Tesla tumbles as growth slows

Tesla collapses

Elon Musk and Tesla shareholders are at a crossroads.

Hit by a crushing price war, increasing competition in North America, Europe and China, and Musk's demands for billions in new Tesla shares, electric vehicle stocks have tumbled this year, slicing about $130 billion from market capitalization.

Shares are down about 8 percent in premarket trading Thursday after Wednesday's lackluster final results.

But Musk sees reason for optimism. He asked investors to look beyond 2024 and predicted a “big wave of growth'powered by a low-cost Tesla model that will be built partly in Austin, Texas and Mexico.

Wall Street doesn't seem to believe the message. The latest stock drop comes after Tesla reported that fourth-quarter profits nearly doubled to $7.9 billion – thanks in large part to a one-time tax break. The company also declined to provide detailed guidance for the full year, but said it expected revenue growth to be “significantly slower.”

“Tesla is indicating that the days of 50 percent or even 30 percent to 40 percent annualized growth won't happen in 2024,” Morningstar Research analyst Seth Goldstein told Bloomberg. “At a certain point you can't lower prices anymore.”

Musk doubled down on his call for more shares. He stunned investors this month when he said that if the board did not increase his stake from 13 to 25 percent, he would consider developing new artificial intelligence products “outside of Tesla.” That even scared Tesla bulls, who feared that awarding so many shares to Musk would dilute their holdings. If he doesn't, there could be a risk that Musk could abandon the AI ​​work that had driven investor enthusiasm for the stock.

Musk said the move was a form of protection against “some kind of random shareholder advisory firm.” He added: “There are a lot of activists who are actually infiltrating these organizations and have strange ideas about what should be done.”

HERE'S WHAT'S HAPPENING

Interest rates are again in the spotlight. The expectation is that the European Central Bank will do this leave the primary interest rate unchanged today, although investors will be looking for clues as to whether rates will start to cut by the summer as signs of easing inflation And Declining growth has consequences for the eurozone economy. The Fed is next, with a decision scheduled for January 31.

The Fed is removing the emergency funding line for banks. The Bank Term Funding Program, a measure introduced last year during the regional banking crisis that offered cheap loans to troubled lenders amid an extraordinary run on deposits, expires in March. As a result, the interest rate on new loans the Fed offers to banks will rise by about 0.5 percentage points.

Tech giants are reaching new valuation heights. Microsoft on Wednesday became the second company to reach a market cap of $3 trillion Meta crossed the $1 trillion threshold for the first time since 2021. Both companies have received backing from investors who hope they will prove to be leaders in deploying artificial intelligence software.

'This will no longer be 'business as usual' for Boeing'

Boeing's stock price is again in the red in premarket trading Thursday after the FAA imposed new restrictions on the plane maker that could hamper the company's growth plans and those of its increasingly frustrated airline customers.

The regulator said Boeing could not expand production of 737 Max planes. The company was trying to boost production of the aircraft, a cash cow, as it continues to lag behind Airbus.

It's another blow for Boeing since a Jan. 5 episode in which a door panel blew off an Alaska Airlines Max 9. That forced the grounding of about 170 Max 9s and has shaken industry confidence in Boeing's production processes.

The Biden administration is increasing the pressure. “Let me be clear: This will no longer be business as usual for Boeing,” Mike Whitaker, an FAA administrator, said in a statement Wednesday. The federal government also plans to intensify oversight of the company's quality control processes. “Right now everything is on the table,” he says Pete Buttigiegthe transport secretary.

Could Washington go further? Questions are being raised about whether the White House will revoke a deferred prosecution agreement Boeing struck with the Trump administration after two fatal crashes of the 737 Max. De Lever reports this.

Boeing says the problems are solvable. After meeting with lawmakers in Washington on Wednesday, Boeing CEO Dave Calhoun said: struck a reassuring tone. The Max 9 problems could be resolved “in days and weeks, not months,” he said, even as airline customers have expressed increasing skepticism in recent days.

It wasn't all bad news for Boeing. The FAA has approved new inspection guidelines for the Max 9s. That paves the way for the plane to fly again soon, with airlines allowed to resume operations once their checks are completed. United and Alaska Airlines said they expected the Max 9s to return to the skies in the coming days.

And Boeing reportedly delivered a 737 Max to a Chinese airline for the first time in five years. China is a crucial market for Boeing's growth ambitions.

Next one: Boeing is expected to give investors a one-year outlook on next week's earnings call, but shares are already down more than 16 percent this month on concerns about Max.

Trump vs. the billionaires

Following Donald Trump's double-digit victory in New Hampshire's Republican primary, donors who had supported his opponents, such as Nikki Haley, have weighed whether to accept the seemingly inevitable and support the former president.

But to the holdouts, Trump issued a stormy warning: Get on board or get lost.

Those who continue to donate to Haley “will be permanently expelled from the MAGA camp,” Trump wrote on his Truth Social platform. “We don't want them and we won't accept them because we put America first and ALWAYS WILL BE!”

Haley shot back in a social media post: “Well, in that case…donate here. Let's go!” with a link to a fundraising page. She also said she did raised more than $1 million since the New Hampshire primary.

The battle underlines a growing dilemma for anti-Trump donors. Many flocked to Haley in recent months as she seemed the best chance to challenge the former president. Those backers include Wall Street stars like Stanley Druckenmiller, Henry Kravis and Cliff Asness, who – tentatively – are hosting a fundraiser for Haley's campaign on January 30. And Silicon Valley investor Tim Draper is planning an event for Haley. next month in California.

But representatives of high-profile donors, including Ken Griffin and Paul Singer, will soon meet in Palm Beach, Florida, to discuss supporting Haley. increasingly a bad investmentsaid Puck.

Haley already sees some money drying up. Reid Hoffman, LinkedIn co-founder and Democrat who donated $250,000 to a super PAC for the former South Carolina governor, has decided closes his walletaccording to CNBC.

How long could Haley's campaign last? According to some political analysts possible until Marchwhile fiercely anti-Trump camps like the Koch family political apparatus continue to publicly support her.

Meanwhile, the business community is trying to figure out a new Trump administration There are few certaintiesaccording to Greg Ip of The Wall Street Journal, foregoing more trade wars — Trump has proposed a 10 percent across-the-board tariff — and a lighter approach to regulation.

What business leaders may fear most is whether a Trump 2.0 administration will be driven by personal animus, including replacing Jay Powell at the top of the Fed with a more dovish chairman and exacting revenge on perceived enemies.

Keeping SPACs on the Line

The boom in SPACs, the publicly traded shell companies that became short-lived the way of taking companies public ended years ago. New rules passed by the SEC are intended to make it harder for them to regain that kind of popularity.

The SEC requires SPACs to provide more information to investors, adopt measures on Wednesday, effectively making these vehicles more like a traditional initial public offering (SPACs, which merge with private companies and give companies their stock price, have long been criticized for insufficient transparency about fees and other matters.)

“The fact that a company uses an alternative method to go public does not mean that its investors are less entitled to time-tested investor protections.” Gary Genslerthe SEC chairman said in a statement.

SPACs have soared in 2020 and 2021, amid market froth that also fueled the rise of meme stocks and cryptocurrencies. More than 860 SPACs raised $246 billion during the period, according to research provider SPACInsider.

But interest in it has since plummeted. The number of SPACs has fallen over the past two years, partly because investors became wary of potential new regulations.

Old skeptics welcomed the new rules. Senator Elizabeth Warren, Democrat of Massachusetts, has argued that wealthy financiers and market insiders benefited at the expense of private investors. “Wall Street insiders create and abuse SPACs to manipulate markets and line their pockets, guaranteeing huge returns even if their dubious investments fail,” she told DealBook.

Defenders of SPACs said they would make it harder for some companies to go public. They include the SEC's two Republican commissioners, who voted against the new rules. “In the long term, this could result in fewer opportunities for companies to access our public markets and fewer opportunities for people to make investments,” he said. Mark Uyedaone of the dissenters.

READING THE SPEED

Offers

Policy

The best of the rest

We want your feedback! Send your ideas and suggestions by email to dealbook@nytimes.com.