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    Beauty brand Madison Reed bets on women’s sports with UConn basketball partnership

    The University of Connecticut and beauty brand Madison Reed have signed a three-year court-naming rights partnership.
    Madison Reed has also signed NIL deals with four UConn athletes, including star Paige Bueckers, to be brand ambassadors.
    As part of the deal, the sponsored players have agreed to wear Madison Reed hair color.

    Paige Bueckers has kicked off her partnership with Madison Reed by going from blond to “sparkling rose.”
    Courtesy: Madison Reed

    The latest women’s college sports deal comes with a splash — of color.
    The University of Connecticut has struck a deal with beauty brand Madison Reed in a wide-ranging partnership that includes court-naming rights; name, image and likeness deals; and career development opportunities.

    Exact terms of the deal were not disclosed, but the partnership is in the multimillion-dollar range, according to Madison Reed.
    As part of the deal, Madison Reed will sponsor UConn’s Gampel Pavilion and XL Center with court-naming rights for the next three years. The school’s men’s and women’s basketball teams play in these venues.
    The company has also signed NIL deals with four UConn women’s basketball players: Paige Bueckers, Azzi Fudd, Ice Brady and Morgan Cheli. As part of their arrangement, the players will act as brand ambassadors and have agreed to wear Madison Reed color in their hair throughout the span of the deal.
    Madison Reed, founded in 2013, makes in-home and salon hair color. Its products are sold nationwide at Amazon, Ulta Beauty, Target and Walmart.
    Madison Reed founder and CEO Amy Errett, who attended the University of Connecticut and now sits on the board of the UConn Foundation, said the deal is extra meaningful for her. The sponsorship marks the first female and grad-founded brand to gain court-naming rights at UConn.

    Errett said it’s important to shine a light on women athletes and help create opportunities for them both on and off the court.
    “I have a thesis that male athletes kind of get set up — they have car dealerships, they have all sorts of things that happen. That doesn’t happen for female athletes, so we wanted to be the first company that gave them an opportunity,” Errett told CNBC.
    But she also sees it as good business as Madison Reed looks to capture the market of women 18 to 44 — 78% of whom color their hair, the company says — by appealing to fans of women’s sports.

    Madison Reed offers 55+ shades of hair color products
    Courtesy: Madison Reed

    UConn’s men’s and women’s basketball team have a combined 17 national championships. The women’s team is led by star guard Bueckers, who’s playing in her senior season and is expected to be the top draft pick in next year’s WNBA draft.
    “We’re going to get a lot of eyeballs on the court,” Errett said.
    As part of the NIL deal, Madison Reed will also provide the athletes with mentorship opportunities, internships for class credit at UConn and opportunities to franchise a Madison Reed Hair Color Bar in the future.
    The four players named in the deal will also receive cash and equity in Madison Reed.
    “For us, it’s holistic,” Errett said. “We’re trying to set them up to run businesses later on if they choose to and we’re saying our success at Madison Reed translates through your equity being worth more money.”
    Hall of Fame coach Geno Auriemma, who is entering his 40th season as head coach for the UConn women’s basketball team, said he’s a big supporter of the deal for the attention it brings to his program.
    “Partnerships like this with Madison Reed are so important as they propel awareness for women’s sports on a larger scale, while elevating the teams and the athletes who are getting the recognition they rightfully deserve,” Auriemma told CNBC in an email.

    Paige Buckers partners with Madison Reed.
    Courtesy Madison Reed

    While each NIL deal differs with the athletes, the most high profile one will be with Bueckers, who kicked off the partnership by going from blond to sparkling rose using Madison Reed ColorWonder dye.
    The UConn senior has been known for her long, blond locks, but she said she’s actually not a natural blonde.
    “I’ve been a proud wearer of hair color since I was in eighth grade,” Bueckers tells CNBC.
    Bueckers said she’s all about trying new things and finds it fun to experiment with different hair colors. She noted that her favorite color is purple, so she might give that a shot.
    She said she’s excited to promote the brand and keep fans guessing about her hair color — and she may even offer fans the chance to vote on colors.
    Bueckers also said she’s not against convincing Auriemma to give it a shot.
    “I just hope it inspires kids and inspires other people to just not be afraid, to be yourself, express yourself in different ways,” she added.

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    Disney beats estimates as combined streaming services turn a profit

    Disney reported earnings before the bell, topping analyst estimates for revenue and earnings.
    The company’s combined streaming businesses, comprised of Disney+, Hulu and ESPN+, turned a profit for the first time, and beat Disney’s earlier guidance that this would happen in its fourth quarter.
    Disney’s parks and experiences segment felt pressure due to lower consumer demand and inflation.

    Disney reported its fiscal third-quarter earnings Wednesday, topping analyst estimates as its combined streaming businesses turned a profit earlier than expected.
    Here is what Disney reported compared with what Wall Street expected, according to LSEG:

    Earnings per share: $1.39 adjusted vs. $1.19 expected
    Revenue: $23.16 billion vs. $23.07 billion expected

    The company’s total segment operating income increased 19% to $4.225 billion compared with the same period last year, led by the positive results for Disney’s entertainment unit, particularly streaming. 
    Disney’s combined streaming business, which consists of Disney+, Hulu and ESPN+, together turned a profit for the first time — and it happened a quarter earlier than the company had expected.
    The combined streaming business posted an operating profit of $47 million compared with a loss of $512 million in the same quarter last year. However, without ESPN+, the direct-to-consumer streaming unit reported a loss of $19 million.
    Meanwhile, in May, Disney highlighted a slightly different metric, noting that Disney+ and Hulu together turned a profit, but when combined with ESPN+, the streaming businesses suffered a loss.
    Disney recently changed how it reports its segments, with ESPN falling under its sports unit, and Disney+ and Hulu being counted as part of the direct-to-consumer entertainment segment. Disney and its peers have been focused on streaming reaching profitability as the traditional TV business bleeds customers.

    PARAGUAY – 2024/07/14: In this photo illustration, the Disney Plus login page is displayed on a smartphone screen. (Photo Illustration by Jaque Silva/SOPA Images/LightRocket via Getty Images)
    Sopa Images | Lightrocket | Getty Images

    Disney+ Core subscribers — which excludes Disney+ Hotstar in India and other countries in the region — increased by 1% to 118.3 million, despite the company’s earlier guidance it wouldn’t add new customers during the fiscal third quarter. Total Hulu subscribers grew 2% to 51.1 million.
    Revenue for the entertainment segment was up 4% to $10.58 billion, driven largely by subscription revenue growth due to price increases and customer growth for Disney+ Core. The company announced further streaming price hikes on Tuesday. Revenue for the traditional TV networks was down 7%.
    Disney’s overall revenue increased 4% to $23.155 billion compared with the same period last year.
    Revenue for ESPN’s domestic and international business — excluding Star India revenue — increased by 5%, largely due to a big uptick of 17% in domestic advertising, as well as growth in subscription revenue. The ad market has started to rebound in recent quarters, particularly for digital and streaming. ESPN’s operating income was up 4% to $1.09 billion.
    However, while Disney’s entertainment and sports divisions drove earnings, the U.S. theme parks business was impacted by slowing consumer demand and inflation.
    “The portfolio is working well,” Disney CFO Hugh Johnston said. “Yes there was softness in the domestic parks, but the entertainment division’s profit tripled in the quarter.” 
    Disney’s parks have been a key profit driver, and the company has pledged to spend roughly $60 billion on its theme parks over the next decade.
    Revenue for the overall experiences unit, which includes domestic and international parks and experiences, as well as consumer products, was up 2% to $8.386 billion. 
    Operating income for U.S. parks was down 6%, while international parks operating income was up 2%. The company attributed the decrease in operating income at the domestic parks to higher costs driven by inflation, as well as increased technology spending and new guest offerings.
    This carried over from the previous quarter, when the Disneyland Resort in California was under pressure with lower profits, with executives citing similar reasons.
    Last month Comcast’s earnings were weighed down by its Universal theme parks, which the company attributed to increased competition from cruises and international tourism. Despite this, Comcast executives said they remained “bullish” on the business, especially with a new theme park opening in 2025.
    — CNBC’s Julia Boorstin contributed to this report.
    Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.

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    CVS slashes profit outlook on higher medical costs, says top Aetna executive will leave

    CVS Health reported second-quarter earnings that topped expectations but slashed its full-year profit outlook, citing higher medical costs that have been squeezing the U.S. insurance industry. 
    The drugstore chain expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from a previous guidance of at least $7 per share.
    It marks the third consecutive quarter that the company has lowered its 2024 profit guidance. 

    The CVS pharmacy logo is displayed on a sign above a CVS Health Corp. store in Las Vegas, Nevada on Feb. 7, 2024.
    Patrick T. Fallon | AFP | Getty Images

    CVS Health on Wednesday reported second-quarter earnings that topped expectations, but slashed its full-year profit outlook, citing higher medical costs that have been squeezing the U.S. insurance industry. 
    The retail drugstore chain also said Aetna President Brian Kane, the top executive at the CVS-owned insurance unit, will leave the company immediately based on the current performance and outlook for the segment.

    CVS CEO Karen Lynch will take over management of the business and CFO Thomas Cowhey will also help to oversee it. Katerina Guerraz, CVS Health’s chief strategy officer and head of enterprise affairs, will also become the insurance unit’s chief operating officer.
    The company expects 2024 adjusted earnings of $6.40 to $6.65 per share, down from previous guidance of at least $7 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $6.97 per share. 
    CVS also cut its unadjusted earnings guidance to a range of $4.95 to $5.20 per share, down from at least $5.64 per share. 
    It marks the third consecutive quarter that the company has lowered its 2024 profit guidance. 
    CVS said its new outlook reflects continued pressure on its health insurance segment, which is seeing increased medical costs and the “unfavorable impact” of the company’s Medicare Advantage star ratings. Those ratings help Medicare patients compare the quality of Medicare health and drug plans. 

    CVS owns health insurer Aetna. The company’s insurance division includes plans by Aetna for the Affordable Care Act, Medicare Advantage and Medicaid, as well as dental and vision.
    Insurers such as UnitedHealth Group, Humana and Elevance Health have seen medical costs spike as more Medicare Advantage patients return to hospitals for procedures they delayed during the pandemic, such as joint and hip replacements. 
    Medicare Advantage, a privately run health insurance plan contracted by the federal Medicare program, has long been a driver of growth and profits for the insurance industry. But Wall Street has become more concerned about the runaway costs associated with those plans, which cover more than half of all Medicare beneficiaries. 
    Here’s what CVS reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

    Earnings per share: $1.83 adjusted vs. $1.73 expected
    Revenue: $91.23 billion vs. $91.5 billion expected 

    The company posted net income of $1.77 billion, or $1.41 per share, for the second quarter. That compares with net income of $1.90 billion, or $1.48 per share, for the year-earlier period. 
    Excluding certain items, such as amortization of intangible assets and capital losses, adjusted earnings per share were $1.83 for the quarter.
    CVS reported sales of $91.23 billion for the quarter, up 2.6% from the same period a year ago due to growth in its pharmacy business and insurance unit. 
    The company noted that sales in its health services segment, which includes its pharmacy benefit manager Caremark, declined during the second quarter. CVS cited price improvements for pharmacy clients and the loss of a large unnamed client.  

    More CNBC health coverage

    Caremark negotiates drug discounts with manufacturers on behalf of insurance plans and creates lists of medications — or formularies — that are covered by insurance and reimburses pharmacies for prescriptions.
    Tyson Foods in January said it had dropped CVS Caremark and instead chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting in 2024. Months earlier, Blue Shield of California, one of the largest insurers in the most populous U.S. state, also dropped Caremark to partner with Amazon Pharmacy and Mark Cuban’s Cost Plus Drugs company. 
    Those decisions represent a larger upheaval in the health-care industry, as startups and the government work to increase transparency and lower costs for U.S. patients. 

    Pressure on insurance unit

    CVS’ insurance segment generated $32.48 billion in revenue during the quarter, a more than 21% increase from the second quarter of 2023.
    Sales were in line with analysts’ estimate of $32.37 billion for the period, according to StreetAccount. 
    But the division reported adjusted operating income of just $938 million for the second quarter. That is below analysts’ expectation of $962 million for the period, StreetAccount said. 
    The insurance unit’s medical benefit ratio — a measure of total medical expenses paid relative to premiums collected — increased to 89.6% from 86.2% a year earlier. A lower ratio typically indicates that a company collected more in premiums than it paid out in benefits, resulting in higher profitability.
    That ratio came in lower than the 90.1% that analysts had expected, according to StreetAccount. 

    A workers stocks the shelves in a CVS pharmacy store on February 07, 2024 in Miami, Florida.
    Joe Raedle | Getty Images

    CVS’ health services segment generated $42.17 billion in revenue for the quarter, down nearly 9% compared with the same quarter in 2023. 
    Those sales were above analysts’ estimate of $41.25 billion for the period, according to StreetAccount. 
    The health services division processed 471.2 million pharmacy claims during the quarter, down from 576.6 million during the year-ago period. 
    CVS’ pharmacy and consumer wellness division booked $29.84 billion in sales for the first quarter, up more than 3% from the same period a year earlier. That unit dispenses prescriptions in CVS’ more than 9,000 retail pharmacies and provides other pharmacy services, such as vaccinations and diagnostic testing. 
    Analysts had expected the division to bring in $30.22 billion in sales, according to StreetAccount.
    The rise was partly driven by increased prescription volume, CVS said. Pharmacy reimbursement pressure, the launch of new generic drugs and decreased front-store volume, among other factors, weighed on the unit’s sales. 

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    Sahm Rule creator doesn’t think that the Fed needs an emergency rate cut

    Sahm was the economist who introduced the so-called Sahm Rule in 2019.
    It states that the initial phase of a recession has started when the three-month moving average of the U.S. unemployment rate is at least half a percentage point higher than the 12-month low.

    The U.S. Federal Reserve does not need to make an emergency rate cut, despite recent weaker-than-expected economic data, according to Claudia Sahm, chief economist at New Century Advisors.
    Speaking to CNBC “Street Signs Asia,” Sahm said, “we don’t need an emergency cut, from what we know right now, I don’t think that there’s everything that will make that necessary.”

    She said, however, there is a good case for a 50 basis point cut, adding that the Fed needs to “back off” its restrictive monetary policy.
    While the Fed is intentionally putting downward pressure on the U.S. economy using interest rates, Sahm warned the central bank needs to be watchful and not wait too long before cutting rates, as interest rate changes take a long time to work through the economy.
    “The best case is they start easing gradually, ahead of time. So what I talk about is the risk [of a recession], and I still feel very strongly that this risk is there,” she said.
    Sahm was the economist who introduced the so-called Sahm Rule, which states that the initial phase of a recession has started when the three-month moving average of the U.S. unemployment rate is at least half a percentage point higher than the 12-month low.
    Lower-than-expected manufacturing numbers, as well as higher-than-forecast unemployment fueled recession fears and sparked a rout in global markets early this week.

    The U.S. employment rate stood at 4.3% in July, which crosses the 0.5 percentage point threshold. The indicator is widely recognized for its simplicity and ability to quickly reflect the onset of a recession, and has never failed to indicate a recession in cases stretching back to 1953.
    When asked if the U.S. economy is in a recession, Sahm said no, although she added that there is “no guarantee” of where the economy will go next. Should further weakening occur, then it could be pushed into a recession.
    “We need to see the labor market stabilize. We need to see growth level out. The weakening is a real problem, particularly if what July showed us holds up, that that pace worsens.” More

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    Consumer giants from Starbucks to General Mills have one big sales problem: China

    Starbucks reported China same-store sales dropped by 14% in the quarter ended June 30, far steeper than the 2% decline in the U.S.
    “Consumer sentiment in China is quite weak,” McDonald’s chairman, CEO and director Christopher Kempczinski, said of the quarter ended June 30.
    After a “strong start” to the year in China, General Mills CFO Kofi Bruce said the quarter ending May 26 “saw a real souring or downturn in consumer sentiment.”

    Pictured here is a McDonald’s store in Yichang, Hubei province, China, on July 30, 2024.
    Nurphoto | Nurphoto | Getty Images

    BEIJING — A theme emerging in the latest slew of U.S. companies’ earnings reports is a drag from the China market.
    The Chinese economy — home to more than four times the population of the U.S. — has attracted multinational corporations for decades given its large, fast-growing market. But slower growth and intense local competition, amid tensions with the U.S., are now weighing on corporate earnings.

    “Consumer sentiment in China is quite weak,” McDonald’s chairman, CEO and director Christopher Kempczinski, said of the quarter ended June 30.
    “You’re seeing both in our industry and across a broad range of consumer industries, the consumer being very, very much deals seeking,” he added. “In fact, we’re seeing a lot of switching behavior in terms of just consumers, whatever is the best deal, that’s where they end up going.”
    McDonald’s said sales for its international developmental licensed markets segment declined 1.3% from a year ago. The unit includes China, for which the company indicated sales declined but did not specify by how much.

    Chinese companies have also struggled. Nationwide retail sales grew by just 2% in June from a year ago.
    In the mainland China stock market, known as A shares, earnings likely hit a bottom in the first quarter and may “pick up mildly” in the second half of the year, Lei Meng, China equity strategist at UBS Securities, said in a July 23 note.

    Several U.S. consumer giants echoed the downward trend in their latest earnings reports.
    Apple said Greater China sales fell by 6.5% year-on-year in the quarter ended June 29. Johnson and Johnson said China is a “very volatile market” and a major business segment that’s performed below expectations.
    After a “strong start” to the year, General Mills CFO Kofi Bruce said the quarter ending May 26 “saw a real souring or downturn in consumer sentiment,” hitting Haagen-Dazs store traffic and the company’s “premium dumpling business.” General Mills owns the Wanchai Ferry dumpling brand.
    The company’s China organic net sales fell by double digits during the quarter.

    We don’t expect the return to the growth rates that we saw pre-Covid.

    Andre Schulten

    The regional results are also affecting longer-term corporate outlooks.
    In China, “we don’t expect the return to the [double-digit] growth rates that we saw pre-Covid,” Procter and Gamble CFO Andre Schulten said on an earnings call last week. He expected that over time, China would improve to mid-single-digit growth, similar to that in developed markets.
    Procter and Gamble said China sales for the quarter ending late June fell by 9%. Despite declining births in China, Schulten said the company was able to grow baby care product sales by 6% and increase market share thanks to a localization strategy.
    Hotel operator Marriott International cut its revenue per available room (RevPAR) outlook for the year to 3% to 4% growth, due largely to expectations that Greater China will remain weak, as well as softer performance in the U.S. and Canada.
    Marriott’s RevPAR Greater China fell by about 4% in the quarter ended June 30, partly affected by Chinese people choosing to travel abroad on top of a weaker-than-expected domestic recovery.
    However, the company noted it signed a record number of projects in the first half of the year in China.
    McDonald’s also affirmed its goal to open 1,000 new stores in China a year.
    Domino’s said its China operator, DPC Dash, aims to have 1,000 stores in the country by the end of the year. Last week, DPC Dash said it had just over 900 stores as of the end of June, and that it expects first-half revenue growth of at least 45% to 2 billion yuan ($280 million).

    Local competition

    Coca-Cola noted “subdued” consumer confidence in China, where volumes fell in contrast to growth in Southeast Asia, Japan and South Korea. Asia Pacific net operating revenue fell by 4% year-on-year to $1.51 billion in the quarter ended June 28.
    “There’s a general macro softness as the overall economy works through some of the structural issues around real estate, pricing, etc.,” Coca-Cola Chairman and CEO James Quincey said on an earnings call.
    But he attributed the drop in China volumes “entirely” to the company’s shift from unprofitable water products in the country toward sparkling water, juice and teas. “I think the sparkling volume was slightly positive in China,” Quincey said.
    Having to adapt to a new mix of products and promotions was a common occurrence in U.S. companies’ earnings calls.
    “We’ve continued to face a more cautious consumer spending and intensified competition in the past year,” Starbucks CEO Laxman Narasimhan said on an earnings call. “Unprecedented store expansion and a mass segment price war at the expense of comp and profitability have also caused significant disruption to the operating environment.”
    Starbucks reported China same-store sales dropped by 14% in the quarter ended June 30, far steeper than the 2% decline in the U.S.
    Chinese rival Luckin Coffee, whose drinks can cost half the price of one at Starbucks, reported a 20.9% drop in same-store sales for the quarter ended June 30.
    But the company claimed sales for those stores surged by nearly 40% to the equivalent of $863.7 million. Luckin has more than 13,000 self-operated stores, primarily in China.
    Starbucks said its 7,306 stores in China saw revenue drop by 11% to $733.8 million during the same quarter.
    Both companies face many competitors in China, from Cotti Coffee on the lower end to Peet’s on the higher end. The only public disclosures regarding Peet’s China business described it as “strong double-digit organic sales growth” in the first half of the year.

    Bright spots

    Not all major consumer brands have reported such difficulties.
    Canada Goose reported Greater China sales grew by 12.3% to 21.9 million Canadian dollars ($15.8 million) in the quarter ended June 30.
    Athletic shoe brands also reported growth in China, while warning of slowdown ahead.
    Nike reported 7% year-on-year growth in Greater China revenue — nearly 15% of its business — for the quarter ended May 31.
    “While our outlook for the near term has softened, we remain confident in Nike’s competitive position in China in the long term,” said Matthew Friend, CFO and executive vice president of the company.
    Adidas reported 9% growth in Greater China revenue for the quarter ended June 30. The region accounts for about 14% of the company’s total net revenue.
    CEO Bjorn Gulden said on an earnings call that Adidas was taking market share in China every month, but local brands posed fierce competition. “Many of them are manufacturers that go then straight to retail with their own stores,” he said. “So the speed they have and the price value they have for that consumer was different than it was earlier. And we are trying to adjust to that.”
    Skechers reported 3.4% year-on-year growth in China in the three months ended June 30.
    “We continue to think China is on the road to recovery,” Skechers CFO John Vandemore said on an earnings call. “We expect a better second half of the year than what we’ve seen thus far, but we are watching things carefully.”
    — CNBC’s Robert Hum and Sonia Heng contributed to this report. More

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    The case for buying bonds right now

    Investors may want to consider bonds to help navigate the market’s recent volatility.
    Joanna Gallegos, BondBloxx co-founder and CEO, recommends prioritizing income and high-yield bonds.

    “It can be really important to start looking at fixed income as you start to diversify and manage more risk,” she told CNBC’s “ETF Edge” on Monday.
    Gallegos also suggests moving out on the yield curve.
    “Fixed income is very different today than it was two years ago,” she said. “We’re at the end of the great rate hike. So, rates are high, and that makes a lot of difference in a portfolio today than it did when we started out with rates being almost at zero.” 

    Arrows pointing outwards

    PIMCO’s Jerome Schneider, who manages one of the biggest actively managed bond exchange-traded funds in the world, also advises investors to look toward bonds.
    “They’re entering these market conditions with a generally underweight posture to fixed income,” the firm’s head of short-term portfolio management said. “What we’re seeing here is that there are better risk-adjusted returns by being an actively managed, fixed income diversified portfolio than there have been in many years.”

    Schneider predicts the Federal Reserve will start cutting rates this year and warns money market funds will likely see yields ebb “pretty quickly.”
    “Favoring the front part of the yield curve is a place that we think is … most attractive at this point in time,” Schneider said. “In the 2-, 3-, [and] 5-year spaces, there’s plenty of opportunities across diversified portfolios to look.”

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    Rivian tops Wall Street’s second-quarter expectations amid cost cuts

    Rivian Automotive beat Wall Street’s top- and bottom-line expectations for the second quarter.
    The electric vehicle maker, which is still losing thousands of dollars for every vehicle it makes, has been focused on reducing costs.

    Workers assemble second-generation R1 vehicles at electric auto maker Rivian’s manufacturing facility in Normal, Illinois, U.S. June 21, 2024. 
    Joel Angel Juarez | Reuters

    Rivian Automotive beat Wall Street’s top- and bottom-line expectations for the second quarter as the electric vehicle maker continues to take costs out of its business.
    Here is how the company did, compared to estimates from analysts polled by LSEG:

    Earnings per share: Loss of $1.13 adjusted vs. loss of $1.21 expected
    Automotive revenue: $1.16 billion vs. $1.14 billion expected

    The company’s net losses widened during the second quarter to $1.46 billion, or a loss of $1.46 per share, compared with a year earlier of $1.2 billion, or a loss of $1.27 per share.
    Its adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA was about level from the same period as a year ago at a loss of $860 million.
    Rivian on Tuesday reaffirmed its 2024 guidance of 57,000 total units of production, a loss of $2.7 billion in adjusted EBITDA and $1.2 billion in capital expenditures. It also said it remains on track for a positive gross profit during the fourth quarter.
    Through the first six months of the year Rivian produced about 23,600 vehicles, including only 9,162 during the second quarter due to downtime at the company’s plant to retool and reduce costs.
    Rivian said a majority of the vehicles sold during the second quarter were from inventory prior to the production cost cuts, meaning most efficiency gains were not realized during that time.

    The second-quarter results come more than a month after Rivian held an investor day that focused on cost-cutting efforts, efficiency gains and in-house technologies and software. The event came days after Rivian announced plans for Volkswagen to invest up to $5 billion in the EV startup, starting with an initial investment of $1 billion.
    Shares of Rivian are off 37% this year amid slower-than-expected demand for EVs as well as Rivian’s significant cash burn. The stock closed Tuesday at $14.80, up 1.3%.
    Rivian, which is still losing thousands of dollars for every vehicle it makes, has been focused on reducing costs. Rivian CEO RJ Scaringe said in June that efficiencies earlier this year in products and manufacturing are expected to lead to 20% material cost reductions in its current vehicles, followed by 45% targeted reductions in its upcoming “R2” vehicles, which are projected to begin production in early 2026.
    Rivian’s expenditures through the first half of the year were $537 million, including $283 million during the second quarter.
    Rivian ended the second quarter with $9.18 billion in total liquidity, including $7.87 billion in cash, cash equivalents and short-term investments.
    Correction: Rivian’s net loss during the second quarter was $1.46 billion. This amount was incorrectly stated in a previous version of the article. More

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    Federal safety hearing over 737 Max blowout puts Boeing, Spirit AeroSystems factories in spotlight

    Boeing and its fuselage supplier Spirit AeroSystems are facing a two-day safety hearing that started Tuesday.
    The NTSB released more than 3,000 pages of documents, including transcripts of interviews with Boeing and Spirit AeroSystems employees, as well as from pilots, flight attendants and executives.
    A Boeing safety executive said the company is working on a design change to avoid a repeat of the midair blowout.

    Jennifer Homendy, Chair of the National Transportation Safety Board, speaks during investigative hearing, into the blowout of a left mid exit door plug on a Boeing 737-9 MAX during Alaska Airlines Flight 1282 flight on January 5, 2024, at the National Transportation Safety Board headquarters in Washington D.C. United States on August 6, 2024. (Photo by Bryan Olin Dozier/Anadolu via Getty Images)
    Bryan Olin Dozier | Anadolu | Getty Images

    A Boeing safety executive told a federal safety hearing on Tuesday that the company is working on design changes to avoid a repeat of the near catastrophic blowout of a door plug from a practically new 737 Max 9 at the start of the year.
    The National Transportation Safety Board — the body in charge of aviation accident investigations in the U.S. — released more than 3,000 pages of documents ahead its full two-day hearing about Flight 1282, including interviews with employees at Boeing and its beleaguered fuselage maker Spirit AeroSystems, some of which pointed to rework.

    “I just want a word of caution here, this is not a PR campaign for Boeing,” NTSB Chair Jennifer Homendy said. “This is an investigation on what happened on Jan. 5. Understand?”
    Bolts that were meant to hold the door in place weren’t attached, according to preliminary investigation results. While there were no serious injuries, the accident put the spotlight back on Boeing’s safety procedures and a series of manufacturing flaws that required changes at the company’s factories, including what led up to the door plug getting removed, but not secured last year.
    “They are working on some design changes that will allow the door, the plug, to not be closed if there is any issue, until it is firmly secure,” said Elizabeth Lund, who heads safety for Boeing’s commercial airplane unit. The changes would be implemented within the year, Lund said.

    An exhibit displayed during an investigative hearing by the National Transportation Safety Board (NTSB) in Washington, DC, US, on Tuesday, Aug. 6, 2024. 
    Al Drago | Bloomberg | Getty Images

    The blowout plunged Boeing back into crisis mode and prompted a management shakeup, including the appointment of a new CEO, Robert “Kelly” Ortberg, an aerospace veteran who previously headed Rockwell Collins. He starts on Thursday.
    The accident has also delayed deliveries of new planes to customers, further eroding the iconic U.S. manufacturer’s relationship with airlines — and with regulators.

    Outgoing CEO Dave Calhoun has said Boeing is working to stamp out so-called traveled work, where defective components of the plane need to be fixed, out of sequence, before the aircraft are handed over to customers. Boeing is in the process of buying back Spirit AeroSystems, a move the company says will give it a closer eye on quality.
    “We’ve been put in uncharted waters to where … we were replacing doors like we were replacing our underwear, forward doors, cargo doors, E/E bay doors,” said one Boeing worker, whose name was redacted from testimony. “The planes come in jacked up every day.”

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