— NYU Buys Noho Office Building; Tesla Profit Drops, Forced to Raise Prices; P&G Ups Full-Year Revenue Forecast; Deloitte Lays Off 1,200 U.S. Employees; Bank of America to Cut 4,000 Jobs Amid Shrinking Deposits; Same-Day Options Trading Equals Gambling; Rakuten Bank IPO Soars 33%
1. NYU Buys Noho Office Building
Property records released Thursday show that New York University (NYU) purchased an office building at 400 Lafayette Street for $97.5 million to expand its campus.
An NYU spokesperson said the building will temporarily house administrative offices and could help reduce leasing costs in the long term.
The seller was Sand Associates. According to listing information, three of the building’s four floors were leased prior to the transaction. Previous tenants included DraftKings, SeatGeek, advertising platform Yotpo, and PebblePost.
In recent years, NYU has acquired several properties near its campus—buying a 733-unit dormitory for $134 million in 2010. Last year, it also acquired the MetroTech Center in downtown Brooklyn for $122 million.
Purchasing office space may reduce long-term leasing expenses.
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2. Tesla Profit Drops, Forced to Raise Prices
Since the beginning of the year, Tesla has repeatedly cut EV prices, severely hurting both its profit margins and share price.
In response, Tesla announced today that it is raising the prices of the Model S and Model X by $2,500, though prices remain lower than they were at the end of Q1.
Yesterday, Tesla released a disappointing earnings report, causing its share price to plunge 9.7%.
In Q1, Tesla sold 10,695 units of the Model S and X, comprising only 2.5% of total deliveries. Therefore, price adjustments for these premium models will have limited impact on overall profitability.
In Q1, Tesla’s gross margin fell to 19%, and operating margin dropped to 11.4%—a two-year low.
Sales of the Model 3 and Y make up a larger share, so price changes there will more directly affect earnings.
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3. P&G Ups Full-Year Revenue Forecast
Consumer goods giant Procter & Gamble (P&G) has raised its 2023 full-year revenue forecast, driven by higher prices and increased sales of some products.
Well-known P&G products include Bounty paper towels and Herbal Essences shampoo.
P&G now expects organic sales to rise 6% year-over-year, up from the previous forecast of 5%, excluding currency effects. However, it warned that EPS may come in at the lower end of its guidance range.
P&G’s earnings offer insight into U.S. consumer health, and its revised revenue forecast may indicate that the pace of U.S. economic decline is moderating.
Today, P&G shares rose 2.5% in premarket trading.
Last quarter, P&G’s organic sales rose 7%, as a 10% increase in prices offset volume declines.
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4. Deloitte Lays Off 1,200 U.S. Employees
This week, consulting and auditing firm Deloitte announced it will lay off 1,200 U.S. employees, representing 1.5% of its workforce. The financial advisory division, affected by a slowdown in M&A, will be among the hardest hit.
A Deloitte spokesperson stated that while some business lines have slowed, demand across the U.S. remains strong overall.
This week, EY also announced it would cut 5% of its U.S. workforce, and its leadership has scrapped plans to spin off its consulting arm.
A survey by investment bank William Blair found that only one-third of M&A advisory firms saw business growth.
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5. BoA Shrinking Deposits Prompt 4,000 Layoffs
On Tuesday, Bank of America (BoA) announced it plans to lay off 4,000 employees—roughly 2% of its workforce—by the end of June.
In Q1, BoA’s net profit rose 15% year-over-year to $8.2 billion, beating expectations.
Data show that headcount increased 4% in the year ending March 31. In the first two weeks of April, BoA had already let go of over 1,000 workers and plans to lay off another 3,000 before the quarter ends.
CEO Brian Moynihan stated that consumer health is not in poor shape and that the bank expects a mild economic recession in the second half of the year.
In Q1, BoA’s total deposits declined 1% to $1.9 trillion, while JPMorgan’s increased by $37 billion.
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6. Zero-Day Options Resemble Gambling
A new study from the University of Muenster in Germany found that since May 2022, day traders investing in zero-day-to-expiration (0DTE) options have been losing an average of $358,000 daily.
During the pandemic, inexperienced retail investors poured billions into ultra-high-risk short-term stock options.
Study author Heiner Beckmeyer stated that these options carry extreme leverage, offering the potential for large gains—but also the risk of 100% loss. For retail traders, this gambling-like product can be deadly.
The research found that sellers of these options generally achieved decent returns, while buyers collectively lost at least $20 million over the past two years.
Even Wall Street professionals struggle with options. To profit, traders must be extremely alert and flexible—and, of course, a bit lucky.
Many 0DTE investors made early gains only to suffer steep losses later, mirroring gambling behavior.
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7. Rakuten Bank Soars 33% in IPO
Today, Rakuten Bank surged 33% on its IPO debut, marking the largest public offering in Japan since SoftBank’s in 2018.
The bank, a subsidiary of Rakuten Group, raised $623 million in the listing. So far this year, no company has raised more than ¥50 billion in an IPO, making Rakuten Bank’s debut a potential catalyst for reviving Tokyo’s listing market.
Bloomberg data show that over the past decade, the average first-day gain for companies raising more than ¥50 billion has been 7.3%.
Rakuten Group aims to use the bank IPO to expand its financial services beyond e-commerce.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.