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Undervalued UnitedHealth Group Won’t Be For Long 2024-04-16 14:53:00+00:00 - Key Points With shares in rebound mode, UnitedHealth Group provided a double boost for the market. The impacts of the cyber attack were less than feared. The underlying business is solid and cash flow is substantial. 5 stocks we like better than UnitedHealth Group UnitedHealth Group's NYSE: UNH Q1 results were better than expected for two reasons: First, the stock price is now rebounding from long-term lows and deep value territory with ample upside ahead. Second, UnitedHealth analysts see it advancing more than 20% at the current consensus, and consensus may go higher because it's cautious. The consensus estimate moderated ahead of the Q1 release because of fears that proved to be extreme. Now analysts will have to rework their estimates and likely revise price targets to be higher. Because results support the market and the stock has value and yield, bullish momentum could easily take this stock price to the high end of the analysts' range. That would put it back on the trend that began in 2020. Get UnitedHealth Group alerts: Sign Up UnitedHealth Cyber Attack Impact Is Less Than Feared UnitedHealth Group's results are good because of underlying business strength and a less-than-expected impact from the recent cyber attack. The company reported $99.79 billion in net revenue for a gain of 8.6% over last year, outpacing the consensus by 50bps. While 50bps is a slim margin, results could have been far worse given the scope of the attack. Optum grew quickest segmentally at 13% and was offset by slower growth in the core UnitedHealth segment. UnitedHealth's growth was primarily driven by an increase in the number of clients served. The GAAP margin was deeply impacted by the sale of Brazil operations and the cyberattack. The impact of the Brazilian operations is primarily non-cash related to FX-translation losses; the cyber attack's impact is quantified at 74 cents per share, including 49 cents in direct response efforts and 25 cents in business disruption. After adjusting for the effects of Brazil and direct response, but not business disruption, the net operating margin is flat compared to last year, and the EPS is above consensus. The $6.91 outpaced the consensus reported by Marketbeat by 29 cents and is compounded by improved guidance. UnitedHealth issued favorable guidance. The company expects adjusted earnings from $27.50 to $28 compared to the analysts' consensus of $27.53. UnitedHealth's Cash Flow and Capital Returns Are Healthy The cyber attack negatively impacted cash flow in Q1 and will this year, but the effects are limited, less than expected, and will diminish as soon as the current quarter closes. Regardless, the company's cash flow in Q1 was sufficient to weather the storm. Balance sheet highlights include a cash build offset by an increase in debt and liability and a single-digit decline in equity. The net result is leverage near 2x cash and 0.7x equity, both fortress-quality, allowing for dividends and share repurchases. The dividend is above the broad market average, yielding about 1.7%. The payout ratio is low at 30% and compounded by share repurchases. The repurchases in Q1 brought the average adjusted share count down 1.4% and are expected to continue this year. A distribution increase is also likely. UNH has increased for 14 consecutive years and is on track to make the next increase when it declares a payment. UnitedHealth Group Confirms a Bottom The price action in UnitedHealth Group advanced more than 5% following the release to confirm a bottom at $450. The market is in rebound mode and likely to move higher. There is some resistance at the $480 level and short-term 30-day EMA, but it may not last long. A break above that level could take the market up to $500 or $520, where resistance may be substantial. The long-term outlook is good. UnitedHealth should resume its long-term uptrend from that point due to insurance industry trends, margins and capital returns. The question is if it will trend moderately higher from this level or surge to the top of the analysts' range and realign with a previous trend. Before you consider UnitedHealth Group, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and UnitedHealth Group wasn't on the list. While UnitedHealth Group currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
ASML’s Earnings Could Bring The Stock to New Highs 2024-04-16 14:20:00+00:00 - Key Points ASML's upcoming earnings announcement may be the spark to light this kerosene-filled stock. Markets bet that it could be an even bigger growth story than Nvidia, or so do EPS projections indicate. Valuations don't lie; institutions are buying ASML stock for a reason, and not even bears dare short it. 5 stocks we like better than The PNC Financial Services Group The semiconductor industry has become a focus of every investor portfolio in the past few months, as technology stocks have outperformed almost every other sector in the past 12 months. Led by names like Nvidia Co. NASDAQ: NVDA, the semiconductor rally has another set of lungs, one that has yet to gain the recognition it deserves. Fears that Nvidia stock may now be overextended are rising, crystalizing a 14% retracement from its all-time high price of $974 a share; it looks like Nvidia needs a breather before potentially returning to its bullish uptrend. Other investors see the potential opportunity in buying Taiwan Semiconductor Manufacturing Co. NYSE: TSM. Yet, geopolitical risks keep the stock from receiving the valuation it deserves. Get PNC alerts: Sign Up A third, perhaps underrated name, is in ASML Holding NASDAQ: ASML. While not a direct semiconductor manufacturing player, it is the company that essentially every chipmaker relies on, as it makes the necessary lithography equipment to make these chips. It’s All About Risk and Reward While investing in Taiwan Semiconductor may seem a little riskier, especially now that China is threatening to invade Taiwan and compromise the company’s operations, ASML provides investors with a somewhat safe haven. These two names are co-dependent, meaning that TSMC relies on ASML to provide it with equipment to produce some of the world’s latest lithography technology. This enables TSMC to keep up with its less-than-10 nanometer chip designs. Because of this relationship, ASML is directly linked to Nvidia’s success and even the success of other more established brands like Intel Co. NASDAQ: INTC. In fact, Intel is one of ASML’s biggest customers, second only to TSMC. For TSMC, its biggest customers are none other than Nvidia and Apple Inc. NASDAQ: AAPL; investors can connect the role ASML plays in the global supply chain this way. ASML shareholders are exposed to the upside in the semiconductor industry without worrying about all of these geopolitical risks, especially now that TSMC received an $11 billion grant from the U.S. government in an attempt to onshore semiconductor manufacturing. Despite these efforts, it will likely take a couple of years before these factories are built and operational, so bringing TSMC’s production capacity to the U.S. won’t be an overnight job. Because of this, the international risk still stands, but not for ASML. The Gap is Clear For ASML Two things typically drive stock prices: earnings per share (EPS) growth and how markets value these future potential earnings today. For ASML, Wall Street analysts believe that the upcoming quarterly earnings announcement may catalyze the stock to new highs. Expecting to see EPS growth of 42% this year emphasizes this first-quarter announcement, especially since the overall semiconductor industry is looking to grow its earnings at an average rate of 26%. This growth compares to Nvidia’s projected 13% EPS growth in the next 12 months, which is less than half of ASML’s. Not even Taiwan Semiconductor, Nvidia’s leading supplier, stands close to ASML in its 24% projection. On a valuation basis, the forward P/E ratio comes in handy (as it attempts to value tomorrow’s earnings today), making ASML an exciting proposition. Valued at 31.3x forward P/E, ASML is close to Nvidia’s 32.4x valuation. If investors could get more than twice the growth at relatively the same price, why would they choose Nvidia stock over ASML? Those who stick with Nvidia simply rely on momentum and market popularity. Another interesting angle is found in Intel. Analysts boldly bet that its EPS could grow by 115% this year. Yet, markets value these potential future earnings at 17.3x, almost half Nvidia and ASML. The saying “it must be cheap for a reason” applies here. Considering that TSMC, not Intel, received the bulk of funding in the CHIPS and Science Act, markets may not be too confident that Intel will achieve this growth. However, if markets are wrong and Intel does beat, it is ASML who will deliver all the upside without any uncertainty since Intel cannot succeed without ASML. Wall Street’s Vote for ASML Analysts at Wells Fargo & Co. NYSE: WFC boosted their price targets on ASML up to $1,150 a share, calling for a 20% upside from today’s prices. Meanwhile, Nvidia’s consensus price target of $926.3 only gives it 5% to move higher from today. Markets aren’t the only ones buying ASML’s growth story and bidding up the stock. Over the past quarter, The PNC Financial Services Group Inc. NYSE: PNC increased its position in the stock by 4%, bringing its total stake to $24.8 million. Fisher Asset Management, known for its macro value strategies, boosted its position by 2%, totaling a $3.4 billion investment in ASML stock. Last but not least, bears have no intention of stopping the rally, as short interest in ASML stock declined for two consecutive months, bringing its net short dollar amount to levels not seen since April 2023, when the stock reached a high for that year. Before you consider The PNC Financial Services Group, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and The PNC Financial Services Group wasn't on the list. While The PNC Financial Services Group currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
DocuSign and The Case for 66% Upside 2024-04-16 14:20:00+00:00 - Key Points Shares of DocuSign have been rallying since November and the recovery rally continues to gain steam. A run of good earnings, a bullish outlook and analyst upgrades have given the stock a lot of momentum, and it looks like it will continue. Last week saw a fresh analyst upgrade, suggesting there's still more than 60% of upside to be realized from current levels. 5 stocks we like better than DocuSign With as much as a 60% gain since November, you might think that shares of DocuSign, Inc. NASDAQ: DOCU were back to their former glory. An optimist would say that's not a rally to be sniffed at, and there are plenty of signs that it's only getting started. A pessimist, however, would point out that shares are trading down more than 80% from their pandemic-inspired high in 2021 and are currently trading only marginally higher than where they IPO'd in 2018. This is all true, of course, but Wall Street is nothing if not forward-looking, and a stock can only be judged on its performance. Get DocuSign alerts: Sign Up Bullish Tailwinds There is no doubt that DocuSign is doing well. Last month's Q4 earnings from the e-signature software company crushed analyst expectations, while forward guidance from management came in hot as well. The general consensus is that the company had made it through the worst of the storm, was more than justifying the rally in its share price (that started in November), and currently has enough tailwinds to further gains. Analysts were impressed by the significant momentum in DocuSign's AI product portfolio, which should lend itself to strong, profitable growth through 2025. There was also a welcome shift in management's approach to margin expansion, something every investor likes to hear. There were several bullish upgrades and comments in the wake of the report, which helped fuel even more gains, and this trend has continued into April. Recent Analyst Upgrades Last week, Citi named DocuSign a top stock in its Value Creators Focus List, giving it a fresh price target of $93. The fact that equities, in general, are sliding this week has only made that more attractive and could support an upside of some 66% from where shares closed on Monday. JMP Securities also got in on the action, reiterating their Outperform rating last week, their price target of $84 only marginally less bullish than Citi. If DocuSign shares hit either target in the coming weeks, they'd be at their highest levels in over two years. It should be noted that some analysts still haven't come out on the bull side yet and are instead urging caution. For example, the Royal Bank of Canada rated Docusign a Neutral Sector Perform last week, echoing the Hold rating that Needham gave to the stock around the same time. And while UBS upgraded Docusign, it was from Sell to Neutral. Considering a Position The combination of analysts' bullish, yet somewhat cautious, stance might be off-putting for some, especially as DocuSign started the week with a 3.5% drop. To be fair, this seems to be a case of falling with the broader market, as both the benchmark S&P 500 and NASDAQ indices are suffering from a surprise pop in inflation. But there's nothing new here; we've been through the inflation story before. Broadly speaking, the Fed has managed to thread the needle, and while there will be bumps along the way, like what we're seeing now, all signs point to inflation being under control. There's no reason to think there'll be too much of a dimming on the risk-on sentiment, which has helped stocks like DocuSign so much, and investors should be watching closely to see what kind of entry opportunity is opening up. Before you consider DocuSign, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and DocuSign wasn't on the list. While DocuSign currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Buckle Up or Bail Out? The Self-Driving Taxi Market's Risky Ride 2024-04-16 13:45:00+00:00 - Key Points Self-driving taxi companies are pursuing divergent technological paths. Safety incidents and evolving regulations will significantly impact the pace and trajectory of the self-driving taxi market. New players have the potential to disrupt the market, forcing established giants to adapt or risk falling behind. 5 stocks we like better than Alphabet The long-held vision of self-driving taxis zipping through city streets is rapidly going from science fiction to current reality. A fight to dominate this emerging market is underway within the automotive sector. Self-driving sub-sector heavyweights like Waymo (owned by Alphabet NASDAQ: GOOG), Tesla NASDAQ: TSLA and GM Cruise NYSE: GM are accelerating their efforts to be first to market. Meanwhile, a new generation of specialized companies like Aurora Innovation NASDAQ: AUR and Luminar Technologies NASDAQ: LAZR are poised to shake up the status quo with innovative technologies. Get Alphabet alerts: Sign Up The Tech Divide: Mapping the Racecourse A fundamental divergence in technological strategies is evident at the heart of the competition to develop self-driving taxis. Companies like Waymo and Cruise have traditionally favored LiDAR (Light Detection and Ranging) systems. LiDAR employs lasers to generate highly detailed, three-dimensional representations of the vehicle's surroundings. This data-rich approach enhances navigational precision but necessitates a complex array of hardware components, potentially impacting system costs. Conversely, Tesla champions a vision-centric strategy, primarily utilizing cameras to replicate a broader scale of human visual perception. These divergent paths carry profound implications for the market. Investors evaluating the viability of LiDAR-heavy systems must carefully consider the long-term costs associated with these sensor-intensive setups and their impact on scalability. In parallel, the success of Tesla's camera-centric approach rests heavily on continual breakthroughs in artificial intelligence (AI) and computer vision software responsible for real-time image and data processing. The ultimate question is whether LiDAR's precision or a streamlined camera-based system offers superior cost-effectiveness, reliability and adaptability in diverse driving conditions. This question remains a central driver of industry debate and investor decision-making. Prioritizing Safety in the Self-Driving Taxi Race The recent news of Cruise resuming testing in Phoenix with human safety drivers present underscores the industry's emphasis on the cautious integration of self-driving technology. This measured approach acknowledges the inherent complexities of realizing full autonomy. Safety incidents involving Tesla vehicles equipped with driver-assistance systems highlight the critical distinction investors must draw between partially automated features and the fully driverless capabilities envisioned for future self-driving taxis. The self-driving taxi market must carefully balance fostering innovation and ensuring public safety. Safety incidents and the evolving regulatory landscape can significantly influence the sector's trajectory. Regulatory bodies will need to strike a balance between encouraging technological advancements and safeguarding public well-being. Companies that prioritize responsible development and demonstrate a steadfast commitment to rigorous safety standards stand to gain trust and may thrive in the long run. Conversely, those entangled in safety-related controversies risk facing setbacks due to regulatory scrutiny or diminishing public confidence. Market Disruptors The self-driving taxi race has created an opening for a new generation of companies focused on delivering specialized components and software solutions. Aurora Innovation seeks to disrupt the market with its "Aurora Driver" platform. Designed for adaptability across a wide range of vehicle types, this platform has the potential to streamline adoption by various automakers. Simultaneously, Luminar Technologies has zeroed in on developing next-generation LiDAR sensors. Promising enhanced performance at reduced costs, Luminar's technology could reshape the economics of LiDAR-based systems, which are crucial for many self-driving solutions. Investors should evaluate closely how these disruptive companies could reshape the established competitive landscape. Aurora and Luminar's success, should they deliver on their technological promises, could force industry titans to adapt or risk rapidly losing their competitive edge. The long-term viability of these emerging players will likely depend on their ability to forge strategic partnerships with automakers or major self-driving players, as well as their capacity to rapidly scale production and meet the surging demands of the market. Understanding Self-Driving Taxis as a Disruptive Force The potential for self-driving taxis to reshape urban transportation is undeniable. The ripple effects of widespread adoption could reverberate far beyond the traditional taxi industry. Legacy automakers may face disruption as the model of individual car ownership could be challenged. Furthermore, the structure of ride-hailing services and the logistics industry stand to be transformed. For investors, the self-driving taxi market embodies a classic scenario where equally significant risks accompany substantial potential rewards. Companies that successfully navigate the intricate web of technological hurdles, evolving regulations and market acceptance could experience exponential growth in the years to come. Conversely, the self-driving car sector is still full of uncertainty. Breakthroughs in the underlying technology may take longer than optimistic projections. Safety incidents have the potential to derail progress and severely damage public trust. Finally, shifts in the regulatory environment could create sudden roadblocks for market leaders or open up opportunities for their competitors. The autonomous taxi industry has arrived at a crucial turning point. Technological strategies are diverging, pushing the boundaries of safety and regulation. New players are entering the scene, promising to upset the established order. How these dynamic forces unfold will not only shape the future of transportation but also create both winners and losers in the stock market. For investors, the road ahead demands a vigilant approach. Closely monitoring technological advancements, safety track records, market expansion, legislative developments and evolving partnerships will be vital in making informed decisions in this rapidly changing sector. The ability to spot emerging leaders, assess potential risks and stay ahead of the curve will separate those who reap the rewards from those who miss out on the opportunities of this transformative and developing industry. Before you consider Alphabet, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Alphabet wasn't on the list. While Alphabet currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
I.M.F. Sees Steady Growth but Warns of Rising Protectionism 2024-04-16 13:26:28+00:00 - The global economy is approaching a soft landing after several years of geopolitical and economic turmoil, the International Monetary Fund said on Tuesday. But it warned that risks remain, including stubborn inflation, the threat of escalating global conflicts and rising protectionism. In its latest World Economic Outlook report, the I.M.F. projected global output to hold steady at 3.2 percent in 2024, unchanged from 2023. Although the pace of the expansion is tepid by historical standards, the I.M.F. said that global economic activity had been surprisingly resilient given that central banks aggressively raised interest rates to tame inflation and wars in Ukraine and the Middle East further disrupt supply chains. The forecasts came as policymakers from around the world began arriving in Washington for the spring meetings of the International Monetary Fund and the World Bank. The outlook is brighter from just a year ago, when the I.M.F. was warning of underlying “turbulence” and a multitude of risks. Although the world economy has proved to be durable over the past year, defying predictions of a recession, there are lingering concerns that price pressures have not been sufficiently contained and that new trade barriers will be erected amid anxiety over a recent surge of cheap Chinese exports.
Retail Investors Can Follow Goldman Sachs' Moves This Quarter 2024-04-16 13:20:00+00:00 - Key Points Earnings season is here for financial stocks, letting investors gauge the actual state of the stock market. Goldman Sachs is up, and the bank's results align with BlackRock's thinking; the market top isn't here yet. The business cycle is just starting; investors may safely stick to their favorite stocks. 5 stocks we like better than Financial Select Sector SPDR Fund The most expected time of the quarter is here. Earnings season for financial stocks has kicked off, letting investors gain insight into the pulse of the global financial markets. With BlackRock Inc. NYSE: BLK leading the way last week (April 8th), traders are now on edge as they await the rest of Wall Street’s biggest names to confirm—or deny—the trend. BlackRock’s earnings show that its clients and managers prefer to passively invest in the stock market rather than the bond market. Despite rising volatility index (VIX) levels, these ‘masters of the universe’ have faith in the S&P 500 making a new high. Get XLF alerts: Sign Up This week, The Goldman Sachs Group Inc. NYSE: GS adds to the answer anyone is looking for: Is the market still going higher? With Citigroup Inc. NYSE: C betting on a stronger U.S. consumer ahead and seeing increasing investment banking revenues, it looks like the potential interest rate cuts coming from the Federal Reserve (the Fed) are more a reality than a wild bet. Goldman’s Departments: A Clue for Investors Goldman Sachs stock is up by more than 4% to start the trading week, all on better-than-expected first-quarter 2024 financial results. Digging inside the company’s press release gives Main Street a potential guide to adjust portfolios in the coming months. Interest income for the bank increased by 31% over the past 12 months, reflecting Goldman’s ability to monetize a higher interest rate environment during this period. However, on a quarter-to-quarter basis, interest income only rose by 6%, a sign of things slowing down in the interest department. Perhaps a sign of lower interest rates to come, this is only one piece of the puzzle. Investment banking revenue jumped by 32% over the year and 26% on a quarterly basis. Because investment banking activity relies on flexible financing rates, this spark in activity adds to the case for lower interest rates ahead. Within the investor presentation for the quarter, management points to debt underwriting, making up many investment banking fees. This typically means that clients want to refinance their debt or start issuing ‘expensive’ debt before it becomes cheap due to lower interest rates… bingo. Investment management revenue rose only 1% over the quarter, while market-making revenues jumped 71% over the same period. Translation? Clients don’t want to trade the markets passively; they want to get the best deals at the best price, hence a need for market making. On an asset & wealth management front, Goldman invested $330 million into private equity versus $35 million a year ago. This could be Goldman's bet on an improving business cycle because private equity is not liquid, and private businesses tightly follow the business cycle. After all, the bank’s analysts warned of a manufacturing sector breakout in their 2024 macro outlook report. Like BlackRock, Goldman saw a net inflow into its equity products offering (stocks) and a net outflow from fixed-income products (bonds). The Market’s View Over the past 6 months, Goldman Sachs outperformed the broader Financial Select Sector SPDR Fund NYSEARCA: XLF by nearly 10%. Compared against the S&P 500, this gap looks more like 15%. Financial stocks tend to rotate their direction before the rest of the market does, but not all stocks are equal. Investment – not commercial – banks are usually the first to turn, and there's a fundamental reason. From 2020 through 2022, Goldman stock outperformed Citigroup and J.P. Morgan Chase & Co. NYSE: JPM but fell behind from 2023 to now. The reason for this performance rotation lies in the business model itself; Goldman is more of a trading and investment banking firm, while Citigroup and J.P. Morgan have more of a commercial aspect. Commercial products like credit cards, mortgages, and other retail solutions allow these commercial banks to cushion the effect of interest rates on the business cycle. Trading and deal-making (investment banking) are deeply entrenched in the business cycle. After underperforming the commercial banks for the past year, Goldman’s response to its first quarterly earnings could signify a new rotation. The ISM manufacturing PMI index had its first expansionary reading in over a year, indicating that the U.S. business cycle could be on a new uptrend. With consumer sentiment at a three-year high and market indexes flirting with all-time highs again, Goldman’s figures encourage investors to confidently hold on to their favorite stocks for another quarter of potentially higher prices. Before you consider Financial Select Sector SPDR Fund, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Financial Select Sector SPDR Fund wasn't on the list. While Financial Select Sector SPDR Fund currently has a "hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
The Paris Olympics’ One Sure Thing: Cyberattacks 2024-04-16 13:19:42.987000+00:00 - In his office on one of the upper floors of the headquarters of the Paris Olympic organizing committee, Franz Regul has no doubt what is coming. “We will be attacked,” said Mr. Regul, who leads the team responsible for warding off cyberthreats against this year’s Summer Games in Paris. Companies and governments around the world now all have teams like Mr. Regul’s that operate in spartan rooms equipped with banks of computer servers and screens with indicator lights that warn of incoming hacking attacks. In the Paris operations center, there is even a red light to alert the staff to the most severe danger. So far, Mr. Regul said, there have been no serious disruptions. But as the months until the Olympics tick down to weeks and then days and hours, he knows the number of hacking attempts and the level of risk will rise exponentially. Unlike companies and governments, though, who plan for the possibility of an attack, Mr. Regul said he knew exactly when to expect the worst.
Tesla job cuts heighten Wall Street concerns that EV maker faces a demand problem 2024-04-16 12:55:00+00:00 - Companies often see their stock price jump after announcing job cuts, as Wall Street rallies around the prospects for improved efficiency and profits. But that’s not how investors treated the latest news out of Tesla. Shares of the electric vehicle maker tumbled almost 6%, falling to their lowest since May of last year, after CEO Elon Musk told employees the company is eliminating more than 10% of its global workforce. “There is nothing I hate more, but it must be done,” Musk wrote in a memo about the layoffs. Tesla shares have been spiraling since the calendar turned, tumbling 29% in the first quarter, the worst period since late 2022 and the third-steepest drop since the company’s initial public offering in 2010. The stock is 60% below its peak reached in November 2021. Previous layoffs haven’t drawn such market pessimism. In 2018, when Tesla cut 9% of headcount, shares rose more than 3%. In 2022, the stock plunged 9% on initial reports around layoffs but recovered after Musk made clarifying comments days later. The Tesla of today finds itself in a different kind of predicament. Earlier this month, the automaker reported a drop in vehicle deliveries in the first quarter, the first annual decline since 2020 when the Covid pandemic disrupted production. In China, Tesla has faced an onslaught of competition from domestic EV makers, including BYD and the phone maker Xiaomi. Prior to the layoffs, Tesla had been cutting prices and providing other buyer incentives, leading to likely margin erosion. Last week, the company said it’s slashing the subscription price of its premium driver assistance system, marketed as Full Self-Driving (FSD), by half for customers in the U.S. FSD doesn’t make vehicles autonomous and requires an attentive driver at all times. According to the most recent available data from Kelley Blue Book, EV prices across the board were lower by 9.7% year over year in March, thanks to “strong incentive packages.” Tesla’s prices hit bottom in January, although their prices were edging higher in March. Monday’s sell-off wasn’t just about layoffs, as Tesla executives Drew Baglino and Rohan Patel announced they’re leaving the company. Baglino had worked with Tesla since its early years, starting as a firmware and electrical engineer in 2006. Patel joined Tesla in 2016 after working as a senior advisor to former President Barack Obama on climate issues and other matters. Musk said in the layoffs memo that “it is extremely important to look at every aspect of the company for cost reductions and increased productivity.” However, analysts and investors see a demand problem, According to FactSet, 18 analysts have lowered their price targets on Tesla shares this month, while none have gotten more bullish. “Just when you think the news couldn’t get any worse for Tesla, we have EV demand questions that have been popping up over the last few quarters,” Doug Clinton, managing partner at Deepwater Asset Management, said on CNBC’s “Squawk Box” Monday. “We have questions now about whether they’re going to build the low-cost Model 2, price cuts on FSD.” Tesla began to acknowledge earlier this year that 2024 growth might be “notably lower” compared to the prior year. The company has said it’s between two waves of EV growth but has refrained from issuing guidance for 2024. Beyond increased competition and the dynamics of the EV industry, there’s also the unpredictability that comes with Musk. The billionaire has faced scrutiny from multiple regulatory agencies over his dealings at X, formerly Twitter, and shareholders have expressed concerns about whether he’s devoting enough attention to Tesla. Musk serves as CEO of SpaceX, owns X, started artificial intelligence venture xAI and runs brain computer interface company Neuralink and tunneling venture The Boring Co. Meanwhile, he has repeatedly disparaged undocumented immigrants, ranted against corporate diversity initiatives and reposted false conspiracy theories. Musk has previously said that he hadn’t missed any “important” meetings at Tesla, and that he wasn’t “totally missing in action.” Tesla didn’t respond to CNBC’s request for comment.
Bayer seeks legal shield from suits claiming Roundup causes cancer 2024-04-16 12:33:00+00:00 - Des Moines, Iowa — Stung by paying billions of dollars for settlements and trials, chemical giant Bayer has been lobbying lawmakers in three states to pass bills providing it legal protection from lawsuits claiming its popular weedkiller Roundup causes cancer. Nearly identical bills introduced in Iowa, Missouri and Idaho this year - with wording supplied by Bayer - would protect pesticide companies from claims they failed to warn that their product causes cancer, if their labels otherwise complied with the U.S. Environmental Protection Agency's regulations. But legal experts warn the legislation could have broader consequences - extending to any product liability claim or, in Iowa's case, providing immunity from lawsuits of any kind. Critics say it could spread nationwide. "It's just not good government to give a company immunity for things that they're not telling their consumers," said Matt Clement, a Jefferson City, Missouri, attorney who represents people suing Bayer. "If they're successful in getting this passed in Missouri, I think they'll be trying to do this all over the country." Bayer described the legislation as one strategy to address the "headwinds" it faces. About 167,000 legal claims against Bayer assert Roundup causes a cancer called non-Hodgkin's lymphoma, which Bayer disputes. The company has won some cases, settled many others but also has suffered several losses in which juries awarded huge initial judgments. It has paid about $10 billion while thousands of claims linger in court. Though some studies associate Roundup's key ingredient with cancer, the EPA has regularly concluded it is not likely to be carcinogenic to humans. The costs of "defending a safe, approved product" are unsustainable, said Jess Christiansen, head of communications for Bayer's crop science division. The legislation was introduced in targeted states pivotal to Bayer's Roundup operations and is at a different stage in each. It passed the Iowa Senate, is awaiting debate in the Missouri House and was defeated in Idaho, where this year's legislative session ended. Farmers overwhelmingly rely on Roundup, which was introduced 50 years ago as a more efficient way to control weeds and reduce tilling and soil erosion. For crops like corn, soybeans and cotton, it's designed to work with genetically modified seeds that resist Roundup's deadly effect. Missouri state Rep. Dane Diehl, a farmer who worked with Bayer to sponsor the legislation, cited concerns that costly lawsuits could force Bayer to pull Roundup from the U.S. market, leaving farmers to depend on alternative chemicals from China. "This product, ultimately, is a tool that we need," said Diehl, a Republican. Prospect of jobs losses being floated Iowa Gov. Kim Reynolds, a Republican, said in an email the legislation maintains the integrity of the regulatory process and, without it, "Iowa risks losing hundreds of jobs" in Muscatine, an eastern Iowa city where Roundup is mostly produced. The Associated Press is seeking public records on Bayer's communications with Reynolds' office. Bayer, like other companies, hires lobbyists in states to advocate for its interests. The company backs this legislation in the states where "we have a big, direct economic impact," Christiansen said. Roundup's key ingredient, glyphosate, is derived from phosphate mined in Idaho. And St. Louis is the headquarters of its North America crop science division, acquired in its 2018 purchase of Monsanto. Because of that, many of the lawsuits are filed in Missouri. The five lobbyists registered for Bayer in Iowa and three in Idaho is largely consistent with recent years, but the number working in Missouri this year ballooned from four to nine. Lobbyist expenditures exceeded $8,000 in Idaho this year; similar information was not available in Iowa or Missouri. Led by Bayer, a coalition of agricultural organizations called Modern Ag Alliance also is spending tens of thousands of dollars on radio and print advertisements claiming that trial lawyers and litigation threaten the availability of glyphosate. On its website, the group asserts that at risk are 500 jobs connected to glyphosate production in Iowa and 800 jobs in Idaho. Bayer stopped short of threatening closures. The Iowa facilities, including in Muscatine, "are very critical facilities to our business, so we'll remain at some sort of support level," Christiansen said. Crux of the matter At issue in the lawsuits and legislation is how Bayer - and any other pesticide company - communicates with consumers about the safety of its products. Companies are required to register products with the EPA, which evaluates - and then reevaluates every 15 years - a pesticide and its label. The EPA reiterated in 2020 that glyphosate used as directed posed no health risks to humans. But a federal appeals court panel in 2022 ruled that decision "was not supported by substantial evidence" and ordered the EPA to review further. The debate over glyphosate escalated when a 2015 report by the International Agency for Research on Cancer, part of the World Health Organization, said it's "probably carcinogenic to humans" based on "limited" evidence of cancer in people and "sufficient" evidence in study animals. Based on that international report, California sought to add a cancer warning label to products containing glyphosate. But a federal appeals court ruled against California last November, concluding such a warning wasn't factual. Christiansen emphasized that many regulatory agencies worldwide agree with the EPA and insisted Bayer has to stick to EPA labeling to ensure it isn't providing false or misleading information. She added that the company is transparent in the information it does provide. Critics of the legislation aren't convinced, citing examples such as opioids and asbestos that had been deemed safe for use as directed - until they weren't. There also are concerns that the legislation could stifle any product liability claim since most such claims rely on the argument that a company failed to warn, said Andrew Mertens, executive director of the Iowa Association for Justice, an organization for trial lawyers. Jonathan Cardi, a product liability and torts expert at Wake Forest University School of Law, also said a strict reading of the Iowa legislation extends beyond liability claims and "the way it's drafted makes it interpretable to mean nobody could bring any suit." In lobbying lawmakers and in speaking with the AP, Bayer representatives disputed that the legislation would cut off other legal actions. Several legal experts said the legislation is unlikely to affect the 18,000 lawsuits already pending in Missouri's capital of Jefferson City and wouldn't prevent similar claims in states that don't adopt similar legislation. In Idaho, the Republican-led Senate narrowly defeated the bill amid concerns about relying on federal agencies' safety standards and limiting the ability of harmed individuals to sue. John Gilbert, who farms in Iowa Falls, Iowa, with limited use of Roundup, called Republicans hypocritical for attempting to protect corporate interests after campaigning on standing up for Iowans. The bill "invites a lot of reckless disregard," said Gilbert, who is on the board for the Iowa Farmers Union. "No amount of perfume's gonna make it anything but a skunk."
Bogus 'tax service specialists' duped business owners in latest Covid relief debacle, IRS says 2024-04-16 09:00:00+00:00 - When the pandemic upended daily life in his small Missouri town, small-business owner Scott Volner went into overdrive to keep his employees on the payroll, despite a drop in revenue. Then he started to get bombarded by telemarketers who were claiming to be “tax service specialists,” telling him he qualified for a special IRS pandemic relief credit. Among hundreds of calls and emails, he signed up with a company and agreed to pay a 10% fee. He ended up with a check for $330,000 — money he plowed back into his business. “They are promoting it, and they have the service to put the whole package together for you so you don’t have to fill out the forms,” said Volner, who runs a fertilizer business in Rolla, Missouri. But it turned out Volner wasn’t eligible for what’s known as the Employee Retention Tax Credit, or ERC, which has very specific and narrow criteria. For one, the credit is available only to business owners based in states where there were mandatory shutdowns. Now Volner has to figure out how to pay back money he has already spent. “It’s going to be a long, hard road to tow to get this all paid back,” said Volner, who had used a company called ERC Specialists, which didn’t respond to requests for comment. Scott Volner. NBC News Volner is among tens of thousands of people caught up in the latest pandemic relief debacle — one the IRS acknowledges is costing taxpayers hundreds of billions more than it should have. Congress said the Employee Retention Tax Credit would cost around $55 billion, but new estimates put the cost at $250 billion, and claims are still pouring in. IRS officials say the program has been a magnet for unscrupulous promoters who took as much as a third of each payout while filing what the IRS commissioner calls “a tsunami of bad claims” on behalf of businesses who never qualified. They say there also has also been a significant amount of outright fraud by people who lied on their applications. “The problem is we have promoters out there who are trying to put one over on small businesses, convincing them they’re eligible for something that they’re not eligible for,” IRS Commissioner Danny Werfel said in an interview. “We have significant concern that promoters and marketers are trying to essentially trick small businesses.” It’s not just promoters and marketers who have sought to deceive the government. A convicted murderer in a California prison is accused of orchestrating a scheme using ERC claims to steal more than a million dollars, some of which he used to throw a party at a $9,000-a-night Las Vegas penthouse and then fly his relatives home on a private jet, according to court documents. Werfel said the IRS has found tens of thousands of claims for businesses that either never existed or didn’t have employees during the pandemic. “There are ways in which you can, unfortunately, trick the IRS,” he acknowledged. The ERC joins a list of pandemic relief programs that have been plundered by fraudsters, with losses reaching as much as $280 billion, or enough to fund the FBI’s annual budget for 25 years. And there aren’t enough FBI and other criminal investigators to catch even 1% of the fraudsters, experts say. The Justice Department last week announced it had charged around 3,500 people and seized $1.4 billion in stolen Covid-19 relief funds — a tiny fraction of the estimated fraud. Werfel, who wasn’t the IRS commissioner when Congress designed the program, described a dynamic that was present in all pandemic relief programs — a desire to get the money out quickly, leading to decreased scrutiny of claims. “When you have an acute situation like a pandemic and emergency, you’re always balancing ‘let’s get funds to people that need it quickly’ versus asking for a bunch of extra paperwork and a bunch of extra proof,” he said. “There are certainly things we need to learn and do better in the future for the next crisis or the next emergency.” The IRS is scrambling to stop the bleeding and to claw back what it can. The agency suspended the processing of ERC claims and says it has launched thousands of audits and at least 400 criminal investigations to go after ineligibility and fraud. It’s also focusing on promoters, six of which have been charged criminally, according to the IRS. So far, the larger promoters who blanketed TikTok with ads haven’t faced charges. Some of those companies raised awareness of the tax credit by featuring celebrities, including Kevin O’Leary of “Shark Tank” and Ty Burrell, who played dad Phil Dunphy on ABC’s “Modern Family.” Neither could be reached for comment. “I’m upset — it’s frustrating and it’s aggravating on multiple levels, because the marketing firms had too much power to be involved in this,” said Michelle Hance, who runs a small audio/visual business in Missouri. She signed up to get the tax credit with Innovation Refunds, and she says she received $13,000 from the federal government, which she recently had to pay back. She said she paid the promoter 25% of the money the IRS paid her, and she now feels misled because it’s now obvious to her that she never qualified. “The promoters got rich,” Werfel told NBC News. “And then you turn around, if you’re the taxpayer, and you say, ‘Promoter, you said no risk,’ and the promoter is gone. They’re abandoning you.” Over the last two months, Innovation Refunds has reported two rounds of layoffs at its Des Moines, Iowa, offices, according to state labor records. A spokesperson for Innovation Refunds said by text message that it would issue clients refunds on the fee the company collected if it had told business owners they qualified for the ERC and the owners then found out from the IRS that they didn’t. “Innovation Refunds is not a tax preparer,” the spokesperson wrote. “Independent tax professionals, to whom Innovation Refunds refers its customers, make ERC eligibility determinations for the businesses they serve. If that independent tax professional determines that money should be returned to the IRS, then we fully support that decision.” The spokesperson said businesses can contact Innovation Refunds “via email” to get money back if they have discovered they are ineligible. IRS scrutiny of ERC promoters will continue, Werfel said. “We’re working with tax professionals that are helping alert us to the types of promoters out there that are driving these types of false claim activities,” he said. “We have criminal investigations underway related to about $3 billion in false claims.” He said the IRS has recovered $500 million in bad claims and is urging Congress to pass legislation to extend the audit period. Without that, the IRS wouldn’t be able to scrutinize claims from 2020. Congress is also considering legislation to repeal the ERC entirely, but it has stalled amid a lobbying campaign to keep it going. Innovations Refunds spent $720,000 lobbying Congress last year, according to Open Secrets, a website that publishes lobbying disclosure records. That company told CNBC it had processed $7 billion in claims. Larry Gray, a CPA in Rolla, Missouri, was among the early voices warning that ERC fraud could become a major problem. He took to YouTube from his office in 2020, sounding the alarm. He also helped Volner and Hance learn they didn’t qualify for the credit. Gray says the responsibility for the mess spans the federal government. “IRS bears a lot of responsibility,” he said. “Congress bears responsibility. Treasury should have got more guidance out.” Early on, Gray said, he realized that anyone could easily defraud the program. “You could put in a fraudulent federal ID number. You could put in fraudulent employees, send it in. … Because everybody’s focused on getting the money out, not seeing if they qualified to get the money.” Soon, third-party promoters sprung up, marketing the tax break. One of the heaviest advertisers was Miami-based Bottom Line Concepts, run by Josh Fox, who boasted online of millions in earnings for his clients, telling companies they were missing out if they didn’t apply for the credit. In a clip posted on TikTok, Fox told an interviewer that he was surprised by how few businesses and elected officials were aware of the tax credit.“It’s amazing how many politicians we speak to who are unaware of the program and when we explain to them that their citizens, the people that own businesses in their town, can typically get hundreds of thousands and potentially millions of dollars back from the federal government,” he said. Fox didn’t respond to multiple messages left at his office in Miami. Many didn’t qualify. In fact, Gray said, the most common way businesses thought they did — if they were significantly affected by government-mandated shutdowns — didn’t apply in many red states where mandatory shutdowns were few and far between. “It appears they didn’t go through the right test or ask the right questions,” Gray said. But so far, when the IRS comes after a business that didn’t qualify, the promoters aren’t the ones on the hook — the businesses are. Scott Volner used the $330,000 he got from the credit to keep employees on the payroll and expand his business, which recycles spent alkaline batteries into fertilizer by chemically extracting the zinc and manganese inside. At the moment, he is trying to persuade the IRS to put him on a gradual repayment plan. Volner said he hasn’t spoken to ERC Specialists since he learned he didn’t qualify for the tax credit because he didn’t think it would do any good. “I feel betrayed, because I think I was sucked into it,” he said.
Stock market today: Most of Wall Street slips as expectations rise for rates to stay high 2024-04-16 08:26:34+00:00 - NEW YORK (AP) — Most U.S. stocks slipped Tuesday, and Treasury yields rose on expectations that interest rates may stay high for a while. The S&P 500 fell 10.41 points, or 0.2%, to 5,051.41. The index deepened its loss from the day before, when it sank under the pressure brought by a jump in Treasury yields. The Dow Jones Industrial Average rose 63.86, or 0.2%, to 37,798.97, and the Nasdaq composite fell 19.77, or 0.1%, to 15,865.25. A 5.2% climb for UnitedHealth helped support the market after the insurer reported stronger results for the first three months of the year than analysts expected. Morgan Stanley was another winner, rising 2.5%, after likewise topping expectations. But the majority of stocks fell as Treasury yields rose following comments by Federal Reserve Chair Jerome Powell. They’ve been climbing rapidly as traders give up hopes that the Fed will deliver many cuts to interest rates this year. High rates hurt prices for all kinds of investments and raise the risk of a recession in the future. Powell said at an event Tuesday that the central bank has been waiting to cut its main interest rate, which is at its highest level since 2001, because it first needs more confidence inflation is heading sustainably down to its 2% target. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said, referring to a string of reports this year that showed inflation remaining hotter than forecast. He suggested if higher inflation does persist, the Fed will hold rates steady “for as long as needed.” But he also acknowledged the Fed could cut rates if the job market unexpectedly weakens. Treasury yields climbed immediately after Powell’s comments. They had already been higher after the Fed’s vice chair made similar comments earlier in the day. Philip Jefferson said his expectation is for inflation to keep easing and for the Fed to hold its main rate “steady at its current level.” That contrasted with his remarks in February, when he said “it will likely be appropriate to begin dialing back policy restraint at some point this year” if things went as he expected. The yield on the two-year Treasury, which tracks expectations for Fed action, shot as high as 5% immediately after Powell spoke and got back to where it was in November. But yields later pared their gains as the afternoon progressed, and the two-year yield drifted back to 4.98%. That’s still up from 4.91% late Monday. Traders are mostly betting on the Fed delivering just one or two cuts to interest rates this year after coming into 2024 expecting six or more. They’re now also betting on a 12.5% probability that no cuts are coming, up from just 1.2% a month ago, according to data from CME Group. The threat of rates staying high for longer hit real-estate investment trusts and utility stocks particularly hard. They pay relatively high dividends and tend to attract the same kind of investors as bonds do. When bonds are paying higher yields, income-seeking investors may camp there instead. Real-estate stocks fell 1.5% for the largest loss among the 11 sectors that make up the S&P 500. Utilities weren’t far behind with a loss of 1.4%. High rates can also translate into more expensive mortgages, and stocks of homebuilders slumped after a report showed they broadly broke ground on fewer sites last month than economists expected. Lennar fell 2.3%, and D.R. Horton sank 2%. Northern Trust slumped 5% after the financial services company reported weaker earnings for the start of the year than analysts expected. Johnson & Johnson sank 2.1% despite topping profit forecasts. Its revenue came in a whisper below expectations. Companies are under even more pressure than usual to report fatter profits and revenue because the other lever that sets stock prices, interest rates, looks unlikely to add much lift soon. The stock of Donald Trump’s social-media company also slumped again. Trump Media & Technology Group fell another 14.2% to follow up on its 18.3% slide from Monday. The company said it’s rolling out a service to stream live TV on its Truth Social app, including news networks and “other content that has been cancelled, is at risk of cancellation, or is being suppressed on other platforms and services.” The stock has dropped below $23 after nearing $80 last month as euphoria fades around the stock and the company made moves to clear the way for some investors to sell shares. In markets abroad, stock indexes tumbled across Asia and Europe as they caught up with the drubbing Wall Street took on Monday. Stock indexes fell 2.1% in Hong Kong, 2.3% in Seoul and 1.8% in London. ___ AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Americans now expect a record $82K to change jobs—and men want nearly $30K more than women 2024-04-16 07:01:00+00:00 - It may be the era of the Big Stay or, depending on who you ask, the Great Talent Stagnation, in which workers just can’t come up with the skills employers are desperately seeking. But that doesn’t mean those workers are willing to jump ship for just any old job. In fact, the salary that Americans say they need to change jobs has jumped to a record $81,822, according to a recent survey from the Federal Reserve Bank of New York. That’s a roughly 8% increase from a year ago and the highest figure in the decade that the New York Fed has been tracking this question as part of its periodic Survey of Consumer Expectations. But pay expectations are very different among different groups of workers—and they are greatest among young, college-educated men who are already making above-average pay, according to the survey. For workers making over $60,000, the lowest pay they say they’ll need to change jobs (known in economic terms as the “reservation wage”) is nearly $100,000, almost double the $51,000 workers making under $60,000 say they’d need to jump ship. And male workers put their reservation wage at $95,500, far more than the $66,300 average pay women workers say they’d need. View this interactive chart on Fortune.com While men’s pay expectations have always been higher than women’s (according to a multitude of surveys), the nearly $30,000 difference is the largest the male-female gap has been in the decade that the Survey of Consumer Expectations has been conducted. To be sure, workers’ wishes are not the same thing as reality. In the same survey, workers who were expecting a job offer said they expected pay of $70,000 on average ($82,000 for men compared to $57,000 for women.) And in the U.S. overall, a household makes $74,000 a year, on average. So what might explain the sudden demand for much higher pay? Blame the rising cost of living, which is driving more and more workers to say they’re worried about issues like income, retirement and health care costs, according to a recent Franklin Templeton survey. This year, financial health eclipsed issues like physical and mental health, the survey found. And while pay has always been one of the major reasons workers work, the cost-of-living crisis has given it renewed salience. “This year in particular the concept of more compensation came out loud and clear,” Jacque Reardon, head of client marketing for retirement, insurance, 529 and wealth management at the company, told Investment News. “I do think inflation has a lot to do with that.” This story was originally featured on Fortune.com
Stock market today: S&P 500 falls back under 5,100 as Big Tech leads stock slide 2024-04-16 05:37:00+00:00 - US stocks flipped to sizable losses Monday as bond yields rose and investors focused on the fallout of Iran's attack on Israel and the continuation of corporate earnings season. The S&P 500 (^GSPC) slid below back below the 5,100 level to close down 1.2%. Its two-day, 2.6% drop is the most significant in over a year. The Dow Jones Industrial Average (^DJI) lost 0.7%. The Nasdaq Composite (^IXIC) fell 1.8% as Big Tech stocks led the declines. All three averages erased earlier session gains. The 10-year Treasury yield (^TNX) touched 2024 highs to hover around 4.63% as traders scaled back bets on the depth of Fed interest rate cuts this year. Stocks have come under pressure in recent days as earnings season got off to a lackluster start and concerns persisted that inflation has stalled in cooling to the Federal Reserve's 2% target. Earlier in the session, investors shrugged off initial concerns of a full-blown war in the Middle East after Iran's direct missile and drone strike on Israel on Saturday. Efforts by the US to encourage Israel not to retaliate appeared to help settle nerves, in part because the well-telegraphed attack allowed damage to be contained. Oil prices pared earlier session losses on Monday as traders awaited Israel's next move. West Texas Intermediate crude futures (CL=F) settled above $85 per barrel, while Brent futures (BZ=F) closed just over $90 per barrel. Goldman Sachs (GS) highlighted the corporate earnings docket Monday, getting big banks back on track. Shares for the Wall Street lender added more than 3% after first quarter profit jumped to beat estimates. Meanwhile, Tesla (TSLA) shares fell over 5% after the electric vehicle maker reduced staff amid a broader EV growth slowdown.
Trump Media stock tanks 18% on move to issue millions of shares 2024-04-16 04:19:00+00:00 - Trump Media & Technology Group (DJT) stock sank 18% to close at $26.61 on Monday after the parent company of Donald Trump's social media platform Truth Social filed to issue more than 21 million shares. Monday's stock slide was an extension of last week's sell-off and highlighted the shares' volatility since Trump Media went public after merging with Digital World Acquisition Corp in late March. Last week, shares tanked more than 20% in one day after an updated regulatory filing from the company showed Trump Media taking on heavy losses and facing "greater risks" associated with the former president's ties to the platform. Trump Media said in its latest filing that more than 21.4 million shares are issuable upon the exercise of warrants stemming from the merger with special purpose acquisition company Digital World. Warrants allow holders to buy shares at a specific price and are often tied to SPAC deals. The company also said it is registering the resale of 146.1 million shares "by the Selling Securityholders." More than 114 million are held by former President Donald Trump. Last week, Trump Media reported sales of just over $4 million as net losses reached nearly $60 million for the full year ending Dec. 31. The company warned it expects losses to continue amid greater profitability challenges. "TMTG has historically incurred operating losses and negative cash flows from operating activities," the filing read. "TMTG expects to continue to incur operating losses and negative cash flows from operating activities for the foreseeable future, as it works to expand its user base, attracting more platform partners and advertisers." Truth Social has accumulated about 9 million users since its inception. The company noted its success largely depends on the "reputation and popularity" of Donald Trump. "TMTG may be subject to greater risks than typical social media platforms because of the focus of its offerings and the involvement of President Trump," the company said, citing risks that include the harassment of advertisers and criticism of Truth Social's moderation practices. "The value of TMTG's brand may diminish if the popularity of President Trump were to suffer." Former President Donald Trump arrives at Manhattan criminal court with his legal team ahead of the start of jury selection in New York on Monday, April 15, 2024. (Photo by Jabin Botsford/Washington Post via AP, Pool) (ASSOCIATED PRESS) The former president founded Truth Social after he was kicked off major social media apps like Facebook (META) and Twitter, the platform now known as X, following the Jan. 6 Capitol riots in 2021. Trump has since been reinstated on those platforms. The stock rose as high as $66.22 per share on March 27. On Monday, the shares were hovering just above $27 apiece. Story continues Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre. Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Click here for the latest stock market news and in-depth analysis, including events that move stocks Read the latest financial and business news from Yahoo Finance
Trump Media stock price plummets Monday as company files to issue millions of shares 2024-04-16 04:02:00+00:00 - Trump Media & Technology Group shares plummeted more than 18% Monday after the company took steps to sell millions of additional shares. Trump Media, the parent company of social media platform Truth Social, filed to register up to 146.1 million shares for sale, including nearly 115 million owned by Trump.The company also listed the potential sale of another 21.5 million shares linked to warrants – contracts that give investors the right to buy or sell a stock at a specific price within a certain time frame. Filing shares for resale is standard among companies that have recently gone public via a merger with a Special Purpose Acquisition Company (SPAC), as Trump Media did last month after merging with Digital World Acquisition Corp. But making more shares available for purchase could curb the value of existing shareholder's stake in the company, which meant the already-volatile stock saw another big swing on Monday. Trump trial live updates: Judge excuses potential jurors who said they can't be impartial. In this photo illustration, Republican presidential candidate former President Donald Trump's social media platform Truth Social is shown on a cell phone on March 25, 2024 in Chicago, Illinois. Trump Media shares were down more than $6 early Monday afternoon, trading at $26.55 on the Nasdaq as of 2:25 p.m. ET. That’s down more than 60% from its peak in late March, after the company made its stock market debut. Next steps for Trump Media Regulatory filings from earlier this month showed Trump Media made about $4 million in revenue and lost more than $58 million in 2023. Its operating losses “raise substantial doubt about its ability to continue as a going concern,” according to an auditor that reviewed the company’s finances. Given the company's performance, some expect it to act quickly with any potential sale. “They’re burning through a lot of cash and their share price is very high now,” said Derek Horstmeyer, a finance professor at George Mason University in Virginia who specializes in corporate finance. “I don’t see any reason why (they wouldn’t jump on this).” Trump Media predicts that exercising the warrants could bring in roughly $247.1 million, according to the company's latest filing. Value of Trump Media Trump Media’s market cap and Trump’s net worth – both tied to the company’s stock – have taken a hit as its stock price has dipped. The company’s market value as of Monday was more than $3.5 billion, down from a peak of nearly $8 billion. As for Trump’s net worth, the former president is no longer listed on the Bloomberg Billionaire’s Index, a list of the top 500 wealthiest people in the world, each worth at least $5.7 billion. His net worth is currently closer to $4 billion, according to Forbes. Story continues Trump owns nearly 60% of Trump Media with 78.75 million shares. He cannot offload his shares until September without approval from the Trump Media board. DJT stock hits turbulence: More volatility ahead for Trump's high-flying Truth Social More volatility expected Experts warned early on about the expected volatility of the company, comparing Trump Media to meme stocks like GameStop and AMC. The company's latest filing notes that its success depends, in part, on the reputation and popularity of Trump, who is currently on trial for allegedly falsifying business records to disguise a hush money payment to a porn star. “I expect the stock price to continue to be highly volatile, with the long-term trend down, but on any given day it might jump up,” University of Florida professor Jay Ritter said. This article originally appeared on USA TODAY: Trump Media shares are down as companies prepares to sell more stock
Gaza war protesters shut down Golden Gate Bridge, block traffic in other cities 2024-04-16 01:20:00+00:00 - Demonstrators protesting the war in Gaza shut down San Francisco’s Golden Gate Bridge for around five hours Monday, as protests were also held in other cities in the U.S. Demonstrators on the famous bridge held a sign that read “stop the world for Gaza” in capital letters. They used vehicles and chained themselves together to block travel lanes on the bridge, the California Highway Patrol said, adding that around 20 people were arrested. NBC Bay Area reported that the bridge was closed for around five hours and that the traffic there was blocked beginning at around 7:30 a.m. The bridge reopened at around 12:15 p.m., the highway patrol said. It’s not the first time pro-Palestinian protesters had blocked traffic on the Golden Gate Bridge to draw attention to the war and their cause. A group blocked traffic on the bridge in February, calling for a cease-fire and demanding the U.S. stop supplying weapons to Israel. On Interstate 880 in Oakland, protesters chained themselves to 55-gallon drums filled with cement, according to the highway patrol. “They are actively working to remove these individuals and lanes will be reopened,” the highway patrol said in a statement. “These individuals will be arrested.” In Chicago, around 40 people were arrested at O’Hare International Airport after a group of protesters obstructed traffic, police said. “Stop sending bombs,” read the stop sign-like badges on the chests of protesters who blocked the expressway leading to O’Hare by connecting themselves to one another with pipes over their arms. The group Chicago Dissenters said the protest date was picked to coincide with the April 15 tax filing deadline. “O’Hare International Airport is one of the largest in the country, and there will be NO business as usual while Palestinians suffer at the hands of American funded bombing by Israel,” the group wrote on social media. New York City police said they were making arrests after protesters blocked traffic on the Brooklyn Bridge. In Seattle, an expressway leading to Seattle-Tacoma International Airport was also blocked, airport authorities there said. The Hamas attack on Israel on Oct. 7 and Israel's subsequent war against the group in Gaza have inflamed passions in the U.S. and in other parts of the world. More than 30,000 people have been killed in Gaza, including thousands of civilians, according to health officials there. More than 1,200 people in Israel were killed in the Hamas attacks, and hostages were also taken.
Homeowners, this week of April is still the best time to sell your house — just don't expect too much 2024-04-15 22:51:00+00:00 - Realtor Alonna Davis has Spring homebuying tips Realtor Alonna Davis has Spring homebuying tips 03:35 For homeowners looking to sell their property this year, spring is still the best time to sell — but you may want to lower your expectations. That's according to a report from Realtor.com which finds that the week of April 14-20 is still the ideal period to sell a house, as buyer demand peaks during the third week of April and there's less competition from other sellers on the market. Home prices are also about 1.1% higher in late April, Realtor.com said, meaning a seller could generate the largest possible profit during that month. But the housing market continues to be challenging for both buyers and sellers this year, as mortgage rates and asking prices continue to climb. The average interest rate on a 30-year home loan was 6.88% on Monday, up from 6.62% in January, according to Freddie Mac. Meanwhile, the national median asking price for a home was $384,500 in February, up 5.7% from a year ago. For anyone selling their home this year, those figures mean that even during the market's prime selling window, they likely will not be getting everything they're asking for, Realtor.com said. "Home prices and mortgage rates remain elevated, so buyers are going to be a little bit more picky and are going to be looking for more flexibility from sellers," Hannah Jones, senior economic research analyst at Realtor.com, said in the report. Home prices rising further out of reach Home prices are growing more unaffordable for the average American, in part because inventory has been low. Homeowners have been hesitant to sell because they would then face buying another property at today's higher mortgage rates. Some homeowners have also watched their home equity grow in value, making them even more reluctant to walk away from that wealth growth. Still, springtime brings with it a fresh batch homebuyers who use those longer days and warm temperatures to visit open houses and place offers. Researchers at real estate data provider ATTOM examined about 51 million single-family and condo home sales between 2022 and 2023 and found that those homes sold for the highest price in April, May and June. Of those three months, sellers tend to get the biggest return in May — 13% above their area's median price. "For sellers, this is your perfect opportunity," Alonna Davis, a realtor in Maryland told CBS Baltimore recently. "Price points are up so if you're thinking about selling make sure your house is in order — get rid of some of those personal items you no longer need — so your home can show well." The Realtor.com study is based on a survey of 1,000 homeowners who plan to sell their home in the next year and 1,000 sellers who sold their home in the past year. Homeowners in the report said they're expecting to sell their property for around $462,000 on average. Sellers preparing to list their home said they were doing so because of family, the need for more space, downsizing and life events such as "a new marriage, child, or divorce."
H&R Block customers experience outages ahead of the Tax Day deadline 2024-04-15 22:35:00+00:00 - Benefits to filing an extension in the final hours of Tax Day Benefits to filing an extension in the final hours of Tax Day 02:34 Waiting until the last day to file their tax returns proved frustrating for some H&R Block customers who experienced tech issues that began Sunday and persisted into most of Monday, hampering their ability to send their 1040s to the IRS before the April 15 deadline. H&R Block late Monday afternoon told CBS MoneyWatch it had resolved an issue "affecting a small number of our downloadable desktop software users." Those impacted "can now e-file their return," the company said. We are aware of an issue preventing some desktop software users from e-filing their returns. Online clients and clients working with our tax professionals virtually or in person are not impacted. — H&R Block Support (@HRBlockAnswers) April 15, 2024 Those unable to file their returns electronically were earlier in the day advised by H&R Block to "try again later today or print and mail their return if that is more convenient." Reports of problems began at about 9 p.m. ET Sunday and continued through Monday before declining at about 4 p.m., according to Downdetector. Thousands of users reported problems with the H&R Block service during that time, the site shows. The regular deadline for filing returns is 11:59 p.m. on Monday in a filer's local time zone, although a few states have later deadlines. Taxpayers can also request an extension, which gives them until October 15 to file. Some H&R Block customers said they received error messages and repeated credit card charges for trying numerous times to file. "Finally! My return was just transmitted successfully. Now to chase them for my 27 attempts that I was charged $19.95 for," one person commented on Downdector's site. The tax-prep software giant in February said it was appealing a Federal Trade Commission ruling that found H&R Block had allegedly marketed products as free before creating hurdles to push them into unnecessary and pricier services.
J&J Braces For Q1 Earnings With Bearish Charts And Patent Cliffs In Play - Johnson & Johnson (NYSE:JNJ) 2024-04-15 21:43:00+00:00 - Loading... Loading... Johnson & Johnson JNJ, will be reporting its first-quarter earnings on April 16. Wall Street expects $2.64 in EPS and $21.4 billion in revenues as the company reports before market hours. Johnson & Johnson stock is down about 9.54% over the past year, and has dropped 5.88% YTD. The company confronts patent cliffs that threaten tens of billions in revenue, yet it’s strengthening its cardiac business by acquiring Shockwave Medical for $12.5 billion. Johnson & Johnson's Stelara is facing increased competition from biosimilars, yet the company is offsetting these challenges with market share gains from newer drugs like Carvykti and Spravato. Meanwhile, strategic acquisitions of Abiomed and Laminar are anticipated to bolster its MedTech segment, countering near-term headwinds. Let’s take a look at how the stock is technically setup, as it heads into Q1 earnings. Also Read: Benzinga’s ‘Stock Whisper’ Index: 5 Stocks Investors Secretly Monitor But Don’t Talk About Yet J&J Stock Technical Setup Ahead Of Q1 Earnings The technical analysis for Johnson & Johnson stock indicates a strongly bearish trend, with selling pressure indicating potential future bearish movement. Chart: Benzinga Pro The share price is below its 5, 20, and 50-day exponential moving averages, reinforcing the bearish sentiment. Additionally, the stock’s price has fallen below its 200-day simple moving average, further signaling a bear trend. Chart: Benzinga Pro The Moving Average Convergence Divergence (MACD) at -2.59 indicator supports a bearish sentiment, although the Relative Strength Index (RSI) at 26.32 suggests J&J stock is deeply oversold. For over a month now, J&J stock has been trading in the lower of the Bollinger Bands, indicating bearish sentiments for both short-term and long-term trends. Investors may want to exercise caution and monitor JNJ’s performance closely amid the current technical setup. J&J Analysts Consensus Ratings Loading... Loading... Ratings & Consensus Estimates: The consensus analyst rating on J&J stock stands at a Neutral, with a price target of $171.95. According to the latest analyst ratings from Cantor Fitzgerald and RBC Capital, Johnson & Johnson’s stock has an average price target of $203.67, indicating a potential 37.15% upside from current levels. Price Action: Shares of Johnson & Johnson were up 0.04% to $147.59 on Monday. Read Next: A Closer Look at 9 Analyst Recommendations For Johnson & Johnson Photo: Shutterstock
Trump Media plunges amid plan to issue more shares. It's lost $7 billion in value since its peak. 2024-04-15 21:38:00+00:00 - After a short-lived honeymoon, former President Donald Trump's media company is experiencing a rough reception on Wall Street. Trump Media & Technology Group — which trades under the ticker DJT, his initials — tumbled 18.4% in Monday trading, a drop that follows last week's 21% plunge. The sharp drop in value comes after Trump Media, whose primary asset is Truth Social, the social media platform, on Monday filed a document with the U.S. Securities and Exchange Commission that opens the door for the future potential sale of millions of shares. The document, called an S-1, relates to warrants held by investors that can be transformed into shares of stock, as well as shares held by company insiders. The filing also includes all the shares held by the former president. Trump, however, remains under a "lockup" deal that largely restricts him from selling his shares for another roughly five months. His son, Donald Trump Jr., who is a director on the board, and CEO Devin Nunes, are also bound by the lockup. The stock plunge has erased billions from Trump's stake — at least on paper. The shares soared when they began trading on March 26, giving Trump's 57% ownership position a value of $6.25 billion. But after DJT's recent slump, that stake is worth $2.1 billion, representing a paper loss of $4.15 billion. Overall, shareholders have lost $7.2 billion in value since the stock touched a high of $79.38 on March 26. The shares tumbled $5.98, or 18.4%, to $26.61 on Monday. When companies issue additional shares, they take on the risk of their stock price coming under downward pressure. That's due, in part, to simple laws of supply and demand — with more stock available, a company's share price tends to fall unless there's a commensurate increase in demand. So far, the former president's supporters comprise a significant part of the company's investor base, with Trump Media CEO Nunes praising their support on Fox Business earlier this month. On Truth Social, some investors said they believed the stock would recover, while others said they were taking advantage of the stock's plunge to buy more shares. "Bought more today just like a lot of you," one member of a Truth Social group dedicated to DJT shares wrote on Monday. "I believe time is our friend. Half a year until election. I can definitely hold until then at the minimum." Other supporters on Truth Social noted that the Monday filing doesn't necessarily mean Trump plans to sell any of his 57% ownership stake in Trump Media. "Trump has NOT signaled intentions to sell his shares," wrote Chad Nedohin, a pastor and musician, on Truth Social on Monday. "There is no new unexpected issuance of new shares. The increase in total shares in the S-1 is for the warrants." S-1 filings are typically filed quickly after a SPAC deal closes, usually within 15 or 30 days, said Kristi Marvin, founder of SPACInsider.com, which specializes in SPAC deals. Trump Media & Technology Group didn't immediately return a request for comment. 200,000 new retail investors Trump, who relies on Truth Social as his primary social media platform, has about 7 million followers on the app, where he frequently blasts his critics and promotes favorable polls. He's also turned to Truth Social to rail about his criminal trial, which began Monday, over accusations of falsifying business records related to a "hush money" payment. About 600,000 retail investors have bought shares in Trump Media & Technology group, with about 200,000 of them buying into the stock within the last few weeks, Nunes told Fox Business earlier this month. He called these small investors "the most amazing part about our company." Those investors have had a wild ride since the stock began trading as DJT on March 26. The shares soared on its first two days of trading, but have since shed more than two-thirds of their value. Such swings have prompted comparisons with so-called "meme" stocks like GameStop, which typically attract individual investors based on social media buzz, rather than traditional metrics favored by investors, such as revenue and profit growth. Last year, Trump Media lost $58 million on revenue of $4.1 million — about half the annual sales booked by a single Chick-fil-A location. —With reporting by the Associated Press.