Stock Markets
This week in tech: A tepid response to Apple’s Vision Pro; SEC vs. Coinbase
Here is your weekly Pro Recap on the biggest headlines out of a big earnings week for tech: reactions to Apple’s Vision Pro launch; the SEC’s lawsuit against Coinbase; GM’s collaboration with Tesla; Amazon Prime’s coming ad-supported tier; and Netflix’s win on password-sharing crackdown.
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A lackluster response to Apple’s Vision Pro
Wall Street reacted with caution to Apple’s (NASDAQ:AAPL) launch of its much-anticipated mixed reality headset, Vision Pro, which comes at a higher-than-expected price of $3,499.
Although we are impressed by its best-in-class hardware/immersive capabilities, we think AAPL failed to identify why it’s a must-own device for consumers, at least for now. Still, the company’s entry into the space and greater engagement from developers will help support adoption and new use cases over time.
Goldman Sachs said it is encouraged by long-term growth prospects, “but expect near-term financial contributions to be limited” particularly given the high retail price point and media reports that it may be sold at breakeven.
And BofA similarly said it expects that “adoption will take time.”
Apple shares initially sank on news of the launch but partially recovered, and ended the week down just 0.9%. The stock is up some 45% year to date.
Coinbase sued by SEC
Cryptocurrency exchange Coinbase (NASDAQ:COIN) took a dive early in the week after it was sued by the Securities and Exchange Commission (SEC) for an alleged breach of U.S. securities rules.
“We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions,” said SEC Chair Gary Gensler in a press release.
The exchange is accused of making billions of dollars “unlawfully facilitating the buying and selling of crypto asset securities.”
BofA reiterated its Underperform rating on the stock and said, “[W]e think these latest developments illustrate ongoing regulatory headwinds, which not only could threaten part of [Coinbase]’s business model, but also represent a big management distraction.”
Meanwhile, Cathie Wood’s Ark Invest increased its stake in the company, as the stock hit near five-month lows. Wood has repeatedly expressed confidence in Coinbase and the broader crypto industry, and has cited a $1 million long-term price target for Bitcoin on the belief that it is an effective inflation hedge.
Coinbase shares fell nearly 16% for the week, having lost ground Monday as well after the SEC sued Binance. It’s still up nearly 60% for the year.
General Motors to partake in Tesla’s charging network
General Motors (NYSE:GM) CEO Mary Barra confirmed this week that the company is preparing to integrate the North American Charging Standard (NACS) connector, designed by Tesla (NASDAQ:TSLA), into its EVs beginning in 2025.
The announcement, made during a live meeting on Twitter Space with Tesla CEO Elon Musk, mirrors a similar revolution made late last month when neighboring rival Ford Motor (NYSE:F) also announced a collaboration with Musk’s Tesla.
These partnerships allow Ford and GM customers to access the extensive network of Tesla Superchargers.
The next day, White House officials handed Tesla another win when they announced that the company’s Superchargers would be eligible to receive a portion of federal funds, amounting in the billions, so long as the chargers also included CCS connections.
After the GM news, Wedbush raised its price target on Tesla to $300 from $215, reiterated its “Outperform” rating, and added the shares to the “Wedbush Best Ideas List.”
GM climbed more than 5% for the week to $36.23. Tesla was up 4% to $244.40, extending an over 117% gain year to date.
Amazon to launch ad-supported Prime Video tier: report
Amazon (NASDAQ:AMZN) plans to launch an advertising-supported tier of its Prime Video streaming services as part of a move to bolster growth from entertainment, the Wall Street Journal reported Wednesday, citing unnamed sources.
Plans to launch an ad-supported tier for its Prime Video streaming service follow similar moves by rivals including Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS) as streaming platforms look for ways to support content spending amid an ongoing battle for dominance.
Warner Bros Discovery (NASDAQ:WBD) and Paramount (NASDAQ:PARAA), meanwhile, are reportedly in talks with Amazon to add the ad-based tiers of their streaming services through Amazon’s Prime Video channels.
Bank of America analysts believe the ad-supported tier makes sense for Prime Video.
“Amazon’s user data, existing relationships with retail advertisers, and extensive ad sales teams provide a competitive advantage for monetizing ad-streaming. Also, tiering may enable Amazon to raise fees on ad-free Prime tiers, which would follow recent fee increases for various Prime and 3P services,” it wrote in a client note.
The analysts also expect Amazon to continue to lean into video content vs. pulling back in a bid to drive usage.
Warner Discovery and Paramount closed the week up 18% and 5%, respectively, following the news. Amazon ended nearly breakeven for the week.
Netflix scoops up new subscribers amid password-sharing crackdown
Netflix climbed after The Wall Street Journal reported that the crackdown on password sharing in the U.S. delivered a new subscriber windfall in its earliest days.
Citing data from Antenna, the WSJ said the streaming giant gained more new U.S. subscriptions between May 25 and May 28, not long after it notified users in the U.S. and other countries of the limits than in any other four-day period since Antenna commenced compiling the data in 2019.
The jump in subscribers suggests Netflix’s decision to end password sharing is yielding results.
The move to end password sharing means users who share an account outside the same home must pay an extra $7.99 a month to watch. In addition, the number of extra members customers could add to their account is limited, depending on the tier they pay for.
Shares rose just under 5% for the week, with year-to-date gains totaling over 40%.
Senad Karaahmetovic, Sam Boughedda, Ambar Warrick, and Michael Elkins contributed to this report.
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Stock Markets
Palantir, Anduril join forces with tech groups to bid for Pentagon contracts, FT reports
(Reuters) – Data analytics firm Palantir Technologies (NASDAQ:) and defense tech company Anduril Industries are in talks with about a dozen competitors to form a consortium that will jointly bid for U.S. government work, the Financial Times reported on Sunday.
The consortium, which could announce agreements with other tech groups as early as January, is expected to include SpaceX, OpenAI, autonomous shipbuilder Saronic and artificial intelligence data group Scale AI, the newspaper said, citing several people with knowledge of the matter.
“We are working together to provide a new generation of defence contractors,” a person involved in developing the group told the newspaper.
The consortium will bring together the heft of some of Silicon Valley’s most valuable companies and will leverage their products to provide a more efficient way of supplying the U.S. government with cutting-edge defence and weapons capabilities, the newspaper added.
Palantir, Anduril, OpenAI, Scale AI and Saronic did not immediately respond to a Reuters request for comment. SpaceX could not be immediately reached for a comment.
Reuters reported earlier this month that President-elect Donald Trump’s planned U.S. government efficiency drive involving Elon Musk could lead to more joint projects between big defense contractors and smaller tech firms in areas such as artificial intelligence, drones and uncrewed submarines.
Musk, who was named as a co-leader of a government efficiency initiative in the incoming government, has indicated that Pentagon spending and priorities will be a target of the efficiency push, spreading anxiety at defense heavyweights such as Boeing (NYSE:) , Northrop Grumman (NYSE:) , Lockheed Martin (NYSE:) and General Dynamics (NYSE:) .
Musk and many small defense tech firms have been aligned in criticizing legacy defense programs like Lockheed Martin’s F-35 fighter jet while calling for mass production of cheaper AI-powered drones, missiles and submarines.
Such views have given major defense contractors more incentive to partner with emerging defense technology players in these areas.
Stock Markets
Weakened Iran could pursue nuclear weapon, White House’s Sullivan says
By Simon Lewis (JO:)
(Reuters) -The Biden administration is concerned that a weakened Iran could build a nuclear weapon, White House National Security Adviser Jake Sullivan said on Sunday, adding that he was briefing President-elect Donald Trump’s team on the risk.
Iran has suffered setbacks to its regional influence after Israel’s assaults on its allies, Palestinian Hamas and Lebanon’s Hezbollah, followed by the fall of Iran-aligned Syrian President Bashar al-Assad.
Israeli strikes on Iranian facilities, including missile factories and air defenses, have reduced Tehran’s conventional military capabilities, Sullivan told CNN.
“It’s no wonder there are voices (in Iran) saying, ‘Hey, maybe we need to go for a nuclear weapon right now … Maybe we have to revisit our nuclear doctrine’,” Sullivan said.
Iran says its nuclear program is peaceful, but it has expanded uranium enrichment since Trump, in his 2017-2021 presidential term, pulled out of a deal between Tehran and world powers that put restrictions on Iran’s nuclear activity in exchange for sanctions relief.
Sullivan said that there was a risk that Iran might abandon its promise not to build nuclear weapons.
“It’s a risk we are trying to be vigilant about now. It’s a risk that I’m personally briefing the incoming team on,” Sullivan said, adding that he had also consulted with U.S. ally Israel.
Trump, who takes office on Jan. 20, could return to his hardline Iran policy by stepping up sanctions on Iran’s oil industry.
Sullivan said Trump would have an opportunity to pursue diplomacy with Tehran, given Iran’s “weakened state.”
“Maybe he can come around this time, with the situation Iran finds itself in, and actually deliver a nuclear deal that curbs Iran’s nuclear ambitions for the long term,” he said.
Stock Markets
Ukraine says Russian general deliberately targeted Reuters staff in August missile strike
(Reuters) -Ukraine’s security service has named a Russian general it suspects of ordering a missile strike on a hotel in eastern Ukraine in August and said he acted “with the motive of deliberately killing employees of” Reuters.
The Security Service of Ukraine (SBU) said in a statement on Friday that Colonel General Alexei Kim, a deputy chief of Russia’s General Staff, approved the strike that killed Reuters safety adviser Ryan Evans and wounded two of the agency’s journalists on Aug. 24.
In a statement posted on Telegram messenger the SBU said it was notifying Kim in absentia that he was an official suspect in its investigation into the strike on the Sapphire Hotel in Kramatorsk, a step in Ukrainian criminal proceedings that can later lead to charges.
In a separate, 15-page notice of suspicion, in which the SBU set out findings from its investigation, the agency said that the decision to fire the missile was made “with the motive of deliberately killing employees of the international news agency Reuters who were engaged in journalistic activities in Ukraine”.
The document, which was published on the website of the General Prosecutor’s Office on Friday, said that Kim had received intelligence that Reuters staff were staying in Kramatorsk. It added that Kim would have been “fully aware that the individuals were civilians and not participating in the armed conflict”.
The Russian defence ministry did not respond to a request for comment on the SBU’s findings and has not replied to previous questions about the attack. The Kremlin also did not respond to a request for comment. Kim did not reply to messages sent by Reuters to his mobile telephone seeking comment about the SBU’s statement and whether the strike deliberately targeted Reuters staff.
The SBU did not provide evidence to support its claims, nor say why Russia targeted Reuters. In response to questions from the news agency, the security agency declined to provide further details, saying its criminal investigation was still under way and it was therefore not able to disclose such information.
Reuters has not independently confirmed any of the SBU’s claims.
Reuters said on Friday: “We note the news today from the Ukrainian security services regarding the missile attack on August 24, 2024, on the Sapphire Hotel in Kramatorsk, a civilian target more than 20 km from Russian-occupied territory.”
“The strike had devastating consequences, killing our safety adviser, Ryan Evans, and injuring members of our editorial team. We continue to seek more information about the attack. It is critically important for journalists to be able to report freely and safely,” the statement said.
Reuters declined to comment further on the allegation that its staff were deliberately targeted.
The SBU statement said Kim had been named a suspect under two articles of the Ukrainian criminal code: waging an aggressive war and violating the laws and customs of war.
“It was Kim who signed the directive and gave the combat order to fire on the hotel, where only civilians were staying,” it said.
Evans, a 38-year-old former British soldier who had worked as a safety adviser for Reuters since 2022, was killed instantly in the strike.
The SBU statement gave some details about how the strike had occurred, according to its investigation.
“To carry out the attack, the Russian colonel general involved one of his subordinate missile forces units,” the Ukrainian agency said, adding that the strike was carried out with an Iskander-M ballistic missile.
The SBU did not identify the specific unit.
Ivan Lyubysh-Kirdey, a videographer for the news agency who was in a room across the corridor, was seriously wounded. Kyiv-based text correspondent Dan Peleschuk was also injured.
The remaining three members of the Reuters team escaped with minor cuts and scratches.
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