Raphael Stevens

In this articleWENRetail traders are taking a fresh look at Wendy’s.Shares of the fast-food chain surged about 26% to records on Tuesday after a post in Reddit’s popular WallStreetBets forum pitched Wendy’s as “the perfect stock” for the group on account of its signature products and “effective” social media presence.It’s the latest so-called meme stock that has captured the group’s interest. The growing list includes GameStop, AMC and Bed Bath & Beyond.Two market analysts cautioned investors about getting in on the hype.”I think the reason the Reddit crowd is pushing it up today is because the retail share float is pretty small in Wendy’s, but I can guarantee you nothing changed overnight to change the fundamental story,” Gradient Investments President Michael Binger told CNBC’s “Trading Nation” on Tuesday.Though the company has a “decent business model” and can take advantage of the economic reopening, its stock is trading at a notably high price-earnings multiple for just 3% sales growth, he said.The stock has even broken above its average analyst price target of $27.85, according to FactSet.”We look for a disconnect between valuation and fundamentals,” Binger said. “With price targets being achieved here trading at these levels, I just don’t think it’s a good entry point here. Unless you’re the nimblest of traders, I would just stay away from Wendy’s right here. I think it’s reached a price target and it’s relatively expensive versus other stocks in the group.”Other names in the category are largely more attractive, Chantico Global founder and CEO Gina Sanchez said in the same “Trading Nation” interview.Not only did Wendy’s largely underperform its peers over the course of the coronavirus pandemic, but its expectations coming out of lockdown fall short as well, said Sanchez, also chief market strategist at Lido Advisors.”Their expectations coming out of the pandemic are OK, they’re not bad, it’s a proven business model, but they’re not as good as the rest of the group,” she said.”Brinker — that just didn’t do very well during the pandemic — has huge expectations coming out,” she said. “And so, this stock compared to other stocks just isn’t as attractive.”Disclaimer More

In this articleCMGA employee sprinkles cheese on a burrito at a Chipotle Mexican Grill restaurant in Hollywood, California.Patrick T. Fallon | Bloomberg | Getty ImagesChipotle Mexican Grill has hiked menu prices by roughly 4% to cover the cost of raising its workers’ wages.Across the restaurant industry, chains such as Chipotle, Starbucks and McDonald’s have been increasing hourly pay for employees of company-owned locations in a bid to attract new workers and retain their current ones. Consumer demand has come roaring back for restaurant meals, but the workforce has been slower to return, pushing eateries to sweeten the deal. In May, the leisure and hospitality industries added 292,000 jobs, but employment in those fields is still down by 2.5 million compared with pre-pandemic levels, according to the Department of Labor.In May, Chipotle said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June. Company executives said at the Baird Global Consumer, Technology & Services Conference that they would be passing along the price of raising pay to consumers.”It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up,” CFO Jack Hartung said at the virtual conference. “Otherwise you’ll just lose the staffing gain.”CEO Brian Niccol said the company prefers not to raise its prices but that the move made sense in this scenario.The timing of the price hikes coincides with rising ingredient costs across the restaurant industry as suppliers grapple with the return of demand. For now, Chipotle isn’t planning on further price increases.”Ingredient costs, there’s talk about it. We’ll see where that leads,” Hartung said.Shares of Chipotle were trading up 1.3% on Tuesday. The stock has fallen more than 3% this year, giving it a market value of $37.72 billion. More

Lumber industry veteran Kyle Little told CNBC on Tuesday that it’s a sensible decision to hold off on beginning discretionary building projects due to high wood costs.”The jobs that you have coming up, don’t expect us to go back to what we saw the previous 10 years. That being said, if you can wait, there’s no reason not to,” the chief operating officer at Sherwood Lumber said on “The Exchange.””We do see some relief over the next six to 12 months, still albeit at prices that are much, much higher than prices we’ve experienced in the recent past,” added Little, who’s spent more than a decade at Sherwood Lumber, a privately held New York-based wholesale distributor. He’s also a former lumber trader.Lumber futures have faced significant weakness in the past month following a major move higher during the Covid pandemic. Lumber futures for July delivery fell more than 5% to $1,158 per thousand board feet Tuesday, which is down more than 30% from a record $1,711 on May 10.Despite the recent declines, lumber remains up more than 200% in the past 12 months.In late May, Little told CNBC he expected the current lumber cycle, featuring volatile trading and elevated prices, to remain for “the foreseeable future.” At the time, he stressed that prices could come off their highs but still be above historic averages.He reiterated that view Tuesday, saying the company’s forecast “really has not changed.””We’re in month number 12 of what we believe to be a 24-to-30-month … cyclical bull wave,” Little said. “We really believe the new three-year mean will be much, much higher — almost two times than what we’ve seen the previous 20 years.”The sharp move higher in wood prices has added cost to projects and was cited as one factor behind a drop in housing construction that was reported in April.Little said a pullback in lumber was “inevitable” as higher prices tamed demand.”These builders and our customers are very savvy,” Little added. “They’re instructing their customers: If it doesn’t need to be done today, it might be a better time to take a breather and start this project later in the fourth quarter, possibly in Q1 of 2022.” More

Some of the world’s richest men — Jeff Bezos, Elon Musk, Warren Buffett, Carl Icahn, Michael Bloomberg and George Soros — pay just a tiny fraction of their increasing wealth in taxes, and in some cases pay no taxes in a given year, according to a report Tuesday.ProPublica, citing confidential IRS data it obtained on thousands of wealthy people, reported that the 25 richest Americans “saw their worth rise a collective $401 billion from 2014 to 2018.”But those people paid a total of just $13.6 billion in federal income taxes for those five years, which “amounts to a true tax rate of only 3.4%,” the article noted.In contrast, the median U.S. household in recent years earned around $70,000 annually and paid 14% of that in federal taxes. Couples in the highest income tax rate bracket paid a rate of 37% on earnings higher than $628,300, the report said.CNBC PoliticsRead more of CNBC’s politics coverage:Infrastructure talks fall apart as Biden starts working with a new group of lawmakersJoe Manchin opposes big parts of Biden’s agenda as the Koch network leans on himFrench President Emmanuel Macron was slapped in the faceProPublica pointed out that billionaires, unlike most other people whose earnings come from conventional wage income, often benefit from “tax-avoidance strategies beyond the reach of ordinary people.”And their wealth is often largely based on the rising value of stock and real estate that is not considered taxable unless those assets are sold, the report noted.ProPublica did not disclose how it obtained the tax information cited in the article, but did say that the outlet “went to considerable lengths to confirm that the information sent to us is accurate.” CNBC has not independently verified the information in the report.The article said that according to ProPublica’s calculations, Buffett’s “true tax rate” was just 0.1%, or $23.7 million in taxes he paid on wealth growth of $24.3 billion, during the five-year time frame.During that period, Buffett, CEO of Berkshire Hathaway, reported legally taxable income of $125 million.Bezos, who as founder of Amazon has become the world’s richest person, paid slightly less than 1% in ProPublica’s true tax rate, or $973 million, on wealth growth of $99 billion during the five-year period. Bezos’ actual taxable income during that time was $4.22 billion, the report said.In 2007, Bezos “did not pay a penny in federal income taxes,” and he also avoided any federal income tax liability in 2011, the article said.The world’s second-richest person, Tesla CEO Elon Musk, paid a 3.27% true tax rate, or $455 million, on wealth growth of $13.9 billion, ProPublica said.Musk, who had an actual taxable income of $1.52 billion during the five-year period, paid no federal income taxes in 2018, according to ProPublica.Bloomberg, former New York City mayor and founder of Bloomberg LP, paid a 1.3% true tax rate, or $292 million, during the time period looked at by ProPublica. His actual taxable income was $10 billion, the report said.Soros, an investor, paid no federal income taxes between 2016 and 2018, which was a result of him losing money on his investments, his spokesman told ProPublica.Icahn, another investor, paid no federal income tax in 2016 and 2017, years in which his total adjusted gross income was $544 million, the article said.Icahn told ProPublica that he registered tax losses in both of those years as a result of taking deductions worth hundreds of millions of dollars due to the interest he paid on loans.Asked whether it was appropriate that he had paid no income tax in certain years, Icahn said he was perplexed by the question, ProPublica reported.”There’s a reason it’s called income tax,” Icahn was quoted as saying in the article. “The reason is if, if you’re a poor person, a rich person, if you are Apple — if you have no income, you don’t pay taxes.”He added: “Do you think a rich person should pay taxes no matter what? I don’t think it’s germane. How can you ask me that question?”White House spokeswoman Jen Psaki on Tuesday was asked about the leak of tax information to Pro Publica.”Any unauthorized disclosure of confidential government information by a person with access is illegal, and we take this very seriously,” Psaki told reporters at a news conference.”The IRS commissioner said today that they are taking all appropriate measures, including referring the matter to investigators and Treasury and the IRS are referring the matter to the office of the inspector general, the Treasury inspector general for tax administration, the FBI and the US attorney’s office for the District of Columbia, all of whom have independent authority to investigate”So obviously, we take it very seriously,” she added.Psaki also said that she would not comment on the specific data in the article, but also said, “Broadly speaking, we know that there is more to be done to ensure that corporations and individuals at the highest income are paying more of their fair share.”Read the full ProPublica report here. 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Andrew Clarke, 47, took over as the CEO of the apparel retailer Francesca’s in March 2020.Source: Francesca’sWhen Andrew Clarke was in his late 30s, he was let go from a retail job because of his sexual orientation.”My boss at the time said to me that my lifestyle was incompatible with the company’s values,” said Clarke, now a 25-year veteran in the retail industry who is also one of retail’s few openly gay CEOs.”This was earlier in my career, but it wasn’t that long ago,” the 47-year-old said. “I think for the early part of my career, I very much hid my private life. I knew, in some of my earlier roles, that my boyfriend — who then became my husband — wouldn’t be welcome at company events.”Today, Clarke serves as chief executive officer of the Houston-based boutique clothing company Francesca’s, but that experience is still shaping his decisions.When he decided to pursue the Francesca’s gig in early 2020, he saw an opportunity to turn around an embattled chain that had reported two years’ worth of losses. Francesca’s had found its name on a number of experts’ bankruptcy watch lists. But Clarke never could have predicted that his first day on the job last March would be 10 days before the Covid pandemic forced mall-based retailers, including Francesca’s, to shut their doors for months. A little over a year into being CEO, Clarke finds himself working under new private equity ownership that rescued the brand out of a Chapter 11 filing.”My turnaround opportunity at Francesca’s became very much a fight for survival,” Clarke said. “But I joined Francesca’s because what I saw was a real opportunity for this brand that hadn’t really been successful for two or three years. I felt there was hidden gold.”When the pandemic hit, stuck-at-home consumers weren’t shopping for apparel, which made up more than 55% of Francesca’s sales — with footwear, jewelry, accessories and gifts accounting for the remainder. Francesca’s also had a skimpy showing online, with e-commerce accounting for less than a quarter of its total sales. That hurt the business terribly when its stores were temporarily dark.For the third quarter, ended Oct. 31, 2020, Francesca’s net sales totaled $79.3 million, a 17% drop year over year, the company said in court documents.On Dec. 3, 2020, Francesca’s filed for Chapter 11 bankruptcy protection, as a yearslong battle to get back to growth came to a head. Its business had hit a peak when it reported positive EBITDA of $87 million in 2016, court documents explained, which diminished to a loss of $62 million in 2020. Francesca’s joined a long list of apparel retailers that also filed for bankruptcy protection last year, including Brooks Brothers, J. Crew and the department store chain J.C. Penney.The business was sold to Francesca’s Acquisition — an affiliate of TerraMar Capital, Tiger Capital Group and SB360 Capital Group — in February. The deal enabled Francesca’s to emerge from bankruptcy with a $25 million asset-based revolving credit facility.’Big unlock'”Although the pandemic was wreaking havoc across the retail industry — and we were certainly not spared — … but that actually was a big unlock for us,” Clarke explained. “We said, ‘We have to innovate. We have to change this model. We have to do it very quickly if we’re going to be here on the other side of the pandemic.'”Shedding underperforming brick-and-mortar stores has been one action. Pre-bankruptcy, Francesca’s was already in the process of closing unprofitable stores in malls. But a court-supervised restructuring process allowed it to break leases and speed up some of that work.Under Francesca’s new owners, at least 275 stores will stay open. It has 460 operating today, down from the 558 locations the retailer had when it filed for bankruptcy last December, and an even bigger decrease from the more than 700 it had in 2019.”On the shoulders of a successfully right-sized footprint, we should be able to build a really profitable omnichannel business,” Clarke said.Clarke’s other focus is fixing the retailer’s merchandise. Prior to him joining Francesca’s, the brand was most known for date-night outfits, dresses for school dances or graduations, and chic work wear, Clarke said. But it has needed to shift as shoppers seek out more casual and comfortable options.Many apparel retailers are grappling with this new preference. Apparel sales fell 19% last year, according to The NPD Group, but categories such as sweatpants and pajamas reported growth. Even as people look to refresh their wardrobes with new styles, many are still seeking comfortable options such as pants with elastic waistbands.Source: Francesca’sFrancesca’s target audience has traditionally been women ages 18 to 35, but the business also now wants to reach younger girls. It recently added a tween collection, called Franki by Francesca’s​, which has a range of more dressed-down options, including graphic tees and distressed denim, as well as crop tops and jumpsuits.By going after Gen Z consumers, Clarke hopes to reach a generation of shoppers that has proven it favors buying from brands that stand for something and speak more authentically in their marketing. His professional background also makes him a fitting pick to be spearheading this shift. Clarke previously served as chief merchandising officer of the tween clothing and accessories brand Justice. He also has run Kmart’s apparel business and led the women’s apparel maker Loft.’Free to be you’Clarke wants to make Francesca’s a safe space for customers and for employees — in large part because he remembers not feeling represented himself as a member of the LGBTQ community earlier in his career.”Being fired for the way I live my life was a wake-up call for me — not about my values, but if I was ever in a position senior enough to create and craft company values, that would be the antithesis of what I experienced myself,” he said. “And that’s what we’re doing now at Francesca’s.”Clarke has taken what used to serve only as an internal motto to boost employee morale, “Free to be you,” and is making it into a customer-facing slogan for marketing and graphics in stores. According to Clarke, this is one example of how the company is trying to pivot to reach more customers, including the LGBTQ community.”As we look at the data around our customer, we see a rich diversity amongst our base,” the CEO explained. “And our strategies have evolved to appeal much more broadly to that diverse customer.”For Pride Month, Francesca’s has partnered with the gender-fluid fashion label The Phluid Project. Select rainbow-inspired products from Phluid Project will be available on Francesca’s website and in its stores, the company said.But Clarke sees the potential to do much more.”This journey we’re on — we’re at the beginning,” Clarke said. “We’re creating a new company … it’s not just about Pride Month. It’s about building something much more longer-term. We are playing catch-up in some respects, from the inside out, and on the product side we sell.”He hopes that by being open about his sexuality to customers and to employees, he will inspire others to be open as well.”In order to change perception, perspective and to educate, it’s necessary to have that representation,” Clarke said. “I’m fortunate enough as an LGBTQ+ community member appointed to my role as the CEO of a public company … I feel absolutely responsible for creating a safe, accepting, diverse working culture and environment for all my associates. It’s as much internal as it is external.””At the beginning of 2020, becoming the CEO of a public company as a gay man … it’s something I never thought I would achieve,” he said. More

An artist’s rendition of a Terran R rocket launching to orbit.Relativity Space3D-printing specialist Relativity Space raised $650 million to step up work on a fully reusable rocket that will attempt to challenge Elon Musk’s SpaceX in less than three years, the company announced on Tuesday.The money will be used “to accelerate some of the production ramp rate and get to a higher launch cadence as quickly as we can, because the demand is certainly there for it,” Relativity Space CEO Tim Ellis told CNBC.Relativity’s new capital will be focused on its Terran R rocket, a launch vehicle that would be similar in size and power to SpaceX’s workhorse Falcon 9 rocket.Terran R will carry 20 times more to orbit than Relativity’s Terran 1 rocket, the latter of which the company is on track to launch for the first time by the end of this year. Additionally, Ellis said Terran 1’s backlog of customer orders makes it “the most pre-sold rocket in history before launch.”The raise, which Ellis described as “war chest doubled,” was led by Fidelity and comes eight months after Relativity brought in $500 million in a round led by Tiger Global. The $650 million in equity added BlackRock, Centricus, Coatue and Soroban Capital as new Relativity investors, with a host of existing investors – including Fidelity, Tiger, Baillie Gifford, K5 Global, Tribe Capital, XN, Brad Buss, Mark Cuban, Jared Leto and Spencer Rascoff – building on prior stakes.Relativity has now raised $1.34 billion in capital since its founding in 2015, with its valuation climbing to $4.2 billion from $2.3 billion in November. Its headcount has grown to 400 people, with Ellis saying the company plans to “add several more hundred this year.””We’ve signed up to create a lot of value, certainly remaining the second most highly valued space company in the world,” Ellis said, as SpaceX commands an industry-leading $74 billion valuation.A timelapse from inside of a 3D-printing bay shows the manufacturing process for a Terran 1 second stage flight tank:Relativity SpaceRelativity is building the first iteration of its Terran 1 rocket and has manufactured 85% of the vehicle for the inaugural launch. It uses multiple 3D-printers, all developed in-house, to build Terran 1 and will do the same for Terran R.The rockets are designed to be almost entirely 3D-printed, an approach which Relativity says makes it less complex, and faster to build or modify, than traditional rockets. Additionally, Relativity says its simpler process will eventually be capable of turning raw material into a rocket on the launchpad in under 60 days.”We’re just seeing in the market that there needs to be another quickly-moving, disruptive launch company that’s actually skating to where the puck is going,” Ellis said.He added that Relativity “never seriously considered the SPAC path,” believing his company doesn’t yet need to go public and can tap “almost limitless capital” in the private markets. A SPAC, or special purpose acquisition company, is a blank-check company that raises funding from investors to finance a merger with a private company to take it public.Ellis noted that Relativity received higher fundraising offers than the one it accepted from Fidelity, but went with the firm as the lead due to its prestige and reputation.Relativity Space ranked No. 23 on this year’s CNBC Disruptor 50 list.Taking on SpaceXThe row of two-story tall 3D printer bays at the company’s headquarters.Relativity SpaceRelativity’s Terran 1 rocket is designed to carry 1,250 kilograms to low Earth orbit. That puts Terran 1 in the middle of the U.S. launch market, in the “medium-lift” section between Rocket Lab’s Electron and SpaceX’s Falcon 9 in capability.But Terran R would go head-to-head with Falcon 9: Targeting a capability of more than 20,000 kilograms to low Earth orbit, almost as tall at 216 feet in length, slightly wider with a 16-foot diameter, and a similarly sized nosecone to carry satellites to space.SpaceX’s rocket features nine Merlin engines in the booster, each capable of about 190,000 pounds of thrust, while Relativity’s Terran R booster will feature seven Aeon R engines that it says will be capable of 302,000 pounds of thrust each. Earlier this year Relativity completed a full duration test firing of a pathfinder engine, using liquid oxygen and liquid methane as its fuel.Musk’s company ships its Falcon 9 boosters via highways from its headquarters in California, and Ellis said Relativity will similarly send its Terran R boosters over land to the coast of Texas, before putting them on a barge to its engine testing facility in Mississippi and then on another barge to Florida.Relativity is aiming to launch the first Terran R mission in 2024 from Cape Canaveral’s LC-16 launchpad, where its first Terran 1 missions will also launch. While Relativity is “nearly out of physical space” in the headquarters it moved into last summer, Ellis said the company has the core infrastructure in place needed to manufacturing Terran R. It has five large scale 3D-printers and five smaller “development” printers, and plans to add two more development bays in the near future. But Ellis noted that the company completed work on a new 3D-printer head, which more than doubles its print speed.”It’s not just adding more printer hardware. We’re also continuously using the data and learning of printing to actually speed up the process and also make changes to the printer design themselves,” Ellis said.Ellis emphasized that Terran R has been a part of the plan since Relativity’s early days, as the company has seen strong “market interest and demand for creating this vehicle.” Although he declined to disclose the name of the customer, Relativity has a “prominent” initial buyer for Terran R launches.”We’ve actually been developing [Terran R] this the whole time, so in many ways I feel like this is a weight off my shoulders, a big reveal,” Ellis said. “We just needed to get enough traction and resources to be in the spot where now we’re going big.”Fully reusing rocketsAn illustration of a Terran 1 rocket, left, next to a Terran R rocket and a silhouette of a person.Relativity SpaceEllis said he is a “huge fan” of SpaceX’s next-generation Starship rocket, which Musk’s company is developing to be fully reusable – hoping to make space travel more akin to air travel.”We need a vehicle that’s going to take people to Mars,” Ellis said. “[Starship] is huge and I think that capability is necessary.”As Terran R aims to be fully reusable, Ellis described it as “more a miniature Starship than a Falcon 9 rocket.” While SpaceX reuses the boosters of its Falcon 9 rockets, it has not been able to reuse the upper stages that carry satellites on to orbit. Relativity wants Terran R to be a “fresh look at what is the best possible” rocket by designing it to be fully reusable from the beginning.Terran R’s booster, or first stage, will use its engines to land standing upright and has features “that would be nearly impossible to produce without 3D-printing.” Ellis said Relativity’s long-term goal is to “get to hundreds to thousands of reuses” per rocket. Reusing the second stage will be the next challenge, with Relativity building it “out of a more exotic 3D-printed metal” to make it lighter and able to endure the intense temperatures of reentering the Earth’s atmosphere.”First stage reuse or even second stage may not work perfectly on the very first try, but every single launch attempt that we’re bringing in revenue we’re able to continue to develop reusability further,” Ellis said.A fully reusable rocket would also be able to deliver cargo quickly from one point on the Earth to another, a use the U.S. military has shown great interest in already with SpaceX’s Starship.”I think point-to-point space transportation is an interesting market that we’re looking at” with Terran R, Ellis said.More broadly, Ellis remains focused on helping to “build an industrial base on Mars” and believes both 3D-printing and fully reusable rockets are key to making that happen.”No one else is doing full reusability and I think that that’s a bit depressing – there needs to be more companies actually trying to make the future happen in a big way,” Ellis said. “What we’re doing is extremely hard ,but we also have the best and most experienced team in the industry.”SIGN UP for our weekly, original newsletter that goes beyond the list, offering a closer look at CNBC Disruptor 50 companies, and the founders who continue to innovate across every sector of the economy.Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today. 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In this articleSBUXSeongJoon Cho| Bloomberg | Getty ImagesStarbucks on Tuesday announced that customers can start using reusable cups at company-owned cafes again on June 22, after pausing the program due to Covid-19.It’s the latest signal from restaurants and retailers that business is returning to normal in the U.S. as states relax restrictions. Last month, Starbucks and many other businesses stopped requiring fully vaccinated customers to wear masks in stores. Costco is starting to bring back in-store samples, while Target has reopened its fitting rooms.To fill a customer’s personal cup, a Starbucks barista will first check that the cup is clean and place it in a ceramic vessel. The beverage will be made without any contact with the cup, and the customer will pick up their drink at the handoff area of the counter. Only clean cups will be accepted. Reusable cups will not be accepted at drive-thru lanes, although the company is testing ways to do so safely at its Tryer Center in Seattle.Prior to the health crisis, Starbucks had offered a 10-cent discount to customers who brought in their own cups. In March 2020, it paused the decades-old program in North America, citing the growing threat of the virus.Despite its longevity, few customers take advantage of the program. Starbucks runs through roughly 7 billion disposable cups every year, weighing on its goal to become resource positive eventually. It’s currently testing initiatives to cut down on its usage of disposable cups, including launching a circular cup program in South Korea this summer. By 2025, the company will offer a reusable cup program across all locations in Europe, the Middle East and Africa.Shares of the coffee giant have risen 4% this year, giving the company a market value of $131 billion. More