Raphael Stevens

GM is expected to report a relatively positive fourth-quarter profit after the markets close Tuesday, capping off an unprecedented year of supply chain issues.
Wall Street analysts expect the Detroit automaker to report $1.19 adjusted earnings per share and revenue of $34 billion, according to Refinitiv estimates.
While investors will be monitoring GM’s quarterly results, they’re more interested in the automaker’s guidance for this year.

General Motors CEO Mary Barra speaks at the General Motors Factory ZERO electric vehicle assembly plant on November 17, 2021 in Detroit, Michigan.
Nic Antaya | Getty Images

DETROIT – General Motors is expected to report a relatively positive fourth-quarter profit after the markets close Tuesday, capping off an unprecedented year of supply chain issues that continue to linger in 2022.
Wall Street analysts estimate the Detroit automaker will post $1.19 per share in adjusted earnings and $34 billion in revenue, according to Refinitiv estimates. That revenue would be lower by 9.3% compared with a year earlier, largely due to constrained production caused by an ongoing global shortage of semiconductor chips.

GM’s fourth-quarter adjusted EPS is expected to be its lowest of the year, and down from $1.93 from the fourth quarter of 2020.
While investors will be monitoring GM’s quarterly results, they’re more interested in the automaker’s guidance for this year as well as insights on outside factors that could impact the company in 2022.
Here’s more on those issues and other things investors should know about ahead of GM’s fourth-quarter results after the markets close Tuesday.

Guidance

Wall Street is waiting for the company’s 2022 guidance. Due to the semiconductor chip shortage, inflation and other outside factors, analysts expect this year to be a bumpy, yet promising, one for the automotive industry.

Last quarter’s earnings “will take a back seat to 2022 guidance” which we expect to be at or below current expectations to start the year, RBC Capital Markets analyst Joseph Spak said in an investor note. “Positioning will matter as we get closer, but broadly, lower guidance could be a clearing event for the path to play autos for volume recovery.”

GM CFO Paul Jacobson told investors at a Credit Suisse conference in December that the company expects “another strong year” in 2022.
Wall Street analysts expect GM and other automakers to be conservative in their earnings guidance this year, continuing a trend from 2021.
Analysts estimate GM will earn $6.93 per share in 2022, according to average estimates compiled by FactSet. That compares with expectations of $6.83 in 2021, including $5.67 per share through the first three quarters of 2021.

Q4 earnings

In December, Jacobson said fourth-quarter results were coming in stronger than expected and increased GM’s adjusted earnings forecast for the year to about $14 billion, up from guidance that was already raised once to a range of $11.5 billion to $13.5 billion.
The new guidance pleased investors and Wall Street analysts who were disappointed when executives said the company would perform at the “high end” of its guidance range when it announced third-quarter results in October.

GM’s initial adjusted earnings guidance for the year was between $10 billion and $11 billion as it tried to forecast the impact of the ongoing semiconductor chip shortage.
GM reported an adjusted pretax profit of $3.7 billion for the fourth quarter of 2020. Revenue was $37.5 billion during that quarter.

Chips

When increasing the automaker’s guidance, Jacobson cited solid vehicle pricing, resilient consumer demand and an improving supply of semiconductor chips. However, he said GM doesn’t anticipate its vehicle inventory levels to get to any normalized amount until after 2022.
“We expect to see first quarter be probably similar to fourth quarter and then starting to stabilize and improve throughout the second half of 2022 and that’s the way we’re thinking about our budgets and our plans going forward,” Jacobson said.
The parts problem caused GM’s annual U.S. new vehicle sales to decline by 12.9% last year to 2.2 million.
Jacobson said GM hopes to achieve a “normalized run rate” for vehicle production by the end of 2022, followed by more normal inventory levels.

Outside factors

Inflation, higher interest rates and other outside factors such as commodity costs are expected to continue to impact the global auto industry in 2022. Investors will want to know more on how these topics are expected to impact GM’s business this year.
“In our view, the single biggest risk to our volume forecasts is that the broader economic environment and health/confidence of the consumer remains very much unclear,” BofA Securities analyst John Murphy said in a recent investor note.

Elaine Buckberg, GM’s chief economist, called inflation “the biggest cloud on the horizon” for the economy during an event last month, according to the Detroit Free Press.
Buckberg also has said the automaker expects a modest rise in interest rates this year as the Federal Reserve normalizes policy.
After GM’s shares soared 40% in 2021, they declined 10% in January. The stock closed Monday at $52.73 a share, up by 5%.
 — CNBC’s Michael Bloom contributed to this report.

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Bob Johnson told CNBC on Tuesday the Biden Administration needs to take additional steps in its Build Back Better plan to tackle the wealth gap between Black and white Americans.
“Closing the Black wealth gap is not a job. It’s not giving us more consumption money to spend. It’s giving us more access to wealth sustainability,” Johnson said.
“That means you got to put more capital at the disposal of Black business men and women who want to create jobs, create wealth, create growth opportunities,” he added.

BET founder Bob Johnson told CNBC on Tuesday the Biden Administration needs to take additional steps in its Build Back Better plan to tackle the wealth gap between Black and white Americans.
“What I look at is, what can you do to increase Black wealth? And that means you got to put more capital at the disposal of Black business men and women who want to create jobs, create wealth, create growth opportunities,” Johnson said. “That’s what was missing in the Build Back Better Act.”

Johnson, 75, made history as America’s first Black billionaire when he sold BET to Viacom in 2001. Shortly after the sale, he started the investment firm The RLJ Cos. He’s no longer on the Forbes billionaires list.
As a thought leader in the Black community, Johnson last year said that Black History Month — in February each year — should focus more on future opportunities.
In Tuesday’s interview on “Squawk Box,” Johnson said the $1.75 trillion Build Back Better bill “was never targeted to how do you close the Black wealth gap.” It also fails to implement provisions that would be cost-free yet still help Black Americans accumulate savings, he added.
The outspoken entrepreneur has criticized Democrats and Republicans alike for not doing enough to address enduring inequities for Black Americans. In 2020, he called for $14 trillion of reparations for slavery and suggested Black Americans form their own political party.
Car affordability, for example, would dramatically reduce the 401(k) cash-outs that Black Americans have to make when they change jobs, Johnson told CNBC. Mandating all companies to implement auto affordability would over a generation put more than $1 billion of into Black Americans’ retirement savings, he added.

“Closing the Black wealth gap is not a job. It’s not giving us more consumption money to spend. It’s giving us more access to wealth sustainability,” Johnson said. 
The Build Back Better plan stalled in December after Sen. Joe Manchin, D-W.Va., said he wouldn’t vote for the bill, which needs every Senate Democrats’ support to become signed into law. The legislation has already passed the House. Biden recently said he plans to break up the bill to first pass spending of more than $500 billion to tackle climate change.
Johnson has also rallied for Congress to enact the Better Opportunity and Outcomes for Socially Disadvantaged Talent, or BOOST, Act, calling it Tuesday the “most significant way to direct capital to Black businesses. 
The bill proposes to provide $30 billion to companies that invest in businesses owned by people of color, and give tax deductions to those who eventually sold their shares in those businesses once they became valuable.
Johnson also said he’s put his advocacy for reparations on the backburner, saying that neither side of the political aisle has offered strong support for the idea.

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Bud Light Seltzer’s Super Bowl ad spotlights its new line of hard soda and stars celebrity chef Guy Fieri.
The hard seltzer category has seen growth slow in recent months, and Bud Light Seltzer’s market share is deteriorating, according to J.P. Morgan.
The commercial will air during the Super Bowl on Feb. 13.

Guy Fieri in Bud Light Seltzer Hard Soda’s Super Bowl commercial
Source: Bud Light

Bud Light Seltzer is hoping that a Super Bowl ad starring celebrity chef Guy Fieri will help jump-start sales in an increasingly crowded drinks category.
The commercial, which the brand says will mark Fieri’s first-ever Super Bowl ad appearance, plays off of the Food Network host’s well-known catchphrase: “Welcome to Flavortown.”

It’s a good match with Bud Light Seltzer Hard Soda, according to Anheuser-Busch InBev, because it doesn’t contain sugar or caffeine but does have “the loudest flavors ever.” The commercial shows partygoers reaching into a fridge that takes them to the “Land of Loud Flavors,” where Fieri is the mayor.

“These are big launches, so to be able to have the platform of the Super Bowl with a product like that and Guy Fieri … is really special for us,” said Andy Goeler, vice president of marketing for Bud Light. “This is the 40th year in the Super Bowl for Bud Light.”
Companies often use Super Bowl ad space to spotlight new products. Although National Football League viewership declined last year, advertisers are hard-pressed to find other events with such large audiences.
And the timing seems right for Bud Light Seltzer Hard Soda, which launched its variety pack of citrus, orange, cola and cherry cola flavors in January. It’s the latest iteration under the Bud Light Seltzer brand, which debuted about two years ago.
NBC is charging as much as $6.5 million for 30-second ad spots for this year’s NFL championship game, which takes place on Feb. 13.

For Bud Light Seltzer, the high price tag could be worth it. After several years of skyrocketing growth, the pace of hard seltzer sales gains has slowed, dealing a blow to some companies.
Truly owner Boston Beer, for example, saw its stock value cut in half over the past 12 months as the company’s rosy projections for hard seltzer sales never came to fruition. Euromonitor International estimates that the U.S. hard seltzer sales category increased just 35.1% in 2021 after being up 64.1% in 2020 and 126.5% in 2019.
As growth lags, competition has ramped up, putting seltzer brands in a fierce battle for market share. J.P. Morgan estimates that Bud Light Seltzer’s share of the hard seltzer market is deteriorating, falling by 4.1% to 8.2% in the four weeks ended Dec. 4 compared with the year-earlier period.
MKM Partners analyst Bill Kirk wrote in a note to clients that he predicts Bud Light Seltzer and Constellation Brands’ Corona Seltzer will get pulled from the market in 2022.
Despite its shrinking share, Bud Light Seltzer is the No. 3 seltzer in the market, trailing just White Claw and Truly. AB InBev’s other hard seltzer brands, Bon V!v and Natural Light Seltzer, have a much smaller share of the market.
“We’re investing in a Super Bowl ad for a brand new product, so it’s a big commitment,” Goeler said. “We believe in it, and we’re going to keep investing in it and building it into a significant part of our portfolio.”
Bud Light’s parent company is planning to run Super Bowl ads for its other brands as well. Bud Light Next, the company’s new zero-carb beer, will make its debut after launching recently. And longtime Super Bowl staple Budweiser will return after sitting out last year’s game. Cutwater Spirits and Michelob Ultra will also air Super Bowl ads.
Shares of AB InBev are roughly flat over the last 12 months, giving it a market value of $109 billion.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

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PepsiCo’s latest drink from Rockstar Energy is infused with hemp seed.
The company wants to draw in younger, female consumers to the energy drink category.
Hemp seed has little to no CBD, and food and beverages infused with it don’t have the same legal restrictions as those made with the cannabis compound.

PepsiCo’s Rockstar Unplugged, infused with hemp seed
Source: Pepsico

PepsiCo’s latest drink from Rockstar Energy wants to help consumers chill out.
Infused with hemp seed oil, spearmint, lemon balm and only about 80 milligrams of caffeine, Pepsi is hoping to attract younger, female consumers with the drink. Men between the ages of 18 and 34 years consume the most energy drinks, according to the National Center for Complementary and Integrative Health.

“It’s a combination of herbals that can help us to relax, but not to sleep,” said Fabiola Torres, PepsiCo general manager and chief marketing officer of its energy business.
Other iterations of Rockstar drinks contain anywhere from 160 milligrams to 300 milligrams of caffeine.
Rockstar Unplugged will be available in slimmer 12-ounce cans in three flavors: blueberry, passion fruit and raspberry cucumber. Beginning Tuesday, the beverage will be available nationwide, starting at $1.99 per can.
This isn’t Rockstar’s first foray into hemp. In April, the brand launched Rockstar Energy + Hemp in Germany. PepsiCo CEO Ramon Laguarta told analysts that month that the German test was specific to that country, which has a sizable hemp market. Torres said Rockstar Unplugged’s formula is quite different, using half the amount of caffeine than the German beverage.
While many consumers may think of hemp seed as synonymous with CBD, there are some differences. Both come from hemp plants, but hemp seed has little to no CBD. It also has much less dramatic effects when consumed.

“[Hemp seed] doesn’t have any functionality, it comes from an herb,” Torres said. “Imagine you’re drinking an herbal tea, with caffeine. That’s it.”
It’s currently illegal for companies to sell CBD-infused food and beverages across state lines, keeping large players like Pepsi and its rival Coca-Cola out of the fray. A number of smaller players with less to lose have introduced their own CBD drinks, but the category remains tiny. Only 1.8% of Americans purchased a CBD drink in the last three months of 2021, according to Brightfield Group.
Hemp seed-infused food and drinks have no such ban in the U.S., but they have failed to catch on like in Germany or other markets.
“This is new territory, so we’re trying to test and learn and really have fun with it,” Torres said.
Shares of Pepsi have climbed 26% over the last 12 months, giving it a market value of $239 billion.

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The 109-year-old company is only planning to produce 5,000 DBX707 vehicles per year and it expects sales to be strongest in the U.S. and China.
The launch of the DBX707 comes a year after Aston Martin launched the standard DBX.
The launch of the internal combustion car comes as many other carmakers announce new electric vehicles.

LONDON — British carmaker Aston Martin Lagonda on Tuesday launched a new non-electric SUV called the DBX707.
“It will be, and is, the greatest ultra-luxury, high performance SUV in the world,” Aston Martin Executive Chairman Lawrence Stroll told CNBC in an interview.

The 109-year-old company is only planning to produce 5,000 DBX707 vehicles per year and it expects sales to be strongest in the U.S. and China, with Europe not far behind, Stroll said.
The launch of the DBX707 comes a year after Aston Martin launched the standard DBX, which has captured a significant percentage of the market, according to Stroll.
“Aston Martin fans said they wanted something with more performance,” Stroll said. “The new vehicle will be the most powerful vehicle in the luxury segment.”
Elsewhere, Rolls-Royce and Bentley have launched their own luxury SUVs, while sportscar brands like Lamborghini and Ferrari have also entered the SUV market.
A lot of the technology in the DBX707 comes from the DBX medical car that was tested on 23 Formula One tracks last year, Stroll said.

An Aston Martin badge bearing the colors of the Union flag, also known as the Union Jack.
Bloomberg | Bloomberg | Getty Images

The launch of the internal combustion powered car comes as many other carmakers announce new electric vehicles.
Stroll denied that Aston Martin is behind on its production plans for electric vehicles, claiming that the company is slightly ahead of schedule.
“We’ve already launched three vehicles,” he said, pointing to a DBX hybrid that’s on sale in China as well as an electric versions of the Valkyrie and Vahlalla models. “We’re well ahead in our journey to ultimately be fully EV by 2025.”
Inflation and currency fluctuations have been affecting businesses worldwide as economies attempt to emerge from the Covid-19 pandemic but Stroll doesn’t expect these macroeconomic factors to have a significant impact on Aston Martin.
“We don’t see any affect,” he said. “Nor do the rest of the luxury sector.”
Unlike other carmakers, Aston Martin has not been hit hard by the chip shortage and other supply chain issues, he added. “We haven’t been affected by any supply shortages,” Stroll said. “We haven’t had problems with these semiconductors like other OEMs have.”

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Sales of real estate in the metaverse topped $500 million last year and could double this year, according to investors and analytics firms.
“There are big risks, but potentially big rewards,” said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.
So far, real estate sales have been concentrated on the “Big Four” — Sandbox, Decentraland, Cryptovoxels and Somnium.

lvcandy | DigitalVision Vectors | Getty Images

Sales of real estate in the metaverse topped $500 million last year and could double this year, according to investors and analytics firms.
Real estate sales on the four major metaverse platforms reached $501 million in 2021, according to MetaMetric Solutions. Sales in January topped $85 million, the metaverse data provider said. It projects that at this pace sales could reach nearly $1 billion this year.

The recent surge in sales was sparked by Facebook’s Oct. 28 announcement that it was rebranding as Meta to focus on the metaverse. Real estate sales surged nearly nine-fold, to $133 million, in November, according to MetaMetric. Sales growth has faded since then, yet January’s sales total will still be more than 10-times the January 2021 levels.
A report from BrandEssence Market Research found that the metaverse real estate market is expected to grow at a compound annual rate of 31% a year from 2022 to 2028.
“There are big risks, but potentially big rewards,” said Janine Yorio, CEO of Republic Realm, a metaverse real estate investor and advisory firm.

‘Big Four’ dominate the space

Republic Realm paid a record $4.3 million for land in the largest metaverse real estate platform, Sandbox. The company is developing 100 islands, called Fantasy Islands, with their own villas and a related market of boats and jet skis. Ninety of the islands sold in the in the first day for $15,000 each and some are now listed for resale for more than $100,000.
For investors, the big question is how to assign value and risk to an asset whose scarcity is artificial and whose future is a blank slate. Over a dozen platforms are now selling real estate in the metaverse, with new ones sprouting up almost weekly. So far, real estate sales have been concentrated on the “Big Four” — Sandbox, Decentraland, Cryptovoxels and Somnium. There are a total of 268,645 parcels on the four platforms, all of varying sizes.

Sandbox dominates the market, with 62% of the available land on the four platforms and three quarters of all land sales in 2022, according to a report from Republic Realm. Sandbox has 166,464 parcels, each 96 meters by 96 meters, and each sold for the Ether equivalent of $12,700 in December.
Decentraland has 90,600 parcels, which are 16 meters by 16 meters, and sold for the Ether equivalent of $14,440 apiece.

Location may still matter

A rush of companies, major brands and investors are pouring into the new land craze, hoping to get in on the ground floor of the next digital Manhattan or Monaco. Yorio said land value in the metaverse will be determined by what owners do with a property — like designing a popular attraction, museum or feature —rather than location.
“You can teleport anywhere so location isn’t as important,” she said.
Yet other investors say that just like in the real world, location in the metaverse is everything when it comes to real estate. Prices for parcels near Snoop Dog’s planned partnership and virtual world in Sandbox are fetching a premium, along with parcels near the Atari development.
Andrew Kiguel, CEO of Toronto-based Tokens.com, recently raised a $16 million fund to invest in metaverse real estate, almost all of which has been allocated to buying land and hiring staff. The company recently spent $2.4 million for land in Decentraland’s fashion district, where the company plans to host fashion events and retail shops.
Kiguel said he is about to announce deals with two North American apparel brands where he is renting space on his property to develop storefronts or experiences. Kiguel said the real opportunity in metaverse land is commercial — renting space and hosting events for companies looking to advertise to a younger digital audience. He said he’s been in talks with accounting firms, investment banks, podcasts and mutual funds to build a presence in the metaverse.
“We’re even talking to companies about putting up digital billboards in virtual conference rooms where people can meet,” he said.
Tokens.com purchased 12 waterfront properties in Somnium that it thinks will increase in value because of its scarcity and visual appeal, Kiguel said.
Still, others say metaverse land is just the latest iteration of the crypto ponzi scheme, luring unwitting investors into projects that may eventually prove worthless. While real land has natural scarcity — hence the old saying “They’re not making any more of it” — virtual land is easily created with code. There is no limit to the number of new metaverse platforms that can launch. Even the big existing platforms can create more land, as Sandbox did when it decided to increase its parcel sizes.
Many point out that previous versions of virtual land grabs, like in “Second Life,” fell far short of their promises.
“Metaverse land sales are generally a pyramid scheme and have been for more than 20 years,” said Edward Castronova, professor of media at Indiana University. “The Metaverse is El Dorado for internet startups. They chase it into the jungle and die.”
While older investors may scoff at metaverse land, Kiguel said, younger consumers and investors are instantly able to see the appeal.
“The problem a lot of people have is that there are generations that have a difficult time attributing value to things that are digital, that you can’t hold and that don’t have weight,” Kiguel said. “The younger generation has no issue with it. Like with NFTs, blockchain technology allows for something to be digital, irreplaceable and scarce. You can hold it, store it, display it and sell it.”

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