Elon Musk is at it again. The
CEO has unveiled plans for a humanoid robot designed to perform everyday boring tasks so we don’t have to.
The announcement’s purpose seems to be intended to show Tesla isn’t just an electric-car company but a technology company. The AI event where Musk unveiled the robot plans was pitched at engineers and scientists Tesla wants to recruit as much as it was at investors. The company’s artificial-intelligence push is worth focusing on, but the bot itself is a theatrical sideshow, at least for now. Musk even admitted the robot, which could launch as a prototype next year, “probably won’t work” at first.
It’s going to take more than a futuristic robot to bring Tesla stock back to life. The shares sit around 25% below January highs, a position not dissimilar to other EV stocks. Rising interest rates and rising bond yields hit high growth stocks like Tesla early in the year, and the global semiconductor shortage has also hampered auto makers. Bond yields have come back down but that hasn’t lifted the EV sector.
The outcome of the National Highway Safety Administration’s investigation into Tesla’s autopilot software, following a number of crashes, is a bigger deal in the short term than a robot of the future. Tesla also unveiled its own computer chips to train its automated driving system and said it could license its AI technology to other car companies, potentially significant developments likely to go under the radar.
*** Join Barron’s deputy editor Ben Levisohn and senior writer Al Root Monday at noon to discuss what’s ahead for financial markets after their recent volatility. Sign up here.
Three Major Auto Makers Report Production Disruptions Over Chips
A continuing shortage of semiconductors has led to a domino effect of challenges for the auto maker industry, where chips are used in everything from steering to motion sensors. Car makers have announced another round of production delays.
plans to cut global production in September by 40% from its previous plans because of a global undersupply of chips, according to a report from Nikkei.
which also owns Audi and Porsche brands, may need to further cut output but sees an improvement by the end of the year and is aiming to make up for production shortfalls.
will temporarily close the Kansas City plant that builds its F-150 pickup truck for a week starting Aug. 23, due to a semiconductor-related part shortage because of surging Covid cases in Malaysia.
German chip maker
which is a major car industry supplier, said plant shutdowns in Texas and Malaysia have forced deliveries to core auto clients to fall.
What’s Next: Chip makers don’t invest as much in the older chip technologies used by car makers, said RBC analyst Joseph Spak. Auto makers could take on more advanced technologies to escape the chip shortage, but that will take time and money for research and development.
—Al Root and Liz Moyer
Facebook Bought Rivals It Saw as Potential Threats: FTC Lawsuit
recognized that rival mobile-based social networks like Instagram and WhatsApp could pose potential competitive threats, it unlawfully acquired them to protect its then largely desktop-based advertising business, the Federal Trade Commission argues in a revised antitrust lawsuit filed Thursday.
- Facebook’s “buy or bury” strategy also involved preventing third-party app developers from accessing its platform, the FTC said in the new 80-page complaint. The agency wants to break up the social media giant.
- A Facebook spokesman said the lawsuit has no merit. “The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final.”
- When social media users shifted to mobile a decade ago, Facebook “lacked the business acumen and technical talent to survive the transition,” said Holly Vedova, acting director of the FTC’s competition bureau. When it couldn’t compete with new rivals, “Facebook illegally bought or buried them.”
- In June, U.S. District Judge James Boasberg dismissed the first version of the lawsuit. Facebook petitioned for FTC Chair Lina Khan to recuse herself, but FTC’s general counsel denied the request.
What’s Next: Facebook has until Oct. 4 to respond to the amended complaint. Facebook is expected to file a motion to dismiss the case. If the FTC’s new lawsuit survives, the long legal battle that is expected to follow could have broad consequences for the tech giant’s future.
—Max A. Cherney and Janet H. Cho
China Sends Tech Stocks Tanking With New Privacy Law
The stock prices of China’s big internet companies fell Friday after the country’s parliament adopted a new, strict privacy law to come into force on Nov. 1.
- The report by the official Xinhua News Agency said that the law was voted by the Standing Committee of the 13th National People’s Congress, and promulgated immediately by President Xi Jinping.
- Its passage marks another step in the Chinese government and regulators’ crackdown on the country’s biggest internet companies, tightening the regulation of cyberspace and strengthening compliance requirements, to better protect user privacy.
- The law comes after another on data security forces companies to classify data to better align with China’s national security requirements.
shares were down 2.6% Friday on the news, with
falling 3% before recovering later in the day. Hong Kong’s
Hang Seng Index
fell 1.8% and the
composite of Chinese blue chips dropped 2%.
What’s Next: The timing may have surprised investors, but Beijing’s intentions had long been made clear. Draft details of the new privacy law had already been published, and Chinese authorities have been determined to take back control of the country’s cyberspace, with a crackdown extending to most of its online activities.
U.S. Hospitalizations Soaring Again, Squeezing ICU Capacity
The average number of Covid patient hospitalizations surged 58% over two weeks beginning early this month, attributed to the highly contagious Delta variant of coronavirus and low vaccination rates in some areas. Florida, Louisiana and Oregon have reported records.
- Statewide in Alabama, intensive care units are fully occupied, and 29 people are waiting in emergency rooms for an ICU bed to become available, according to the Alabama Hospital Association, the New York Times reported.
- In Texas, more hospitals are reporting shortages of ICU beds now than at any point since the pandemic hit the state 18 months ago, and cases and hospitalizations are nearing their January peaks, the Texas Tribune reported. In Dallas County, only 16 ICU beds were available to serve 2.6 million people.
- One-third of the people now hospitalized with Covid-19, and 31% of those in hospital ICUs, are from Florida and Texas, according to Johns Hopkins University. Hospitalizations are at pandemic highs in Florida, Hawaii, Mississippi, Oregon and Washington state.
What’s Next: An additional 1 million doses of Covid-19 vaccines were administered as of Thursday, including 562,000 among those newly vaccinated. The national vaccination rate, which peaked at 3.4 million shots a day in mid-April and then dropped, has recently risen to more than 540,000.
—Janet H. Cho
Macy’s, Kohl’s Crush Earnings Estimates as Shoppers Return
It looks like consumers still want to shop in stores, as
- Another sign of the return of in-store shopping: Toys “R” Us, which filed for bankruptcy in 2017, will open shops at more than 400 Macy’s locations in the U.S. in 2022, the companies said. Macy’s also said its board approved a $500 million stock buyback program. Macy’s stock closed up 19.6%.
- Kohl’s also said it is ramping up its share buyback plans. “As pleased as we are with our ongoing strategic progress, much of our opportunity is still ahead of us,” CEO Michelle Gass said in a statement. Shares closed up 7.3%.
- Amazon has dabbled in bricks-and-mortar stores for years, but the new move would mark its entry into the department-store business. Stores of about 30,000 square feet will open in Ohio and California, selling items from leading consumer brands, as well as its own private-label goods, the Journal reported.
What’s Next: Kohl’s and Macy’s increased their earnings outlook. Kohl’s said it expects full-year net sales to increase in the low-20s percentage range, up from the mid-to-high teens. Macy’s sees full-year sales between $23.55 billion and $23.95 billion, up from a prior range that topped out at $22.23 billion.
Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to firstname.lastname@example.org.
1. Absent a sharp sell off Friday, the S&P 500 index will have gone 200 sessions without a drawdown of at least 5% from its recent peak. What year did the last such streak begin?
2. Facebook unveiled Thursday a virtual-reality videoconferencing software to make the experience of meeting remotely with colleagues easier. What’s the new product called?
a. Horizon Workrooms
b. Sunrise Workspaces
c. Collaboration Spaces
d. Facebook Meet
3. Robinhood Markets customers went crypto-crazy in the second quarter. What percentage of the company’s revenue came from the “joke” cryptocurrency Dogecoin?
4. In 2010, the U.S. Department of Defense said Afghanistan had at least $1 trillion worth of minerals, going so far as to call the country the Saudi Arabia of what?
5. After nearly a decade as CEO, Johnson & Johnson Alex Gorsky said he would be stepping down from the post in January. His lieutenant, Joaquin Duato, will succeed him. How long has Duato been at the company?
a. 8 years
b. 16 years
c. 24 years
d. 32 years
—Newsletter edited by Liz Moyer, Mary Romano, Camilla Imperiali, Steve Goldstein, Rupert Steiner