Today in the Market (1/30/2024)

Good Morning! On Tuesday, U.S. equities were mixed just before major tech earnings were released after the bell. The S&P 500 almost came back but finished down 0.06%, while the Dow Jones had a steady climb, increasing 0.35%. The NASDAQ stayed in the red all day, down 0.76%.

PEDAL TO THE METAL

General Motors (GM) reported that it exceeded expectations in terms of both revenue and net income for the fourth quarter. Additionally, GM’s positive profit announcement comes as the firm aims to overcome the impact of the UAW strike and readjust its electric car launch, which has caused “some uncertainty,” according to the company.

  • Revenue: $42.98 Billion vs. $39.53 Billion Expected
  • Earnings Per Share: $1.24 vs. $1.16 Expected

There were some issues, though… Regarding EV sales, GM encountered setbacks in 2023 with its previously ambitious launch strategy, and a decrease in sales is anticipated this year. According to a corporate representative, GM will set aside $1.7 billion in reserves during the fourth quarter to cover losses associated with its current electric vehicle inventory. With that, GM, which previously abandoned its target of manufacturing 400,000 EVs by mid-2024, has now revised its plan and intends to sell a minimum of 250,000 EVs in 2024, based on customer demand.

Going forward! GM has projected that the overall sales of the US auto sector will reach 16 million cars in 2024. This would signify a significant recovery from the impact of the pandemic. In contrast, the industry saw a decline in sales, with just 13.4 million vehicles sold in 2022, marking the lowest sales in ten years.

NOT MEANT TO BE

Amazon (AMZN) and iRobot dropped their $1.4 billion agreement to collaborate after the announcement by European Union antitrust officials that they would reject Amazon’s intended purchase of iRobot, the manufacturer of Roomba.

So what now? According to Ars Technica, Amazon is now obligated to pay iRobot a termination fee of $94 million. The majority of this amount will be used towards repaying the $200 million loan that iRobot obtained to maintain its financial stability in 2022. On top of that, iRobot further declared its intention to lay off 350 individuals, which accounts for 31% of its workforce, and choose a new CEO to replace the current one, who has been in the position for more than 25 years.

Will this be a new trend going into 2024? According to Bloomberg, as regulatory authorities in the US and Europe intensify their efforts to restrict the consolidation of big technology businesses, experts caution that giant corporations will encounter significant challenges in successfully executing significant mergers and acquisitions.

 

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