—— U.S. GDP Surges 3.3%; Tesla Stock Plunges 10%; Microsoft Lays Off 1,900 Gaming Employees; Bank of America Awards $800M in Stock to Staff; Radio Failure Causes NYC Subway Derailment; eBay Cuts 1,000 Jobs Due to Overstaffing; LVMH Raises Dividend
1. U.S. GDP Surges 3.3%
Preliminary estimates released by the U.S. government today show that GDP grew at an annualized rate of 3.3% in Q4 of 2023, bringing full-year growth to 2.5%.
With inflation continuing to ease, American consumers maintained strong spending power, pushing GDP growth well beyond economists’ expectations.
In Q4, personal consumption—the main driver of GDP—increased by 2.8%, while business investment also played a supportive role.
Wall Street economists widely expected a recession in 2023, but an unexpectedly stable labor market provided vital support to the economy.
Healthy consumer spending contributed 1.91 percentage points to GDP growth.
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2. Tesla Stock Plunges 10%
On Wednesday after market close, Tesla released its highly anticipated Q4 earnings report. Revenue came in at $25.2 billion, slightly below Wall Street’s $25.9 billion forecast.
Throughout 2023, Tesla lowered EV prices, which hurt profit margins. CEO Elon Musk warned that revenue growth this year could drop significantly, and prior 40–50% annual increases may not be repeated.
In a rare move, Tesla did not provide a 2024 revenue forecast, but Musk said the company will begin producing its new low-cost EV in Austin later this year.
Bernstein analyst Toni Sacconaghi said 2024 will be very challenging and that 2025 isn’t expected to improve much either, with Tesla’s gross margins and growth rate both under pressure.
Tesla shares are down more than 16% year-to-date, marking its worst-ever start to a year.
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3. Microsoft Lays Off 1,900 Gaming Employees
According to an internal email obtained by Bloomberg, Microsoft will cut 1,900 jobs from its gaming division, including roles from Activision Blizzard.
Phil Spencer, head of Xbox, said the company identified overlapping roles and areas of strategic focus, requiring layoffs affecting about 8% of its 22,000 gaming employees.
Following the acquisition, Activision Blizzard also parted ways with chairman Mike Ybarra and chief design officer Allen Adham—both co-founders of the company.
Activision Blizzard will also cancel the launch of its survival game Odyssey.
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4. Bank of America Awards $800M in Stock to Staff
Bank of America CEO Brian Moynihan announced today that 97% of global employees will receive a share of an $800 million pool in restricted stock units (RSUs), in addition to existing bonuses.
This marks the seventh such award since 2017. The company has granted a total of $4.8 billion in stock-based rewards over that time.
Earlier this month, the bank reported $26.5 billion in net income for 2023, down from $27.5 billion in 2022.
To preserve margins, Bank of America laid off around 213,000 people and avoided excessive severance costs.
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5. Radio Failure Causes NYC Subway Derailment
On January 4, two subway trains derailed and collided on Manhattan’s Upper West Side, injuring 22 passengers and 3 transit workers.
A preliminary investigation by the National Transportation Safety Board (NTSB) found that a brief loss of radio communication caused one train to miss a stop signal.
The Metropolitan Transportation Authority (MTA) confirmed the accuracy of the NTSB’s findings. Neither of the trains had onboard event recorders or video cameras.
One train ran a red signal at the 96th Street station and collided with another carrying 200 passengers.
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6. eBay Cuts 1,000 Jobs Due to Overstaffing
This week, eBay announced it will lay off 1,000 full-time employees and reduce its number of contract workers, citing that headcount growth had exceeded business growth.
In a statement, eBay said its staffing and costs were far beyond expectations and that the company needs structural reorganization and team consolidation to boost efficiency and improve the user experience globally.
In February 2023, eBay cut around 500 jobs due to a slowdown in consumer spending.
So far in 2024, over 60 tech companies have laid off a combined 11,000 employees.
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7. LVMH Raises Dividend
Luxury giant LVMH is expected to announce a dividend of €13 per share at its upcoming annual meeting, up from €12 last year.
LVMH, which owns brands like Louis Vuitton, Dior, and Tiffany & Co., is widely regarded as a bellwether for the global personal luxury market.
In Q4, LVMH’s revenue from high-end handbags and apparel rose 9% to €11.3 billion, though full-year growth was slower than in 2022.
Annual revenue also rose 9% to €86.2 billion, in line with analysts’ expectations, but far short of the 23% increase seen in 2022.
LVMH founder Bernard Arnault is consolidating family holdings and recently appointed two of his sons to the board.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.