—— WeWork Posts Wider Loss Than Expected; Sovereign Wealth Funds Eye NBA Stakes; Bitcoin Returns to $25,000; Tesla Recalls 360,000 EVs; BofA to Cut 100 IB Jobs; Nestlé Raises Prices, Sales Fall; Apollo Offers $5.5B Loan to Carlyle
1. WeWork Posts Wider Loss Than Expected
According to its latest Q4 earnings report, coworking firm WeWork reported $848 million in revenue, up 3.6% from the previous quarter, but below analysts’ forecast of $859 million.
Net loss narrowed from $629 million in Q3 to $527 million in Q4, though still 61% worse than the analyst consensus of a $328 million loss.
In today’s earnings call, CEO Sandeep Mathrani said tech-sector layoffs have impacted demand at certain WeWork locations. Still, overall office occupancy reached 75%, up from the prior quarter.
Earlier this year, WeWork laid off 300 employees after shuttering 40 underperforming sites and downsizing its Brooklyn HQ, moves that helped cut management costs by about 10%.
As of year-end 2022, WeWork’s debt stood at $1 billion—up from $666 million the year before.
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2. Sovereign Wealth Funds Eye NBA Stakes
Sources say two of the world’s wealthiest sovereign wealth funds—Abu Dhabi’s Mubadala Investment Co. and Qatar Investment Authority—are interested in acquiring minority stakes in NBA franchises and are seeking team owners open to selling.
The NBA is one of the most profitable sports leagues globally, and team valuations have surged. Recently, billionaire Mat Ishbia purchased over 50% of the Phoenix Suns at a $4 billion valuation.
Last year, the NBA board approved allowing sovereign funds to acquire up to 20% ownership in teams, easing earlier restrictions that required them to invest through approved channels.
The NBA’s loosened ownership rules in 2022 created a window of opportunity for sovereign wealth fund investments.
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3. Bitcoin Returns to $25,000
Bitcoin, the largest cryptocurrency, rallied past $25,000. Smaller tokens like Ethereum, Cardano, and Avalanche posted even larger gains.
Crypto consultancy Venn Link Partners said the rally likely triggered a short squeeze. On Wednesday alone, $64.5 million in short positions were liquidated—setting a new monthly record—driving Bitcoin’s price up 9%.
Global equity and crypto markets have risen in recent weeks amid optimism the Fed can tame inflation without triggering a recession. However, investors may be underestimating the eventual peak in rates and their long-term impact.
Despite ongoing regulatory crackdowns in the U.S., investors continue to buy crypto assets.
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4. Tesla Recalls 360,000 EVs
The U.S. National Highway Traffic Safety Administration (NHTSA) revealed that Tesla will recall 362,758 vehicles due to self-driving software defects that could prevent safe navigation through intersections.
Tesla said it will issue a remote software update by April 15 to fix the issue.
Between May 2019 and September 2022, the company received 18 potentially related warranty claims. So far, no injuries or fatalities have been reported.
Tesla’s Autopilot mode may accelerate through yellow left-turn signals, raising the risk of crashes.
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5. BofA to Cut 100 Investment Banking Jobs
Sources report that Bank of America is planning to lay off fewer than 200 investment bankers. Initially, the firm froze hiring earlier this year, but is now proceeding with direct job cuts—reflecting the tough outlook facing global IB divisions.
If M&A and IPO activity remain muted, banks that have already cut staff may need to explore additional cost-saving strategies.
In Q4, BofA’s investment banking revenue plunged 54% to $1.09 billion, with equity underwriting revenue down 65% to $189 million.
Like its peers, BofA is facing severe declines in IBD revenue and must cut costs to stay profitable.
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6. Nestlé Raises Prices, Sales Fall
According to its latest earnings report, Nestlé raised product prices by 10% last quarter, which led to a 2.6% drop in sales volume.
CEO Mark Schneider said the company continues to face cost pressures. While input prices for arabica coffee, dairy, and some energy bars have eased since last fall, year-over-year costs remain elevated. Nestlé is working to “heal” the damage caused by inflation.
Schneider noted that consumer spending capacity has held up better than expected, though early signs of weakening are emerging. The company’s revenue growth was driven primarily by inflation, not by organic volume increases.
Inflation has begun to impact basic food sales, forcing many households to cut back on groceries.
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7. Apollo Offers $5.5B Loan to Carlyle
Sources say Apollo Global Management and HPS Investment Partners are offering to provide $5.5 billion in financing to help Carlyle Group acquire 50% of healthcare analytics firm Cotiviti Inc.
Blackstone and other private equity and credit firms have also expressed interest. The deal could become the largest ever financed entirely by private credit.
Cotiviti is currently owned by Veritas Capital and may be valued at up to $15 billion.
Private equity firms are increasingly bypassing traditional investment banks and working directly with private lenders to save time and reduce fees.
As of late 2022, private credit firms managed $1.4 trillion in assets. Research firm Preqin expects the market to grow to $2.3 trillion by 2027.
After arranging an acquisition loan, investment banks often resell the debt to other investors to limit exposure.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.