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    Etsy stock falls after company lays off 11% of its staff, citing ‘very challenging’ environment

    Etsy is laying off 11% of its workforce, about 225 employees.
    Etsy CEO Josh Silverman noted in a letter to employees that Etsy’s marketplace has more than doubled in size since 2019 but said today’s macroenvironment and competitive realities call for sweeping changes. 
    The marketplace giant also updated its fourth-quarter guidance and is now expecting its adjusted EBITDA margin to be between 27% and 28%, up from previous guidance of 26% to 27%. 

    Etsy is laying off 11% of its workforce at the height of the holiday season as the e-commerce giant looks to restructure its business and streamline costs against a “very challenging” macro and competitive environment, the company announced Wednesday. 
    Approximately 225 employees will be cut from Etsy’s workforce, which will bring the headcount for the core Etsy marketplace to about 1,770 people, similar to the company’s headcount in early 2022 and above 2020 levels. 

    Etsy CEO Josh Silverman noted in a letter to employees that Etsy’s marketplace — known for selling handmade items and connecting buyers with local artisans across the globe — has more than doubled in size since 2019 but said today’s realities call for sweeping changes. 

    Josh Silverman, CEO of Etsy.
    Adam Jeffery | CNBC

    “We are operating in a very challenging macro and competitive environment, and [gross merchandise sales] has remained essentially flat since 2021,” the letter reads. “This means we are not bringing our sellers more sales, which is the single most important thing we can do for them. At the same time, employee expenses have grown, even as we have introduced significant cost-cutting measures and adjusted or paused hiring plans. This is ultimately not a sustainable trajectory and we must change it.”
    The news comes alongside updated fourth-quarter guidance for Etsy. The company now expects gross merchandise sales to decline between 1% and 2% during the period from the year-ago quarter and revenue to increase between 2% and 3%. It’s expecting adjusted EBITDA margin of between 27% and 28%, up from previous guidance of 26% to 27%. 
    Shares of Etsy closed 2% lower following the announcement, after falling as much as 7% earlier in the day.
    “Etsy is intensely focused on reigniting growth, driving sales for our nearly 7 million sellers around the world, and delivering value to all of our stakeholders. Today, we announced that we are reorganizing our internal structure so that we can double down on these efforts, which unfortunately means saying goodbye to approximately 225 of our colleagues,” Silverman said in a statement to CNBC. 

    The layoffs come two days after toymaker Hasbro announced it was cutting 1,100 employees as it grapples with soft sales that have continued into the crucial holiday shopping season. Hasbro had about 6,300 employees as of earlier this year, according to a company fact sheet.
    Etsy’s layoffs will cost between $25 million and $30 million, the bulk of which will be used for severance payments, employee benefits and other related costs, the company said in a securities filing. Over time, the restructuring is expected to “deliver meaningful operational efficiencies and cost savings and/or cost avoidance,” especially when it comes to salary costs and benefits.
    The restructuring is expected to be complete by the end of the first quarter of 2024. 
    As part of the restructuring, Etsy’s chief marketing officer Ryan Scott will be leaving the company and his position will be consolidated under the chief operating officer role, which is currently held by Raina Moskowitz, a former American Express executive. 
    Etsy’s chief human resources officer Kimaria Seymour will also be leaving the company and will be replaced by Toni Thompson, the company’s current vice president of global people and talent strategy. 
    Considering the layoffs come in the middle of the holiday season when many employees are shopping for gifts for their loved ones, Etsy said it would pay affected staff through at least Jan. 2, even though the last working day for most staff will be Wednesday. 
    They’ll receive severance of 16 weeks of base pay, plus one week for each full year of service, along with other benefits such as extended COBRA health insurance benefits and the ability to keep their company laptop.Don’t miss these stories from CNBC PRO: More

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    Fed holds rates steady, indicates three cuts coming in 2024

    The Federal Reserve on Wednesday held its key interest rate steady for the third straight time and set the table for multiple cuts to come in 2024 and beyond.
    With the inflation rate easing and the economy holding in, policymakers on the Federal Open Market Committee voted unanimously to keep the benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%. 

    Along with the decision to stay on hold, committee members penciled in at least three rate cuts in 2024, assuming quarter percentage point increments. That’s less than market pricing of four, but more aggressive than what officials had previously indicated. 
    Markets had widely anticipated the decision to stay put, which could end a cycle that has seen 11 hikes, pushing the fed funds rate to its highest level in more than 22 years. There was uncertainty, though, about how ambitious the FOMC might be regarding policy easing. Following the release of the decision, the Dow Jones Industrial Average jumped more than 400 points, surpassing 37,000 for the first time.

    The committee’s “dot plot” of individual members’ expectations indicates another four cuts in 2025, or a full percentage point. Three more reductions in 2026 would take the fed funds rate down to between 2%-2.25%, close to the long-run outlook, though there was considerable dispersion in the estimates for the final two years. 
    Markets, though, followed up the meeting and Chair Jerome Powell’s press conference by pricing in an even more aggressive rate-cut path, anticipating 1.5 percentage points in reductions next year, double the FOMC’s indicated pace.
    In a possible nod that hikes are over, the statement said that the committee would take multiple factors into account for “any” more policy tightening, a word that had not appeared previously. 

    “While the weather is still cold outside, the Fed has suggested a potential thawing of frozen high interest rates over the next few months,” said Rick Rieder, chief investment officer of global fixed income at asset management giant BlackRock.
    Along with the interest rate hikes, the Fed has been allowing up to $95 billion a month in proceeds from maturing bonds to roll off its balance sheet. That process has continued, and there has been no indication the Fed is willing to curtail that portion of policy tightening. 

    Inflation ‘eased over the past year’

    The developments come amid a brightening picture for inflation that had spiked to a 40-year high in mid-2022. 
    “Inflation has eased from its highs, and this has come without a significant increase in unemployment. That’s very good news,” Chair Jerome Powell said during a news conference.
    That echoed new language in the post-meeting statement. The committee added the qualifier that inflation has “eased over the past year” while maintaining its description of prices as “elevated.” Fed officials see core inflation falling to 3.2% in 2023 and 2.4% in 2024, then to 2.2% in 2025. Finally, it gets back to the 2% target in 2026.
    Economic data released this week showed both consumer and wholesale prices were little changed in November. By some measures, though, the Fed is nearing its 2% inflation target. Bank of America’s calculations indicate that the Fed’s preferred inflation gauge will be around 3.1% year over year in November, and actually could hit a 2% six-month annualized rate, meeting the central bank’s goal. 

    The statement also noted that the economy “has slowed,” after saying in November that activity had “expanded at a strong pace.” 
    In the news conference, Powell said: “Recent indicators suggest that growth in economic activity has slowed substantially from the outsized pace seen in the third quarter. Even so, GDP is on track to expand around 2.5% for the year as a whole.”
    Committee members upgraded gross domestic product to grow at a 2.6% annualized pace in 2023, a half percentage point increase from the last update in September. Officials see GDP at 1.4% in 2024, roughly unchanged from the previous outlook. Projections for the unemployment rate were largely unchanged, at 3.8% in 2023 and rising to 4.1% in subsequent years.  
    Officials have stressed their willingness to hike rates again if inflation flares up. However, most have said they can be patient now as they watch the impact the previous policy tightening moves are having on the U.S. economy.  
    Stubbornly high prices have exacted a political toll on President Joe Biden, whose approval rating has suffered in large part because of negative sentiment on how he has handled the economy. There had been some speculation that the Fed could be reluctant to make any dramatic policy actions during a presidential election year, which looms large in 2024. 
    However, with real rates, or the difference between the fed funds rate and inflation, running high, the Fed would be more likely to act if the inflation data continues to cooperate. More

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    Pfizer shares fall as 2024 revenue and profit forecast disappoints

    Shares of Pfizer fell after the drugmaker forecast 2024 revenue and profit below Wall Street’s expectations.
    A continued slowdown in demand for the company’s Covid vaccine and treatment Paxlovid largely drove the weakness.
    Pfizer also raised the target of its sweeping cost-cutting plan by $500 million, bringing the total to $4 billion. 

    Shares of Pfizer fell Wednesday after the drugmaker forecast 2024 revenue and profit below Wall Street’s expectations, as it sees weak demand for its once-blockbuster Covid products. 
    Pfizer also raised the target of its sweeping cost-cutting plan by $500 million, bringing the anticipated total to $4 billion.

    The company expects 2024 revenue of $58.5 billion to $61.5 billion. Wall Street had anticipated sales of $63.17 billion, based on a survey of analysts by LSEG, formerly known as Refinitiv.  
    Pfizer’s forecast suggests revenue next year could fall or come in flat compared with 2023. The company expects revenue of $58 billion to $61 billion this year.
    Pfizer also said it anticipates $5 billion in 2024 revenue from its Covid vaccine and $3 billion in sales from its antiviral pill Paxlovid, for a total of $8 billion from Covid products. That’s far less than the $13.8 billion in combined 2024 sales analysts expected. 
    “While we do not expect Covid vaccination and infection rates to change materially in 2024 versus this year, we have set our Comirnaty and Paxlovid 2024 revenue expectations lower,” Pfizer CFO Dave Denton told investors during a call Wednesday, referring to the company’s Covid products.
    The pharmaceutical giant also forecast adjusted earnings in the range of $2.05 to $2.25 per share. Analysts had expected adjusted profit of $3.16, according to LSEG. 

    Notably, Pfizer expects a 40-cent per share hit from financing costs related to its $43 billion acquisition of cancer drug developer Seagen, which it plans to formally close Thursday. 
    Shares of Pfizer closed nearly 7% lower on Wednesday, after earlier hitting a 10-year-low following the release of the forecast.
    Pfizer’s stock has fallen nearly 50% this year and is trading below where it was at the start of the pandemic in early 2020. 
    Shares of Pfizer’s German Covid vaccine partner BioNTech closed 1% lower on Wednesday, while the stock of its rival Moderna closed flat.

    More CNBC health coverage

    After raking in billions of dollars from its Covid products, Pfizer has struggled to navigate a world beyond the pandemic and reassure investors about its growth potential. Pfizer is hoping to shift investor focus toward its record drug pipeline, which includes a handful of cancer drugs from Seagen. 
    The company expects Seagen’s products to contribute $3.1 billion to 2024 revenue. Pfizer previously said it anticipates Seagen will rake in $10 billion in revenue by the end of the decade. 
    Seagen is a leading developer of medicine called antibody-drug conjugates, or ADCs, which are designed to kill cancer cells and spare healthy ones. ADCs have become among the most desired cancer drugs, with Merck, Bristol Myers Squibb and AbbVie recently signing billion-dollar deals to access them. 
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    in Finance

    DoubleLine’s Jeffrey Gundlach says 10-year Treasury yield will fall to 3% next year

    Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 6, 2019.
    Adam Jeffery | CNBC

    DoubleLine Capital CEO Jeffrey Gundlach said Wednesday the 10-year Treasury yield will continue to fall to the 3% range next year, following the Federal Reserve’s new forecast for rate cuts.
    “I think we’re still going to have bonds rallying,” Gundlach said on CNBC’s “Closing Bell.” “I would guess that we will see the 10-year Treasury yield in the low threes sometime next year.”

    The benchmark rate hit a low of 4.015%, the lowest level since August, after the Fed held rates steady for a third consecutive meeting and set the stage for three interest rate reductions in 2024.
    The yield, a benchmark for mortgage rates and other consumer loans, had topped the key 5% level in October for the first time since 2007. Yields and prices move in opposite directions to one another.
    “There’s something about if you break below four on the 10-year that I think it almost sounds like a fire alarm going off relative to the economy,” Gundlach said.
    Projections released by the Fed showed the central bank would slash rates to a median 4.6% by the end of 2024, which would equate to three quarter-point reductions from the current targeted range between 5.25% and 5.5%. 
    Gundlach believes it’s unlikely that the central bank would reduce borrowing cost by that much next year.

    “They’re just going to cut by three quarters of a percentage point or so says the Fed. I mean, I think that’s pretty unlikely,” Gundlach said. “I think that if they cut rates that much, they’ll have to cut them more than that.”Don’t miss these stories from CNBC PRO: More

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    Fed lowers inflation forecast for 2024, seeing core PCE falling to 2.4%

    The central bank also predicted that the core personal consumption expenditures price index will decline to 2.2% by 2025 and finally reach its 2% target in 2026.
    These new forecasts suggest a softer inflation picture in the next two years than that from the last update in September.

    Federal Reserve Board Chairman Jerome Powell answers a question during a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, November 1, 2023.
    Kevin Lamarque | Reuters

    The Federal Reserve dialed back its inflation projections on Wednesday, seeing its favorite gauge falling to 2.4% in 2024.
    The central bank also predicted that the core personal consumption expenditures price index will decline to 2.2% by 2025 and finally reach its 2% target in 2026. The gauge rose 3.5% in October on a year-over-year basis.

    These new forecasts suggest a softer inflation picture in the next two years than that from the last update in September. The Fed had foreseen the core PCE hitting 2.6% in 2024 and 2.3% in 2025.
    In the post-meeting statement released Wednesday, the Federal Open Market Committee said inflation has “eased over the past year” while maintaining its description of prices as “elevated.” 
    While the public more closely watches the consumer price index as an inflation measure, the Fed prefers the core PCE reading. The former measure primarily looks at what goods and services cost, while the latter focuses on what people actually spend, adjusting for consumer behavior when prices fluctuate. Core CPI was at 4% in November while headline was at 3.1%.
    Committee members also upgraded their forecast for gross domestic product. They now expect GDP to grow at a 2.6% annualized pace in 2023, a half percentage point increase from the last update in September.
    Officials see GDP at 1.4% in 2024, roughly unchanged from the previous outlook. Projections for the unemployment rate were largely unchanged, at 3.8% in 2023 and rising to 4.1% in subsequent years.  

    Dot plot
    Projections released by the Fed showed the central bank would slash rates to a median 4.6% by the end of 2024, which would be three quarter-point reductions from the current targeted range between 5.25%-5.5%. 
    The individual members of the FOMC indicate their expectations for rates in the following years in the “dot plot.”
    Here are the Fed’s latest targets:

    Arrows pointing outwards

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    Here’s what changed in the new Fed statement

    This is a comparison of Wednesday’s Federal Open Market Committee statement with the one issued after the Fed’s previous policymaking meeting.
    Text removed from the October-November meeting statement is in red with a horizontal line through the middle.

    Text appearing for the first time in the new statement is in red and underlined.
    Black text appears in both statements.

    Arrows pointing outwards More

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    SpaceX valuation climbs to $180 billion

    The valuation of Elon Musk’s space and internet company SpaceX hit $180 billion based on an ongoing secondary share sale, CNBC confirmed Wednesday.
    The company is discussing an agreement with investors to sell stock from insiders in a purchase offer at $97 a share, according to a person familiar with the discussions.
    SpaceX’s latest valuation ranks it above the market value of top U.S. defense contractors as well as the most valuable U.S. telecommunications companies.

    SpaceX’s next-generation Starship spacecraft atop its powerful Super Heavy rocket is launched from the company’s Boca Chica launchpad on an uncrewed test flight, near Brownsville, Texas, on Nov. 18, 2023.
    Joe Skipper | Reuters

    The valuation of Elon Musk’s SpaceX hit $180 billion based on an ongoing secondary share sale, CNBC confirmed Wednesday.
    The company is discussing an agreement with investors to sell stock from insiders in a purchase offer at $97 a share, according to a person familiar with the discussions. The offer does not include raising new capital, as the purchase offer represents a secondary sale of existing shares and is expected to close in January.

    SpaceX typically performs these secondary rounds about twice a year, to give employees and other company shareholders a chance to sell stock. The latest valuation represents a 20% increase from SpaceX’s previous high of $150 billion, which the company hit through a July secondary sale at $81 a share.
    It has a near-monopoly on the U.S. satellite launch market, due to its workhorse Falcon rockets and the struggles of rivals to field operational rockets to compete. SpaceX’s Starlink satellite internet business is seen as a key economic driver for the company, with more than 5,000 satellites launched to date and a service boasting upward of two million subscribers. Its monstrous Starship vehicle continues to advance in flight tests, representing an attempt to create a next-generation reusable rocket of unprecedented scale and power.

    Sign up here to receive weekly editions of CNBC’s Investing in Space newsletter.

    The company is one of the most valuable private companies in the world, classifying it as a “centicorn” or “hectocorn” — a $1 billion unicorn, 100 times over.
    SpaceX’s latest valuation ranks the company above the market value of any of the top U.S. defense contractors — including Boeing (about $150 billion), Lockheed Martin (about $112 billion) and Northrop Grumman (about $73 billion) — as well as the most valuable U.S. telecommunications companies — such as Verizon (about $154 billion) or AT&T (about $115.9 billion), according to FactSet data on Wednesday.
    The company did not immediately respond to CNBC’s request for comment on the sale process. Bloomberg first reported SpaceX’s $97 a share pricing.

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    Washington sports teams Capitals, Wizards to move to new Virginia complex in 2028

    The NHL’s Washington Capitals and the NBA’s Washington Wizards are slated to move to Alexandria, Virginia.
    It’s part of a $2 billion entertainment complex effort led by the state of Virginia and Monumental Sports & Entertainment, which owns both pro teams.
    The complex is expected to open in late 2028, pending legislative approval.

    The National Hockey League’s Washington Capitals and the National Basketball Association’s Washington Wizards are slated to move to Alexandria, Virginia, as part of a $2 billion entertainment complex effort, the state’s Gov. Glenn Youngkin announced Wednesday.
    The development, about 8 miles south of Washington, D.C., will house the new global headquarters for Monumental Sports & Entertainment, which owns the Capitals and Wizards, as well as the new home arena for the teams. The 9 million square foot district will also feature mixed-use retail, hotel and conference spaces.

    Virginia Gov. Glenn Youngkin answers questions following the announcement of a new sports arena for the Washington Wizards NBA basketball team and Washington Capitals NHL hockey team, December 13, 2023 in Alexandria, Virginia. 
    Win Mcnamee | Getty Images News | Getty Images

    “This is the most visionary sports and entertainment development in the world. The Commonwealth will now be home to two professional sports teams, a new corporate headquarters, and over 30,000 new jobs — this is monumental,” Youngkin said in a statement. 
    Construction on the complex is slated to begin in 2025 and it is set to open in late 2028.
    The development is subject to legislative approval, the statement noted. Legislators will have to greenlight the creation of the complex in the next Virginia General Assembly session.

    In an aerial view, the site of a new sports arena for the Washington Wizards NBA basketball team and Washington Capitals NHL hockey team is seen on December 13, 2023 in Alexandria, Virginia.
    Win Mcnamee | Getty Images News | Getty Images

    The $2 billion investment will come from bond sales as well as a $403 million contribution from Monumental Sports & Entertainment.
    “We are committed to providing world-class fan experiences while continuously evolving our teams, deepening community ties, and solidifying our role as leaders at the forefront of sports and technology,” said Monumental chair and CEO Ted Leonsis in a separate statement.Don’t miss these stories from CNBC PRO: More