In today’s top stories, Tesla’s Shanghai plant cuts its output target to 1,200 vehicles. In other news, JetBlue pursues a hostile takeover of Spirit, Ford sells more than Rivian stock, hedge funds scale back positions and Goldman cites risks of a recession.
Tesla delays Shanghai output
Tesla [TSLA] has temporarily put the brakes on restoring production at its Shanghai factory to levels before the city’s current Covid-19 lockdown. As reported previously by Reuters, it plans to roll off 1,200 cars a day from its production line this week, despite the EV maker originally targeting a daily output of 2,600 for this week. next week. It does plan to increase this back up to 2,600 from 23 May. The city plans to end its lockdown on 1 June.
Goldman sees recession risk
The risk of recession in the US is “very, very high,” Goldman Sachs senior chairman Lloyd Blankfein told CBS News. The bank cut its 2022 growth outlook for the US economy from 2.6% to 2.4% last week, warning that the Federal Reserve will be forced to hike interest rates further. Despite this, on Monday the bank identified 20 ‘safety stocks’ likely to weather a bear market, including Best Buy [BBY], Electronic Arts [EA] and Vertex Pharmaceuticals [VRTX].
JetBlue’s Spirit hostile takeover bid
Low-cost carrier Spirit [SAVE] has been pursuing a merger with Frontier [ULCC], but JetBlue [JLBU] has launched a hostile takeover bid. Just days after Spirit rejected a $33-per share offer from JetBlue on antitrust grounds, the latter has released a letter urging Spirit shareholders to “protect their interests” and vote against the Frontier transaction. “JetBlue is fully prepared to negotiate in good faith,” a statement read.
Hedge funds scale back
The heavy selloff in technology stocks and other hot areas of the market has led to a cooldown among hedge funds. According to client reports seen by the Financial Times, funds that trade with Morgan Stanley and JP Morgan Chase have reduced their positions in the last week. Peter Giacchi leads Citadel Securities’ floor trading team at the NYSE and told the publication: “There are clearly people taking risk off.”
Ford offloads more Rivian stock
There’s more bad news for electric truck maker Rivian [RIVN]. A regulatory filing on 13 May showed Ford [F] had dumped another 7 million shares after selling 8 million the previous week following the expiry of Rivian’s IPO lock-up. “We think it’s prudent at this point to monetise a small portion of the investment,” a Ford spokesperson told Barron’s. It still holds around 87 million shares, representing a 9.7% stake.
Earnings preview: Vodafone
Vodafone [VOD.L] has been coming under pressure from Europe’s largest activist fund, Cevian Capital, which wants the mobile group to restructure its portfolio and streamline its businesses. Meanwhile, Middle Eastern telecoms outfit e& announced on 15 May that it had taken a 10% stake in its UK rival. Shareholders will be hoping the presence of new investors will help to turn the troubled company’s fortunes around post-earnings today.
Earnings preview: Greggs
Bakery chain Greggs [GRG.L] has announced sales rose 27% in the 19 weeks to 14 May, But the nation’s favourite pasties and sausage rolls haven’t been immune to inflation – their prices rose by between 5p and 10p earlier this year. “We will continue to work to mitigate the impact of cost pressures while protecting Greggs’ reputation for exceptional value,” the company said in a statement. Its annual general meeting takes place later today.
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