Investing

Nearly half of parents with a child over 18 provide them with at least some financial support, according to a recent report.
For parents, however, supporting grown children can be a substantial drain at a time when their own retirement security is at risk. 

Many argue it’s harder today for young adults to make it on their own.
In addition to soaring food and housing costs, millennials and Generation Z face other financial challenges their parents did not at that age. Not only are their wages lower than their parents’ earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also carrying larger student loan balances, recent reports show.

So parents are stepping in to help. From buying food to paying for a cell phone plan or covering health and auto insurance, nearly half, or 47%, of parents with a child over 18 provide them with at least some financial support, according to a report by Savings.com.
These parents are shelling out $1,384 a month, on average, the report found.
More from Personal Finance:3 ways Gen Zers can build creditWhy can’t today’s young adults leave the nest?Gen Z, millennials are ‘house hacking’ to become homeowners
By other measures, young adults are doing well.
Compared with their parents at this age, Gen Zers are more likely to have a college degree and work full time — particularly women, who are not only achieving increasing levels of education but also earning more.   

And yet, 61% of adult children still living at home don’t contribute to household expenses at all, Savings.com found. 

‘Create boundaries and figure out a balance’

For parents, however, supporting grown children can be a substantial drain at a time when their own retirement security is at risk. 
In fact, 58% of parents said they have sacrificed their own financial security for the sake of their adult children, a jump from 37% of parents a year earlier, Savings.com also found.
Parents should “have a good financial plan for themselves, then budget how much they can give their kids,” said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.

McClanahan, who also is a member of CNBC’s Advisor Council, suggests parents set parameters and a time frame before providing financial support that takes into account their own retirement plans or other financial goals, such as paying off debt or saving for long-term health-care costs.
“You need to create boundaries and figure out a balance.”
As a general rule, you should set aside money for your retirement and emergency fund first, she said.
Isabel Barrow, the director of financial planning at Edelman Financial Engines, advises clients to agree on a deal: Parents will offer some financial support to their children, if their kids are also making decisions that support their own financial future in other ways, such as contributing 10% of their salary to a 401(k) at work.
“If they have income, they have a job, they can save. That needs to be their commitment to you,” Barrow said.
Subscribe to CNBC on YouTube. More

Despite some voters’ misgivings, President Joe Biden’s age is less of an anomaly than a sign of the times, experts say.
Workers 75 and older are the fastest-growing age group in the labor market.
The 118th Congress, meanwhile, is one of the oldest in history. There are five senators who are 80 or older, including Bernie Sanders, 82, and Chuck Grassley, 90.

U.S. President Joe Biden stops to talk to journalists about new Russian sanctions as he departs the White House on February 20, 2024 in Washington, DC. Biden is traveling to California to attend campaign receptions across the state. 
Chip Somodevilla | Getty Images

Should he prevail in the upcoming presidential election, President Joe Biden, 81, would become the nation’s first octogenarian elected commander in chief.
Despite the misgivings that fact has sparked among some voters, Biden’s age is less of an anomaly than a sign of the times, experts say.

“There are lots and lots of people who still work in their 80s,” said Dr. Dennis Selkoe, a Harvard Medical School professor who has won awards for his advances in aging research. “It’s more common than ever.”
Indeed, workers 75 and older are the fastest-growing age group in the labor market, more than quadrupling in size since 1964, according to the Pew Research Center.
If former president Donald Trump win in November, he’d be 78 at that point, and would become the second U.S. president to serve in his 80s. The 118th Congress, meanwhile, is one of the oldest in history. There are currently five senators who are 80 or older, including Bernie Sanders, 82, and Chuck Grassley, 90.
“People are just living longer,” said Joel Kramer, director of neuropsychology at the University of California San Francisco’s Memory and Aging Center. “So you’re going see a lot more people in their 80s and 90s who are rock stars.”
(On a literal note, Mick Jagger, who turned 80 last summer, is on tour this year and expected to perform in 16 cities across the United States.)

More from Personal Finance:Many think pensions key to achieving American DreamHow to avoid unexpected fees with payment apps’Ghosting’ gets more common in the job market
Still, Biden — already the oldest president in the nation’s history — is dealing with the perception that his age is a problem.
Almost two-thirds, 62%, of voters say they have major concerns that Biden does not have the necessary mental and physical health to be president for a second term, according to a national NBC News poll conducted in January. The majority of those polled who voted for Biden in 2020 now say he’s too old to be effective, a New York Times/Siena College poll recently found.
The White House did not respond to a request for comment.
But how valid are these worries? To find out, CNBC spoke to neurologists and aging experts about the human brain and our ability to work in our 80s.

‘Occasional gaffes’ do not reflect anything

The most recent blow Biden faced over his age came from the Feb. 8 special counsel’s report about his handling of classified documents. Robert K. Hur wrote that no criminal charges against the president were warranted, but he referred to Biden as a “well-meaning, elderly man with a poor memory.”
Shortly after those findings were publicized, Biden defended himself from the White House.
“My memory is fine,” Biden said. But then he mistakenly called the president of Egypt, Abdel Fattah el-Sisi, the “president of Mexico” while discussing the Israeli-Gaza war.
Concerns over his age were hardly put to bed.

However, such “occasional gaffes” do not indicate anything about an older person’s competence, said John Walsh, an associate professor of gerontology at the University of Southern California.
“Fluid intelligence” slows with aging, Walsh said. That means people’s reaction times might not be as fast as when they were young, or they might need more time to remember a particular name or date, he said. That knowledge hasn’t been lost, though.
Aging experts also refer to this as “benign forgetfulness,” and say it’s a normal part of the aging process.
“Given more time, they perform at the same level as their younger counterparts,” Walsh said.

U.S. President Joe Biden delivers the State of the Union address at the U.S. Capitol in Washington, D.C., March 7, 2024. 
Elizabeth Frantz | Reuters

In fact, the hardest thing for people to remember as they get older are names, Selkoe said.
“But that does not mean there are other aspects of their cognitive function that aren’t quite strong,” he said.
People in highly stressful and emotional jobs are especially likely to forget certain details, Selkoe said.
“I’ve seen some very famous politicians in my clinic,” he said. “Those people are under a lot of pressure and would have more difficulty in quickly coming up with what is otherwise rather minor information.”
The special counsel interviewed Biden right after the Oct. 7 terrorist attack on Israel.

You’re going see a lot more people in their 80s and 90s who are rock stars.

Joel Kramer
director of neuropsychology at the University of California San Francisco’s Memory and Aging Center

Ageism, or the discrimination of someone based on their age, may lead people to pay outsized attention to Biden’s missteps, Walsh said. Nearly 80% of older workers say they’ve seen or experienced age discrimination in the workplace, according to research by AARP.
“People fear aging,” Walsh said. “And we do not like the way aging looks and jump to conclusions that we all age the same, in a bad way.”
The research tells a different story.

Age and job performance are largely unrelated

At the UCSF Memory and Aging Center, Kramer said he sees lots of people who are still fully mentally and physically competent in their 80s and 90s.
“Many of them still work,” Kramer said. “What is striking is the variability: There are always people in their 80s who are doing better than people in their 50s.”

Age and job performance are largely unrelated, said Philip Taylor, a professor at the University of Warwick who studies the aging workforce
“There are areas where older workers outperform younger workers,” Taylor said.
Employees later in their careers tend to be more engaged with the well-being of their organization and are likelier to arrive to work on time, he said. Some studies also show that people’s vocabularies increase with age and that creativity doesn’t wane.
“Think about artists who remain creative at very late ages,” Taylor said. (The painter Alex Katz is still working in his late 90s, and Toni Morrison published her last novel at 84.)
“The idea that your most creative years are behind you when you enter your 50s?” Taylor said. “It is not so.”

There are areas where older workers outperform younger workers.

Philip Taylor
University of Warwick professor

“Crystallized intelligence,” considered wisdom, also grows throughout our life, experts say.
“With that wisdom and experience, the older person may be able to sort through possible solutions and come up with an effective strategy for dealing with a situation faster and more successfully than a younger person,” Walsh said.
Selkoe seconded that.
“People do get better cognitive function in some areas,” he said. “More in their emotional intelligence, [they’re] less likely to be bent out of shape by various events because they’ve experienced them all over decades.”

People fear aging.

John Walsh
associate professor of gerontology at the University of Southern California

However, Taylor was reluctant of framing any age group as better than another. Ageism hurts younger people too, he said.
“Age is just a really poor proxy for performance at work,” he said. “When people ask me about these things, I tell them if you want to make a decision about who to hire, don’t make it based on their age.”
In Biden’s State of the Union address on Thursday evening, the president said that at the beginning of his career — he became a senator at 29 — he was told that he was “too young.”
“By the way, they didn’t let me on the Senate elevator for votes sometimes,” Biden said.

Senator of Joseph Biden. Undated color slide circa. 1973.
Bettmann | Getty Images

Taylor, who has studied older workers for decades, said he found it depressing that the debate in the U.S. focused so much on Biden’s age, with discriminatory words like “elderly” and “senile” being tossed around.
“I think it’s a time for celebration,” Taylor said. “I’ve seen older people talking themselves out of working. They say, ‘It’s too late for me. No one will hire me.’ What the president is telling people is, ‘I can keep contributing to society.'”
This article was written with the support of a journalism fellowship from The Gerontological Society of America, The Journalists Network on Generations and the The Silver Century Foundation.

Don’t miss these stories from CNBC PRO: More

Target’s store in Harlem is one of nine locations that the retailer recently shuttered. It blamed the closures on high levels of theft and safety risks.
Melissa Repko | CNBC

Investors searching for a regular stream of income can give their portfolios a boost by adding attractive dividend stocks.
Given the large universe of dividend-paying companies, it can be difficult for investors to conduct an in-depth analysis and pick the right stocks. To this end, insight from the top analysts can help inform investors’ decisions.

Here are three attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.
Energy Transfer
This week’s first dividend stock is Energy Transfer (ET), a master limited partnership or MLP. The midstream energy company operates more than 125,000 miles of pipeline and related energy infrastructure.
Earlier this year, Energy Transfer announced a quarterly cash distribution of $0.3150 per common unit for Q4 2023, reflecting a year-over-year increase of 3.3%. With an annualized distribution per unit of $1.26, ET stock offers an attractive yield of 8.4%.
Following the company’s fourth-quarter results, Stifel analyst Selman Akyol reiterated a buy rating on ET stock with a price target of $18 per share. The analyst noted that the Q4 2023 earnings before interest, taxes, depreciation and amortization surpassed Wall Street’s estimates, with the company guiding 2024 adjusted EBITDA between $14.5 billion and $14.8 billion.
Akyol highlighted that ET is operating at the lower end of its leverage range, with the management commenting that the company could continue to reduce its debt further to maintain some “dry powder” (or cash reserves), which would enable it to pursue additional M&A deals. Coming to the Crestwood acquisition, management expects annual synergies of $80 million by 2026, with $65 million expected in 2024. 

Management also intends to consider growing its distribution and conducting opportunistic buybacks. “We believe ET will generate well over $1 billion of FCF [free cash flow] after distribution in 2024, which could be geared towards incremental growth projects or potential unit buybacks,” said Akyol.
Akyol ranks No. 396 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each generating an average return of 6.9%. (See Energy Transfer Stock Charts on TipRanks)
Garmin
We move to the navigation device maker Garmin (GRMN). The company impressed investors by delivering better-than-anticipated fourth-quarter earnings and solid guidance, thanks to the strength in its auto and fitness businesses.
Garmin announced a quarterly dividend of 73 cents per share, payable on March 29. Further, it will propose a dividend hike of 2.7% to 75 cents per share at the upcoming annual shareholders meeting in June. The company also announced a new share repurchase program of up to $300 million through December 2026. GRMN stock offers a dividend yield of 2.1%.
Tigress Financial analyst Ivan Feinseth recently reiterated a buy rating on GRMN stock and raised the price target to $175 from $165. The analyst noted that the company’s Q4 2023 and full-year revenue gained from solid demand for its advanced smart wearables, several new launches, and momentum in the auto OEM (original equipment manufacturer) business.
Feinseth highlighted that the company’s strong balance sheet and cash flow enable it to invest in new product development, make strategic acquisitions and increase shareholder returns. The analyst added that the company is boosting its investment in automotive product development, focusing on OEM partnerships with prominent auto players and rolling out new automotive specialty products.
“GRMN’s diversified product lines and industry-leading products position it to benefit from new opportunities in all its key markets, including Aviation, Automotive, Fitness, Marine, and Outdoor pursuits,” he said.
Feinseth ranks No. 233 among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 61% of the time, with each generating an average return of 12.1%. (See Garmin Insider Trading Activity on TipRanks)
Target
This week’s third dividend pick is Target (TGT), which delivered better-than-expected fourth-quarter revenue and earnings, even as macro pressures continue to weigh on the retailer’s business. Given a tough macroeconomic backdrop, the company is focused on improving its profitability through better inventory management and increased efficiency in its operations.
Target’s quarterly dividend of $1.10 per share reflects a 1.9% year-over-year increase and represents a dividend yield of 2.6%. Target has increased its dividends for 52 consecutive years.   
Impressed by the Q4 results, Jefferies analyst Corey Tarlowe reiterated a buy rating on TGT stock and boosted the price target to $195 from $170. Tarlowe noted that the retailer’s Q4 revenue benefited from a 10% rise in other revenue, thanks to solid growth in advertising. The analyst expects further gains, as Target is ramping up its advertising business.
The analyst stated that while Target slightly surpassed Q4 revenue expectations, investors were more impressed with the company’s operating margin beat of nearly 100 basis points. The analyst is encouraged by the improvement that Target has shown in its inventory management, shrink reduction, and in-store and supply chain efficiencies.   
Tarlowe remains bullish on Target’s long-term opportunity and concluded, “TGT has a clean inventory position and is continuing to lap temporary margin headwinds, which could result in margin recapture opportunities.”
Tarlowe holds the 399th position among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 67% of the time, with each generating an average return of 17%. (See Target Ownership Structure on TipRanks) More

EV prices are being reduced amid weaker demand and lower-than-anticipated value in the used auto market, but early electric and hybrid vehicles have begun to draw interest from collectors.
Big factors in the collector car market are rarity, design and historical significance.
Power and beauty don’t hurt either, making the original Tesla Roadster and BMW i8 popular.

Elon Musk at a Tesla Motors press conference at the 2009 North American Auto Show.
James Leynse | Corbis Historical | Getty Images

The term “collectible vehicle” might conjure up images of an elegant convertible from the 1930s, or maybe a souped-up muscle car. But time moves on. A new crop of all-electric vehicles and hybrid cars have begun to draw interest from collectors despite big price reductions on new EVs and a volatile used marketplace where five-year-old EVs depreciate almost 50% and used hybrids hold their value better than every vehicle category except trucks.
So which EVs and hybrids may become collectible and possibly rise in value in the decades to come?

“What people like when they’re younger becomes collectible when they’re older,” said Daniel Strohl, former editor of the collector car publication Hemmings Daily. “We saw that with the muscle cars boomers collected, and we’re seeing it now with 1980s trucks and Japanese imports that are popular with younger collectors.”
The biggest factors to collectability are design, performance and historical significance, noted John Wiley, manager of valuation analytics at Hagerty, which offers collector car insurance and car valuation data, among other auto market services. “If the car did something important, looks great and is fun to use, it will be collectible.”

More from Your Money:

Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Rarity and condition are also important factors, said Dietrich Hatlapa, founder of the Historic Automobile Group International, which tracks the market with several indexes. “Small production numbers help,” he said. “With mass-produced cars, usually only the most pristine examples with low miles are collectible.”
As with most things, power and beauty add to a car’s appeal. High-performance sports cars demand a premium over more pedestrian vehicles. “It’s about bragging rights, so cars that turn heads such as the Tesla Roadster and BMW i8 are getting interest,” Hatlapa said.

Early EV collectibles

Some early EVs and hybrids are already highly collectible. This includes the historic Owen Magnetic hybrid of 1915 to 1921 and the sleek 1996 to 1999 EV1 that General Motors made available to lessees around the turn of the millennia.

Here are some recent limited-production models from major automakers that meet all or most of the criteria for collectability cited by experts. A couple have already risen in value. The rest may, some day. 
Acura NSX (2017-2022)

The Acura NSX.

Honda’s original NSX, introduced for the 1991 model year, showed the world that exotic mid-engine sports cars can be reliable and comfortable enough for daily driving. These original cars are highly collectible and that bodes well for the second-generation, an all-wheel-drive hybrid with up to 600 horsepower sold from 2017 to 2022. This newer NSX can hit 60 miles per hour in only 2.9 seconds and kept the reputation of its forebear alive with a comfortable interior and intuitive controls. The hybrid NSX had an initial MSRP of $157,000, and has already exceeded $230,000 at auction.
BMW i8 (2014-2020)

The BMW i8.

The i8 was a plug-in hybrid offered as both a 2+2 coupe and a two-seat convertible. The i8 isn’t especially rare — BMW built more than 20,000 over seven model years — and a four-second 0-to-60 time was not especially quick considering its starting price was nearly $150,000. But the i8 has a couple of factors working in its favor: beauty and presence. It looks like a supercar with dramatic, “Lambo-style” butterfly doors. Plus, BMW is a storied enthusiast brand with a decades-deep lineup of cars that attract collector interest.
Cadillac ELR (2014 and 2016)

The Cadillac ELR coupe.

The ELR coupe was based on GM’s mainstream Chevrolet Volt but featured more power and a seriously luxurious interior covered in leather, wood and carbon fiber. The initial run of ELRs featured 217 horsepower and 37 miles of electric range, increasing to 233 horsepower and 39 miles of range in 2016. Cadillac sold less than 3,000 in total, making it one of the brand’s rarest cars. This scarcity, along with its sleek styling, could appeal to future collectors. However, while originally listed for $76,000, used ELRs have depreciated heavily, and generally sell for less than $20,000 today.
Tesla Roadster (2008-2012)

The Tesla Roadster displayed during its production debut in the Tesla Flagship Store in Los Angeles on May 1, 2008.
Vince Bucci | Getty Images Entertainment | Getty Images

The Tesla Roadster was conceived back in 2003 by company founder Martin Eberhard. The targa-topped two-seater is not only beautiful, fast and rare, but it also has historical significance as the groundbreaking company’s first production car. The Roadster’s initial MSRP was $98,000, but well-kept examples have sold for more than $200,000 to collectors. With more than 200 miles of driving range and a 0-to-60 time as low as 3.7 seconds, the Roadster can still compete with more modern EVs. Fewer than 2,500 were produced through 2012.
Tesla has a new Roadster in the works that is due to begin delivery in 2025. The four-passenger coupe is expected to start at $200,000, and CEO Elon Musk says it will accelerate to 60 miles per hour in less than one second, which would make it the quickest road-legal car sold in the U.S., if true.
Volkswagen XL1 (2013-2016)

The Volkswagen XL1.
Volkswagen

Volkswagen is the largest automaker in the world, but it only built 250 of these spaceship-like hybrids. The XL1 remains the most efficient road car ever sold with a combustion engine. It could get more than 261 miles per gallon due to a unique diesel-electric plug-in hybrid system, extremely low weight and a highly aerodynamic shape. These sold for about $150,000 when new and can command more than $111,000 at auction. They were never imported to the U.S., but anyone wealthy enough to afford one might be able to swing it.

Hyper-expensive exotic EVs and hybrids

While six- and seven-figure cars do depreciate, it’s not uncommon for the rarest, fastest and most beautiful examples to become collectible and rise significantly in value over the long term. For instance, the 1992 to 1998 McLaren F1 sold for about $1 million when new, but has commanded up to $20.5 million at auction. It was the fastest production car of its day, topping out at over 240 miles per hour, and only 106 were produced.
The very top of the car market operates by its own rules, which promote collectability.
For instance, Ferrari has been known to have “invite-only” sales of special editions whereby only existing customers in good standing are allowed to make a purchase. That builds loyalty with existing customers, fuels envy among sales prospects and helps keep used Ferrari prices high. The Italian brand, along with other luxury makers such as Porsche and Aston Martin, also offers restoration and certification services for its classic cars. The business model works. Ferrari sold every one of the 1,398 SF90 XX Stradale plug-in hybrids it planned to produce prior to the car’s official launch last June.
Luxury automakers are also known to police their used sales, as seen last year when Rolls Royce threatened to blacklist any purchasers who flip its first all-electric vehicle, the Spectre coupe.

EV aging challenges

One problem with collecting older EVs can be keeping them on the road. Internal combustion engines have been ubiquitous for more than a century and mechanics everywhere know how to fix them. By contrast, EVs are still relatively rare, and repairing them can require specialized knowledge. In addition, battery, charging and computer technology is still evolving rapidly and parts can be hard to come by.
“Batteries aren’t designed to last more than 15 or 20 years, and the market for replacing or repairing (EV) batteries is only starting to develop,” Strohl said. “Plus, even if you can use a new battery in an older car, the software might not be compatible.”

People collect cars out of passion, nostalgia and to meet like-minded enthusiasts. These are all great things, but actually making money on a collector car is difficult. If financial gain is your main goal, you might be better off sticking with a diversified index fund. This holds true even with cars that have appreciated dramatically.
For instance, a well-kept 1997 Toyota Supra Turbo that listed for $39,067 when it was new sold for $230,000 at auction in 2022 — a profit of nearly $191,000, minus upkeep, insurance and other costs. If that Supra’s initial purchase price had instead been invested in an S&P 500 index fund at the beginning of 1997, it would have grown to $322,477 by the end of 2022, minus a few thousand in fees — a far larger profit of more than $283,000.
For another example, the McLaren F1 mentioned above may have appreciated more than 20 times since its debut, but the S&P 500 has gone up nearly as much — 1,900% growth from January 1992 — and without incurring the F1’s substantial additional insurance, storage, fuel and maintenance costs.
Of course, you can’t cruise around in an index fund, or show it off outside the corner coffee shop.  More

Kseniya Ovchinnikova | Moment | Getty Images

Company: Criteo SA (CRTO)

Business: Criteo SA is a France-based company specializing in digital performance marketing. Its solution consists of the Criteo Engine, the company’s data assets, access to inventory, as well as its advertiser and publisher platforms. The Criteo Engine consists of various machine-learning algorithms, including prediction, recommendation, bidding and creative algorithms. The Criteo Engine delivers advertisements through multiple marketing channels and formats, including display advertising banners, native advertising banners and marketing messages delivered to opt-in e-mail addresses. The company operates in approximately 90 countries through a network of over 30 international offices located in Europe, the Americas and the Asia-Pacific region.
Stock Market Value: $1.84B ($33.39 per share)

Stock chart icon

Criteo SA’s performance over the past year

Activist: Petrus Advisers

Percentage Ownership:  5.60%
Average Cost: n/a
Activist Commentary: Petrus Advisers, a Europe-based activist investor founded in 2009, is focused on developing a deep, fundamental understanding of the public companies it invests in, paired with active engagement both publicly and behind the scenes. The firm focuses exclusively on European countries where it can invest like the “locals” and within industries in which it’s an expert.

What’s happening

On Feb. 22, Petrus sent a letter to Criteo’s chair of the board Rachel Picard and CEO Megan Clarken, calling for the execution of the following actions: (i) prepare an investor day as soon as possible to explain the company’s retail media strategy and a new mid-term plan; (ii) accelerate the existing share buyback by means of a substantial self-tender of up to $150 million; (iii) initiate a comprehensive strategic review no later than Q4 2024; and (iv) refresh the company’s board by adding independent candidates whom Petrus will propose.

Behind the scenes

Criteo SA is a global advertising technology company incorporated and domiciled in France with a primary American depositary receipt listing on the Nasdaq. The company leverages commerce data and artificial intelligence to connect brands, retailers and customers through their Criteo ad platform. Criteo operates across three segments – marketing solutions, retail media, and Iponweb – but generated 83% of its $1.95 billion of revenue in 2023 from the marketing solutions segment. Criteo is a market leader in the space and has access to some of the best technical talent in France. The company is profitable and has expanded gross profit margins over the past four fiscal years from 33% to 44%. However, since its peak in 2018, it has suffered top-line contraction to $1.95 billion from $2.3 billion, and the stock price has fallen to $33 from $44 in 2021.

Historically, Criteo’s marketing solutions segment has been a “cookie monster” with their key tech and revenue generation coming from cookie data-based applications for digital advertising. However Alphabet’s Google said late last year that starting in January 2024, it will start phasing out the use of cookies and expects to phase them out for 100% of Chrome users by Q3 2024. To many in the investor community, this was the death knell for cookies leading to uncertainty for Criteo’s largest segment. However, Criteo believes it has the technical capabilities and product suite in AI ad-tech to use algorithms that will replace 60% to 70% of the revenue loss associated with the end of cookies. Additionally, the company’s retail media segment is a very appealing and growing business using software as a service for e-commerce companies.
Accordingly, during its 2022 investor day on Oct. 31 of that year, the company presented a 2025 net revenue target (defined as contribution ex traffic acquisition costs (“TAC”)) of $1.4 billion and a plan to triple its retail media business, with retail media net revenue projected to grow at a compound annual growth rate of 45% to 50% between 2022 and 2025. But about a year later, on Nov. 2, 2023, Criteo stated that the ambition to achieve $1.4 billion in net revenue was “not expected to materialize within the 2025 time frame” sending the stock down nearly 12%. A quarter later, the company disclosed surprisingly upbeat results of total net revenue growth of 10% year over year and retail media growth of 29%, sending shares higher. The volatility in this stock is influenced by a management team that could stand to improve its communications with the market. That not only creates unnecessary volatility but also a lack of investor confidence in management guidance, which can have a significant ability to suppress a stock, particularly when Criteo’s largest segment is at an inflection point and investors need to believe management when they say that they can replace 60% to 70% of the revenue.
This situation reminds me of a story from the great basketball coach Frank Layden, in which he said to a young, talented player not reaching his potential: “Son, what is it with you? Is it ignorance or apathy?” To which the player responded: “I don’t know, and I don’t care.”
The good news is that the biggest problem facing this company is communications, not operations; and that can be solved with the addition of experienced directors to the board with capital market knowledge as proposed by Petrus. Additional value can be created through better capital allocation. Criteo is sitting on over $400 million of net cash and $150 million of earnings before interest, taxes, depreciation, and amortization. As a result, Petrus is calling upon Criteo to take four key actions: (i) refresh the company’s board by adding independent candidates whom Petrus will propose; (ii) prepare an investor day as soon as possible to explain the retail media strategy and a new mid-term plan; (iii) accelerate the existing share buyback by means of a substantial self-tender of up to $150 million; and (iv) initiate a comprehensive strategic review no later than Q4 2024.
Petrus will likely nominate outside directors to the board as they rarely propose Petrus insiders for board seats. Petrus is the kind of investor that likes to work with management to create shareholder value, but this management team has not shown a great willingness to work with others. In a rational world, this would settle quickly. If it does not settle, Petrus has shown that they are willing to take a proxy fight to a vote. But this one should not go that far as it is relatively easy for both Petrus and Criteo to know where they stand in a potential proxy fight. There is a very concentrated shareholder base with the top ten shareholders — including Petrus — owning 68.48% of the stock. Even better for Petrus, these are not the normal index fund owners but investors like Neuberger Berman, AllianceBernstein and Cadian Capital Management, who are more likely to support a shareholder on the board.
But Petrus is also calling for a comprehensive strategic review no later than Q4 2024. This is not because Petrus is being a short-term minded shareholder looking for a quick bump on a sale. They take positions like this because they believe in the company and the CEO. But if management cannot reinvigorate the equity story, they need to find a suitor. And there have been reports that suitors are interested. As early as February 2021, Bloomberg reported, citing people with knowledge of the matter, that Criteo is “attracting takeover interest from strategic and financial investors.” Then, in February 2023, Reuters reported, citing people familiar, that Criteo is “making a new attempt to sell itself” and hired Evercore to assist in that endeavor. However, on a Feb. 8, 2023 conference call, management dismissed the Reuters article as speculation, making some wonder whether management is genuinely exploring strategic alternatives or not.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.  More

Smart Tax Planning

President Biden has proposed a “mortgage relief credit” of $5,000 per year for two years for middle-class, first-time homebuyers.
He is also calling for a one-year credit of up to $10,000 for middle-class families who sell their “starter homes” to another owner-occupant.
However, experts have mixed opinions about whether the policies will help the country’s housing affordability issues.

Cavan Images | Cavan | Getty Images

President Joe Biden has floated plans to address the country’s affordable housing issues, including new tax breaks for first-time homebuyers and “starter home” sellers. However, experts have mixed opinions on the proposals.
“I know the cost of housing is so important to you,” Biden said during his State of the Union speech Thursday night.

“If inflation keeps coming down, mortgage rates will come down as well. But I’m not waiting,” he said.

More from Smart Tax Planning:

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

How the homebuyer, ‘starter home’ sale credit works

Biden has proposed a “mortgage relief credit” of $5,000 per year for two years for middle-class, first-time homebuyers, which would be equivalent to lowering the mortgage interest rate for a median-price home by 1.5 percentage points for two years, according to an outline released by the White House on Thursday.
The administration is also calling for a one-year credit of up to $10,000 for middle-class families who sell their “starter homes” to another owner-occupant. They define starter homes as properties below the median price for the seller’s county.

U.S. President Joe Biden delivers the State of the Union address in the House Chamber of the U.S. Capitol in Washington, D.C., on March 7, 2024.
Pool | Getty Images News | Getty Images

“Many homeowners have lower rates on their mortgages than current rates,” the White House said. “This ‘lock-in’ effect makes homeowners more reluctant to sell and give up that low rate, even in circumstances where their current homes no longer fit their household needs.”
However, it’s difficult to predict whether Biden’s proposal will progress during a presidential election year, especially with a split Congress, experts say.

Interest rates still near ‘multidecade highs’

With soaring home prices and mortgage interest rates, 2023 was the least affordable year for homebuyers in more than a decade, according to a report from Redfin.
In 2023, those making the median U.S. income of $78,642 would have spent 41.4% of earnings by purchasing a median-price home at $408,806, up from 38.7% in 2022, the report found.

While rates have fallen from 2023 peaks, the average interest rate for 30-year fixed-rate mortgages was still hovering around 7%, as of March 7.
“We’re close to multidecade highs for mortgage rates,” said Keith Gumbinger, vice president of mortgage website HSH.
“Unless [Biden’s proposed credit] counts as qualifiable income, it’s not going to actually make it easier for homebuyers to qualify for mortgages,” he said.

There’s a ‘housing supply crisis’

Of course, higher mortgage interest rates are only one piece of the country’s affordable housing puzzle.
“The housing supply crisis has been building, really, since the Great Recession,” said Janneke Ratcliffe, vice president for housing finance policy and leader of the Housing Finance Policy Center at the Urban Institute.

The housing supply crisis has been building, really, since the Great Recession.

Janneke Ratcliffe
Vice president for housing finance policy at the Urban Institute

Since the economic crisis, there has been a “perfect storm” of issues for the country’s housing supply, including declines in new home construction, she said.
“What we don’t need today in the market is more demand,” said Gumbinger. “We have plenty of demand, but we don’t have adequate supply.”
Still, Ratcliffe said she was pleased to see housing affordability highlighted during the State of the Union speech. “I think this is a great starting point,” she said.

Don’t miss these stories from CNBC PRO: More

The winner of November’s presidential contest may determine the future of Social Security and Medicare as the programs face funding issues.
In the State of the Union address on Thursday, President Joe Biden promised to protect benefits by requiring the wealthy to pay their ‘fair share.’

U.S. President Joe Biden delivers his third State of the Union address in the House Chamber of the U.S. Capitol in Washington, D.C., on March 7, 2024.
Shawn Thew | Via Reuters

President Joe Biden urged lawmakers to “stand up for seniors” in his annual State of the Union address on Thursday, while pledging to protect Social Security and Medicare.
“If anyone here tries to cut Social Security or Medicare or raise the retirement age, I will stop them,” Biden said.

The president’s vow comes as he will likely face off with former president Donald Trump at the polls in November. While Trump has said he doesn’t plan to touch Social Security, former Republican candidate Nikki Haley suggested raising the retirement age on the campaign trail.
Social Security and Medicare face crucial inflection points. The trust funds Social Security relies on are due to run out within 10 years, or by 2034, at which point 80% of benefits will be payable, the program’s trustees have projected. Medicare’s hospital insurance fund, which is dedicated to Medicare Part A, may be depleted in 2031.
To fix Social Security’s funding, Biden on Thursday suggested lifting the annual payroll tax cap — currently limited to $168,600 in wages — to “make the wealthy pay their fair share.”

Workers with $1 million in gross annual wage income stopped paying into Social Security on March 2 after reaching the taxable maximum for the year, a recent analysis from the Center for Economic and Policy Research found. Most workers have Social Security payroll taxes deducted from their paychecks throughout the year.
“Working people who built this country pay more into Social Security than millionaires and billionaires do,” Biden said. “It’s not fair.”

Democrats have bills that call for applying the Social Security payroll tax to earnings over $250,000 or over $400,000 in separate proposals, while also raising taxes on investment income.
“It’s time to act, it’s time to vote, not only to protect Social Security, but to expand benefits that haven’t been expanded in more than 50 years,” Rep. John Larson, D-Conn., said in a post-State of the Union speech.
Larson’s bill, the Social Security 2100 Act, currently has 183 Democratic co-sponsors in the House.
More from Personal Finance:Millionaires may have hit their 2024 Social Security payroll tax limit78% of near-retirees failed or barely passed a basic Social Security quizMany Americans believe pensions are key to achieving the American Dream
Biden has not proposed a specific plan to address Social Security’s solvency as president. However, his campaign platform called for applying the payroll tax to wages over $400,000 while making benefits more generous, particularly for those with lower incomes.
The White House has proposed increasing the Medicare tax rate for incomes above $400,000, while also closing loopholes that allow certain high-income individuals and business owners to avoid paying those taxes.

Efforts to create a commission

During the State of the Union address, Biden also took a swipe at Republicans’ alleged intentions for the programs.
“Republicans will cut Social Security and give more tax cuts to the wealthy,” Biden said.
Ahead of the State of the Union, House Republicans advanced a 2025 budget that calls for the creation of a bipartisan fiscal commission to evaluate Social Security and Medicare solvency issues.
The Committee for a Responsible Federal Budget praised the move to create a commission to “address the unsustainable growth of the national debt.”
Yet, advocates for Social Security and Medicare worry that the process may lead to benefit cuts.
“The commission is designed to slash vital earned benefits through a fast-track, closed-door process, intended to allow Republicans to avoid political accountability,” Nancy Altman, president of advocacy group Social Security Works, said in a statement.
Biden also took the opportunity on Thursday to tout other initiatives to help seniors, including efforts to increase the number of medications subject to Medicare negotiations from a current target of 20 per year to 50 per year and to establish minimum staffing levels for nursing homes.
“In tonight’s State of the Union address, President Biden put himself unequivocally on the side of American seniors and the programs they rely on,” Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.

Don’t miss these stories from CNBC PRO: More

“Wages keep going up and inflation keeps coming down,” Biden said in his State of the Union address.
Inflation has cooled while wages have ticked higher, but many households are still struggling to keep up with the increased cost of living.
While inflation remains above the Federal Reserve’s 2% annual target, getting over the final disinflationary hurdle will be a challenge without curtailing economic growth and risking recession, some economists say.

In his State of the Union address, President Joe Biden celebrated his administration’s progress in the fight against inflation.
“Wages keep going up and inflation keeps coming down,” Biden said in the annual speech before Congress.

Inflation has cooled while wages have ticked higher, but households are still struggling to keep up with the increased cost of living.
More from Personal Finance:Why gas is so expensive in CaliforniaCredit card users face ‘consequences’ from falling behind‘Last mile’ of inflation fight may be more challenging
“Factually, the president is, of course, correct,” said Mark Hamrick, senior economic analyst at Bankrate.com. 
However, “it is difficult to tell people that inflation isn’t so bad as it was, given that it has taken about one-fifth of purchasing power away from people,” he said.
The consumer price index, a key inflation barometer, has fallen gradually from a 9.1% pandemic-era peak in June 2022 to 3.1% in January. 

But regardless of the latest economic reports, many Americans are living paycheck to paycheck in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.
Lower-income families have been particularly hard hit, said Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers.
Further, reports show wage gains and consumer confidence have only notched recent improvements, he said.
The Biden administration “is like a football team that’s down 10 points at half time but then scores a field goal and claims they are a winning team,” Philipson said.

‘The last mile problem’ in the inflation fight

Then there is the “last mile problem,” said Sung Won Sohn, a professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.
While inflation remains above the Federal Reserve’s 2% annual target, getting over the final disinflationary hurdle will be a challenge without curtailing economic growth and risking recession, some economists say.
“Much of the decline in the inflation rate in the past came from the easing of the supply bottlenecks, which are behind us,” Sohn said.
Subscribe to CNBC on YouTube.

Don’t miss these stories from CNBC PRO: More