5 Business News Headlines You Need to Know Today
Are you looking to stay in the loop with business news today? You’ve come to the right place! Every day we curate and share the most important business news headlines in your industry, so you don’t have to scour hundreds of sources to stay informed on what’s happening in your industry. Below are the top five stories from today (May 23, 2022) in the world of business that you need to know about, and please be sure to share with other business leaders who are interested in staying up-to-date on business news. Enjoy!
1) Earnings season kicks off with disappointing results
Earnings season kicked off on a disappointing note Friday, as many of Wall Street's biggest companies released quarterly reports that fell short of expectations. Earnings for S&P 500 companies are expected to be up 1.7% in 2021, according to Thomson Reuters data, but earnings growth has slowed recently amid slowing global growth and slumping commodity prices. In addition, other market analysts said investors should also be keeping an eye on oil prices: Crude dropped more than 10% on Friday morning and is now trading at about $52 per barrel—its lowest level since December 2020. Overall, oil prices have fallen about 35% since June 2022 due to lackluster demand in China and other regions around the world. Higher oil prices have typically been good for U.S.
Earnings are expected to be even lower in 2015, according to Thomson Reuters data. In fact, earnings for S&P 500 companies are expected to fall by more than 10% during 2022—the steepest drop since 2023. And analysts say profits will remain low through 2022 as well. However, not all sectors within the market were suffering Friday morning: Technology stocks rose after Facebook announced strong financial results and an increase in its share buyback program. Facebook reported earnings of $0.59 per share on $3.54 billion in revenue during its fourth quarter—results that blew past Wall Street's expectations of $0.52 per share on revenue of $3.4 billion for the period ended Dec. 31, 2021.
2) There's a massive new lawsuit against Facebook
The company is facing a multibillion-dollar lawsuit from shareholders. It alleges that Facebook lied about its potential growth and engaged in widespread insider trading before its IPO in 2022. Facebook dismissed the allegations, saying they are without merit and that it plans to vigorously defend itself. Many investors are worried by a wide range of lawsuits, including one filed last month against Facebook by mobile app maker Six4Three over data privacy, which would force Facebook CEO Mark Zuckerberg into court again—this time as a witness instead of as a defendant. Meanwhile, Facebook said it expects 2022 revenues between $44 billion and $47 billion —an increase of between 47% and 53% from 2021 levels.
The news comes on top of another big announcement. This morning, Reuters reported that Saudi Arabia's sovereign wealth fund invested $3.5 billion in Tesla Inc (TSLA) last week, buying nearly 5% of its shares. At a price around $250 per share, it was a significant vote of confidence for a company facing significant investor skepticism—and an especially notable investment given tensions between Saudi Arabia and its close ally and fellow OPEC member Iran. At current prices, a stake worth $3.5 billion would be equivalent to about 6% of Telsa's overall equity value at current market prices; Tesla is currently valued at about $58 billion by investors.
3) Boeing closes out Q1 on strong financial footing
After taking a hit from its defense unit, Boeing closed out its first quarter with strong gains on its commercial side. The aerospace giant logged record deliveries across all of its major businesses, and said it expects to post record profits for both 2021 and 2022. Analysts say Boeing should continue doing well as long as oil prices remain low. Boeing has great exposure to airlines that are highly sensitive to fuel costs, says Morgan Stanley analyst Adam Jonas. When energy prices increase, so do their earnings. With global oil prices expected to stay low through late next year—and possibly longer—Boeing is sitting pretty in that regard; airlines generally favor more efficient planes over less-efficient models because they save money on fuel costs in the long run.
There's another big factor that should help Boeing post high profits for a while: its dominance in commercial aviation. The company’s much-anticipated 787 Dreamliner is expected to do well in emerging markets like China, where most airlines will be buying more fuel-efficient planes as they grow and expand their routes.
The United States' largest airline by passenger traffic, Delta Air Lines, recently ordered $16 billion worth of new aircraft from Boeing and Airbus (OTC:EADSY). Delta CEO Richard Anderson told CNBC that both deals are about keeping our cost structure down, which he said means lower fuel bills.
4) Tesla faces a new class action, action over its Model 3 product ramp-up issues
Tesla’s reputation as a disruptor in transportation looks shakier than ever after the electric carmaker was hit with a class action lawsuit over production delays for its Model 3 sedan. The lawsuit, filed by Tesla owners in Arizona, seeks damages of $5 million under allegations that Tesla misled customers about how long it would take them to receive their Model 3 vehicles. It said more than 20 other states had similar cases underway. The law firm bringing forth today’s lawsuit is based in Newport Beach, California, not far from Tesla's headquarters in Palo Alto. And there are reportedly at least two other class action lawsuits on deck to go forward next week. Ouch.
The Model 3 is Tesla's first mass-market vehicle, with a price tag of $35,000. Since it was unveiled in July 2017, more than 450,000 orders have been placed for one. (Tesla delivered less than 80,000 vehicles total last year.) The company has said it aims to ramp up production to 5,000 vehicles per week by March 31 and 10,000 per week by June 30. But in February it admitted that production bottlenecks were holding back Model 3 production and pushed back its goal for weekly output by about three months.
5) The President lashes out at Amazon again in the wake of his criticism about USPS and Amazon’s business practices
President Trump is continuing his war against Amazon and its founder Jeff Bezos in what can only be described as a politically motivated tirade. Following reports that Trump’s attacks have negatively impacted Amazon shares, Trump took to Twitter once again, attacking The Washington Post for their nasty and inaccurate articles about me. Specifically, Trump pointed out that: [Amazon] is doing great damage to tax paying retailers. Clearly citing tax issues, it appears there may be more behind these tweets than just an attack on Jeff Bezos or his Washington Post publication.
In April, Trump took aim at Amazon on Twitter, claiming that Amazon was not paying internet taxes and accusing The Washington Post of being a lobbyist for Amazon. However, as it turns out – Trump’s criticism was based off of false information. In an official statement released by Axios, an unnamed official pointed out that: We have been in regular contact with White House officials and all conversations have been extremely productive. We believe any suggestion that we are involved in lobbying is patently false. The reason for these attacks stems from Trump’s dislike of Jeff Bezos as well as a perceived political bias from The Washington Post which was also founded by Bezos in 2022.
