EV Tariffs, Home Depot’s Q1, Video Game Revenue, and More!
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White House Boosts Tariff on Chinese EVs
The Biden administration is set this week to raise tariffs on the import of Chinese electric vehicles (EVs) from 25% to 100%.
According to the White House, the decision has to do with protecting American jobs… although it certainly can’t hurt with the upcoming presidential election. Biden has been working to win over union workers at auto factories in several swing states.
There’s been some concern that the economical EVs flooding the Chinese markets — such as those made by Nio (NYSE: NIO) and Zeekr (NYSE: ZK) — could pose a serious threat to their U.S. rivals.
Biden’s office has been reviewing the tariffs that former President Trump enacted on Chinese imports when he began his trade war in 2018. The new tariffs on EVs will be announced along with the results of this review.
Apparently, the White House is concerned that China’s “green” technology is outpacing the strides made by American companies. That’s especially the case in the solar industry — China currently accounts for roughly 80% of the world’s solar panel production.
“The Biden administration is trying to get ahead of the curve and ensure that the U.S. car industry does not suffer the same fate as the U.S. solar industry, which was virtually decimated by unfairly traded Chinese imports,” Wendy Cutler, formerly the vice president of the Asia Society Policy Institute, told the Financial Times.
According to Cutler, Chinese EV makers have been willing to absorb the cost of the current tariffs in order to compete in the U.S. However, the new tariff rates will make this a more difficult feat.
“A quadrupling of the tariff rate… would more effectively shield U.S. auto manufacturers from unfairly traded Chinese vehicles before they can gain a foothold in the U.S. market,” Cutler said.
Squarespace to Go Private
On Monday, Squarespace (NYSE: SQSP) announced that it is being acquired by private equity firm Permira in an all-cash deal valued at roughly $6.9 billion.
That was enough to send shares of the company, which specializes in designing and building websites, up by more than 12% in premarket trading.
The deal will take Squarespace private.
Squarespace went public in 2021 after raising $300 million with a valuation of $10 billion. After its initial public offering (IPO), Squarespace shed some of its valuation, dropping as low as $2 billion in 2022.
However, this year, Squarespace has enjoyed a rebound — thanks to some strong earnings reports — and its market cap has clambered back to over $5 billion.
According to Permira, it will offer Squarespace shareholders $44 per share. That’s a nearly 30% premium on the stock’s 90-day trading average. CEO Anthony Casalena will remain at the helm and continue his role as chairman of the Squarespace board.
In recent years, Permira has made some pretty big-ticket acquisitions, including its $5.8 billion purchase of Mimecast in 2021 and its 2022 acquisition of Zendesk, which it completed through a joint venture with Hellman & Friedman for $10.2 billion.
Squarespace, which offers products to consumers, is different from these companies, which typically feature a B2B (business-to-business) model. It’s likely Permira is really after Squarespace’s artificial intelligence (AI) potential.
“The Squarespace ecosystem provides [small to medium-sized businesses] with a broad offering — from demand generation to powerful payment solutions, all seamlessly interwoven with intuitive [generative AI],” Permira’s Andrew Young said in a statement. “We share Anthony and the team’s vision to further invest in these tools to help customers grow.”
Home Depot’s Q1 Miss Indicates Consumers Are Postponing DIY Projects
Yesterday, Home Depot (NYSE: HD) reported disappointing first-quarter earnings that indicated consumers are putting off big home-improvement projects.
For the quarter, the retailer posted net income of $3.6 billion, or $3.63 per share. This fell below the year-ago quarter’s net income of $3.87 billion, or $3.82 per share.
Home Depot’s comparable sales saw a 2.8% drop globally, and a 3.2% dip here in the U.S. Revenue came in at $36.42 billion, versus Wall Street expectations of $36.66 billion.
In a recent interview with CNBC, Home Depot Chief Financial Officer Richard McPhail opined that consumers are putting off big-ticket projects and purchases due to high interest rates. Those higher rates are also keeping consumers from moving — which also cuts into Home Depot sales. He’s expecting this trend to continue throughout 2024.
“The home-improvement customer is extremely healthy from a financial perspective,” McPhail said. “And so it’s not the case of not having the ability to spend. What they tell us is they’re just simply deferring these projects as given higher rates; it just doesn’t seem the right moment to execute.”
He added, “When we have seen mortgage rates decrease slightly, as we saw at the beginning of this quarter, the housing turnover seems to respond quickly and sharply in a positive direction. And so we think that’s an indicator that there is a tremendous amount of pent-up demand for household formation and housing turnover and the larger projects that are associated with housing turnover.”
The Most Lucrative Game Companies
Anyone who has kids — or even “gamer” adults in the household — knows that there’s big money in video games.
For fiscal year 2023, Sony’s (NYSE: SONY) game segment hauled in revenue of roughly $27.4 billion. That’s a 17% increase on a year-over-year basis.
Take a look at how Sony’s gaming revenue stacks up against other publicly listed companies in this sphere:
You will find more infographics at Statista
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