Finance

Improbable, which is backed by SoftBank, recorded a loss of £19 million in the 2022 fiscal year, down more than 85% from the £131 million loss it posted a year prior.
Improbable said that a part of the reason behind the company’s reduction in losses was a dramatic lowering of costs for running mass-scale virtual events.
Founded in 2012, Improbable has for years been attempting to build vast, continuously rendering worlds in which thousands of people can play games and interact with each other.

Herman Narula, co-founder and CEO at Improbable, speaks during a session at the Web Summit in Lisbon.
Henrique Casinhas | Sopa Images | Lightrocket | Getty Images

Virtual reality startup Improbable said Wednesday that it reduced losses by 85% in 2022, a year that saw the company pivot its focus to powering new “metaverse” experiences.
The British company said in a press release that its revenues more than doubled last year to £78 million ($95 million), as its work on metaverses expanded significantly.

It reduced losses in the 2022 fiscal year by £131 million to £19 million.
Improbable CEO Herman Narula said the company had reported its “best financial year” on record which reflected how its bet on the metaverse had paid off.
Speaking with CNBC in an interview Tuesday, Narula said Improbable has managed to ship more products with fewer people thanks to advances in generative artificial intelligence. Coders in the company are using generative AI “daily” to write code and come up with solutions to business problems, he said.
“We’re starting to think that the model of a successful tech company in 2023 … the optimal size is probably not that big,” Narula told CNBC. “You probably want to be thinking about much smaller companies overall.
One driver for downsizing tech firms beyond generative AI, according to Narula, is remote work, which he said has made it “harder to motivate a group of people, especially if those people feel distant from management.”

“You’re really looking at a world where we’re moving from big battleships down to swarms of very nimble entities,” he added.
“It gives me a lot of hope that companies like ours have a shot at becoming really successful because we don’t have to adopt the same tactics [Big Tech companies like Microsoft and Meta] had to, such as hiring tens of thousands of people.”
Improbable has historically burned through lots of money as it attempts to make its vision for vast virtual worlds a success. Critics have raised questions about the commercial sustainability of the business.
Improbable said that part of the reason behind the company’s reduction in losses was a dramatic reduction in the cost of running mass-scale virtual events.
Whereas initially it took millions of pounds to host one event, it now takes hundreds of thousands of pounds, the company said, and it anticipates this to continue to fall.
The year also saw Improbable divest two of its games studios, Inflexion Games and Midwinter Entertainment, and sell off a business unit focused on servicing defense clients.
Improbable finished the year with £140 million cash in the bank, signaling ongoing support from shareholders, the company said.
Improbable’s backers include the likes of SoftBank, Andreessen Horowitz, and Temasek.
Full accounts for Improbable are yet to be released on Companies House, the U.K.’s official register of companies.

Metaverse pivot

In 2022, Improbable unveiled its ambition to become a major player in the so-called “metaverse” — the concept for a vast world, or worlds, in the digital sphere where people can work, buy and sell things, or just hang out.
The company has been working with players in the digital asset sphere, including Yuga Labs, which it worked with to build out the Otherside metaverse, where people can make their own digital avatars, attend events, and more.
The company doubled down on its metaverse strategy earlier this year with a white paper detailing its vision for MSquared, a “network of interoperable Web3 metaverses.”
MSquared, which is a separate business entity from Improbable, raised $150 million from investors last year.
The service — a complex piece of technical engineering with significant computing requirements — is intended to be accessible via cloud streaming, meaning you won’t have to download any software to jump into one of its worlds, similar to how movies and TV shows are accessed on Netflix. 
It’s drawn interest from big names in sports and entertainment, like Major League Baseball (MLB).
The company struck a major deal with MLB to launch a new virtual ballpark based on Improbable’s metaverse technology. People in the MLB metaverse can choose any seat they’d like to watch a game, or pick a camera spot to focus on a particular player.
The tech industry has been betting that virtual and augmented reality will prove to be something of a “paradigm” shift in technology akin to the invention of the internet or the smartphone.
Some are calling it the technology’s “iPhone moment,” in reference to effect Apple’s now ubiquitous handset had on consumers and businesses globally.
Apple recently announced its first virtual and augmented reality headset, called the Vision Pro, while Meta unveiled its Quest 3 headset in June. 
Improbable is taking a different route to companies like Apple, Meta, and Microsoft, which is behind the HoloLens mixed reality products.
For one, you won’t need a headset to enter an MSquared space, as the software will be desktop-based. The experience is also intended to be more decentralized and interoperable, with the ability to take content from one metaverse to another.
Founded in 2012, Improbable has for years been attempting to build vast, continuously rendering worlds in which thousands of people can play games and interact with each other.
The London-headquartered firm, one of Japanese tech investment giant SoftBank’s biggest bets in Britain, was founded by Cambridge computer science students Narula and Rob Whitehead with the ambition of developing large-scale computer simulations and “synthetic environments.” More

A customer uses an ATM at a Wells Fargo Bank in San Bruno, California, on April 14, 2023.
Justin Sullivan | Getty Images

Check out the companies making headlines in midday trading.
Cintas — Shares fell 5.3% after the company reported its 2024 fiscal first-quarter earnings. The corporate apparel company posted $3.70 in earnings per share on $2.34 billion in revenue, topping analysts’ consensus estimates of $3.67 per share in earnings and matching revenue forecasts, per StreetAccount. Cintas raised its full-year guidance but the lower end of its EPS and revenue predictions came in below analysts’ estimates.

Pinterest — Shares of the image-sharing platform declined 0.6% after HSBC initiated coverage of the stock with a buy rating. The Wall Street firm said Pinterest has “the right management team in place, a product fit for shopping and a differentiated capital-light strategy to deliver on its foray into social commerce.”
United Natural Foods — Shares sank 27.4% Tuesday after United Natural Foods forecast earnings per share and adjusted EBITDA in the coming year below analysts’ estimates, citing profitability headwinds. The food company’s guidance ranges between a loss of 88 cents per share to earnings of 38 cents per share, excluding items, while analysts called for $1.94 per share, according to StreetAccount. The company’s fiscal fourth-quarter revenue missed analysts’ $7.47 billion estimate.
Fisker — The electric vehicle maker climbed 9.6% after Bank of America initiated coverage of shares at a buy rating. The firm said the company offers pure-play exposure in a growing market.
Wells Fargo, JPMorgan, Goldman Sachs — Bank stocks declined Tuesday after JPMorgan Chase CEO Jamie Dimon warned the Federal Reserve could still raise interest rates even further to tamp down inflation, which added to overall bearish sentiment. Shares of Wells Fargo and Goldman Sachs declined 2.2% and 1.5%, respectively, while Morgan Stanley and JPMorgan both lost about 1%. 
SiriusXM — Shares of the media company slipped 3.2% following news of a proposal from Liberty Media to SiriusXM’s special committee of independent directors to combine the two corporate structures into one entity.

DraftKings — DraftKings’ shares jumped just above 2% after JPMorgan upgraded the sports betting stock to overweight from neutral, saying the company’s recent underperformance creates an attractive entry point for investors.
Barclays — U.S.-listed shares of the bank added 2.2% after Morgan Stanley upgraded Barclays to overweight from an equal weight rating, citing an improved revenue outlook and opportunity for U.S. credit card growth.
Amazon – Shares dropped 4% after the Federal Trade Commission and 17 state attorneys general sued Amazon on Tuesday, hitting the e-commerce retailer with antitrust charges. The suit alleges that Amazon uses its “monopoly power” to hike prices and prevent rivals from competing against it.
— CNBC’s Hakyung Kim, Alex Harring, Brian Evans, Samantha Subin and Yun Li contributed reporting. More

Minneapolis Fed President Neel Kashkari thinks there’s nearly a 50-50 chance that interest rates will need to move significantly higher to bring down inflation.
In an essay posted Tuesday, the central bank official said the U.S. could be headed for a “high-pressure equilibrium” in which inflation stays elevated and requires “potentially meaningfully higher” rates.

Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, attends an interview with Reuters in New York City, New York, U.S., May 22, 2023. 
Mike Segar | Reuters

Minneapolis Federal Reserve President Neel Kashkari thinks there’s nearly a 50-50 chance that interest rates will need to move significantly higher to bring down inflation.
In an essay the central bank official posted Tuesday, he said there’s a strong case to be made that the U.S. economy is headed toward a “high-pressure equilibrium.” Such a condition would involve continued growth featuring strong consumer spending and “the economic flywheel spinning.”

In that instance, the inflation rate falls but stays above the Fed’s 2% target, posing a challenge for policymakers.
“The case supporting this scenario is that most of the disinflationary gains we have observed to date have been due to supply-side factors, such as workers reentering the labor force and supply chains resolving, rather than monetary policy restraining demand,” he wrote in a post titled, “Policy Has Tightened a Lot. Is It Enough?”
Noting that rate-sensitive areas such as housing and autos have held strong despite Fed tightening, Kashkari remarked, “These dynamics raise the question, How tight is policy right now? If policy were truly tight, would we observe such robust activity?”
Services inflation, excluding the cost of renting shelter, has been coming down, but has otherwise remained elevated, raising longer-term concerns.

“Once supply factors have fully recovered, is policy tight enough to complete the job of bringing services inflation back to target? It might not be, in which case we would have to push the federal funds rate higher, potentially meaningfully higher,” Kashkari said. “Today I put a 40 percent probability on this scenario.”

Of course, that still means he assigns a 60% chance of the Fed sticking its “soft-landing” goal, with inflation coming back to the goal without a harmful recession. He cited “the actual progress we have made against inflation and the actual labor market performance” as factors contributing to policymakers reaching their goal.
However, the comments come the same day as The Times of India published an interview with JPMorgan Chase CEO Jamie Dimon, in which the bank executive entertains the possibility that the Fed may have to take its benchmark rate up to 7%. The fed funds rate currently is targeted in a range between 5.25%-5.5%.
Several other Fed officials recently have stated they, at the least, expect to keep rates elevated for a prolonged period of time.
For his part, Kashkari had long been known as one of the more dovish members of the rate-setting Federal Open Market Committee, meaning he favors lower interest rates and looser monetary policy.
However, in recent months he has switched to a more hawkish stance as he worries about the dynamics that are keeping inflation above target. Kashkari this year is a voting member of the FOMC, which last week decided to hold rates steady while indicating another quarter-point hike could be on the way before the end of the year.
While acknowledging the progress made so far — as well as market and consumer expectations that the inflation rate will keep falling — Kashkari said the neutral rate of interest may have risen in the current era, requiring tighter policy. More

JPMorgan’s U.K. digital bank Chase UK said in a statement Tuesday that, starting Oct. 16, customers would “no longer be able to make crypto transactions via debit card or by outgoing bank transfer.”
The company said it was taking the step because “fraudsters are increasingly using crypto assets to steal large sums of money from people.”
It follows similar moves from other banks in the U.K. to restrict transactions involvement cryptocurrencies, as lenders look to prevent their customers from becoming victims to fraud.

Signage outside a Chase bank branch in San Francisco, California, on Monday, July 12, 2021.
David Paul Morris | Bloomberg | Getty Images

Chase UK, the British challenger bank brand of JPMorgan, has blocked customers in the U.K. from purchasing crypto assets.
The company said in a statement Tuesday that, starting Oct. 16, Chase UK customers would “no longer be able to make crypto transactions via debit card or by outgoing bank transfer.”

“Customers will receive a declined transaction notification if they do attempt to make a crypto-related transaction,” the bank said in an email to clients.
“This has been done to protect our customers and keep their money safe.”
The company said it was taking the step because “fraudsters are increasingly using crypto assets to steal large sums of money from people.”
Chase UK cited data from Action Fraud, Britain’s fraud reporting agency, that showed U.K consumer losses to crypto fraud increased by over 40% in the last year, surpassing £300 million for the first time.
Crypto scams accounted for more than 40% of all reported crimes in England and Wales last year, according to the Office for National Statistics, Chase UK said in the customer email.

Chase UK is the latest bank in the country to take steps to limit the ability of their customers to purchase cryptocurrencies.
NatWest imposed limits on its customers which meant they could only send a maximum of £1,000 per day and £5,000 over a 30-day period to crypto exchanges, in an effort to tackle the rise in fraud attempts involving crypto.
HSBC and Nationwide have announced similar restrictions on crypto-linked purchases.
“We’re committed to helping keep our customers’ money safe and secure,” a Chase spokesperson told CNBC via email Tuesday.
“We’ve seen an increase in the number of crypto scams targeting U.K. consumers, so we have taken the decision to prevent the purchase of crypto assets on a Chase debit card or by transferring money to a crypto site from a Chase account.” 
WATCH: Crypto enthusiasts want to reshape the internet with ‘Web3.’ Here’s what that means More

Dimon suggested that Eastern Europe was the epicenter of risk, with the war in Ukraine straining relationships between economic superpowers.
“We have dealt with inflation before, we dealt with deficits before, we have dealt with recessions before, and we haven’t really seen something like this pretty much since World War II,” Dimon said.

Jamie Dimon, Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co., gestures as he speaks during an interview with Reuters in Miami, Florida, U.S., February 8, 2023. 
Marco Bello | Reuters

JPMorgan Chase CEO Jamie Dimon says geopolitics after Russia’s invasion in Ukraine is the biggest risk, larger than high inflation or a U.S. recession.
Global markets have taken a hit over the past week, as the U.S. Federal Reserve signaled that interest rates will likely remain higher for longer, in order to bring inflation sustainably back down to its 2% target.

Speaking to CNBC TV-18 in India on Tuesday, Dimon said people should “be prepared for higher oil and gas prices, higher rates, as a matter of just being prepared,” but that the U.S. economy will likely get through any turbulence. However, the war in Ukraine has polarized global powers and shows no sign of abating.
“I think the geopolitical situation is the thing that most concerns me, and we don’t know the effect of that in the economy,” he added.
“I think that the humanitarian part is far more important. I think it’s also very important for the future of the free democratic world. We may be at an inflection point for the free democratic world. That’s how seriously I take it.”
Further negative pressure on markets in recent months has come from a slowdown in the Chinese economy, driven in large part by weakness in its massive property market.
Asked about the potential impact of this slump on the long-term prospects for China and the global economy, Dimon again suggested that Eastern Europe was the actual epicenter of risk, with the war in Ukraine straining relationships between economic superpowers.

“Far more important to me is the Ukraine war, oil, gas, food migration — it’s affecting all global relationships — very importantly, the one between America and China,” Dimon said.
“I think America takes this very seriously, I’m not quite sure how the rest of the world does. You have a European democratic nation invaded under the threat of nuclear blackmail. I think it’s been a good response, but it’s going to affect all of our relationships until somehow the war is resolved.”
China and India have attempted to maintain a neutral stance on the war and position themselves as potential peacemakers, utilizing the closer ties with Russia demonstrated by the BRICS alliance. Beijing has submitted a peace plan proposal to resolve the conflict in Ukraine, which has so far failed to gain traction.
This placed the world’s two most populous countries somewhat at odds with the U.S. and Europe, which have supplied Ukraine with weapons and financial support in the belief that only a Ukrainian victory will restore international order.
“India is going its own way. They’ve made their priorities quite clear about national security and what that means,” Dimon said.
“I’m an American patriot, so governments are going to set foreign policy, not JPMorgan, but I think Americans should stop thinking that China is a 10-foot giant. Our GDP per person is $80,000, we have all the food, water and energy we need, we’ve got the unbelievable benefits of free enterprise and freedom.”

The Wall Street titan added that renewed U.S. engagement with China on issues such as trade and national security was positive, and that he would like to see more of it to rebalance the trade and investment relationship between Washington and Beijing, even if that caused a “little bit of unravelling.”
“But it’s not just America, every country is relooking at its net. What is national security? Do I have reliant energy lines? Do I need semiconductors from China? Where do I get my rare earths from? Ukraine woke everyone up to that and that’s a permanent state of affairs now,” Dimon said.
Asked if geopolitics was the No. 1 risk facing the world today, Dimon responded, “absolutely.”
“We have dealt with inflation before, we dealt with deficits before, we have dealt with recessions before, and we haven’t really seen something like this pretty much since World War II,” he added. More

The all-electric 4-door Convertible GT Fisker Ronin is revealed during its inaugural “Product Vision Day” in Huntington Beach, California, on August 3, 2023.
Frederic J. Brown | AFP | Getty Images

Check out the companies making headlines before the bell.
Fisker — Shares of the vehicle development company surged 4.1% premarket after Bank of America reinstated coverage with a buy rating. BofA said Fisker offers investors “pure-play exposure to the rapidly growing EV market” and that it has a lower-risk business model relative to EV peers. Fisker also said it plans to ramp up deliveries of its Ocean vehicle to 300 per day.

Tesla — Tesla shares slipped 1% before the market open on news that the European Union will reportedly probe the electric vehicle maker over its China exports.
Barclays — Barclays shares rose 2% after Morgan Stanley upgraded the U.K. bank to overweight from equal weight, citing growth in its credit card business and an improved investment banking outlook.
DraftKings — The sports betting stock jumped 3% before the bell after JPMorgan upgraded DraftKings to overweight from neutral, saying that the recent underperformance creates an attractive entry point for investors.
Thor Industries — Shares of the recreational vehicle company slipped 3% premarket after it warned that it expects net sales to decline in the coming year. For the quarter just ended, Thor posted $1.68 in earnings per share on $2.74 billion of revenue. Analysts surveyed by LSEG were looking for 96 cents in earnings per share on $2.42 billion of revenue. Thor had outperformed so far this year going into the report, climbing 26% year-to-date through Monday.
United Natural Foods — Shares sank 17% before the open. United Natural Foods forecast earnings per share and adjusted EBITDA in the coming year below analysts’ estimates, citing profitability headwinds, and fiscal fourth quarter revenue that missed analysts’ $7.47 billion estimate, according to StreetAccount.
— CNBC’s Jesse Pound and Pia Singh contributed reporting More

About two weeks ago, the European Commission announced an investigation into government subsidies for electric vehicle makers in China.
Europe may have started investigating Chinese electric vehicle subsidies, but no assumptions should be made about the probe’s outcome, the head of trade for the European bloc’s executive branch said Tuesday.

BEIJING — Europe has launched an investigation into Chinese electric vehicle subsidies, but no assumptions should be made about the probe’s outcome, the head of trade for the European bloc’s executive branch said Tuesday.
About two weeks ago, the European Commission announced an investigation into government subsidies for EV makers in China.

The probe focuses on subsidies for electric vehicle production, and will be “fact-based,” Valdis Dombrovskis, executive vice president and trade commissioner of the European Commission, told reporters Tuesday. He was speaking in Beijing after a four-day trip in China.
The investigation will be in line with EU and World Trade Organization rules, and involve engagement with Chinese authorities and businesses, he added.
“The outcome of investigation is going to be determined by those … [I] cannot prejudge the outcome of the investigation,” Dombrovskis said.

China’s electric car exports have surged in recent months. When considering exports of all types of cars, China’s have already surpassed Germany’s, and are on track to surpass Japan’s this year as the largest car exporter globally, according to Moody’s.
Homegrown Chinese electric car companies Nio, Xpeng and BYD are among those that have started to expand to Europe, but in relatively small numbers so far. More than two-thirds of China’s electric car exports to Europe were from Tesla and other international brands manufacturing in China, according to HSBC.

However, the future consequences for business are great.
Dombrovskis noted the EU plans to phase out sales of internal combustion engine cars by 2035. He also said the share of Chinese EV brands in the EU market has gone from less than 1% to 8% in the last two or three years.
The other element of the EU’s subsidy probe is “risk of injury” for the European auto industry, he told reporters.
European auto giants such as Volkswagen derive significant sales from China but have struggled to penetrate the highly competitive electric car market there. Earlier this year, VW and EV startup Xpeng announced a strategic partnership through which they would jointly develop cars for the Chinese market.
China’s Ministry of Commerce was quick to criticize the EU investigation and called it a “blatantly protectionist act” that would distort the global auto industry.
Cui Dongshu, head of the China Passenger Car Association, also said in an online post that China’s new energy vehicle exports are growing because of a highly competitive domestic supply chain and market environment.
On Tuesday, Dombrovskis told reporters that the EU probe into EV subsidies was raised in pretty much every meeting with his Chinese counterparts.

Read more about electric vehicles, batteries and chips from CNBC Pro

China’s electric vehicle ambitions started well over a decade ago. Former Audi engineer Wan Gang became China’s Minister of Science and Technology in 2007 and convinced the central government to roll out a national strategy for developing new energy vehicles and battery technology.
Between 2009 and 2015, the central government spent at least 33.4 billion yuan ($4.57 billion) in subsidies on developing electric vehicles, according to the Ministry of Finance. Beijing has tended to lump EVs into the broader category of new energy vehicles.
The government-led push was not without waste. In 2016, the Ministry of Finance said it found at least five companies cheated the system of over 1 billion yuan. 
The country’s more recent electric car-related subsidies have focused on tax breaks for consumers. Electric cars are considered one of the bright spots in China’s slowing economy, and a driver of advanced manufacturing, retail sales and exports.

— CNBC’s Clement Tan contributed to this report. More

Rolled aluminum is fed into a machine on the auto treatment line at the Alcoa Inc. Davenport Works aluminum facility in Riverdale, Iowa.
Daniel Acker | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Alcoa — Shares of the aluminum stock slipped 6.1% after the company said executive vice president William Oplinger would succeed Roy Harvey as CEO and president. Oplinger also joined Alcoa’s board of directors, the company added.

Nio — The Chinese electric vehicle company’s U.S.-traded shares dipped about 2.3%. The stock pared earlier losses, incurred after the firm denied media reports that Nio is considering raising as much as $3 billion in capital from investors. Nio said it currently has no reportable capital raising activity.
Li Auto — U.S.-traded shares of the Chinese EV company dropped 10% following news that Huawei made moves in the increasingly competitive space. The telecommunications giant teased two new electric cars — its first sedan and a high-end SUV — at its launch event Monday.  Huawei partners with an auto manufacturer to sell cars under the Aito brand.
GE HealthCare Technologies — Shares of the medical technology gained 3.3%. On Friday, GE HealthCare announced a cash dividend of 3 cents per share for the third quarter. The dividend will be payable Nov. 15 to shareholders of record as of Oct. 20.
Williams-Sonoma — Shares of the home goods company jumped 11.6% after Green Equity Investors, an arm of investment firm Leonard Green and Partners, revealed a 5% stake in Williams-Sonoma. The securities filing disclosing the position indicated that this is a passive investment.
Dow Inc. — Shares added about 1.7% after JPMorgan upgraded the petrochemicals company to overweight from neutral, citing potential upside from higher oil prices.

Opendoor Technologies — The real estate company slipped nearly 5.5% after Citi cut its target price to $2.70 per share from $3.90. Citi said the reason for concern was the low volume of preexisting homes on the market.
JD.com — U.S.-listed shares of the Chinese e-commerce stock slid 2.1% as concerns over the state of the country’s economy grew. A central bank official said on Sunday that the country has little room to further relax monetary policy and said the economy instead needs major reforms.
Sealed Air — The food packaging stock climbed 3.6% following an upgrade by Citi to buy from neutral. The firm said the company is at a discounted valuation and could see third-quarter earnings as a catalyst.
Chefs’ Warehouse — The specialty food distributor popped 1.6% after UBS initiated coverage of the stock at a buy. UBS said the company has an attractive business model, even as it faces some near-term challenges.
Hudson Technologies — The reseller of sustainable refrigerant products advanced 5.8% after Canaccord Genuity initiated coverage of the stock at a buy rating. The firm said the company is likely undervalued and should be helped as refrigerant reclamation gains popularity.
— CNBC’s Yun Li, Jesse Pound, Pia Singh, Brian Evans and Hakyung Kim contributed reporting. More