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    Cramer’s lightning round: Stick with Netflix

    Monday – Friday, 6:00 – 7:00 PM ET

    It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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    GameStop Corp: “I like great American stories. I don’t like that whole group.”

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    Netflix Inc: “You got the pain, you get the gain. Stick with it.”

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    DraftKings Inc: “Stock could come around, but it’s got to be 50 states before we get there.”

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    Medtronic PLC: “Medtronic right now is not being run well. … I want you to stay away from that.”

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    Jim Cramer says Meta Platforms’ latest quarter is why he stuck with the stock

    Monday – Friday, 6:00 – 7:00 PM ET

    CNBC’s Jim Cramer on Thursday used Facebook parent Meta Platforms as a case study of why it sometimes pays off to hold downtrodden stocks.
    Meta shares soared over 23% on Thursday the day after the company reported a fourth-quarter revenue beat and announced a $40 billion stock buyback.

    CNBC’s Jim Cramer on Thursday used Facebook parent company Meta Platforms as a case study of why it sometimes pays off to hold downtrodden stocks.
    “When companies change their stripes, or when they’re incredibly well managed, or disciplined, or efficient, or when they invent amazing products and reinvent themselves on the fly, you should stick with them,” Cramer said.

    related investing news

    Meta shares soared over 23% on Thursday the day after the company reported a fourth-quarter revenue beat and announced a $40 billion stock buyback.
    CEO Mark Zuckerberg also called 2023 a “year of efficiency” and committed to cutting costs, with management lowering its expense outlook for the year. 
    The tech giant’s prioritization of efficiency comes after investors worried for months about Meta’s pricey investment into the metaverse, sending its stock tumbling. Shares closed at about $189 a share on Thursday, more than double its 52-week low of roughly $88 in November.
    Cramer, whose Charitable Trust owns shares of Meta, also reminded investors that they should buy and sell stocks in stages rather than making hasty, all-or-nothing trading decisions — and that waiting for the bottom is often rewarding.
    “When the company’s well run, the pain often represents a great buying opportunity,” he said.

    Disclaimer: Cramer’s Charitable Trust owns shares of Meta Platforms.

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    Ford posts full-year net loss, ugly fourth quarter as ‘execution issues’ plague operations

    Ford Motor reported an ugly fourth quarter and a full-year net loss.
    The automaker cited “execution issues” that plagued operations. It fell short of expected sales by 100,000 units.
    The company is looking to cut additional costs this year and is not ruling out additional layoffs.

    Ford CEO Jim Farley takes off his mask at the Ford Built for America event at Fords Dearborn Truck Plant on September 17, 2020 in Dearborn, Michigan.
    Nic Antaya | Getty Images

    DETROIT – Ford Motor reported an ugly fourth quarter, missing Wall Street’s earnings expectations and falling short of its own full-year guidance by $1.1 billion, as the company reported “execution issues” that plagued operations.
    Ford’s fourth-quarter net income was $1.3 billion, $11 billion lower than the same period a year earlier. For the full year, Ford lost $2 billion, nearly $20 billion off its 2021 profit.

    “We should have done much better last year,” CEO Jim Farley said in an earnings release. “We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.”
    Shares of Ford were off by more than 6% during afterhours trading. The stock closed Thursday at $14.32 per share, up 3.8% on the session.
    Here’s how Ford performed in the fourth quarter, compared with analysts’ estimates as compiled by Refinitiv:

    Adjusted earnings per share: 51 cents vs. 62 cents estimated
    Automotive revenue: $41.8 billion vs. $40.37 billion estimated

    The company’s overall revenue increased 16% to $158.1 billion for 2022, including a 17% uptick in the fourth quarter to $44 billion.
    In October, Ford said it expected full-year adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion. On Thursday it reported 2022 earnings of $10.4 billion, nearly flat year over year.

    “‘I’m frustrated’ is an understatement, because the year could have been so much more for us at Ford,” Farley told investors during an earnings call.

    Missed opportunities

    Ford CFO John Lawler said Thursday that the company’s disappointing earnings were largely due to execution and supply chain management issues. The company fell short of expected sales by 100,000 units, equating to about $1 billion in missed earnings, he said.
    The automaker’s full-year results were further weighed down by a $7.4 billion loss on its 9.5% stake in electric vehicle maker Rivian Automotive and a $2.8 billion loss associated with disbanding its Argo AI autonomous vehicle unit.
    Lawler said the automaker is looking to cut additional costs this year. He did not rule out additional layoffs, specifically in Europe. He said the other $1 billion in missed opportunities last year were related to costs.
    “Our cost structure is not competitive,” he said during a media call. “Our quality is not where it needs to be. And we will take the actions and be more aggressive about making sure that we’re making progress on both of those key areas for us in 2023.”
    “It’s a significant amount we plan on taking out this year,” Lawler said regarding cost-cutting, adding more information will come throughout the year.
    Ford also will be providing more clarity on its traditional business operations, electric vehicles and Ford Pro fleet business units — the automaker said it will begin reporting each business unit separately this year.

    A 5-day stock chart comparing Ford and GM stocks.

    Lawler said Thursday that Ford’s EV business is not currently profitable. The company earlier this week cut costs of its top-selling electric Mustang Mach-E crossover in response to Tesla EV price cuts. Farley said higher EV margins will be unlocked with its next-generation vehicles, which are expected to begin production in 2025 at a new plant under construction in Tennessee.
    Executives said Ford hoped to offset some of the near-term profit shrink with cost improvements thanks to the additional production as well as a reduction in some commodity costs.
    There was pressure on Ford to deliver a strong fourth quarter and relatively solid guidance. Crosstown rival General Motors on Tuesday significantly outperformed Wall Street’s expectations. That automaker also forecast stronger-than-expected 2023 results, including adjusted earnings before interest and taxes of $10.5 billion to $12.5 billion and adjusted earnings per share of between $6 and $7.
    For 2023, Ford said it expects to earn between $9 billion and $11 billion in adjusted earnings before interest and taxes, presuming seasonally adjusted annual rates of about 15 million vehicles in the U.S. and about 13 million in Europe.
    Ford anticipates generating about $6 billion in adjusted free cash flow. That assumes “no distributions” from its financial arm Ford Credit, the company said.
    “We are executing a double transformation. While we’re making progress, it’s hard work,” Farley told investors. “As with any transformation of this magnitude, certain parts are moving faster than I expected and other parts are taking longer.”

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    Starbucks misses expectations as China Covid surge hurts international sales

    Starbucks reported earnings and revenue after the bell that fell short of Wall Street’s expectations.
    The coffee chain was expected to post quarterly earnings per share of 77 cents and revenue of $8.78 billion.
    A surge in Covid cases in China heavily weighed on Starbucks’ sales in the country.

    A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California.
    Lucy Nicholson | Reuters

    Starbucks on Thursday reported quarterly earnings and revenue that fell short of analysts’ expectations as weak international demand weighed on its results.
    In China, the company’s second-largest market, transactions at cafes open at least 13 months plunged 28%. During the quarter, the Chinese government relaxed its zero Covid policy, which led to new outbreaks of the virus. Outgoing CEO Howard Schultz said that more than 1,800 of its 6,090 Chinese locations were closed at the peak of the latest Covid wave.

    related investing news

    4 hours ago

    Despite weak performance in China, CFO Rachel Ruggeri reiterated the company’s fiscal 2023 outlook. However, Starbucks now expects negative same-store sales growth in China through the fiscal second quarter, followed by a reversal of the trend in the second half of the fiscal year.
    Shares of the company fell more than 1% in extended trading.
    Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

    Earnings per share: 75 cents adjusted vs. 77 cents expected
    Revenue: $8.71 billion vs. $8.78 billion expected

    The coffee giant reported fiscal first-quarter net income of $855.2 million, or 74 cents per share, up from $815.9 million, or 69 cents per share, a year earlier.
    Excluding restructuring and impairment costs and other items, Starbucks earned 75 cents per share.

    Net sales rose 8% to $8.71 billion. Globally, its same-store sales rose 5%, driven by a 7% increase in average transaction spend.
    In the U.S., Starbucks saw same-store sales growth of 10%, thanks to customers spending more and a 1% bump in traffic. Customers bought a record $3.3 billion in gift cards over the holiday season.
    Schultz also said that while many retailers reported falling traffic and weak holiday sales, those with Starbucks locations inside their stores said the coffee chain drew traffic and sales.
    Its U.S. rewards program reached 30.4 million active members, up 15% from the year-ago period and 6% from the prior quarter. The coffee chain recently changed its loyalty program, making it more expensive to redeem points for a hand-crafted drink but cheaper for beverages that are easier to make.
    Outside its home market, Starbucks’ same-store sales shrank 13%, dragged down by China’s dismal performance.
    But China’s sales are already improving. Ruggeri said the country’s same-store sales plunged 42% in December but just 15% in January.
    The company opened 459 net new locations in the quarter.
    Looking to 2023, the company is projecting revenue growth of 10% to 12% and adjusted earnings per share growth on the low end of 15% to 20% for fiscal 2023.
    Schultz also teased an announcement coming later in February. He said he discovered “an enduring transformative new category” when he visited Italy last summer.
    “The word I would use to describe it without giving too much away is alchemy,” he told analysts on what’s expected to be his final conference call as chief executive.
    Laxman Narasimhan is slated to take over as CEO on April 1.
    Read the full Starbucks earnings report.

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    Kohl’s names interim CEO Tom Kingsbury to the post permanently

    Kohl’s named Tom Kingsbury as its permanent CEO.
    Kingsbury served as interim CEO since December following former chief executive Michelle Gass’s departure.
    The retailer also reached an agreement with activist investor Macellum, which had been pushing for changes to the company’s board.

    The Kohl’s logo is displayed on the exterior of a Kohl’s store on January 24, 2022 in San Rafael, California.
    Justin Sullivan | Getty Images

    Kohl’s on Thursday named interim CEO Tom Kingsbury to the post on a permanent basis.
    He took over as interim CEO in December after former chief executive Michelle Gass decided to leave for Levi Strauss. Kingsbury’s appointment had been expected.

    related investing news

    The company also said activist investor Macellum Advisors agreed to back off its pressure campaign.
    “The Board appreciates our constructive dialogue with Macellum during the last few months and their engagement as we conducted the CEO search process. We look forward to their continued support and partnership,” Michael Bender, a member of Kohl’s board, said in a release Thursday.
    In October, Macellum had been pushing for board seats and also urged the company to oust the board’s chairman, Peter Boneparth.
    Kingsbury, a retail industry veteran, was the nominee of Macellum and other activist investors who had been angling for a leadership restructure. Kingsbury had previously served as CEO of Burlington Stores from 2008 to 2019.
    Boneparth on Thursday praised Kingsbury. “Tom’s exceptional track record growing retail businesses and his deep knowledge of Kohl’s makes him the right choice for Kohl’s next CEO,” he said in a release.

    Demands for a leadership shakeup came after the company backed out of a deal to sell to Franchise Group as it struggled to navigate economic headwinds and maintained low guidance.
    Kohl’s has been struggling to boost sales as budget-conscious consumers rein in spending amid inflation. The company has made a variety of attempts to revamp its brand, including with store redesigns, new partnerships and an expansion of its e-commerce offerings.
    Shares of Kohl’s were up about 1% in after-hours trading on Thursday.
    Read the full release from Kohl’s.

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    Ticketmaster braces for Beyoncé’s ‘Renaissance’ tour amid fears of Taylor Swift-level demand

    Ticketmaster is gearing up for what’s expected to be high demand for tickets to Beyoncé’s upcoming “Renaissance World Tour.”
    Ticketing for the North American leg of the 41-date tour begins Feb. 6, according to Ticketmaster and parent company Live Nation.
    The ticketing site has come under fresh scrutiny in light of a botched presale for Taylor Swift’s “Eras” tour that was overrun by bots.

    Beyoncé performing.
    Larry Busacca | PW18 | Getty Images

    Ticketmaster is gearing up for what’s expected to be high demand for tickets to Beyoncé’s upcoming “Renaissance World Tour,” as the ticketing giant continues to face criticism over the botched presale for Taylor Swift’s “Eras” tour last year.
    Beyoncé announced Wednesday that her first solo world tour since 2016 will kick off May 10 in Stockholm, Sweden, and conclude Sept. 27 in New Orleans. The superstar will perform songs from her seventh studio album, “Renaissance,” which released over the summer and is in the running for Album of the Year at Sunday’s Grammy Awards ceremony.

    Ticketmaster said in a statement that “demand for this tour is expected to be high” and that it plans to use its Verified Fan system again to prioritize tickets for those who register with the platform. The company said the multistep verification process will “ensure more tickets get into the hands of concertgoers” and will “help filter out buyers looking to resell tickets” and automated bots.
    Ticketing for the North American leg of the 41-date tour begins Feb. 6, according to Ticketmaster and parent company Live Nation, and fans hoping to secure presale tickets will have a better chance if they register with Ticketmaster’s Verified Fan system.
    Ticketmaster said registering does not guarantee tickets and only verified fans who later receive a code through lottery-style selection will then have access to join the sale on a first-come, first-served basis on the sale date. Registration windows vary by city, and the company warns “there will be more demand than there are tickets available.”
    In November, verified fans for Taylor Swift’s “Eras” tour presale faced long wait times, confusion and technical glitches. Within 48 hours of the presale going live, Ticketmaster canceled the general public sale, citing “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory to meet that demand.”
    The company later said bots were at least partially responsible for the disruption.  

    Ticketmaster and Live Nation did not immediately respond to CNBC’s requests for comment Thursday.
    Following the November meltdown, Ticketmaster and Live Nation have faced fresh scrutiny over their 2010 merger, with politicians and competitors saying the ticketing site’s monopoly in the live music industry has resulted in exorbitant ticket fees and poor customer service.
    Senators heard testimony on the matter Jan. 25, when lawmakers from both sides of the aisle questioned Live Nation’s chief financial officer, Joe Berchtold.
    A group of Swift fans is suing Live Nation, accusing the company of “anticompetitive conduct.”

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    IRS about 3 to 5 times more likely to audit Black Americans’ tax returns, study finds

    Smart Tax Planning

    Black Americans are roughly three to five times more likely to face an IRS audit than other taxpayers, according to a study.
    The findings show the disparity stems from a faulty software algorithm used by the agency to pick who gets audited.
    The Treasury Department said, “Equitable enforcement of our tax laws is a top priority for the administration” and Inflation Reduction Act funds will help upgrade technology and hire top talent.

    Jeffrey Coolidge | Photodisc | Getty Images

    Black Americans are roughly three to five times more likely to face an IRS audit than other taxpayers, according to a new study.
    While there isn’t evidence of explicit discrimination from the IRS or its revenue agents, the findings show the disparity stems from a faulty software algorithm used by the agency to pick who gets audited.

    Based on microdata on roughly 148 million tax returns and 780,000 audits, the study was conducted by economists at Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago.

    More from Smart Tax Planning:

    Here’s a look at more tax-planning news.

    “Equitable enforcement of our tax laws is a top priority for the administration, and resources provided by the Inflation Reduction Act will enable the IRS to upgrade technology and hire top talent to go after wealthy tax evaders,” a Treasury Department spokesperson told CNBC in an email.

    Focus on ‘low dollar, high certainty cases’

    The study’s co-author, Evelyn Smith, an economics graduate student at the University of Michigan and visiting fellow at Stanford University’s RegLab, said the audit rate differences seem to be driven by the agency’s focus on “low-dollar, high-certainty cases.”
    Specifically, the study examines audits of filers claiming the earned income tax credit, a tax break for low to moderate earners. The credit is refundable, meaning eligible filers can receive it even with zero taxes due.
    The findings show Black filers claiming the earned income tax credit were more likely to be audited than non-Black filers claiming the same credit.

    “It’s a type of audit that the IRS does a lot,” she said. “It’s cheap, it’s easy to perform and Black taxpayers get caught up in that disproportionately relative to non-Black taxpayers.”

    Focusing on these individual-level issues rather than the total dollar amount of underreporting seems to be driving these differences.

    Evelyn Smith
    Study co-author

    Smith said the IRS has focused on specific mistakes with claiming the earned income tax credit, such as missing dependents or misreporting income, which are required for eligibility.
    “Focusing on these individual-level issues rather than the total dollar amount of underreporting seems to be driving these differences,” she said, noting a shift to self-employed earned income tax credit filers would help address the problem.

    Cuts created ‘distorted prioritization of audits’

    The study comes amid the ongoing debate over the nearly $80 billion in IRS funding, including enforcement, approved by Congress in August.  
    Chuck Marr, vice president for federal tax policy at the Center on Budget and Policy Priorities, said the findings were “very troubling” and it speaks to the agency’s need for staffing. “The enforcement division has been decimated by budget cuts in the last decade,” he said. “And one result of that has been this distorted prioritization of audits.”
    The IRS is expected to deliver a plan for allocation of the funding to Treasury Secretary Janet Yellen in February. More

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    Trian presses Disney to replace board member Michael Froman with Nelson Peltz

    Activist investor Trian sent another letter to Disney, pushing for the removal of a board member in favor of instituting Nelson Peltz, as the proxy battle between the two heats up.
    Trian is pushing for votes to put Peltz on the board and remove Michael Froman, according to a Thursday filing.
    Trian holds 9.4 million shares of Disney and went public with its activist campaign in early January.

    Nelson Peltz
    David A. Grogan | CNBC

    The proxy battle between Disney and activist investment firm Trian Management LP is heating up ahead of the company’s annual shareholder meeting.
    Earlier in January Trian went public with its fight for a seat on the board, taking issue with Disney’s $71 billion acquisition of Fox in 2019, board missteps in the succession planning process and losses for shareholders.

    The two traded barbs on Thursday after Trian said in a filing that Disney shareholders should vote to remove Michael Froman from the board and replace him with Nelson Peltz.
    “Trian Group believes Mr. Froman has no experience as a public company director outside of Disney,” the firm said in a statement Thursday. “In contrast, Nelson Peltz has served on numerous public company boards over the last several years.”
    Disney’s board responded later Thursday saying Froman’s “deep background in global trade and international business” leads them to believe he is better qualified than Peltz to help drive shareholder value.
    Trian is arguing that Disney shareholders have lost out in value over the years due to “weak corporate governance.” The firm said Disney lost more than $120 billion of its market value in 2022, earnings per share has declined 50% since 2018 and pointed to Disney eliminating its dividend in 2020.
    Trian said it holds about 9.4 million shares valued at approximately $1 billion, which it accumulated months ago.

    Disney’s board on Thursday urged shareholders not to endorse Peltz. The board said that replacing Froman with Peltz would be a mistake, saying Peltz would “threaten the strategic management of Disney during a period of important change in the media landscape.”
    Last month, Disney shot back at Trian, defending CEO Bob Iger’s past acquisitions. The company also said Peltz didn’t have an understanding of Disney’s business and lacked the skills to drive shareholder value while presenting no strategy. Disney said its board was where it needed to be.
    “Peltz has no track record in large cap media or tech, no solutions to offer for the evolving media landscape,” Disney said in an investor presentation released Tuesday.
    In a move to preempt and oppose Trian in January, Disney said Mark Parker, the executive chairman of Nike, would become the new chairman of the board.
    Froman, the vice chairman and president of strategic growth at Mastercard, has served as a director on the board since 2018. He also served as U.S. Trade Representative under then-President Barack Obama.
    Few members of Disney’s board have media experience outside of the Mouse House.

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