’s Analytics
“Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together.
Another way to look at the trend is through rents. Manhattan’s Penn Station submarket, with its estimated $13 billion overhaul and neighboring Hudson Yards development, has seen asking rents jump 32% to $74.87 a square foot in the second quarter since the fourth quarter of 2019, according to Moody’s Analytics. That compares with a 2% bump in asking rents in downtown New York City to $61.39 a square foot for the same period.
The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns.
Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. The additional vacancies would roughly translate to 57% of Los Angeles roughly 300 million square feet of office space sitting empty.
“The fundamental reason why we had offices in the first place have not completely disintegrated,” LaSalvia said. “But for some of those Class B and C offices, the writing was on the wall before the pandemic.”
U.S. stocks were mixed Thursday, but headed for losses in a tough August for stocks, with the S&P 500 index SPX
off about 1.5% for the month, the Dow Jones Industrial Average DJIA
2.1% lower and the Nasdaq Composite COMP
down 2% in August, according to FactSet.