Raphael Stevens

The Mediterranean restaurant company reported second-quarter net income of $6.5 million.
Net sales soared 62% to $172.9 million, fueled by new restaurant openings.
Cava said its traffic grew 10.3%, outstripping the broader restaurant industry.

A banner for the Mediterranean restaurant chain Cava is displayed outside of the New York Stock Exchange (NYSE) as the company goes public on June 15, 2023 in New York City.
Spencer Platt | Getty Images

Cava on Tuesday posted a profitable quarter for its first earnings report since its initial public offering in June.
Cava’s stock surged as much as 12% in extended trading. Shares have more than doubled in value since its IPO, fueled largely by its blockbuster public market debut.

The Mediterranean restaurant company has a market value of $5.27 billion, as of Tuesday’s close.
Here’s what the company reported for the quarter ended July 9:

Earnings per share: 21 cents
Revenue: $172.9 million vs. $163 million

Cava reported second-quarter net income of $6.5 million, or 21 cents per share, swinging from a net loss of $8.2 million, or $6.23 per share, a year earlier.
CNBC does not compare reported earnings per share to Wall Street estimates for a company’s first report as a public company, as uncertain share counts can skew expectations.
Net sales soared 62% to $172.9 million, fueled by new restaurant openings. The chain said it opened 16 net new Cava restaurants during the period, for a total of 279.

Cava’s same-store sales climbed 18.2% in the quarter. The chain said its traffic grew 10.3%, making it an outlier in the broader restaurant industry, which has seen customer visits shrink in recent months. CFO Tricia Tolivar attributed some of the chain’s strong traffic to increased brand awareness after the company’s IPO.
However, Tolivar also said that same-store sales growth has moderated in recent weeks. More diners have also shifted from delivery orders to picking up their own warm bowls and salads, suggesting that Cava’s customer base may be pulling back on their restaurant spending.
Rival Sweetgreen reported a similar trend. Delivery orders tend to be pricier because of added fees.
Cava’s menu prices were up nearly 8% compared with the year-ago period, though executives said the restaurant chain has no plans to raise prices further.
More than a third of Cava’s quarterly sales came from digital orders in the quarter.
Looking ahead to 2023, Cava expects to report same-store sales growth for the full year of between 13% and 15%. CEO Brett Schulman cited broader economic pressures, like rising interest rates and gas prices, as the primary reason for the cautious sales forecast.
The company plans to open between 65 to 70 new locations. It’s also forecasting adjusted earnings before interest, taxes, depreciation and amortization of $62 million to $67 million. More

Overall, traditional TV usage in July fell below 50% for the time ever as streaming takes up a bigger chunk of consumers’ viewership habits, according to data from Nielsen.
Broadcast and pay-TV viewing dropped during the month as companies see an accelerated decline in pay-TV customers, according to recent earnings reports.
Although viewers are turning more to streaming, subscriber growth for those platforms has also slowed.

Simpson33 | Istock | Getty Images

The decline of traditional TV continues, even as the prices of streaming services rise.
Total traditional TV usage, comprised of broadcast and pay TV, dropped below 50% in July for the first time ever, according to Nielsen’s monthly streaming report, The Gauge.

Usage among pay-TV customers fell to 29.6% of TV, while broadcast dropped to a 20% share during the month. Streaming made up nearly 39% of usage in July, the largest share reported since Nielsen’s first time reporting the monthly numbers in The Gauge in June 2021.
Pay TV has steadily declined as consumers cut traditional bundles and opt for streaming. The rate of that drop-off has only accelerated since the beginning of the Covid-19 pandemic, when streaming usage surged.
Major pay-TV providers, such as Comcast Corp. and Charter Communications, often report quarterly drops in customers. Comcast and Charter lost 543,000 and 200,000 pay-TV subscribers during the second quarter, respectively.
“We think the metrics for linear TV are all bad,” Tim Nollen, a Macquarie senior media tech analyst, said in a recent report.
Pay-TV operators reported a weighted average 9.6% decline in subscribers year over year — losses that amount to about 4.4 million households — and pricing “does not drive upside,” according to Macquarie’s report.

The overall number of pay-TV households has steadily declined. There were 41 million pay-TV households during the second quarter, down from 50 million and 45 million in the same periods in 2021 and 2022, respectively, according to Macquarie.
Year-over-year, pay-TV viewership was down 12.5%, while broadcast was down 5.4%, according to Nielsen.
The rise of streaming services, from Netflix to Disney’s Disney+, Hulu and ESPN+ to Warner Bros. Discovery’s Max often take the blame. But many of these operators, including Disney, Warner Bros. Discovery and Comcast, are fighting to gain share and bring in profits from streaming while their pay-TV channels and businesses deteriorate.
Although viewers are turning more to streaming, subscriber growth for those platforms has slowed, especially for larger services such as Netflix and Disney+. Fledgling apps such as Paramount’s Paramount+ and Comcast’s Peacock have seen more member growth but have smaller subscriber bases.
Streaming companies have turned from using subscriber growth as a measure of success, and instead are pushing to reach profitability in the segment as the traditional TV business shrinks.
Many consumers left the traditional TV bundle due to its steep prices. Now, streamers are also raising prices across the board — including Disney for ad-free Disney+ and Hulu subscriptions — in a bid to boost revenue.
Lackluster streaming subscriber growth hasn’t helped much in their bid for profitability, Macquarie noted in its report.

Patrick J. Adams as Mike Ross on “Suits.”
Shane Mahood | USA Network | NBC Universal | Getty Images

Advertising is playing a bigger role in driving revenue and companies are looking to crack down on password sharing. Cutting content expenses, especially for original programming, has also been a big part of the cost-cutting strategy.
The move away from originals comes as licensed programming, especially from traditional outlets, is often some of the most-watched content.
For Netflix, a recent hit has been “Suits,” the series that originally aired on NBCUniversal’s cable channel USA Network. The show that co-stars Meghan Markle was previously only streaming on Peacock. The series looks to have driven streaming viewership on Netflix, as well as Peacock, accounting for 18 billion viewing minutes in July, according to Nielsen.
Netflix viewership rose 4.2% during the month, bringing streamers to 8.5% of total TV usage. Behind it followed Hulu, Amazon’s Prime Video and Disney+, which likely got a boost from the kids cartoon, “Bluey,” another licensed program rather than an original. More

Disney has been accused of withholding profits from TSG Entertainment, a long-time financing partner of its 20th Century Fox studio.
The suit alleges the company withheld profits and cut deals to boost its streaming platforms and stock price.
TSG said this act deprived it of cash to invest in individual films and its efforts to sell its stakes in other movies, according to the suit.

Avatar: The Way of Water
Courtesy: Disney Co.

Hollywood financer TSG Entertainment is suing Disney for breach of contract.
The suit filed Tuesday in Los Angeles Superior Court alleges that Disney and its studio 20th Century Fox committed a number of transgressions, including withholding profits and cutting deals to boost its streaming platforms and stock price. This act deprived TSG of cash to invest in individual films and its efforts to sell its stakes in other movies, the lawsuit says.

Representatives from Disney did not immediately respond to CNBC’s request for comment.
TSG co-finances the production and marketing costs of films in exchanges for a share of the defined gross receipts after the film’s release. The group has helped co-finance around 140 films produced by 20th Century Fox, which Disney acquired in 2019, including “Avatar: The Way of Water.” In total, the company said it has invested around $3.3 billion in the studio’s content since 2012.
Audiences would also recognize TSG from the opening credits of films like “The Menu,” “Jojo Rabbit,” “The Greatest Showman” and “Gone Girl.” The financier’s logo is a depiction of a man with a bow shooting an arrow through several axe heads.
Noticing a decline in profits, TSG requested an audit of a sampling of three of the films it financed for 20th Century Fox. TSG alleges that it found “rampant self-dealing” and “accounting tricks” within the books and had been underpaid by at least $40 million.
“At its root, it is a chilling example of how two Hollywood behemoths with a long and shameful history of Hollywood Accounting, Defendants Fox and Disney, have tried to use nearly every trick in the Hollywood Accounting playbook to deprive Plaintiff TSG — the financier who, in good faith, invested more than $3.3 billion with them — out of hundreds of millions of dollars,” the suit says.

In one alleged incident, TSG said Fox licensed “The Shape of Water,” which won best picture at the 2018 Academy Awards, to FX, a channel owned by the studio, for $4 million less than it should have under its output agreement.
Additionally, TSG said through its audit that it found it had not been credited with revenue it should have received and was charged millions of dollars for distribution fees that weren’t part of its revenue-participation agreement with the studio.
TSG is represented by John Berlinkski of the law firm Bird Marella, who previously represented Scarlett Johansson when she sued Disney for putting Marvel’s “Black Widow” on Disney+ at the same time it was released in theaters. That suit was eventually settled.
TSG is purporting that Disney’s 2021 deal with Warner Bros. Discovery, which waived exclusivity to the HBO premium channel and the Max streaming service in exchange for smaller license fees, directly cut into TSG’s potential profits.
Additionally, TSG said when it attempted to exercise its right to sell its stake in other films it had funded back to Disney or a third party, it was denied. As a result, TSG says it did not have the financial resources to invest more in individual films like “Avatar: The Way of Water.”
“The consequence was that TSG’s share of defined gross receipts was dramatically reduced, further eroding TSG’s ability to generate liquidity for future productions, and frustrating TSG’s ability to realize the benefit of its agreement with Fox,” the suit alleged. “Most egregiously, this scheme triggered a provision in the [revenue participation agreement] that entitles Fox to a 50% share of TSG’s profits after the winding-up of TSG’s investment vehicle.”
The Wall Street Journal first reported on the lawsuit. More

Shares of Vietnamese electric vehicle maker VinFast began trading on the Nasdaq on Tuesday.
A SPAC deal with Black Spade valued VinFast at approximately $23 billion
VinFast, the automobile arm of Vietnamese conglomerate Vingroup, has so far imported about 2,100 of its EVs to the U.S. from Vietnam, and brought nearly 800 more to Canada.

Shares of Vietnamese electric vehicle maker VinFast began trading on the Nasdaq on Tuesday, following completion of its merger with the U.S.-listed special purpose acquisition company Black Spade Acquisition.
VinFast’s new U.S. shares opened at $22 on Tuesday and rose sharply to end the day at $37.06 for a gain of over 68%. Black Spade Acquisition’s shares closed at $10.45 on Monday.

SPACs are shell companies that raise capital in an IPO and use the cash to merge with a private company in order to take it public, usually within two years.
The deal with Black Spade valued VinFast at approximately $23 billion, according to a June filing with the U.S. Securities and Exchange Commission.

A VinFast VF7 electric vehicle is seen during the 2023 Canadian International AutoShow in Toronto, Canada on Feb. 17, 2023.
Zou Zheng | Xinhua News Agency | Getty Images

“It’s a big milestone for us to be listed in the U.S. The listing is going to open access to the capital markets for us in the future,” VinFast CEO Lê Thị Thu Thủy, who uses the name Madame Thủy in English, told CNBC’s “Squawk Box Asia” earlier Tuesday morning.
VinFast, the automobile arm of Vietnamese conglomerate Vingroup, was founded in 2017. It has so far imported about 2,100 of its EVs to the U.S. from Vietnam, and brought nearly 800 more to Canada.
The company made its first U.S. deliveries in March, but it still has a long way to go to compete with giants like Tesla and the Detroit automakers.

We try to stay competitive in every market that we are in in terms of profitability. I think it will come together with the volume. For now, we will stay true to our strategy.

Lê Thị Thu Thủy
CEO of VinFast

On whether VinFast is under the pressure to cut prices in general, following a series of price reductions by Tesla and other EV rivals earlier this year, Le said the company’s strategy is “offering premium quality products at affordable pricing with excellent after sales service.”
“We always price our products quite competitively compared to other similar products. But when you look deeply into our products, we are loaded with more features and more technology. So I think consumers started recognizing the values that we bring with our products,” said Lê.
“We try to stay competitive in every market that we are in in terms of profitability. I think it will come together with the volume. For now, we will stay true to our strategy.”
As a comparison, VinFast’s 5-seater VF 8 starts from $46,000, while the basic Tesla 5-seater Model Y is priced from $47,740.
Tesla passenger vehicles are eligible for a $7,500 federal tax credit in the U.S., while VinFast vehicles don’t currently qualify for the tax savings as they’re not built in the U.S. More

The Poseidon Dynamic Cannabis ETF is shuttering.
The fund has lost roughly 74% in value since it was founded, versus a 1.7% decline in the S&P 500.
Its closure is the latest blow to the quasi-legal cannabis industry, which awaits critical economic reform at the federal level.

A proposed constitutional amendment for recreational marijuana is under review by the Florida Supreme Court.
Brad Horrigan | Tribune News Service | Getty Images

A leading exchange-traded fund in the cannabis space will close up shop as investor interest in the legally restricted industry wanes.
AdvisorShares, the largest cannabis fund manager, said its Poseidon Dynamic Cannabis ETF will see its final day of trading Aug. 25. The fund will liquidate assets and pay shareholders Sept. 1, according to a notice on the fund’s website.

The fund, led by sibling founders Emily & Morgan Paxhia, launched on the New York Stock Exchange in November 2021 during a pandemic-era cannabis sales boom.
The closure comes as investors lose interest in the quasi-legal cannabis industry that has struggled to scale. Wholesale prices have declined, and Congress has not reformed federal laws that have hampered the sector’s growth.
In an emailed statement to CNBC, co-founder Morgan Paxhia said the fund was not “immune to the broader macro-economic environment and, more specifically, the dramatic shift in investor sentiment that has impacted the cannabis industry.”
While nearly half of U.S. states have legalized the recreational use of cannabis by adults, it remains illegal at the federal level. Its classification as a Schedule I substance along with heroin and LSD has barred the sector from accessing most banking services and from being traded across state lines, causing a glut of cannabis in many states and a drop in prices.
Sliding equity values have made investors turn away from the industry and capital has dried up.

Poseidon Investment Management, which started in 2013 as one of the first cannabis-focused hedge funds in the U.S., has seen its ETF lose roughly 74% in value since it was founded, versus a 1.7% decline in the S&P 500.
Its value has fallen 65% in the last year and traded under $1 Tuesday. Meanwhile, Pure US Cannabis ETF, another fund in the industry by AdvisorShares, plummeted about 60% during the same period.
Poseidon is the latest casualty in an industry strained by market forces and economic policy.
Last month, a $2 billion merger between cannabis multistate operators Cresco Labs and Columbia Care went up in smoke more than a year after the companies announced the acquisition. Mastercard, in a move that further alienates the cannabis industry from big banking, announced last month it will stop allowing cannabis transactions on its debit cards to be in compliance with federal law. More

Longtime ESPN SportsCenter anchor Sage Steele said Tuesday she is exiting the network following a lawsuit settlement.
Steele sued Disney’s network last year, alleging the company retaliated against her for comments she made on a podcast regarding the Covid vaccine and other political and social topics.
Steele said in the lawsuit she was protected by the First Amendment and that she did nothing wrong since she was interviewed on the podcast as a private citizen on her day off, rather than as an ESPN employee.

ESPN Analyst Sage Steele talks on set during Game Four of the NBA Finals between the Toronto Raptors and the Golden State Warriors at Oracle Arena in Oakland, California, June 7, 2019.
Rey Josue II | NBA Photos | National Basketball Association | Getty Images

Sage Steele and ESPN have parted ways.
The longtime SportsCenter anchor said on X, the website formerly known as Twitter, that she was exiting Disney’s ESPN following a lawsuit settlement with the network.

Steele sued the network in 2022, alleging the company retaliated against her for comments she made in a podcast interview with former NFL quarterback Jay Cutler regarding the Covid vaccine and other political and social issues.
“Having successfully settled my case with ESPN/Disney, I have decided to leave so I can exercise my first amendment rights more freely,” Steele wrote Tuesday on X. “I am grateful for so many wonderful experiences over the past 16 years and am excited for my next chapter!”
In her lawsuit against ESPN and its parent company, the anchor alleged her contract and free speech rights were violated after she was “sidelined” following her podcast appearance.
“ESPN and Sage Steele have mutually agreed to part ways,” an ESPN spokesperson said Tuesday. “We thank her for her many contributions over the years.”
During the September 2021 podcast, Sage said she had been vaccinated against Covid but referred to the company’s vaccine mandate as “sick.”

She also made comments regarding former President Barack Obama’s race, saying, “Barack Obama chose Black and he’s biracial … congratulations to the president, that’s his thing. I think that’s fascinating considering his Black dad was nowhere to be found but his white mom and grandma raised him.” Sage also accused the late Barbara Walters of belittling her for identifying as biracial.
Steele is the daughter of Gary Steele, the first Black football player at West Point, and Mona Steele, a white woman.
During the same podcast, Steele also suggested that women who wear provocative clothes in the workplace bear responsibility for sexism they may experience.
Soon after the podcast, Steele apologized for her comments, saying, “I know my recent comments created controversy for the company, and I apologize. We are in the midst of an extremely challenging time that impacts all of us, and it’s more critical than ever that we communicate constructively and thoughtfully.”
Following her comments, Steele said in her lawsuit that media coverage “erupted” and in “a knee-jerk reaction,” ESPN and its parent company forced her to publicly apologize and suspended her for a period of time soon after.
Steele said in the lawsuit she was protected by the First Amendment and that she did nothing wrong since she was interviewed on the podcast as a private citizen on her day off, rather than as an ESPN employee. More