Many investors will have greeted the start of corporate America’s latest earnings season feeling chipper. After a brief wobble in the first half of last year, the profits of big American firms in the S&P 500 index have climbed steadily higher in each subsequent quarter. This time around their profits are expected to grow by a bit more than 4%, year on year. More
Peloton is partnering with Costco to sell its Bike+ in stores and online between Nov. 1 and Feb. 15.
Costco will offer Peloton’s Bike+ in 300 of its U.S. stores for $1,999, and on Costco.com for $2,199, compared to the typical price of $2,495.
The partnership comes as Peloton looks for fresh and profitable ways to reach new customers.
Peloton and Costco.
Shannon Stapleton | Reuters Justin Sullivan | Getty Images
Peloton’s stationary bikes will soon sell at Costco’s stores and on its website as the beleaguered fitness company looks for new ways to reach younger and affluent customers, Peloton is set to announce Tuesday.
Under the terms of the deal, Costco will offer Peloton’s Bike+ in 300 of its U.S. stores for $1,999, and on Costco.com for $2,199 between Nov. 1 and Feb. 15. It is a steep discount from the typical price of the Bike+, which is selling on Peloton’s website for $2,495. It is unclear how the price will compare to any holiday promotions Peloton plans to offer.
The new partnership comes during a state of transition for Peloton, which is being led by two board members after its former CEO Barry McCarthy stepped down earlier this year.
Long focused on growth at all costs, Peloton has turned its sights to profitability and has had to become more creative as it tries to reach new users.
As sales fall and losses mount, Peloton is looking for cheaper ways to attract new customers. Costco is one way to get there, Dion Camp Sanders, Peloton’s chief emerging business officer, told CNBC in an interview.
“We’ve been able to architect a deal with Costco that meets our needs with regard to profitable, sustainable unit economics, while at the same time delivering robust and clear value to Costco members,” said Camp Sanders. “We’ve structured this deal with Costco to both meet our needs for profitable, sustainable growth and getting us access to Costco’s very large net incremental audience.”
Camp Sanders said Peloton’s partnership with Costco is only for a limited time because fitness is a seasonal category for the company, but Peloton hopes to keep building on the relationship and perhaps expand it to future locations both in the U.S. and abroad.
The deal with Costco gets Peloton onto the shelves of a retailer with a strong fan following and wealthier customers. The membership-based club has gained popularity as shoppers across all incomes prioritize value and try to get more for their money with bulk packs and private-label items.
As of Sept. 1, store traffic at Costco had increased 31% compared with the same period in pre-pandemic 2019, according to Placer.ai, an analytics company that estimates visits to locations based on smartphone data.
Costco’s members are also getting younger. Those consumers prioritize health and wellness — and are willing to invest in it — in ways that older generations do not.
About half of Costco’s new membership sign-ups last fiscal year came from people who were under 40 years old, and the average age of its 76 million members has fallen since the Covid-19 pandemic, Chief Financial Officer Gary Millerchip said on an earnings call in late September.
According to Numerator, 36% of Costco’s customers have a household income of more than $125,000. Numerator has a panel of 150,000 U.S. consumers that is balanced to be representative of the country’s population.
Camp Sanders said Costco’s members “have the disposable income to be able to afford our premium products,” and their lifestyles align with what Peloton offers.
“Many of Peloton’s members are affluent, they often have larger homes in the suburbs and they also have life situations where Peloton fits a clear need,” said Camp Sanders. “Many Costco members are juggling families, they maybe have a busy career … and they’ve got the space in their home” to build their own gyms, he continued.
Costco’s Executive Vice President of Merchandising Claudine Adamo declined to comment to CNBC.
Peloton already sells its workout equipment through Amazon and Dick’s Sporting Goods, but has also been working to develop relationships with other companies that cater to similar customer bases.
For example, hundreds of Hyatt Hotel properties have Peloton equipment on site. As of this month, hotel members can earn points for completing workouts on the Peloton Bike and Row during their stay.
It also announced a deal with Truemed — the PayPal of the health savings account and flexible spending account world — that allows Peloton members to use pretax earnings to buy certain hardware products, including the Bike, Bike+ and Tread.
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GM easily outperformed Wall Street’s third-quarter earnings expectations, leading the Detroit automaker in raising key guidance targets for 2024.
GM now expects full-year adjusted EBIT of between $14 billion and $15 billion, or $10 and $10.50 a share, up from between $13 billion and $15 billion, or $9.50 and $10.50.
GM executives will host an earnings conference call at 8:30 a.m. ET.
DETROIT — General Motors easily outperformed Wall Street’s third-quarter earnings expectations, leading the Detroit automaker in raising key guidance targets for 2024.
Here’s how the company performed in the third quarter, compared with average estimates compiled by LSEG:
Earnings per share: $2.96 adjusted vs. $2.43 expected
Revenue: $48.76 billion vs. $44.59 billion expected
This marks the third time this year that GM has updated its guidance after beating Wall Street’s top- and bottom-line expectations, led by the automaker’s North American operations.
GM is now forecasting full-year adjusted earnings before interest and taxes of between $14 billion and $15 billion, or $10 and $10.50 a share, up from between $13 billion and $15 billion, or $9.50 and $10.50. It also raised its adjusted automotive free cash flow forecast to between $12.5 billion and $13.5 billion, up from $9.5 billion and $11.5 billion.
The automaker tightened its net income attributable to common stockholders, which excludes some dividend payouts, to between $10.4 billion and $11.1 billion, or $9.14 and $9.63 per share. That compared to its previous guidance of $10 billion to $11.4 billion, or $8.93 and $9.93.
GM CFO Paul Jacobson warned earnings will be lower during the fourth quarter, citing timing of truck production, seasonality, lower wholesale volumes and vehicle mix, including selling more electric vehicles.
Shares of GM were up roughly 2% during premarket trading Tuesday.
The automaker has topped Wall Street’s EPS estimates for nine consecutive quarters and revenue for eight straight quarters.
GM’s third-quarter results were assisted by continued strong pricing, offsetting losses in China and year-over-year cost increases of $200 million in labor and $700 million in warranty costs.
Jacobson said the company’s average transaction price per vehicle, which Wall Street has been monitoring for signs of weakening, remained over $49,000 from July through September.
“The consumer has held up remarkably well for us,” he said during a media briefing. “Nothing we see has changed from where we’ve been for the last several quarters.”
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GM, Ford and Stellantis stocks in 2024.
GM said revenue during the third quarter was up 10.5% from roughly $44 billion a year earlier. Its net income during the quarter rose slightly to $3 billion.
Jacobson noted some of the company’s third-quarter outperformance was assisted by the automaker pulling ahead some truck production from the fourth quarter, which represented a $400 million boost in adjusted earnings.
The company’s North American operations represented a disproportional amount of its earnings. They included adjusted earnings before interest and taxes of nearly $4 billion, up 12.9% from a year earlier. The results represented a 9.7% adjusted profit margin.
The North American results compared to a $137 million loss in China, where GM is attempting to restructure operations, and an 88.2% drop in adjusted earnings in its other international markets compared to a year earlier to $42 million.
GM’s financing arm reported a 7.3% decline in adjusted earnings to $687 million during the third quarter. The automaker’s embattled Cruise autonomous vehicle unit has lost roughly $1.3 billion through September, including a loss of $383 million during the third quarter.
The quarterly report comes just two weeks after a GM investor day in which the company indicated its earnings strength is expected to continue into next year. GM expects to share its full 2025 guidance in January.
Topics of interest for investors that were not addressed earlier this month include GM’s funding plans for its embattled Cruise autonomous vehicle unit, details on its China restructuring and any updates regarding its near-term electric vehicle sales and plans.
“We think we can turn it around,” Jacobson told CNBC’s Phil LeBeau on Tuesday regarding China. He said the automaker has several meetings scheduled with its Chinese partners regarding the restructuring, including cost cuts.
Shares of GM are up about 36% this year as of Monday’s close of $48.93. The stock has been boosted by billions of dollars in buybacks by GM, which have led to a 19% year-over-year reduction in outstanding shares.
This is developing news. Please check back for additional updates.
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Major League Soccer said it set a fresh regular season record with nearly 11.5 million fans attending games.
The growth comes a year after the league implemented a new club performance unit, led by Chris McGowan, which advises clubs on business strategies.
The league, which saw its regular season end this past weekend, also experienced more fan engagement on social media and notches record sponsorship revenue.
Lionel Messi of Inter Miami competes during a friendly match between Inter Miami and Newell’s Old Boys at DRV PNK Stadium in Fort Lauderdale, Florida on February 15, 2024.
Arturo Jimenez | Anadolu | Getty Images
Major League Soccer scored several regular season records, including for attendance and sponsorship, thanks in part to international super star Lionel Messi — and corporate strategy.
MLS has been nabbing well-known athletes like Messi and Luis Suárez, and leaning on the growing popularity of the sport within the U.S. in a bid to solidify its fanbase after nearly three decades of league play. It’s even created a corporate team to help clubs implement new business strategies.
It appears to be paying off. Nearly 11.5 million people attended MLS matches during the regular season — which ended this past weekend — the most in its history, according to data from the league. That’s up 5% from last year, and 14% from 2022. Each match during the 2024 season averaged 23,234 attendees, the highest ever for the regular season.
While those stats pale in comparison to other U.S. professional sports leagues — the National Basketball Association had more than 22.5 million attendees during the 2023-2024 regular season, for example — MLS seems to be building momentum.
Last year, MLS’ Inter Miami signed Messi, which caused a surge in attendance, jersey and other product sales, and overall fanbase engagement. The halo effect from the Messi, often referred to as the greatest of all time, seems to have held even with Messi playing fewer games this season due to an injury.
This past weekend Inter Miami ended the season with 74 points, breaking the MLS record for most scored in a season, and Messi notched a hat trick for the first time with the U.S. league. The MLS postseason begins this week.
Fans with signs supporting Lionel Messi before the start a MLS League game between Inter Miami CF (1) and D.C.United (0) at the Chase Stadium on May 18th, 2024 in Fort Lauderdale, Florida, USA.
Simon M Bruty | Getty Images Sport | Getty Images
But it wasn’t just on-the-field talent that made the difference.
This was the first full season that Chris McGowan served as executive vice president and chief club performance officer at the league since joining in June 2023. McGowan was hired to lead the new unit, which serves to advise and develop strategies to help clubs perform better, particularly on the business side.
While most of this season was focused on building out McGowan’s team, he said they also developed a strategic plan when it comes to identifying focus areas and creating relationships with clubs. McGowan’s role is akin to a consultant, making suggestions that the teams can choose to implement or not.
For example, McGowan and his unit helped the New York Red Bulls this season “with some decisions on premium seating that they’re going to launch in their stadium.”
“We foster continued growth by being a great resource for clubs in areas like quickly and efficiently sharing best practices,” said McGowan. “Being able to quickly get information for clubs to make business decisions … these are things that maybe weren’t happening as systematically and as efficiently as they are now.”
Kicking off new records
Fans of Nashville SC cheer for their team prior to the match at GEODIS Park on February 25, 2024 in Nashville, Tennessee.
Johnnie Izquierdo | Getty Images Sport | Getty Images
The bigger audience is drawing bigger sponsorship dollars.
The league signed 18 new sponsorship partners this season between MLS and Soccer United Marketing, or SUM, the commercial arm of MLS. Sponsorship revenue for the league and SUM was up 13% year to date, and sponsorship revenue at the club level was also up 13% for the same period.
League- and club-level sponsorship revenue both reached records.
Messi’s Inter Miami jersey continued to be a fan favorite, ranking as the highest-selling jersey in the league. It was also No. 1 globally for Adidas in jersey sales of individual players, according to MLS.
Meanwhile, its social media following grew faster than any other major men’s North American sports league on TikTok, Instagram and YouTube, according to the league. On TikTok, followers were up 26% since the beginning of the year. On YouTube, followers were up 21%, and on Instagram, they were up 10%.
Inter Miami led the league as the most followed North American sports team on TikTok with 9.4 million followers, according to MLS. It was the third most followed North American sports team on Instagram with 17.2 million followers.
Like other sports leagues in the U.S., MLS has been focusing on growing its audience and presence internationally. Earlier this month it signed an agreement with German digital media platform OneFootball to provide highlights, stats and other content to a global audience.
When it comes to TV viewership — a marquee stat for most other professional sports leagues in the U.S. — MLS is in something of a league of its own. The league has an exclusive media rights deal with Apple, meaning most of its matches are only available through MLS Season Pass on Apple TV, a separate subscription alongside the Apple TV+ streaming service.
Viewership data isn’t available for MLS Season Pass, but Apple executives have said on public calls that the audience has risen since Messi joined the league.
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Walmart said Tuesday that it will start delivering prescriptions to customers’ doorsteps.
The discounter will start with six states, but plans to offer prescription delivery in 49 states by the end of January.
Walmart’s move comes as Walgreens and CVS shutter stores and try to turn around their struggling businesses.
Walmart will start to deliver prescriptions to customers’ doorsteps. Customers can also get additional items dropped off along with medications, such as groceries.
Courtesy of Walmart
As CVS and Walgreens shutter hundreds of stores nationwide to shore up profits and investor sentiment, Walmart said Tuesday that it is offering a new option for customers: Delivering prescriptions to their doorsteps.
The nation’s largest retailer said deliveries are now available in six states: Arkansas, Missouri, New York, Nevada, South Carolina and Wisconsin. The company said in a news release that it expects to deliver prescriptions in 49 states by the end of January. Prescription deliveries will not be available in North Dakota due to state laws, Walmart said.
The prescription delivery service is another example of how Walmart is trying to outmatch competitors on convenience along with low prices. With the new service, customers can get a mix of items dropped off during the same delivery, such as a box of tissues, blanket or chicken noodle soup.
Walmart’s new delivery offering could be another blow to drugstore chains, which are falling out of favor with consumers in a trend that has hit their profits and stock prices and forced them to reconsider their strategies. Still, it is unclear how much market share Walmart could win from CVS and Walgreens, both of which offer same-day, one-day and two-day prescription deliveries.
Tom Ward, chief e-commerce officer for Walmart U.S., said the company added pharmacy deliveries because of shopper demand.
“This is actually the number one service requested by our customers,” he said.
He said Walmart tested the deliveries in several states and saw that customers took advantage of getting a mix of items, including the prescription, in a single delivery.
Walmart’s delivery service will be available for new prescriptions and refills, the company said. It will cost $9.95 for a delivery, the standard price for Walmart doorstep deliveries, but will be free for members of Walmart+, the company’s membership program.
Health insurance plans will be applied to the transaction, like they would in the store, the company said.
The deliveries will come with a few more safety steps than Walmart’s other deliveries, the company said: Medications will be put into tamper-evident packaging. Customers can track orders in real time through Walmart’s app or website and get a photo in the app or by email when the prescription is delivered. And when a customer orders a new prescription and chooses delivery, they are prompted to do a consultation with the pharmacy by phone.
Most of Walmart’s annual revenue in the U.S. – nearly 60% – comes from groceries, but health and wellness is a growing category for the company, according to the retailer’s most recent annual filing for the fiscal year that ended Jan. 31. Health and wellness accounts for about 12% of its annual revenue in the U.S. It includes pharmacy, over-the-counter drugs and other medical products, optical services and other clinical services.
A new challenge for drugstores
As of Monday’s close, shares of Walmart were up around 54% for the year. Meanwhile, shares of CVS were down roughly 26% so far this year, while shares of Walgreens were down nearly 60%.
CVS is the top U.S. pharmacy in terms of prescription drug revenue, holding more than 25% of the market share in 2023, according to Statista data released in March. Walgreens trailed behind with nearly 15% of that share last year, while Walmart held just 5% of that share.
CVS and Walgreens are grappling with falling reimbursement rates for prescription drugs. Inflation, softer consumer spending and competition from Amazon, big-box retailers and grocery stores are making it difficult for them to turn a profit at the front of the store, which carries cleaning supplies, beauty products and pantry staples, among other items.
CVS CEO Karen Lynch left the company and was replaced by David Joyner last week, as CVS faces pressure from Wall Street and, more recently, an activist investor to turn around its business. On top of the leadership shakeup, CVS plans to cut $2 billion in expenses over several years. That includes slashing less than 1% of its workforce, or roughly 2,900 jobs, on the corporate side of its business.
The company is also wrapping up a three-year plan to close 900 of its stores, with 851 locations closed as of August.
Walgreens is similarly cutting costs, announcing last week that it will close roughly 1,200 stores over the next three years, which includes 500 in fiscal 2025 alone. The chain has around 8,700 locations in the U.S., a quarter of which it says are unprofitable.
Walmart has faced its own financial challenges on the health-care side of the business. The discounter planned to bring its low-price spin to health care by opening clinics that offered doctor, dentist and therapy appointments for less.
Yet in the spring, Walmart shuttered all of the clinics, saying in a news release at the time that it couldn’t operate a profitable business because of “the challenging reimbursement environment and escalating operating costs.” More
“Swicy,” a portmanteau of sweet and spicy, has become the popular term to describe the resurgence of sweet and spicy food and drinks appearing on menus this year.
Nearly a tenth of U.S. restaurants have “sweet and spicy” menu items, according to Datassential.
While sweet and spicy pairings are nothing new, a more diverse population and Gen Z’s desire for heat have fueled the latest iteration of the trend.
A general view of atmosphere during ‘Sonic Desert’ presented by Coca-Cola Spiced and Topo Chico in partnership with BPM Music on April 13, 2024 in Thermal, California.
Randy Shropshire | Getty Images
The hottest food and drink trend this year isn’t just spicy — it’s also sweet.
“Swicy,” a portmanteau of sweet and spicy, has taken over restaurant marketing. While the term hasn’t actually appeared on menus, the shorthand has become a popular way to describe the resurgence of foods and drinks marrying sweet and spicy flavors. The Food Institute even dubbed it the “Summer of Swicy” this year.
Nearly 10% of restaurant menus have “sweet and spicy” items, up 1.8% over the last 12 months, according to market research firm Datassential. Over the next four years, its menu penetration is expected to rise 9.6%.
A slew of restaurant chains have embraced the trend, from Shake Shack’s swicy menu to Burger King’s Fiery Strawberry & Sprite to Starbucks’ Spicy Lemonade Refreshers. Common menu items have paired fruity flavors and chili powder, or used sauces like hot honey and gochujang, a red chili paste that’s a popular Korean condiment.
Starbucks Spicy Lemonade Refreshers.
Courtesy: Starbucks
Although the menu items were largely only available for a limited time, culinary experts think that the swicy trend has staying power.
Buzzy, trendy menu items are more important now to restaurants, which are leaning on both discounts and innovation to attract diners and reverse declining sales. In August, traffic to U.S. restaurants fell 3.6%, the industry’s second-worst monthly performance this year since January, according to Black Box Intelligence. Limited-time menu items are particularly attractive to Gen Z customers, a key demographic because they account for roughly a fifth of Americans.
The ‘swicy’ story
While the swicy portmanteau might be new, the flavor pairings have been around for decades, according to trendologist Kara Nielsen. The one element that might have changed over time are the spice levels.
“I’m sure food is hotter now than it was 20 years ago,” Nielsen said.
She remembers when Jeffrey Saad opened a fast-casual Mexican restaurant in San Francisco called Sweet Heat in 1993, before he became a celebrity chef and Food Network star.
Fudio | Istock | Getty Images
The second coming of the sweet heat trend started when Mike’s Hot Honey started blowing up around 2010, according to Nielsen. Korean cuisine, especially its sweet and spicy gochujang sauces have become more popular, too, helping to drive more people to the flavor combination.
The pandemic also led more consumers to return to classic comfort foods: burgers, fried chicken sandwiches and pizza. But the desire for familiar favorites has faded, and now diners are once again seeking novelty — or at least a twist.
“Now, four years on, we’re moving out of this and adding more spicy flavors,” Nielsen said.
Experts at McCormick first called out the reemerging trend in its 2022 flavor forecast report, according to Hadar Cohen Aviram, executive chef for the spice and flavoring company’s U.S. consumer division.
McCormick highlighted “plus sweet,” when sweetness acts as a flavor enhancer rather than being the star of the show. The forecasters were even considering naming the trend “swicy” in their report but went with “plus sweet” because it was broader, she said.
The following year, McCormick, which owns Frank’s RedHot and Cholula, called out “beyond heat,” or using other flavors to bring out more flavor in addition to the spiciness.
“We see lots of different people wanting to add some heat to their plates, but they do want to make sure that there’s something for everyone,” Cohen Aviram said.
Gen Zwicy?
One reason why so many U.S. consumers are seeking out spicy foods and drinks? Increasing diversity.
“The reason that sweet heat or swicy is sort of everlasting is that it’s a key component of traditional global cuisines like Mexican, like Thai, like Korean, that a lot of people of those ancestries and heritages are familiar with it. Then it gets introduced and repackaged,” Nielsen said.
For example, Shake Shack’s culinary team was inspired to make Korean-inspired items for a limited-time menu, according to John Karangis, the company’s executive chef and vice president of culinary innovation.
One of the menu items was a Korean fried chicken sandwich, coated in a sweet and spicy gochujang glaze. After it created the limited-time menu, Shake Shack’s marketing team pitted the chicken sandwich against the Korean BBQ burger, with savory and salty flavors. It told customers to pick a side: team swicy or team umami.
The swicy trend also appeals to Gen Z, the cohort born between 1997 and 2012.
“We have a new generation, Generation Z, that’s really excited about complex flavor profiles — but there’s only so many you can taste: sweet, salty, bitter, umami,” Nielsen said.
Here’s one example of the generation’s heat-seeking behavior: over half of Gen Z consumers identify as “hot sauce connoisseurs,” according to a survey conducted by NCSolutions.
And with swicy, achieving the perfect ratio can be tough because it’s so personal, McCormick’s Cohen Aviram said.
Feedback from Shake Shack’s customers reflects that, too.
“Of course, we hear a lot of great feedback from guests, and we also heard other feedback like ‘Hey, you could have punched it up a little bit,'” Karangis said.
Cohen Aviram prefers about 40% sweet, 60% spicy when she’s creating swicy concoctions, like a Frank’s RedHot ice cream bar.
“The thing with sweetness if that it kind of hijacks your palate, so if you use too much of it, you’re just not going to sense the nuance,” she said.
When Burger King released its Fiery menu this summer, it ranked the items on a scale of spiciness. At one – meaning the least spicy – was its Fiery Strawberry & Sprite drink. The swicy menu item was inspired by another trend: “dirty sodas,” the combination of soda, creamers and syrups started in Utah, according to Pat O’Toole, Burger King North America’s chief marketing officer.
The drink marked the first time that Burger King tweaked a classic fountain beverage, but it previously introduced a Frozen Fanta Kickin’ Mango, with a similar swicy flavor profile.
“Guests can easily and accessibly try a ‘swicy’ beverage offering and work their way up the spice scale with other food items, if they so choose,” O’Toole said, adding that the chain saw strong interest across its focus groups for a spicy take on Sprite.
Of course, not all swicy profiles resonate with customers. For example, Coca-Cola in September discontinued its spiced Coke just six months after it hit shelves, after it initially intended it as a permanent offering.
But despite some missteps, the swicy pairing is likely here to stay – at least for a while.
“The flavors will stick around, for sure. I think the name will get tiresome. … It probably still has a couple of years to go,” Nielsen said.
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Lucid Group announced a public offering last week to raise roughly $1.75 billion.
CEO Peter Rawlinson said the raise was a timely, strategic business decision to ensure the EV maker has enough capital for its ongoing operations and growth plans.
He told CNBC that investors should have expected the move, saying it was “misinterpreted and misreported” after the company’s stock fell.
Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.
Andrew Kelly | Reuters
DETROIT — Investors misinterpreted a public offering on Wednesday by Lucid Group that raised roughly $1.75 billion — and led to the stock’s worst daily performance in nearly three years, CEO Peter Rawlinson told CNBC.
Rawlinson said the raise, which included a public offering of nearly 262.5 million shares of its common stock, was a timely, strategic business decision to ensure the electric vehicle company has enough capital for its ongoing operations and growth plans. It also should alleviate any potential worries that the company would need to issue a “going concern” disclosure regarding its operations, he said.
“We’d signaled that we had a cash runway to Q4 next year. As a Nasdaq company, we have to avoid a going concern. And a going concern is issued within 12 months of your financial runway,” Rawlinson said Monday from the company’s newly opened offices in suburban Detroit. “So, it should have been no surprise to anybody.”
But Wall Street analysts largely took a negative view of the move due to its timing. Several said the raise was unnecessary or came earlier than expected for the company, which had $5.16 billion of total liquidity to end the third quarter. That included more than $4 billion in cash, cash equivalents and investment balances.
The announced transactions also come two months after Lucid said Saudi Arabia’s Public Investment Fund had agreed to supply the company with $1.5 billion in cash, as the EV maker looks to add new models to its product line.
“A cap raise was slightly larger and earlier than we had expected,” Morgan Stanley analyst Adam Jonas wrote following the raise being announced Wednesday after markets closed.
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Lucid’s stock
RBC Capital Markets analyst Tom Narayan shared similar thoughts: “We suspect that investors will wonder why LCID is raising more capital just after it secured the PIF capital in August, and at currently depressed share price levels. We expect Lucid shares to trade sharply lower as a result,” he wrote in an investor note Wednesday night.
Rawlinson on Monday reiterated that the company would raise capital “opportunistically.” He said the company’s current funds now secure its capital into 2026, ahead of it launching a new midsize platform later that year.
“This is exactly as expected. It is exactly to the playbook. It should have come as zero surprise to anyone,” he said. “And why did I choose this moment? Because I didn’t want to string it out to the end, because I didn’t have to.”
Shares of Lucid declined about 18% on Thursday after the announcement — marking the worst daily decline for the company since December 2021.
Rawlinson said Lucid is currently in a highly capital-intensive investment period as it expands its sole U.S. factory in Arizona; builds a second plant in Saudi Arabia; prepares to launch its second product, an SUV called Gravity; develops its next-generation powertrain; and builds out its retail and service network.
“Those five categories are the long-term investment for the future that we’re making now,” Rawlinson said. “Have we got to cut costs with every car we’re making? Absolutely.”
Read more CNBC auto news
Wednesday’s announcement was made in conjunction with plans for Lucid’s majority stockholder and affiliate of PIF, Ayar Third Investment Co., to purchase more than 374.7 million shares of common stock from Lucid to maintain its roughly 59% ownership of the company.
Such a transaction is called pro rata, which allows an investor such as PIF to participate in future rounds of financing and retain its ownership stake. It’s something the PIF has routinely done with Lucid.
Individual investors were likely concerned by share dilution following the action, but Rawlinson said the continued support of the PIF should be viewed as a positive.
“I think it’s been misinterpreted and misreported,” Rawlinson said. “The norm is to go pro rata. If we didn’t go pro rata, it surely would be a signal that the PIF were losing faith in us.”
Lucid last week said the public offering was expected to raise about $1.67 billion, with a 30-day option for underwriter BofA Securities to purchase up to nearly 39.37 million additional shares of Lucid’s common stock as well.
Lucid has reported record deliveries in 2024 of its current model, an all-electric sedan called Air. The company expects to produce 9,000 vehicles this year. Production of its Gravity SUV is expected to start by the end of this year.
However, Lucid’s sales and financial performance have not scaled as quickly as expected following higher costs, slower-than-expected demand for EVs, and marketing and awareness problems for the company. More
Nike will be the exclusive uniform provider for the NBA and WNBA for another 12 years.
The sneaker giant, which also designs uniforms for the MLB and NFL, has shored up its relationship with one of its most important allies as it struggles with falling sales and looks to hang on to its contract with the NFL.
Nike’s previous contract with the NBA was reportedly worth $1 billion and its latest contract is “much bigger,” a person familiar with the matter told CNBC.
The NBA logo is seen outside an NBA store in New York on July 8, 2024.
Angela Weiss | AFP | Getty Images
Nike will be the exclusive uniform and apparel provider for the National Basketball Association and Women’s National Basketball Association for another 12 years after they renewed their partnership with the sneaker giant, the leagues announced Monday.
Under the terms of the deal, Nike will be the leagues’ global outfitting, merchandising, marketing and content partner until 2037. The company will also be in charge of designing and manufacturing uniforms, on-court apparel and fan merchandise.
Nike’s last deal with the basketball leagues, which kicked off during the 2017-18 NBA season, was reported to be worth $1 billion and marked the first time an apparel partner had its logo on an NBA or WNBA jersey. It is unclear how much Nike’s contract renewal with the leagues is worth, but a source familiar with the deal characterized it as “much bigger” than the previous contract.
As the largest athletic apparel company in the world, Nike has long been a favorite among professional sports leagues and their athletes. Even so, its contract renewal with the NBA comes at a time when the sneaker giant has had to work harder to maintain its critical partnerships, and new CEO Elliott Hill tries to regain market share lost in recent years.
Nike is also the official uniform supplier of the National Football League and Major League Baseball, but those relationships have taken a hit as the company faces declining sales and criticism that it has fallen behind on innovation.
The NFL’s deal with Nike expires after the 2027 season, but the league has opened up the process to other bidders and is already in talks with several companies interested in competing for the agreement, a source told CNBC.
Nike’s contract with the MLB does not expire until 2029. However, it will have to repair its relationship with the league after it debuted new uniforms earlier this year that led to widespread complaints from players and fans that they were see-through, did not fit right and looked “amateurish,” ESPN reported at the time.
Despite Nike’s recent stumbles, the NBA told CNBC it has no concerns about continuing its partnership with the apparel company.
“From our perspective, we have 100% confidence in Nike on a long term global basis,” said Sal LaRocca, the NBA’s president of global partnerships. “They’re endemic to basketball. They’ve been a partner of ours in one form or another for well over 30 years.”
LaRocca added the partnership has been so strong that the league did not even open the process up to other bidders.
When asked about the MLB fiasco, LaRocca defended Nike and said those kinds of issues come with the territory.
“I think any company that is on the edge of innovation and is always looking to push the envelope for improvement may run into some unintended consequences,” said LaRocca.
Nike has not faced significant criticism for its basketball uniforms. LaRocca said, “you’ll certainly see fresh new products on a regular basis from them.”
Nike has had a marketing partnership with the NBA since 1992 — and with the WNBA since its 1997 founding — and the brand endorses most of the leagues’ biggest players, including LeBron James, Kevin Durant, Caitlin Clark and Sabrina Ionescu.
As of Friday’s close, Nike’s stock has fallen about 24% this year and has underperformed both competitors and the S&P 500, which has gained about 23% this year. On Running and Deckers, two companies that have been taking market share from Nike, are up 79% and 43%, respectively.
Historically, Nike has outperformed the S&P 500 by an average of about 8%.
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