Raphael Stevens

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    in Business

    EVgo revenue beats analyst expectations as private-label charging business booms

    EVgo’s second-quarter revenue beat expectations, and the company lost less money than expected.
    More drivers are using EVgo’s chargers and they’re using more electricity per charge, the company said.
    Revenue from EVgo’s private-label business, providing chargers to other companies, has surged in 2023.

    A view of an EVgo EV charging station on July 28, 2023 in Corte Madera, California. 
    Justin Sullivan | Getty Images

    EV charging network operator EVgo on Wednesday reported second-quarter revenue that beat Wall Street’s expectations and posted a narrower-than-expected loss, as more electric vehicle drivers used its network and revenue from its private-label eXtend unit boomed.
    EVgo also increased its guidance for the full year. Shares were up about 8% in after-hours trading following the report.

    Here are the key numbers from EVgo’s second-quarter report, compared with Wall Street analysts’ consensus estimates as reported by Refinitiv:

    Loss per share: 8 cents vs. 27 cents expected.
    Revenue: $50.6 million vs. $29.6 million expected.

    The company reported a net loss of $21.5 million, or 8 cents per share. A year ago, EVgo reported a profit of $17 million, or 6 cents per share, on revenue of $9.1 million.
    “We are pleased to report EVgo’s network throughput growth is accelerating, demonstrating the leverage in our business and financial model as the auto sector rapidly electrifies,” CEO Cathy Zoi said in a statement.
    EVgo’s “network throughput” is a measure of the total amount of electricity provided to its charging customers. That figure grew 147% year over year to 24.9 gigawatt-hours in the second quarter, and by about 30% per individual charging stall, on average.
    The increased throughput is a result of more EVs on the road, more powerful EV batteries that require more power to charge, and increased utilization of EVgo’s chargers, the company said.

    EVgo also reported significant growth in its “eXtend” unit, which provides and manages chargers for business clients under those businesses’ own brands. Revenue from eXtend totaled about $33.3 million in the second quarter, or nearly 66% of EVgo’s total revenue for the period. 
    General Motors, truck-stop operator Pilot and banking giant Chase are among the businesses that have signed up for the eXtend program.
    As of June 30, EVgo had approximately 3,200 fast charging stalls in operation or under construction, up from about 3,100 at the end of the first quarter. The company added more than 82,000 new customer accounts during the period, for a total of about 688,000 as of June 30, up 55% year over year.
    EVgo now expects revenue between $120 million and $150 million for the full year, up from $105 million to $150 million in its prior guidance. It now expects an adjusted EBITDA loss of between $68 million and $78 million, a narrower range than the $60 million to $78 million in its earlier guidance.
    EVgo still expects to have between 3,400 and 4,000 fast charging stalls in operation or under construction at year-end, unchanged from its earlier guidance.
    EVgo separately announced Wednesday that Zoi will retire from the company in November. Board member Badar Khan, a 25-year veteran of the energy sector and the former president of National Grid’s U.S. operations, will be her successor. More

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    in Finance

    Stocks making the biggest moves after hours: PayPal, Robinhood, Qualcomm, Clorox, DoorDash and more

    Robinhood CEO and co-founder Vlad Tenev and co-founder Baiju Bhatt pose with Robinhood signage on Wall Street after the company’s initial public offering in New York City, July 29, 2021.
    Andrew Kelly | Reuters

    Check out the companies making headlines in extended trading.
    Robinhood — Shares of the trading platform slipped 4.7% after it reported quarterly results. The firm reported adjusted earnings of 3 cents per share in the second quarter, while analysts polled by Refinitiv forecast a loss of 1 cent. The company said monthly active users came in at 10.8 million, while analysts called for 11.2 million, according to StreetAccount.

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    Etsy — The e-commerce company fell almost 6% in extended trading after Etsy gave guidance on third-quarter revenue and the lower end of the range was below what analysts anticipated. The company is calling for revenue ranging between $610 million and $645 million, while analysts called for $632 million, per Refinitiv.
    DoorDash — The food delivery giant added 4.6% Wednesday after posting quarterly results. DoorDash’s revenue for the second quarter was $2.13 billion, while analysts called for $2.06 billion, per Refinitiv. However, the company posted a wider-than-expected loss of 44 cents a share, while analysts called for a loss of 41 cents per share.
    Qualcomm — Shares declined 7% after the company reported lower-than-expected revenue for its third fiscal quarter. Qualcomm posted $8.44 billion in adjusted revenue, while analysts polled by Refinitiv forecast $8.5 billion. Guidance for the fourth quarter was also light.
    Zillow — Stock in the online real estate company pulled back 2% after the company issued disappointing guidance for the third quarter. Zillow forecasts revenue of $458 million to $486 million, while analysts polled by FactSet are calling for revenue of $488.1 million.
    Qorvo — Shares climbed 3.7% after an earnings beat. Qorvo posted fiscal first-quarter earnings of 34 cents per share, excluding items, on revenue of $651 million. Analysts polled by FactSet called for 15 cents per share in earnings and revenue of $640.3 million.

    Clorox — Clorox stock ticked up 7% after flying past earnings expectations. The company reported adjusted earnings of $1.67 per share on $2.02 billion in revenue, while analysts polled by Refinitiv expected earnings of $1.18 per share and revenue of $1.88 billion.
    Tripadvisor — Tripadvisor shares gained 4%. The company reported revenue of $494 million in the second quarter, while analysts polled by Refinitiv anticipated $473 million.
    MGM Resorts — Shares of the casino operator dropped 5%, even as the company posted beats on the top and bottom lines in the second quarter. MGM reported adjusted earnings of 59 cents a share on $3.94 billion in revenue. Analysts polled by Refinitiv called for 54 cents a share in earnings and revenue of $3.82 billion.
    PayPal — PayPal shares tumbled nearly 6% after the company posted earnings that were in line with analysts’ predictions. The payments company reported adjusted earnings of $1.16 per share, the same expected by analysts polled by Refinitiv. Revenue came in higher than anticipated, with PayPal posting $7.29 billion, versus analysts’ estimates of $7.27 billion.
    Unity Software — Shares of the software company popped about 5% after Unity trounced analysts’ estimates for revenue in the second quarter. The company posted $533 million in revenue, while analysts polled by Refinitiv sought $518 million.
    — CNBC’s Darla Mercado contributed reporting. More

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    in Finance

    Stocks making the biggest moves midday: SolarEdge Technologies, Humana, Starbucks, Robinhood and more

    A Solarpro employee installs a SolarEdge Technologies inverter at a residential property in Sydney, May 17, 2021.
    Brendon Thorne | Bloomberg | Getty Images

    Check out the companies making the biggest moves midday.
    SolarEdge Technologies — The solar stock tumbled 18.36% after the company reported $991 million in revenue, missing analysts’ estimates of $992 million, according to Refinitiv. SolarEdge also issued disappointing third-quarter revenue guidance.

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    CVS Health — The retail pharmacy stock gained 3.3% Wednesday after the company posted strong earnings and revenue for the second quarter. CVS reported earnings of $2.21 per share on revenue of $88.9 billion, while Wall Street analysts expected $2.11 per share on earnings of $86.5 billion, according to Refinitiv.
    Norwegian Cruise Line — The cruise stock sank 3.97%, a day after reporting weaker-than-expected guidance for the third quarter. Its second-quarter earnings, however, topped analysts’ estimates. Shares were also downgraded by Susquehanna to neutral from positive. The Wall Street firm said Norwegian’s return to pre-pandemic EBITDA margin will take some time.
    Emerson Electric — Shares rallied 3.83% following Emerson Electric’s earnings and revenue beat for its fiscal third quarter. The company reported adjusted earnings per share of $1.29, topping the $1.10 expected from analysts polled by StreetAccount. Revenue was $3.95 billion, compared with the $3.88 billion expected by Wall Street.
    Pinterest — The social media platform slid 3.83% despite beating expectations on revenue for the second quarter. Pinterest posted $708 million against FactSet’s $696.4 million consensus estimate. Pinterest’s third-quarter revenue growth forecast, however, missed expectations.
    Starbucks — Shares edged 0.86% higher following the coffee giant’s earnings report. Starbucks’ adjusted earnings per share for the fiscal third quarter was $1, versus the 95 cents expected by analysts, per Refinitiv. However, revenue fell short at $9.17 billion compared with the $9.39 billion expected.

    Advanced Micro Devices — The chipmaker’s shares declined 7.02% in reaction to its second-quarter earnings release Tuesday after the bell. While the company posted better-than-expected earnings in the prior quarter, its forecast for the third quarter was weaker than analysts’ estimates amid a weak PC market. Several Wall Street firms, including Bank of America and JPMorgan, said the company may be nearing the peak of its rally.
    Humana — Shares popped 5.6% after the health insurer reported second-quarter adjusted earnings per share of $8.94, topping the $8.76 per share anticipated by analysts, per StreetAccount. Humana forecast its Medicare Advantage business will grow by about 825,000 members in 2023.
    Generac — Shares dropped 24.4% after the company posted a second-quarter earnings miss. Adjusted earnings per share came in at $1.08, versus StreetAccount’s estimate of $1.16. The company also lowered its forecast for residential product sales in the second half, citing a softer-than-expected consumer environment.
    Scotts Miracle-Gro — The stock sank 19.01% after the maker of consumer lawn, garden and pest control products reported an earnings and revenue miss for its third quarter. Scotts also forecast a bigger-than-expected revenue decline for the fiscal 2023 year.
    Freshworks — Shares popped 18.48% after the software as a service company beat expectations for both earnings and revenue. Canaccord Genuity upgraded the stock to buy from hold and hiked its price target to $25 from $15, suggesting 37% upside from Tuesday’s close.
    Robinhood — The retail brokerage’s stock shed 3.34% ahead of the company’s quarterly results, due after the bell. Analysts are expecting a quarterly loss of 1 cent, according to StreetAccount.
    Paycom Software — Shares tumbled 19.19% despite the payroll provider’s earnings and revenue beat after the bell Tuesday. However, the company’s revenue guidance for the third quarter was $410 million to $412 million, compared with the $412 million expected from analysts polled by StreetAccount.
    Chinese tech stocks — Shares of Chinese technology stocks dropped after regulators in China proposed limits on smartphone use for minors. U.S.-listed shares of JD.com slid 4.47%, Baidu fell 4.24%, Alibaba dropped 5.02%and Tencent Music shed 4.78%.
    — CNBC’s Hakyung Kim, Pia Singh and Alex Harring contributed reporting. More

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    in Finance

    JPMorgan CEO Jamie Dimon calls Fitch Ratings U.S. downgrade ‘ridiculous’ but says it ‘doesn’t really matter’

    The Fitch Ratings downgrade of the United States’ long-term credit rating ultimately doesn’t matter, JPMorgan Chase CEO Jamie Dimon told CNBC on Wednesday.
    “It doesn’t really matter that much,” because it’s the market, not rating agencies, that determines borrowing costs, Dimon told CNBC’s Leslie Picker.
    Still, it is “ridiculous” that other countries are rated higher than the U.S. when they depend on the stability created by the U.S. and its military, Dimon added.

    The Fitch Ratings downgrade of the United States’ long-term credit rating ultimately doesn’t matter, JPMorgan Chase CEO Jamie Dimon told CNBC on Wednesday.
    “It doesn’t really matter that much” because it’s the market, not rating agencies, that determines borrowing costs, Dimon told CNBC’s Leslie Picker.

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    Still, it’s “ridiculous” that other countries have higher credit ratings than the U.S. when they depend on the stability created by the U.S. and its military, Dimon added.
    “To have them be triple-A and not America is kind of ridiculous,” Dimon said. “It’s still the most prosperous nation on the planet, it’s the most secure nation on the planet.”
    Fitch downgraded the country’s rating to AA+ from AAA on Tuesday, pointing to “expected fiscal deterioration over the next three years,” an erosion of governance and a growing general debt burden.
    The agency put the U.S. rating on watch in May after members of Congress butted heads over raising the debt ceiling and brought the country to near-default.
    “We should get rid of the debt ceiling,” Dimon said. “It’s used by both parties” in ways that sow uncertainty for markets, he said.

    Fed, A.I. and Ukraine

    In the wide-ranging interview, Dimon touched on topics including artificial intelligence, the U.S. economy, bank regulation and geopolitics.
    He called artificial intelligence technology such as ChatGPT “a game changer” that will likely help future generations live longer, better lives.
    “It needs to be done right,” Dimon added. “I do worry about it because bad guys are going to use it too.”
    The U.S. economy, he said, is being supported by consumer and business strength, low unemployment and healthy balance sheets.
    “It’s pretty good, even if we go into recession,” Dimon said. “The storm cloud part is still there,” he added, referring to a warning he gave last year on the economy.
    What worries Dimon most are the geopolitical risks created by the Ukraine war and the Federal Reserve’s effort to rein in its balance sheet known as quantitative tightening, he said.

    Consumer impact

    Dimon lambasted regulators’ efforts to tighten standards on U.S. banks, saying the proposals unveiled last week were “hugely disappointing.” At one point, he held up a chart showing the web of regulators that banks deal with.
    Banks will be forced to hold more capital as a cushion against a variety of risks, which will affect consumers, because the industry will cede more products to nonbank players, Dimon warned. That’s what happened in the U.S. mortgage market, which is dominated by firms including Rocket Mortgage.
    Part of the changes involve banks ditching internal risk models for more standardized versions from the Federal Reserve.
    “If I was the Fed, I’d be careful about saying their models are perfect,” Dimon said. “Remember, their models didn’t show inflation and didn’t show 5% interest rates.” More

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    in Finance

    Veteran banker Jeffrey Schmid picked to lead Kansas City Fed

    Schmid has held positions at the Federal Deposit Insurance Corporation and Mutual of Omaha Bank, which he helped establish.
    Schmid will serve the remainder of George’s five-year term helming the Kansas City Fed.

    Jeffrey Schmid, the new president and CEO of the Kansas City Fed.
    Courtesy: Federal Reserve Bank of Kansas City

    The Kansas City Federal Reserve is about to get a new leader as the inflation-fighting central bank plots its course ahead.
    Jeffrey R. Schmid, with more than 40 years of experience as a regulator and banker, will take over Aug. 21 for Esther George, who retired earlier this year.

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    Most recently, Schmid has served as president and CEO of Southern Methodist University’s Cox School of Business, where he worked after holding positions at the Federal Deposit Insurance Corporation and Mutual of Omaha Bank, which he helped establish.
    “Jeff’s perspective as a native Nebraskan, his broad experience in banking and his deep roots in our region will be an incredible asset to the Federal Reserve, both as a leader of the organization and in his role as a monetary policymaker,” said Maria Griego-Raby, president and principal of Contract Associates in Albuquerque, New Mexico. As deputy chair of the bank’s board of directors, she led the search for George’s successor.
    The appointment comes after the Fed approved a series of 11 interest rate increases aimed at bringing down inflation that had been running at a 40-year high. George was long thought to be one of the rate-setting Federal Open Market Committee’s more hawkish members in favoring tighter monetary policy.
    Schmid will serve the remainder of George’s five-year term helming the Kansas City Fed, which will take him to Feb. 28, 2026.
    Interestingly, he arrives at the Fed just before the Kansas City district hosts its annual Jackson Hole summit, which this year will run from Aug. 24-26. The retreat features a keynote address from the Fed chair and often is pivotal in laying out policy strategy. More

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    in Business

    Hollywood producers seek sit-down with striking writers, the first sign of stalemate break

    The Writers Guild of America told striking screenwriters that Carol Lombardini, the studio negotiator, requested to talk Friday about the possibility of resuming negotiations with the guild.
    The meeting request doesn’t guarantee that producers and writers will resume talks, but it’s the first sign of movement in a stalemate between the Alliance of Motion Picture and Television Producers and the WGA since early May when the strike began.
    Fiery rhetoric and striking actors have added pressure to the already tense dynamic.

    Picketers walk outside the Walt Disney Studios in Burbank, CA on Tuesday, June 6, 2023 as the Writers Guild of America strike enters the sixth week. 
    Myung J. Chun | Los Angeles Times | Getty Images

    As the Hollywood writers strike nears its 100th day and pressure from striking actors mounts, producers are asking for a meeting.
    The Writers Guild of America told screenwriters that Carol Lombardini, the studio negotiator, requested to talk Friday about the possibility of resuming negotiations with the guild.

    “As we’ve said before, be wary of rumors,” the guild warned members Tuesday. “Whenever there is important news to share, you will hear it directly from us.”
    The meeting request doesn’t guarantee that producers and writers will resume talks, but it’s the first sign of movement in a stalemate between the Alliance of Motion Picture and Television Producers and the WGA since early May when the strike began.
    The request comes as pressure on the AMPTP to resolve the labor disputes has mounted in recent weeks.
    Tens of thousands of actors joined the picket lines last month, bringing Hollywood productions to a standstill and marking the first simultaneous actors’ and writers’ strikes since 1960.
    The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), led by president Fran Drescher, has towed a hard line with the AMPTP, publicly criticizing studio executives and holding firm to their demands.

    Hollywood performers are looking to improve wages, working conditions, and health and pension benefits, as well as create guardrails for the use of artificial intelligence in future television and film productions. Additionally, the union is seeking more transparency from streaming services about viewership so that residual payments can be made equitable to linear TV.
    “As we’ve stated publicly and privately every day since July 12, we are ready willing and able to return to the table at any time,” said Duncan Crabtree-Ireland, SAG-AFTRA national executive director and chief negotiator. “We have not heard from the AMPTP since July 12 when they told us they would not be willing to continue talks for quite some (time). The only way a strike comes to an end is through the parties talking and we urge them to return to the table so that we can get the industry back to work as soon as possible.”
    The AMPTP said in a statement it remains “committed to finding a path to mutually beneficial deals with both unions.”

    Pressure building

    Fiery rhetoric from the acting guild, including the public damnation of Disney CEO Bob Iger, may have helped push producers to seek resumption of talks with the writers.
    That’s on top of mounting tension with industry scribes. Reports surfaced last month about tactics studio producers allegedly planned to implement against writers, including waiting months for workers to run out of money and possibly lose their homes, thus forcing them to come to the bargaining table.
    While the AMPTP has denied these reports, studio executives have remained outspoken about what they consider unreasonable contract requests.
    The WGA is seeking higher compensation and residuals, particularly when it comes to streaming shows, as well as new rules that will require studios to staff television shows with a certain number of writers for a specific period.
    The guild also is seeking compensation throughout the process of pre-production, production and post-production. Currently, writers are often expected to provide revisions or craft new material, often without being paid.
    The WGA also shares similar concerns over the use of artificial intelligence when it comes to script writing.
    Exacerbating matters for Hollywood producers is the shutdown of film and television productions, which has led to release date chaos. Movies set for next year are already shifting and the upcoming fall television season is expected to be interrupted.
    Even films that have been completed could move on the calendar, as actors are not permitted to promote projects, hindering marketing efforts.
    Media companies have been contending with ramped up cord-cutting of the traditional pay TV bundle — which remains a cash cow, even as it’s dwindling — and working to make streaming businesses profitable.
    While media companies have said their slates for streaming and traditional TV are in good shape for the fall — particularly Netflix, which has a deep vault of content to be released, as well as international programming — the strikes could cause further chaos in an industry that is going through a tumultuous period.
    Iger said on CNBC recently that the stoppage couldn’t occur at a worse time, noting “disruptive forces on this business and all the challenges that we’re facing” on top of the industry still recovering from the pandemic.
    Other issues include the soft advertising market due to macroeconomic concerns and uncertainly. While advertisers have been putting more dollars toward streaming, traditional TV has taken a hit. The work stoppage hasn’t played a big role in conversations with advertisers yet, although if it carries into the new year it could cause hiccups, according to advertising industry executives.
    Netflix and NBCUniversal parent company Comcast recently said during earnings calls they’re committed to reaching a solution with the writers and actors. Warner Bros. Discovery and Paramount Global report their earnings on Thursday and Monday, respectively.
    Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers. More

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    in Business

    Disney CEO Bob Iger wants minority partners for ESPN, but landing a deal won’t be easy

    ESPN has held talks with the NBA, NFL, MLB and the NHL on being minority partners in the network.
    ESPN likely will not launch a direct-to-consumer product before 2025, sources said.
    While Iger would prefer to keep a majority stake in ESPN, Disney executives would consider a full spin of ESPN if they can’t reach a deal to do so, according to a person familiar with the matter.

    Disney CEO Bob Iger speaking with CNBC’s David Faber at the Allen&Co. Annual Conference in Sun Valley, Idaho. 
    David A. Grogan | CNBC

    Disney CEO Bob Iger has taken the unusual step of paying former executives Kevin Mayer and Tom Staggs a consulting fee to help him solve a complex problem: what to do with ESPN.
    Mayer and Staggs are the co-CEOs of Candle Media. Both men are close with Iger and have served as informal advisors to him in the past. They’re working with ESPN President Jimmy Pitaro on the strategic options for ESPN and, to a lesser degree, Disney’s other linear cable networks.

    Iger is looking for new ways to jumpstart ESPN because the rate of U.S. cable cancellations has accelerated. In years past, ESPN could still generate revenue growth by increasing programming fees for pay TV distributors, such as Comcast, Charter and DirecTV.
    That dynamic no longer exists. As ESPN revenue declines, it will become a larger anchor on Disney’s earnings. That has prompted Iger to explore different strategic alternatives.
    Iger told CNBC’s David Faber last month he has had become more confident about when ESPN will launch a direct-to-consumer product. ESPN’s best programming is still exclusive to the linear cable TV bundle. Disney offers many of its lower-rated live games on its ESPN+ streaming service, which costs $9.99 per month.
    When ESPN does decide to offer an unbundled subscription service, it will likely cause even more people to cancel pay TV. That’s why ESPN has waited so long to go direct to consumer.
    Iger declined last month to say when he planned to offer a direct-to-consumer ESPN. It likely won’t be in 2023 or 2024, according to people familiar with the matter.

    An ESPN spokesman declined to comment.

    Discussions with the leagues

    Iger wants to find minority partners to take equity stakes in ESPN. The sports network has held early talks with the National Football League, Major League Baseball, and the National Basketball Association on the concept, CNBC reported last month.
    The National Hockey League has also been involved in these conversations, according to people familiar with the matter. An NHL spokesperson declined to comment.
    Selling a part of ESPN to four professional sports leagues would be unprecedented. The leagues are focused on transitioning their products to a streaming-dominated landscape. Taking a stake in ESPN and having the network’s expertise in building an all-sports subscription service could help the leagues create a unified product and navigate the new economics outside of the traditional TV bundle.
    But a deal might also irritate their existing media partners and create potential conflicts of interest. Leagues would have a vested interest in ESPN’s success if they owned equity stakes. That may not help the leagues maximize sports rights valuations, which have traditionally risen due to bidding wars among media and technology companies such as Comcast’s NBCUniversal, Fox, Paramount Global, Warner Bros. Discovery, Apple, Alphabet and Amazon.
    If ESPN can’t find a suitable deal for minority partners, it has not ruled out a full spin of the network, according to a person familiar with the matter.
    Iger has resisted spinning off ESPN in the past and told CNBC he wanted to stay in the sports business. Mayer, who was executive vice president of corporate strategy at Disney before running the streaming business, has been more open minded about spinning off ESPN when he previously worked at Disney, according to people familiar with the matter.
    Mayer left the company in 2020 to take the CEO job at TikTok. He declined to comment.
    Iger told Faber last month that he wasn’t “necessarily” interested in spinning off ESPN as a separately traded company. The focus for Mayer, Staggs and Pitaro is finding a way where Disney can keep a majority stake in ESPN, according to people familiar with the matter. Disney currently owns 80% of ESPN and Hearst holds 20%.
    Iger is looking for partners who bring advantages to ESPN in either content or distribution. Still it’s unclear if another strategic company would have any interest in owning a minority stake in ESPN. If Disney is the majority owner, it would control the fate of the network. More

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    Elon Musk tweets and Twitter bots drove up price of FTX-listed altcoins, research finds

    Rampant bot activity on Twitter helped pump the price of FTX-listed and Alameda Research-traded cryptocurrency, a new study found.
    Researchers at the Network Contagion Research Institute also found that bot activity and price action significantly increased after X Corp. CTO Elon Musk shared Tweets about two altcoins.
    Bankman-Fried and his executives were acutely aware of the influence that Twitter had on the crypto markets.

    Sam Bankman-Fried, co-founder and chief executive officer of FTX, in Hong Kong, China, on Tuesday, May 11, 2021.
    Lam Yik | Bloomberg | Getty Images

    Rampant bots on Twitter helped to pump up the price of cryptocurrency, including coins traded by insiders at FTX hedge fund Alameda Research before its collapse, according to a new study from the Network Contagion Research Institute published Wednesday.
    NCRI researchers conducted a scaled analysis on Twitter (now known as X) examining over 3 million tweets from Jan. 1, 2019, to Jan. 27, 2023, pertaining to 18 different cryptocurrencies in partnership with New Jersey GovSTEM Scholars. They also shared their findings with X Corp. days ahead of publication.

    Mentions of certain altcoins by Tesla and SpaceX CEO Elon Musk, who led an acquisition of Twitter that closed last October, appear to have caused prices to spike by as much as 50% within one day, the researchers found.
    The NCRI study pointed to Musk’s June 24, 2023, retweet of a post featuring a kitten and the caption, “I wake up there is another PSYOP,” a coin created by a pseudonymous Twitter influencer known as Ben.eth. Trading of this altcoin nearly doubled in volume over the next day, according to CoinMarketCap data.
    Separately, a Musk tweet on May 13, 2023, featuring Pepe the Frog memes led to a more than 50% increase in the price of altcoin PEPE within 24 hours. Musk’s tweet fueled both authentic discussion and bot and promotional tweets about the altcoin, which is based on a popular far-right meme.
    The NCRI findings raise significant questions about social media driven market manipulation in the broader crypto markets. The study also highlights the considerable challenge Musk faces in reigning in bot activity that was pervasive on the social media platform for years and still persists there.
    Musk has claimed, without providing data, that bot activity has fallen since he acquired Twitter.

    According to Alex Goldenberg, Lead Intelligence Analyst for NCRI, “Since Musk’s team took over Twitter last year, API changes were made to deter bot creation, possibly reducing crypto promotion and scams. However, these changes come with trade-offs as they also hinder independent audits by third-party researchers.”
    Goldenberg recommends that if bot activity remains high, X Corp. could “consider stricter account verification, machine learning for bot detection, and special permissions for certified researchers to ensure transparency while combating malicious bot activity and other forms of online harm.”
    X Corp. has been increasing the price to access data for researchers, while also filing lawsuits and threats against researchers looking into hate speech and other online harms on its platform. In recent weeks, X Corp. sued Bright Data and the Center for Countering Digital Hate, for example, raising the ire of House Democrats. NCRI partners with Bright Data for pro-bono access to social media data, Goldenberg noted.
    X Corp. did not immediately respond to a request for comment.

    FTX benefitted greatly from Twitter bot activity

    The NCRI study also highlights how inauthentic activity on Twitter helped drive up the price of tokens listed on FTX in the months before the crypto exchange collapsed. “Bot-like accounts were used to manipulate market sentiment and drive up the price of FTX-listed tokens,” Goldenberg told CNBC in an interview.
    Six small-cap tokens listed by FTX were significantly influenced by inauthentic social media activity on Twitter, NCRI found. The researchers said that “inauthentic chatter” was “successfully and deliberately deployed to influence changes in FTX coin prices,” for six tokens: BOBA, GALA, IMX, RNDR, and SPELL.
    Alameda held at least five of these tokens before they were listed on FTX, and as bot-like activity on Twitter amplified the visibility of the tokens. For one crypto asset, RNDR, inauthentic posts and activity on Twitter concurred with or preceded double-digit percentage jumps in its price.
    On four separate dates from 2022 to 2023, spikes in bot activity on Twitter preceded increases in RNDR’s price ranging from 11% to 30% within a single day, the NCRI analysis found.
    FTX founder Sam Bankman-Fried and his team were well aware of Twitter’s influence on the crypto markets, and how sophisticated investors could extract value from social-media driven price action.
    “People on crypto Twitter, or other sort of similar parties, go and put $200 million in the box collectively,” Bankman-Fried said in an 2022 interview on Bloomberg’s Odd Lots podcast. “In the world we’re in, if you do this, everyone’s gonna be like, ‘Ooh, box token. Maybe it’s cool. If you buy in box token,’ you know, that’s gonna appear on Twitter and it’ll have a $20 million market cap.”
    FTX was one of the largest crypto exchanges in the world before it filed for bankruptcy in 2022.
    Bankman-Fried, 31, now faces a federal indictment for allegedly committing securities and wire fraud. He’s also the subject of Securities and Exchange Commission charges, which alleges that he built his empire on a “foundation of deception.”
    Representatives for Bankman-Fried declined to comment. The SEC and FTX did not immediately respond to a request for comment.
    Read the full NCRI study here. More