Business

Frontier is offering a $250 million reverse breakup fee to Spirit.
JetBlue Airways is trying to acquire Spirit and has launched a hostile takeover attempt.
JetBlue’s offer includes a $200 million reverse breakup fee.

A Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

Frontier Airlines’ parent company on Thursday said it would pay a $250 million reverse breakup fee to Spirit Airlines if regulators don’t approve the planned combination of the two discount carriers for antitrust reasons, an effort aimed at convincing investors to approve the deal next week as rival JetBlue Airways tries to buy Spirit outright.
“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” Mac Gardner, Spirit’s chairman said in a news release.

New York-based JetBlue offered $33 a share, or $3.6 billion cash for Spirit, in April, above the $2.9 billion cash-and-stock deal that Spirit and Frontier announced in February.
Spirit’s board rejected JetBlue’s advances, and JetBlue last month made a tender offer of $30 a share and has urged Spirit shareholders to vote against the deal.
Spirit said a deal with JetBlue wouldn’t likely be approved by regulators. JetBlue’s offer includes a $200 million reverse breakup fee if regulators don’t approve the acquisition.
On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns about the lack of a reverse termination fee.
Spirit’s shareholder meeting is set for June 10.

WATCH LIVEWATCH IN THE APP More

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.

Loading chart…

Loading chart…

Loading chart…

Loading chart…

Loading chart…

Loading chart…

Upstart Holdings Inc: “I didn’t like the loans on the balance sheet. If it gets rid of the loans … or it makes me convinced that they’re good, then all is forgiven and I’m cool with it.”

Loading chart…

Loading chart…

WATCH LIVEWATCH IN THE APP More

The FDA is expected to make its decision on Pfizer and Moderna’s Covid shots for infants through preschoolers soon after the agency’s committee of independent experts reviews the data on June 15.
Dr. Ashish Jha, the White House Covid response coordinator, said the shots would start shipping after the FDA makes its decision, with vaccinations starting as early as June 21.
Jha said it will take some time for the vaccination program to ramp up, but added that every parent should be able to get an appointment within weeks of the rollout.

Covid vaccinations for children under age 5 are expected to begin as early as June 21, a senior Biden administration health official said on Thursday.
Dr. Ashish Jha, the White House Covid response coordinator, said the Biden administration will initially make 10 million doses of Pfizer and Moderna vaccines available to states, pharmacies and community health centers. States can begin placing orders on Friday, Jha said, but the vaccine doses will ship only after the Food and Drug Administration authorizes the shots.

The FDA is expected to make its decision on Pfizer and Moderna’s Covid shots for infants through preschoolers soon after the agency’s committee of independent experts reviews the data on June 15, Jha said. The Centers for Disease Control and Prevention would then issue its recommendations quickly after the FDA decision, which would allow vaccinations to begin after the Juneteenth federal holiday, he said.

A nurse administers a pediatric dose of the Covid-19 vaccine to a girl at a L.A. Care Health Plan vaccination clinic at Los Angeles Mission College in the Sylmar neighborhood in Los Angeles, California, January 19, 2022.
Robyn Beck | AFP | Getty Images

Jha said it will take some time for the vaccination program to ramp up, but added that every parent should be able to get an appointment within weeks of the rollout.
“We’re going to ship doses out as fast as possible,” Jha told reporters during White House press briefing. “We’re going to make sure that supply is always meeting demand. And we’re going to do everything we can to make it easy for providers and parents alike to get their kids vaccinated.”
Parents have been waiting months for the FDA to authorize the shots for kids under age 5, which is the only group left in the U.S. not eligible for Covid vaccination. Though Covid is normally less severe in children than adults, hospitalizations of kids under age 5 were five times higher during the winter omicron surge compared to the peak during the previous delta wave, according to the CDC.
Pfizer said its three-dose vaccine for children ages 6 months through 4 years old was 80% effective at preventing illness from the omicron variant. The shots are three micrograms, one-tenth the dosage level for adults.

Moderna said its two-dose vaccine was about 51% effective against infection from omicron in children under 2 and about 37% effective among those 2 through 5. However, Moderna Chief Medical Officer Dr. Paul Burton said the antibody levels observed in the children should translate to high levels of protection against severe illness. Moderna’s shots are 25 micrograms, much smaller than the 100 micrograms currently approved for adults.
If FDA authorizes the shots in June, parents would have a few months to get their kids vaccinated ahead of the fall. Public health officials are expecting another wave of Covid infections then with people spending more time indoors in the colder weather.
Covid infections and hospitalizations have increased again in recent weeks as more transmissible omicron subvariants sweep the U.S. The nation is currently reporting more than 103,000 new infections per day on average as of Tuesday, according to CDC data. More than 3,700 people with Covid are admitted to hospitals per day on average, according to the data.

CNBC Health & Science

Read CNBC’s latest global coverage of the Covid pandemic:

WATCH LIVEWATCH IN THE APP More

Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer said Thursday that despite conventional wisdom, he believes investors should pick up shares of homebuilding stocks the next time they plummet.
“I believe these stocks will drop again, but when they do … I think you’ve got to pounce,” the “Mad Money” host said.

CNBC’s Jim Cramer said Thursday that despite conventional wisdom, he believes investors should pick up shares of homebuilding stocks the next time they plummet.
“I believe these stocks will drop again, but when they do — and that might be on a statement from the Fed that says they’re still seeing signs of inflation — I think you’ve got to pounce,” the “Mad Money” host said. “That could be as soon as the next rate hike.”

Homebuilder sentiment fell to a two-year low on decreasing demand and rising costs in May. Mortgage rates rose sharply this week after easing over the last few weeks, as home prices also continued to rise.
But Cramer says there are bullish signs for the market suggesting that despite the Federal Reserve getting ready to tighten the economy, homebuilding stocks might go against the tide and be attractive assets for investors’ portfolios.
He pointed out that the pandemic has changed the homebuilding industry’s landscape, leaving downtown offices empty because of work-from-home, plumping potential buyers’ bank accounts and driving a baby boom that could mean more business for homebuilding companies.
In addition, skyrocketing rent prices have meant some people invested in homes rather than signing a lease, while constrained supplies of houses have kept properties from depreciating in value and led to bidding wars between potential buyers, he said.
“We’ll get more downgrades and maybe even some estimate cuts, but when they come I’m going to go out on a limb right here and I’m going to say the time is right to buy the homebuilders,” Cramer said.

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.
Disclaimer

Questions for Cramer?Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer’s world? Hit him up!Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram
Questions, comments, suggestions for the “Mad Money” website? [email protected]

WATCH LIVEWATCH IN THE APP More

Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Thursday urged investors to purchase shares of Deere at the start of the next trading session.
“You can now get its stock for just 15.5 times earnings, which I just think is absurd. So, you’ve got my blessing to buy it tomorrow morning,” the “Mad Money” host said.

CNBC’s Jim Cramer on Thursday urged investors to purchase shares of Deere at the start of the next trading session.
“I’ve told you to buy Deere all year. Liked it even more when Russia invaded Ukraine, because …  it’s created a powerful bull market in all things agriculture,” the “Mad Money” host said. “This is a textbook real company that makes real stuff and sells it at a profit, with a reasonable valuation,” he added.

“You can now get its stock for just 15.5 times earnings, which I just think is absurd. So, you’ve got my blessing to buy it tomorrow morning,” he said.
Shares of Deere tanked 14% after the equipment maker missed Wall Street expectations on revenue but beat on profit in its latest quarter. However, the stock bounced during last week’s marketwide rally.
Cramer said that he believes the stock fell because investors were expecting a blowout quarter due to the current bull market in agriculture, and dumped the stock after Deere reported quarterly results that left more to be desired.
The company’s guidance also left investors unenthusiastic, Cramer said, adding that the stock rallied after Deere had its analyst day and investors reassessed the company’s latest quarter.
“This one is an important bellwether, and not just for farm equipment. The crazy action in Deere stock … can tell you a lot about the temperament of this market and how it’s changed,” Cramer said.

Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market.
Disclaimer

Questions for Cramer?Call Cramer: 1-800-743-CNBC
Want to take a deep dive into Cramer’s world? Hit him up!Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram
Questions, comments, suggestions for the “Mad Money” website? [email protected]

WATCH LIVEWATCH IN THE APP More

Lululemon expects the momentum in its business to continue in spite of broader economic headwinds.
The athletic apparel retailer posted earnings and revenue that topped Wall Street’s expectations.
“Our product pipeline remains very strong and it’s the bedrock of the business,” CEO Calvin McDonald said.

Lululemon customers so far aren’t balking at higher prices on the retailer’s leggings and sports bras, Chief Executive Officer Calvin McDonald said Thursday.
The athletic apparel maker reported fiscal-first quarter profit and revenue that outpaced Wall Street’s expectations, boosted by double-digit growth online and in the retailer’s still nascent men’s division.

It also raised its financial outlook for fiscal 2022, expecting the momentum in its business to continue in spite of broader economic headwinds, including red hot inflation and the snarled supply chain.
Lululemon, which caters to a more affluent customer, joins a group of retailers including Levi Strauss & Co., Nordstrom and Macy’s high-end Bloomingdale division that are luring shoppers with enough extra money to splurge on new clothes and accessories while prices are rising at rates last seen four decades ago. In late March, Lululemon said it would be raising prices on certain items to help offset higher costs for raw materials, labor and air freight.

Pedestrians seen walking past Canadian athletic apparel retailer Lululemon in Shanghai.
Alex Tai | SOPA Images | LightRocket | Getty Images

Lululemon in particular was seen as a pandemic beneficiary, as people sought out stretchy pants and comfortable clothing to wear at home. But now, even as Americans emerge from their homes to return to offices and social outings, they’re still buying so-called athleisure items. Lululemon has also broadened its assortment more recently to include footwear and skin-care products.
“Our product pipeline remains very strong and it’s the bedrock of the business,” McDonald said on a call with analysts.
Lululemon sees sales in fiscal 2022 in a range of $7.61 billion to $7.71 billion, up from a prior forecast of $7.49 billion to $7.62 billion. Analysts were looking for $7.54 billion, according to Refinitiv data.

The company expects to earn, on an adjusted basis, between $9.35 and $9.50 per share, up from a prior range of $9.15 to $9.35. Analysts were looking for per-share earnings of $9.28.
Lululemon’s shares were little changed during extended trading.
Here’s how Lululemon did in its fiscal first quarter compared with what Wall Street was expecting, based on Refinitiv data:

Earnings per share: $1.48 vs. $1.43 expected
Revenue: $1.61 billion vs. $1.53 billion

The retailer reported net income in its fiscal first quarter of $190 million, or $1.48 per share, compared with net income of $145 million, or $1.11 a share, a year earlier.
Lululemon’s revenue grew roughly 32% to $1.61 billion from $1.23 billion a year earlier.
Same-store sales, which track revenue online and at Lululemon stores open for at least 12 months, rose 28% from the prior year. Analysts had been looking for an increase of 20.4%, according to StreetAccount estimates.
Women’s sales grew 24% on a three-year basis, and men’s grew 30% versus 2019 levels, the company said.
For the second quarter, Lululemon expects revenue to be in the range of $1.75 billion to $1.78 billion, topping analysts’ expectations for $1.71 billion.
Excluding the gain on the sale of an administrative office building, adjusted earnings per share are expected to be in the range of $1.82 to $1.87, ahead of analysts’ expectations for $1.77.
Regarding China, which is still facing Covid-related restrictions in some regions, McDonald said that roughly one-third of Lululemon’s 71 stores in the country were closed for a period of time in the latest quarter and into the second.
However, he said the company will continue to invest in China, viewing the softened demand as a short-term challenge. “Our brand momentum remains strong,” the CEO told analysts.
Lululemon shares are down about 23% year to date.

WATCH LIVEWATCH IN THE APP More

The IRS is working to boost audit rates for the wealthiest Americans, according to a statement from the agency.
While plummeting audits have drawn congressional scrutiny, the numbers doubled for higher earners over the past seven months, the IRS reported.
Still, “resource constraints” have limited the agency’s ability to review high net worth individuals, large corporations and complex business structures.

Jeffrey Coolidge | Photodisc | Getty Images

The IRS is working to boost its audit rates for the wealthiest Americans, according to a statement recently released with the agency’s annual Data Book, covering activities for the 2021 fiscal year.
While plummeting audits have drawn scrutiny from Congress, percentages have doubled for filers making over $100,000 to more than $10 million over the past seven months, according to the statement. 

What’s more, audits of higher-income taxpayers often come later in the statutory period — within three years of a filing — meaning audits for 2019 may still happen through at least 2023, the agency says.
More from Personal Finance:Tax professionals ‘horrified’ by IRS destroying 30 million filers’ dataIRS insists destruction of taxpayer data won’t affect payersLate tax refunds will earn 5% interest — but it’s taxable
Still, the IRS says “resource constraints” have limited the agency’s ability to audit high net worth individuals, large corporations and complex business structures, and reviews have significantly declined since the 2010 tax year.  

“Audit rates for taxpayers with incomes of more than $200,000 decreased the most, largely because higher-income audits tend to be more complicated and require auditors to manually review multiple issues,” Ken Corbin, chief taxpayer experience officer for the agency, told the House Oversight Subcommittee in May.

Currently, the agency still has only 6,500 agents to tackle audits for high-income filers, according to the May IRS statement. 

Although the IRS in March said it planned to hire 10,000 workers to address the agency’s backlog, Corbin admitted hiring has been a challenge. The agency on Wednesday issued another call to hire 4,000 representatives.
IRS audits declined by 44% between fiscal years 2015 and 2019, according to a 2021 report from the Treasury Inspector General for Tax Administration. Audits dropped by 75% for filers making $1 million or more, and 33% for low-to-moderate earners claiming the earned income tax credit, known as EITC.
Returns claiming the EITC have “historically had high rates of improper payments and therefore require greater enforcement,” Corbin said during the May House Oversight Subcommittee hearing.
Since many lower-income filers are wage earners, audits are generally less complex and may involve an automated process.
Americans making more than $5 million annually had just over a 2% chance of being audited in 2019 compared with more than 16% in 2010, according to a May report from the Government Accountability Office, a federal watchdog.
The report cites budget cuts as the primary reason for the decline, dropping to $11.9 billion for fiscal 2021, which is $200 million less than 2010, along with limited staffing. 

WATCH LIVEWATCH IN THE APP More

Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer on Thursday gave investors the go-ahead to buy shares of valuable companies that reported bad news, yet still managed to keep their stocks afloat.
“Because the stocks have been so crushed in anticipation of multiple rate hikes, you can be bold enough to buy a discounted product without much hesitation,” the “Mad Money” host said.

CNBC’s Jim Cramer on Thursday gave investors the go-ahead to buy shares of valuable companies that reported bad news, yet still managed to keep their stocks afloat.
“The lack of new, broken-the-moment-you-buy-it stocks, and the horrendous declines in very valuable companies, have coalesced to create an environment where Wall Street’s willing to overlook some of the imperfections. Not all. But some,” the “Mad Money” host said.

“You’re free to overlook a blemish or two, and because the stocks have been so crushed in anticipation of multiple rate hikes you can be bold enough to buy a discounted product without much hesitation. I think that we’ve reached that level,” he added.
Cramer highlighted several instances in which investors ignored “textbook bad news” from a company, pointing out that shares of Nvidia, Microsoft and Salesforce all dropped after reporting disappointing financial results or forecasts but managed to rally.
Cramer said he believes this new forgive-and-forget attitude from Wall Street might be because IPOs are falling by the wayside while even valuable companies see declines.
“We’re finally at the point in the stock cycle … where the underwriters are no longer pumping out the bilge, these lethal IPOs for which there’s no appetite whatsoever,” he said. “Enough money has been lost in the new, why go back – why not go back to the old?”
Disclosure: Cramer’s Charitable Trust owns shares of Microsoft, Nvidia and Salesforce.

WATCH LIVEWATCH IN THE APP More