Daily Business Briefing
Aug. 11, 2021, 11:50 p.m. ET
Aug. 11, 2021, 11:50 p.m. ET
Lordstown Motors, the cash strapped electric pickup truck start-up, said on Wednesday that it will only begin “limited production” by the end of September and expects that to be the situation through the rest of this year.
The company, in a release of second quarter financials, indicated it was still in need of cash to meet its eventual production goals. Lordstown said it had $366 million in cash on hand at the end of June and expected to have no more than $275 million available by the end of September unless it comes up with new financing.
Lordstown previously has said that without new sources of financing it may not be able to continue as a “going concern.”
The report comes after a tumultuous year for Lordstown. Expectations for the start-up grew after it merged with DiamondPeak Holdings, a cash-rich special purpose acquisition company led by a Wall Street real estate investor, which came calling with about $700 million to finance the deal.
The company has burned through nearly half of that cash in just about six months. It said it was considering making room to “accommodate additional manufacturing partners” at a 6.2 million-square-foot factory in Ohio that it acquired from General Motors.
The company, which has yet to produce a truck, said it lost $108 million in the second quarter.
Lordstown has been on a downward spiral since March, when a research firm issued a report critical of the company’s claims that it had 100,000 in pre-orders for its still-to-be-built truck. The company has since disclosed that it is being investigated by federal prosecutors in New York and by the Securities and Exchange Commission.
The company tried this summer to revive its fortunes by putting in a new management team following the resignation of Steve Burns, its founder and chief executive. Lordstown, which has warned investors that it is need of cash to continue operating, struck a deal to periodically sell shares to a New Jersey investment firm to raise up to $400 million.
But auto industry experts contend that Lordstown will need much more money than that to produce its pickup, which it calls Endurance, at a scale that would make it commercially viable.
Lordstown’s stock has tumbled since the spring, when it traded for a near-record price of about $31 a share. It closed on Wednesday at $5.58.
Earlier this week, Workhorse Group, another electric vehicle manufacturer, disclosed that it had sold more than 70 percent of its original 10 percent stake in Lordstown, for about $79 million — $52 million less than the shares had originally been valued at.
Workhorse was an early investor in Lordstown, in part because Mr. Burns had been Workhorse’s longtime chief executive before leaving in early 2019 to form Lordstown.
A rise in coronavirus cases brought on by the spread of the highly contagious Delta variant has pushed companies to grapple with vaccine mandates and delayed returns to the office.
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McDonald’s said Wednesday that it would require U.S.-based office workers to be vaccinated against the coronavirus. The requirement does not apply to employees of McDonald’s restaurants, whether corporate-owned or franchised.
The company said it would push back its official office reopening to Oct. 11 from Sept. 7 to allow time for vaccinations. In addition, the company said U.S.-based office workers must wear masks when they are not eating, drinking or alone in an enclosed room. The news was shared with employees in an internal memo obtained by The New York Times.
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Capital One said that it would require all employees returning to the office to prove that they are vaccinated.
“Unvaccinated associates should continue to work from home and will be supported in doing so,” the bank’s chief executive, Rich Fairbank, said in a memo to employees. Mr. Fairbank said that policy would be in place through at least the first three months of 2022.
Capital One will also push back its return-to-office date to Nov. 2 from early September.
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The New York Stock Exchange said that starting Sept. 13, anyone entering the iconic trading floor will need to be fully vaccinated. The Big Board is also expanding its random testing program to include vaccinated brokers and exchange employees who work on the floor, effective immediately, according to a memo from Michael Blaugrund, the N.Y.S.E.’s chief operating officer. The moves are “based on recent shifts in public health conditions as well as updated recommendations from federal, state and local authorities,” according to the memo.
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All Amtrak employees must be fully vaccinated by Nov. 1, the rail service’s chief executive, Bill Flynn, said Wednesday in a companywide memo. Those who do not provide documentation will be required to be tested weekly for the coronavirus. In addition, all new hires as of Oct. 4 must be vaccinated to start work.
The return to work sites has been extended to Nov. 1, and masks are required in all facilities, including offices, the company said.
Vaccine mandates are legally allowed and have been held up in court challenges. But for various reasons, not all employers have applied blanket requirements. Here is how some companies are approaching them:
4 Different Return-to-Work Approaches
Lauren HirschReporting on back-to-office policies 💼
4 Different Return-to-Work Approaches
Lauren HirschReporting on back-to-office policies 💼
Companies have mandated vaccines for their workers as the highly contagious Delta variant has driven a surge in coronavirus cases. But not all of these mandates look the same.
Here’s what some companies are doing →
Emily Flitter, Gregory Schmidt and Noam Scheiber contributed reporting.
The United States budget deficit is starting to ease from its pandemic highs as a recovering economy yields higher tax revenues and the gush of government relief spending begins to slow, Treasury Department figures showed on Wednesday.
For the 12 months through July, the budget deficit declined by 10 percent from a year earlier to $2.54 trillion. The modest decline from last year’s record high came as spending on unemployment benefits and health care have started to slow and as companies and individuals are paying more in taxes because employers are returning to work and spending is picking up.
For July, the federal government recorded a shortfall of $302 billion. That was the highest on record for the month, but revenue in July 2020 skewed higher because the usual April tax deadline was delayed last year.
A Treasury official said that the numbers reflected a recovering economy. However, the official could offer no forecast for how long the Treasury Department could continue to use “extraordinary measures” to give Congress more time to raise or suspend the statutory debt limit, which expired this month.
Treasury Secretary Janet L. Yellen called on Congress this week to take action to address the debt limit. On Wednesday, Jen Psaki, the White House press secretary, urged lawmakers to follow the “historical precedent” and act on the debt limit on a bipartisan basis.
More spending is most likely in store. The Senate passed a bipartisan infrastructure bill this week that the Congressional Budget Office estimated would increase the deficit by $256 billion. Democrats are now moving ahead with a $3.5 trillion budget plan that would tackle climate change and fund health care, child care, family leave and public education expansion while increasing taxes on wealthy people and corporations.
Southwest Airlines no longer expects to turn a profit in the third quarter as a recent rise in coronavirus cases slows sales and drives an increase in cancellations.
In a securities filing on Wednesday, the company forecast revenue for the three months that end in September to be down 15 to 20 percent from the same period in 2019, a decline of three to four percentage points from its previous estimate.
The revised forecast is a rapid turnaround from a few weeks ago, when Southwest and other major carriers said that business was booming and that the highly contagious Delta variant of the virus was not yet affecting sales. In fact, Southwest said Wednesday that it was profitable again in July, but that it no longer expected to turn a profit for the current quarter, at least after excluding the effect of federal payroll aid to the industry.
Late last month, Scott Kirby, the chief executive of United Airlines, said the Delta variant had not affected sales at all. “The most likely outcome is that the recovery in demand continues largely unabated,” he said on a call to discuss quarterly financial results with analysts and reporters.
After climbing for months, the number of people flying in the United States appears to have stagnated in recent weeks at about 80 percent of 2019 levels, according to Transportation Security Administration airport screening data. Still, more than 2.2 million people were screened on Aug. 1, the most relative to 2019 since the pandemic began. The rebound so far has mainly been driven by people traveling on vacations or visiting friends and family.
Airlines had hoped that growing confidence in travel and a widespread return to offices in the fall would help accelerate a recovery in business travel, which has lagged behind the leisure rebound. But the Delta variant has dashed those hopes as a growing number of companies delay their office reopenings.
Robinhood, the popular trading app for small investors, announced on Tuesday that it agreed to acquire Say Technologies, which specializes in digitizing shareholder votes, for $140 million. The takeover speaks to Robinhood’s pledge to “democratize finance,” the DealBook newsletter reports.
Many retail investors buy shares but then don’t vote on things like executive pay packages and who sits on a company’s board. Nell Minow, a shareholder rights and corporate governance expert, said that making it easier for Robinhood’s users to vote their shares could shake up corporate boardrooms just like when millions of traders used the app to send meme stocks soaring this year.
“Robinhood was at the kindergarten stage when it came to democratizing Wall Street, and this moves it up to at least the first year of high school,” Ms. Minow said. Individuals acting together could compel companies to take the lead on environmental and social justice issues, she said.
But small investors tend to side with management more than institutional investors do, said Jonathon Zytnick, a research fellow at the Institute of Corporate Governance and Finance at N.Y.U. Law School. “Voting methods matter a ton getting retailer shareholders to vote,” Mr. Zytnick said. “And retail investors can perform a monitoring role, but at least right now, it is almost certainly wrong to think of this as a means of environment and social change.”
But if there’s anything that the past few months have taught us, the behavior of big crowds of small investors is hard to predict.
YouTube on Tuesday removed a video by Senator Rand Paul of Kentucky for the second time and suspended him from publishing for a week after he posted a video that disputed the effectiveness of wearing masks to limit the spread of the coronavirus.
A YouTube representative said the Republican senator’s claims in the three-minute video had violated the company’s policy on Covid-19 medical misinformation. The company policy bans videos that spread a wide variety of misinformation, including “claims that masks do not play a role in preventing the contraction or transmission of Covid-19.”
“We apply our policies consistently across the platform, regardless of speaker or political views, and we make exceptions for videos that have additional context such as countervailing views from local health authorities,” the representative said in a statement.
In the video, Mr. Paul says: “Most of the masks you get over the counter don’t work. They don’t prevent infection.” Later in the video, he adds, “Trying to shape human behavior isn’t the same as following the actual science, which tells us that cloth masks don’t work.”
In fact, masks do work, according to the near-unanimous recommendations of public health experts.
On Tuesday, Twitter suspended Representative Marjorie Taylor Greene, Republican of Georgia, for seven days after she posted that the Food and Drug Administration should not give the coronavirus vaccines full approval and that the vaccines were “failing.”
On Twitter, Mr. Paul called his suspension “a badge of honor” and blamed “left-wing cretins at YouTube,” while linking to an alternative site to watch the video.
The senator said in a statement that private companies had the right to bar him, but that YouTube’s decision was “a continuation of their commitment to act in lock step with the government.”
“I think this kind of censorship is very dangerous, incredibly anti-free speech and truly anti-progress of science, which involves skepticism and argumentation to arrive at the truth,” he said.
Last week, YouTube removed from his channel an eight-minute Newsmax interview in which the senator said that “there’s no value” in wearing masks. According to YouTube policy, the company issues a warning for a first offense, then the weeklong suspension is part of its “first strike” response to a second offense.
The strike will be removed from his account after 90 days if there are no more violations. A second-strike in the 90 days would result in a two-week suspension, and the account would be permanently banned after a third strike.
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U.S. stocks rose on Wednesday after data showed monthly inflation in the United States rose in July roughly in line with economists’ expectations. The Consumer Price Index rose 0.5 percent from the previous month and 5.4 percent compared with a year earlier.
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The S&P 500 index rose 0.3 percent by the end of the trading session.
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The yield on 10-year U.S. Treasury notes fell to 1.33 percent from 1.36 percent.
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Companies set to gain from a federally funded infrastructure push rose on Wednesday. Asphalt makers Vulcan Materials and Martin Marietta Materials both rose about 3.25 percent. United Rentals, which provides machinery for road and bridge building, rose 4.9 percent. The steel maker Nucor also rose 3.7 percent, helping to make the materials sector a top-performing part of the S&P 500.
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Coinbase, the cryptocurrency exchange, rose 3.2 percent after the company said on Tuesday that its quarterly revenue soared by more than 1,000 percent and profit skyrocketed nearly 4,900 percent from a year earlier.
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WW International, formerly known as Weight Watchers, fell more 24 percent on Wednesday after reporting a slowdown in subscriber growth during the second quarter.
Despite decades of investment, scientists have not yet created fusion systems that generate more power than they consume. But an extremely powerful magnet that is under development could open the gates toward what researchers believe could eventually be a fusion reactor. READ THE ARTICLE →
Instagram is rolling out new features on Wednesday to make racist material harder to view.
Among them, one will let users hide potentially harassing comments and messages from accounts that either don’t follow or recently followed them, Ryan Mac and Tariq Panja report for The New York Times.
The actions follow a more than two-year campaign by English soccer to pressure Facebook and other social media companies to rein in online hate speech against their players.
Soccer officials have since met numerous times with the platforms, sent an open letter calling for change and organized social media boycotts. Facebook’s employees have joined in, demanding that it to do more to stop the harassment.
“The unfortunate reality is that tackling racism on social media, much like tackling racism in society, is complex,” Karina Newton, Instagram’s global head of public policy, said in a statement. “We’ve made important strides, many of which have been driven by our discussions with groups being targeted with abuse, like the U.K. football community.”
But Facebook executives also privately acknowledge that racist speech against English soccer players is likely to continue. “No one thing will fix this challenge overnight,” Steve Hatch, Facebook’s director for Britain and Ireland, wrote last month in an internal note that The Times reviewed.
Recovery in some of the world’s major economies appears to be slowing down as people spooked by the Delta variant spend less, travel less and dine out less, according to a new report by the Organization for Economic Development and Cooperation, the research and policy group of the world’s richest countries.
In recent months, as vaccination rates increased globally, optimism that life appeared to be returning to normal helped spur consumer spending from Ohio to Paris to Beijing.
But that renewed sense of confidence may be ebbing amid news of breakout infections, lockdowns and other requirements. In countries like France and Italy, people now need health passes — paper or digital proof of being fully vaccinated, a recent negative test or recent Covid-19 recovery — to attend big concerts and to enter cinemas, museums and theaters.
The O.E.C.D., a Paris-based organization, looked at economic indicators including employment, retail sales, manufacturing output and wage growth in 38 member countries. It said the indicators suggested that growth in major economies like the United States and China may be slowing down, with similar signs of sputtering in Europe, including in Britain, France and Germany.
The group said that there might be higher than usual fluctuations in how economic recoveries are playing out because of persistent uncertainties, “despite the gradual lifting of Covid-19 containment measures in some countries and the progress of vaccination campaigns.”
The report also said that growth was slowing in Russia and Brazil, where the pandemic has buffeted society and industry. In Brazil, millions have gone hungry in recent months, with scenes of undernourished teenagers holding placards at traffic stops with the word hunger in large print.
China, a manufacturing powerhouse, has played a leading role in an upward global economic trend. But some economists say that its growth has started to level off in recent months and that the government’s tougher pandemic restrictions could undermine it.
There have been some cautiously encouraging signs, however. Since the pandemic recession bottomed out in the United States in the spring of 2020, the nation’s economic output has been resilient, with second-quarter output 0.8 percent higher than before coronavirus.
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Coinbase, the cryptocurrency exchange, said on Tuesday that its quarterly revenue soared by more than 1,000 percent and profit skyrocketed nearly 4,900 percent from a year earlier, in its second earnings report as a publicly traded company. Revenue totaled $2.2 billion in the three months ending in June, up from $186 million a year ago. Profit was $1.6 billion, compared with $32 million a year earlier.
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The Biden administration said on Tuesday that it had reached an agreement with Tridonex auto parts factories in Mexico to address accusations that workers had been harassed and fired for trying to organize with an independent union in place of a company-controlled union. Under the deal, Tridonex agreed to provide severance and back pay to workers who had been dismissed. It also agreed to a number of steps to help ensure workers’ collective bargaining rights. The case posed an early test of the labor protections in the United States-Mexico-Canada Agreement.
Today in the On Tech newsletter, Shira Ovide writes that she wants it to be OK for a company to be just OK. That’s why she wants to talk about eBay.
