Tag: shareholdings

‘We have a deal’: EU bans new gas-fueled cars starting in 2035

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The European Union reached a deal Thursday to effectively ban new gas-powered cars beginning in 2035.

It’s a move seen as a key part of a broader plan to reduce carbon emissions across economic sectors — and a major policy achievement to carry into high-profile United Nations climate-change talks in Egypt early next month.

Speculation about a deal, which had been heavily debated, was reported earlier this week and confirmed Thursday via a tweet from the spokesperson for the rotating presidency of the bloc, currently held by the Czech Republic.

Broadly, the agreement is part of a plan that requires a 55% cut in emissions across transportation, buildings, power generation and other sources this decade. That halfway mark is seen as a major milestone as the EU aims to reach net-zero emissions by 2050.

The announcement comes as the U.N. climate arm has released a series of updated reports this week. One chastised the “highly inadequate” steps to date by rich nations to cut emissions of Earth-warming greenhouse gases, such as those from burning fossil fuels. The window to act is closing but is not quite shut yet, according to the Emissions Gap report from the U.N. Environment Programme. “Global and national climate commitments are falling pitifully short,” U.N. Secretary-General Antonio Guterres said Thursday. “We are headed for a global catastrophe.”

The EU is the world’s largest trade bloc, and its moves could push other major economies to also set firm cutoff dates for gasoline
RB00,
-0.52%
and diesel engines. Volkswagen AG
VOW,
+0.88%
and Daimler Truck Holding AG
DTG,
+2.67%
are already moving deeper into electric vehicles. Volkswagen this week said it would stop selling internal-combustion-engine cars in Europe between 2033 and 2035.

Other major economies, including the U.S., have set similar goals, but the U.S. has not set any federal-level restrictions on vehicle manufacturing. Some individual automakers, including General Motors
GM,
+0.79%,
have set their own timelines. And California approved plans in August to mandate a gradual phasing out of vehicles powered by internal-combustion engines, with only zero-emission cars and a small portion of plug-in gas/electric hybrids to be allowed by 2035.

As the world’s fifth-largest economy, California can create ripple effects with its moves. At least 15 other states have signed on to California’s existing zero-emission vehicle program or have shown interest in and are working toward codifying the change. Among them, Washington, Massachusetts, New York, Oregon and Vermont are expected to adopt California’s ban on new gasoline-fueled vehicles.

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October 27, 2022
Mobileye prices IPO above targeted range to raise nearly $1 billion, and most of it will go to Intel

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Mobileye Global Inc. priced its initial public offering higher than its targeted range late Tuesday to raise nearly $1 billion, most of which will go to Intel Corp.

Mobileye priced its initial public offering at $21 late Tuesday, the company announced in a news release, after previously stating a targeted range of $18 to $20; shares are expected to begin trading on the Nasdaq under the ticker symbol “MBLY” on Wednesday. Intel
INTC,
+0.85%
will sell at least 41 million shares of Mobileye, which would raise $861 million, and also agreed to a $100 million concurrent sale of stock to General Atlantic, which would make the total raised at least $961 million.

Intel paid $15.3 billion to acquire Mobileye in 2017, and was reportedly aiming for a valuation as high as $50 billion when originally planning this IPO, but instead will settle for a basic valuation of roughly $16.7 billion. After a record year with more than 1,000 offerings in 2021, the IPO market has largely dried up in 2022.

Read: Mobileye IPO: 5 things to know about the Intel autonomous-driving spinoff

Underwriting banks — Intel listed two dozen underwriters, led by Goldman Sachs Group Inc.
GS,
+1.13%
and Morgan Stanley
MS,
+1.36%
— have access to an additional 6.15 million shares for overallotments, which could push the total raised higher than $1 billion and make Mobileye the second-largest offering of the year. Only two offerings thus far this year have raised at least $1 billion — private-equity firm TPG Inc.
TPG,
+4.21%
raised exactly $1 billion in January, and American International Group Inc.
AIG,
-0.11%
spinoff Corebridge Financial Inc.
CRBG,
+1.36%
raised at least $1.68 billion in September.

Intel will receive the bulk of the proceeds of the offering — after promising to make sure that Mobileye has $1 billion in cash and equivalents, the chip maker will take the rest of the proceeds for its own coffers. Wells Fargo analysts calculated that Mobileye will need about $225 million to hit that level, leaving at least $736 million for Intel before fees and other costs.

Intel will also maintain control of the company after spinning it off, keeping class B shares that will convey 10 votes for each share while selling class A shares that convey one vote per share. Intel will retain more than 99% of the voting power and nearly 94% of the economic ownership of the company, and the Mobileye board is expected to include four members with ties to Intel, including Chief Executive Pat Gelsinger serving as chairman of the board.

Read also: Intel files for Mobileye IPO, creating a share structure that will keep the chipmaker in control

Mobileye will continue to be led by founder Amnon Shashua, who served as chief executive before Intel acquired the company and stayed at the helm while it was part of the Silicon Valley chip maker. Shashua founded Mobileye in 1999 and turned it into a pioneer in the field of automated-driving technology and one of Israel’s most prominent tech companies.

Mobileye filed for the initial public offering at the end of September, when executives were still reportedly hoping for a $30 billion valuation.

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October 25, 2022
Snap investors, do you still trust Evan Spiegel?

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When Snap Inc. went public in 2017, this column boiled down the entire investment opportunity to one, simple question: Do you trust Evan Spiegel?

As Snap
SNAP,
-0.64%
stock heads toward its lowest prices since March 2020, and potentially even lower, that question is even more important, and answering “yes” should be even harder.

Three months ago, amid the beginning of a huge slowdown in the ad business, Snap initiated a unique dividend meant to ensure that the founders maintained control of the company, even if they sold their stock — protecting themselves. Then in August, news came that Snap was laying off one in five employees. As Snap again reported disappointing results Thursday and saw the stock plunge again, the company decided now was the time to initiate a stock buyback plan, promising to spend up to $500 million to offset the dilution from employee stock plans — in the past nine months, Snap has spent $937 million on stock-based compensation.

On the face of it, this seems like an investor-friendly approach — Barron’s pointed out earlier this year that investors were suffering while employees were faring better with the hefty stock-comp plans. But it’s also worth pointing out who the biggest investors in Snap are: Spiegel and his co-founder Bobby Murphy.

As the company’s largest individual shareholders, Spiegel and Murphy are among the key beneficiaries of Snap’s plans to buy back stock, which usually leads to a boost in the stock price. Those two still control over 99% of the voting power of the company’s capital stock, and as the parent of Snapchat reminded investors in its annual report, “Mr. Spiegel alone can exercise voting control over a majority of our outstanding capital stock.”

Shares of Snap tumbled an additional 25% to just under $8 in after-hours trading, putting them near the lowest prices since March 2020. On Thursday, the company ended regular trading hours with a market capitalization of around $17.91 billion, but that was headed toward $13 billion with the after-hours collapse.

Besides protecting themselves and their investment, Snap’s executives have shown little ability to head off big issues, nor offer any worthwhile solutions to the current ad downturn. In the third quarter, its revenue grew a paltry 6%, down from the most recent second-quarter revenue growth of 13%. Snap appears to be in a steady revenue slowdown, from its peak growth of 116% in the June 2021 quarter.

Snap has blamed both privacy changes that Apple Inc.
AAPL,
-0.33%
made to the iPhone that affected ad tracking, and more recently, the macroeconomic advertising climate, while avoiding one of the biggest factors — the rise of TikTok. Top executives didn’t seem to see any of those challenges coming early enough, and did not do enough about them once they did.

“The company was slow to react — or acknowledge — the significant headwinds faced by privacy initiatives, compounded by competition, and more recently macro headwinds,” Colin Sebastian, an analyst at Baird Equity Research, wrote in a note.

The competition factor, mostly from China’s TikTok, was addressed briefly on the company’s call with analysts, but was not really acknowledged by Snap leaders.

“We believe that the differentiated nature of our service is what’s contributing to the daily active-user growth, which grew 19% year-over-year to 363 million daily active users,” Spiegel said. “In terms of the content specifically, I think there’s a lot of headroom, of course, to continue to grow content engagement.”

In the company’s shareholder letter, Spiegel acknowledged that the results were “far from our aspirations,” and that Snap would use this time of reduced demand “to pull forward and accelerate changes to our advertising platform and auction dynamics that we believe will deliver better results for our advertising partner.”

Spiegel is known for going by his own instincts and not listening to other executives, employees or even market forces, as was noted in a Wall Street Journal report that detailed his push for an unsuccessful product redesign in 2018. While the company appeared to have snapped back from that debacle last year, it is now facing a fiercer rival for young people on social media in the form of TikTok.

Investors who still have patience to wait and see if this stock ever recovers will also have to stick around with Spiegel — and as our IPO column noted — Snap is unapologetically founder-controlled. No change at the top can ever come unless it is initiated by Spiegel himself. Investors have to make a leap of faith that Spiegel can turn things around, but they need to remember that Spiegel usually thinks about himself first.

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October 20, 2022
Elon Musk teases massive Tesla stock buyback as CFO trims forecast for annual deliveries and stock falls

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Tesla Inc. Chief Executive Elon Musk suggested the electric-vehicle maker could repurchase up to $10 billion worth of its stock Wednesday, as shares declined following a third-quarter revenue miss and his CFO brought down delivery expectations for the full year.

Some Tesla
TSLA,
+0.84%
investors have been agitating for a stock buyback after multiple stock splits and the company losing more than a third of its market capitalization in 2022, and Musk said in an earnings conference call that Tesla’s board has discussed a buyback in the range of $5 billion to $10 billion.

“We debated the buyback idea extensively at board level. The board generally thinks that it makes sense to do a buyback, we want to work through the right process to do a buyback, but it is something possible for us to do a buyback on the order of $5 [billion] to $10 billion even in a downside scenario next year, given next year is very difficult,” he said, adding that it “is obviously pending board review and approval.”

“So it’s likely that we will do some meaningful buyback,” he concluded.

The statement did not immediately move Tesla’s stock, as it was followed closely by a forecast revision from Chief Financial Officer Zachary Kirkhorn, who said, “We do expect to be just under 50% growth [for deliveries] due to an increase in the cars in transit at the end of the year.”

Tesla delivered a record number of cars in the third quarter, but still missed analysts’ expectations and made it more difficult to hit executives’ target for the year of an increase of more than 50% in vehicle deliveries. Kirkhorn said that the company will increase production of cars by 50%, “although we are tracking supply-chain risks which are beyond our control.”

Shares declined more than 6% following the car company’s earnings report. Tesla reported third-quarter earnings of $3.29 billion, or 95 cents a share, on sales of $21.45 billion, up from $13.76 billion a year ago. After adjusting for stock-based compensation, the electric-vehicle manufacturer reported earnings of $1.05 a share, up from 62 cents a share a year ago.

Analysts on average were expecting adjusted earnings of $1 a share on sales of $21.98 billion, according to FactSet. Tesla shares declined about 5% in after-hours trading immediately following the release of the results, after closing with a 0.8% increase to $222.04 in the regular trading session.

Tesla shares have fallen more than 37% so far this year, a harder descent than the 22% decline of the S&P 500 index
SPX,
-0.67%,
after years of outsize gains. Pundits have put forth a variety of reasons for the downturn, including increasing competition in the EV market, negative press around Tesla’s full-self-driving claims and actual performance, and Musk’s attention being diverted to his attempt to acquire Twitter Inc.
TWTR,
+0.10%.

Don’t miss: Market share for electric vehicles expected to roughly double

None of that cowed Musk, however. He predicted that Tesla would be worth as much as the two most valuable companies in the world, Apple Inc.
AAPL,
+0.08%
and Saudi Arabian Oil Co.
2222,
+0.42%,
combined. Both companies have market capitalizations topping $2 trillion.

“Now I am of the opinion that we can far exceed Apple’s current market,” Musk said on the call, after referencing a previous prediction that Tesla would reach Apple’s then-record market cap. “In fact, I see a potential path for Tesla to be worth more than Apple and Saudi Aramco combined. That doesn’t mean it will happen or that it will be easy, in fact it will be very difficult, require a lot of work, very creative new products, expansion and always good luck. But for the first time I’m seeing, I see a way for Tesla to be, let’s say roughly twice the value of Saudi Aramco.”

In a preview of the report Tuesday, Wedbush Securities analyst Daniel Ives said that “the Street is starting to worry that the bloom is coming off the rose in the Tesla story with delivery shortfalls front and center.”

“Between logistical issues in China, supply-chain problems, FSD black-eye moments, the Musk Twitter fiasco and EV competition increasing across the board, there is growing pressure on Musk & Co. to prove themselves,” Ives wrote.

Tesla’s automotive gross margin, which declined in the second quarter despite price increases that Musk called “embarrassing,” were the same sequentially at 27.9%. Operating margin increased both sequentially and year-over-year, however, to 17.2% from 14.6% both in the third quarter a year ago and the previous quarter.

Earnings preview: Do record Tesla deliveries mask a demand problem?

In their communications with investors on Wednesday, Tesla executives disclosed that they will change the process for one of their most challenging tasks of late — transporting cars — in hopes of bringing costs down.

“We are reaching such significant delivery volumes in the final weeks of each quarter that transportation capacity is becoming expensive and difficult to secure. As a result, we began transitioning to a smoother delivery pace, leading to more vehicles in transit at the end of the quarter,” the company’s shareholder deck reads. “We expect that smoothing our outbound logistics throughout the quarter will improve cost per vehicle.”

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October 19, 2022
Russia Wipes Out Exxon’s Stake in Sakhalin Oil-and-Gas Project

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Russia Wipes Out Exxon’s Stake in Sakhalin Oil-and-Gas Project

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October 17, 2022
Why It’s Time to Buy This Uranium Miner’s Stock

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Heading into this past week, uranium miner

Cameco

was that rare stock in the market: It had posted a double-digit gain in 2022. One deal made those gains disappear—and created a buying opportunity.

At first glance, there didn’t seem to be all that much that was controversial about the joint venture Cameco (ticker: CCJ) announced this past Tuesday. Along with

Brookfield Renewable Partners

(BEP), Cameco agreed to buy Westinghouse Electric, a servicer to nuclear power plants, for $7.88 billion, including debt. Cameco will own 49% of the joint venture once the deal is completed.

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October 14, 2022
Kroger and Albertsons Say Their Merger Will Cut Prices. Their Shares Are Tumbling.

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With inflation still an untamed threat, Friday’s announced merger of the grocers

Kroger

and

Albertsons

will spur debate about whether the consolidation will raise food prices, or lower them.

The Biden administration’s antitrust regulators are scrutinizing mergers more closely than did predecessors, and an old argument against combinations is that they lead to price-gouging.

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October 14, 2022
WSJ News Exclusive | Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped

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John Foley, the co-founder and former chief executive of Peloton Interactive faced repeated margin calls on money he borrowed against his Peloton holdings before he left the fitness company’s board last month, according to people familiar with the situation.

As Peloton’s shares slumped over the past year, Goldman Sachs Group asked Mr. Foley several times to provide fresh funds or additional collateral for personal loans the bank had extended to him, the people said. The company’s share price has fallen nearly 95% from its $160 peak in December 2020.

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October 11, 2022
WSJ News Exclusive | Bio-Rad Laboratories in Talks to Combine With Qiagen

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Bio-Rad Laboratories is in talks to combine with fellow life-sciences company Qiagen NV in a deal that would be worth more than $10 billion, according to people familiar with the matter.

The talks have been going on for a while but any agreement isn’t likely for another few weeks or more—and there may not be one.

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October 10, 2022
Ford stock is now a ‘sell’ at UBS as an oversupply problem looms

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Shares of Ford Motor Co. were hit hard Monday by UBS analyst Patrick Hummel’s recommendation that investors sell, as the auto industry is facing a worrisome U-turn from undersupply to oversupply.

Hummel also cut his ratings on several other global auto makers, including General Motors Co.
GM,
-5.59%,
saying that as a recession concerns grow, “demand destruction is no longer a vague risk.”

In addition to all of the data suggesting the economy is slowing, Hummel said growing U.S. dealer inventories, weak used-car pricing, used-car dealer profit warnings and signs indicating deteriorating orders and shorter delivery times make him more cautious on the overall auto industry.

Don’t miss: CarMax stock suffered biggest selloff since the year 2000, as inflation, low consumer confidence lead to big profit miss.

“We think it will only take 3-6 months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented OEM [original equipment manufacturer] pricing power and margins,” Hummel wrote in a note to clients.

As part of his negative industry outlook, he cut his rating on Ford
F,
-7.38%
to sell from neutral and his stock price target to $10 from $13, with the new target implying about 11% downside from current levels.

Ford’s stock sank 7.6% in morning trading. It was trading up just 0.6% month to date, after plunging 26.5% in September to suffer its worst monthly performance since it plummeted 30.6% during pandemic-stricken March 2020.

Hummel noted that Ford has already warned about having more vehicles in inventory than expected, and above payments to suppliers running about $1 billion higher than projected, so he sees little margin left for negative surprises in terms of fourth-quarter deliveries and supply costs.

Hummel cut his 2023 adjusted earnings-per-share estimate by 61% to 52 cents a share, to reflect a $6.5 billion drop in price and sales mix. The compares with the current 2023 FactSet EPS consensus of $1.87.

“This sounds very negative, but Ford gains $19 billion in price alone since the beginning of 2020,” Hummel wrote.

Also read: Ford again raises price of F-150 Lightning electric pickup.

Read more: Ford September sales fall as drop in trucks offsets near tripling in EVs.

Meanwhile, GM’s stock dove 6.9% in morning trading toward a three-month low, and shares have shed 2.5% so far this month after tumbling 16% last month.

Hummel downgraded GM to neutral from buy, and dropped his price target by 32%, to $38 from $56.

The rating remains above Ford’s, because unlike its rival, Hummel noted that GM has had “no hiccups” in its third-quarter production schedule and therefore a “solid” quarterly report is expected. However, the downgrade reflects the fact that GM is “not immune” to a downturn in the industry.

Separately, Hummel also cut his stock-price target on Tesla Inc.
TSLA,
-0.16%
to $350 from $367, saying that following a third-quarter volume report that was below expectations, it will be “more challenging” for the electric-vehicle maker to meet its 2022 delivery growth target.

However, Hummel reiterated his buy rating on Tesla, as he believes the EV maker is best positioned to use pricing as the tool to fill its factories.

“Overall, the recession outlook should result in moderately lower margins for Tesla than previously expected, but we’re highly confident that by keeping the top line [revenue] momentum, Tesla will even widen the gap vs. competitors in terms of profitability,” Hummel wrote.

Ford’s stock has fallen 3% over the past three months, while GM shares have lost 3.1% and Tesla’s stock has dropped 11.8%. In comparison, the S&P 500 index
SPX,
-1.08%
has declined 7.5% the past three months.

Among other auto makers, he also downgraded both Renault SA
RNO,
+2.41%

RNLSY,
+1.17%
and Volkswagen AG
VOW,
-3.29%
to neutral from buy. He also downgraded auto parts makers Continental AG
CON,
+0.10%
and Faurecia SE
EO,
-3.77%

FURCF,
-3.67%
to neutral from buy.

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October 10, 2022
Elon Musk wants to move forward with his purchase of Twitter. Here’s how some Twitter users reacted.

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Elon Musk sent a letter to Twitter
TWTR,
+22.24%
indicating he intends to move forward with his original proposal that he acquire the company for $54.20 a share, according to a filing from the Securities and Exchange Commission.

The Tesla Inc.
TSLA,
+2.90%
CEO agreed to buy the social media company back in April for $44 billion, but in recent months said he wanted to terminate the deal, publicly citing concerns about bots on the platform. The two sides had been entrenched in a legal battle over the past few months, and a Delaware Chancery Court judge was scheduled to hear arguments on the case in October, a case Wedbush analyst Daniel Ives said Musk was “highly unlikely” to win.

See also: College students who got low grades complained about their ‘dismissive’ professor. Then NYU fired him.

Twitter users reacted to the news on Tuesday afternoon, many of them joking about a potential resolution to the seemingly never-ending Elon Musk Twitter saga.

One Twitter user said she believes Musk will look to reinstate the account of former President Donald Trump, which was banned shortly after the attack on the Capitol on Jan. 6, 2021. Trump has claimed he won’t return to Twitter even if the Musk deal is executed, and he’ll continue to post on his platform, Truth Social.

See also: Trump’s Facebook ban may end as soon as January 2023, Meta executive says

“We’re doing a big platform right now, so I probably wouldn’t have any interest,” the former president said.

Another user tweeted that supporters of the meme crypto dogecoin
DOGEUSD,
+1.11%
are excited by Musk’s move to proceed with the deal. Musk has touted dogecoin on several occasions in the past few years.

Similar to bitcoin, dogecoin is a peer-to-peer, open-source cryptocurrency. It trades under the ticker symbol “DOGE” and features the face of the shiba inu from the popular Doge meme as its logo. Dogecoin was up as much as 9.16% after the Bloomberg news was published.

Musk has not publicly commented on the report, but one Twitter user pointed out that he tweeted about his satellite internet project Starlink after the news broke, but did not mention Twitter in any way.

A report from The Wall Street Journal stated Musk’s legal team relayed the proposal to Twitter’s team “overnight Monday.”

Shares of Tesla Inc. dipped after the news, and are now up just 1.31% during Tuesday’s trading. Shares of the EV maker were up as much as 5.65% on the day before the Musk news.

See also: SPAC backing Trump’s Truth Social hit by news Musk is again offering to acquire Twitter at original price

The news comes a few days after hundreds of text messages from Musk’s phone were made public as evidence in Twitter’s lawsuit.

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October 4, 2022
Buffett’s Likely Successor Buys $68 Million of Berkshire Stock

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Berkshire Hathaway

Vice Chairman Greg Abel, the likely successor to CEO Warren Buffett, bought about $68 million of the company’s shares last Thursday in what appears to be his first purchases of Berkshire stock since he assumed the position in 2018.

In several Form 4 filings Monday with the Securities and Exchange Commission, Abel disclosed that he purchased 168 Berkshire Hathaway (ticker: BRK/A, BRK/B) Class A shares through the Gregory Abel Revocable Trust on behalf of his wife, children, and other family members.

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October 3, 2022