to offer the entertainment company’s Paramount+ streaming service to subscribers of Walmart’s membership program.
Walmart has been exploring a subscription video-streaming deal to draw more people to Walmart+ as it seeks to challenge
Amazon.com Inc.,
which has grown its own Prime membership program to about 200 million global members.
The companies agreed to a 12-month exclusivity agreement and a two-year deal that would give Walmart+ members access to Paramount’s ad-supported streaming service, according to people familiar with the deal. The perk will be available starting in September, Walmart said.
Walmart’s announcement on Monday came after The Wall Street Journal reported the two companies had reached an agreement. Walmart is scheduled to announce quarterly earnings on Tuesday.
The deal is the latest tie-up in the fast-changing streaming industry, where a growing group of companies are looking to bundle content to draw viewers or customers. YouTube is planning to launch an online store for streaming video services and has renewed talks with entertainment companies about participating in the platform. YouTube, which is owned by
Alphabet Inc.,
would join
Apple Inc.,
Roku Inc.
and Amazon, which all have hubs to sell streaming video services.
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Walmart executives have held talks in recent weeks to discuss a streaming deal with executives at
Walt Disney Co.
,
Comcast Corp.
and Paramount Global, according to people familiar with the matter.
While this partnership is new, Paramount and Walmart have worked together for years. Paramount has had an office in Bentonville, Ark., dedicated to Walmart, which historically has been a big seller of its consumer products and home entertainment.
Paramount Global runs the Paramount+ service, which has shows such as “Halo,” the “Star Trek” series and “Paw Patrol.” The company said this month that Paramount+ had more than 43 million subscribers at the end of its latest quarter.
Walmart introduced Walmart+ in 2020 and aims to use the service to add new streams of revenue beyond selling goods, as well rival the success Amazon has had with its Prime membership services. A subscription to Walmart+ costs $12.95 a month or $98 a year and includes free shipping on online orders and discounts on gasoline. The retailer has added perks to build interest, such as six months of the
Spotify
music-streaming service.
Walmart said Monday that Walmart+ has had positive membership growth every month since its launch, without specifying membership numbers. A Morgan Stanley survey in May said the service has about 16 million members, compared with about 15 million the previous November.
Amazon has invested heavily to ramp up its own Prime Video service, adding original programming and live sports. Prime Video is included along with free shipping and other perks in its Prime membership, which costs $14.99 a month or $139 a year in the U.S. Amazon also recently added a year of Grubhub’s restaurant delivery services for Prime subscribers.
The deal would give Paramount+ a new avenue for growth in an increasingly competitive streaming market now that all of the major entertainment companies have streaming offerings and growth in the U.S. among many services, such as
Netflix Inc.,
has started to slow.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart
Technology stocks have taken a beating this year. Many individual investors have used it as an opportunity to double down.
The Nasdaq Composite Index—home to the big tech stocks that propelled the market’s decadelong rally—has fallen 21% in 2022. Shares of
Amazon.com Inc.
AMZN 10.36%
and the parents of Google and
Facebook
META -1.01%
have suffered double-digit declines as well, stung by higher interest rates and souring attitudes about their growth prospects.
Yet many of those stocks remain the most popular among individual investors who say they are confident in a rebound and expect the companies to continue powering the economy.
In late July, purchases by individual investors of a basket of popular tech stocks hit the highest level since at least 2014, according to data from Vanda Research. The basket includes the FAANG stocks—Facebook parent Meta Platforms Inc., Amazon,
Apple Inc.
AAPL 3.28%
,
Netflix Inc.
and Google parent
Alphabet Inc.
GOOG 1.79%
—along with a handful of others like
Tesla Inc.
and
Microsoft Corp.
Meanwhile, Apple, chip company
Advanced Micro Devices Inc.
and the tech-heavy Invesco QQQ Trust exchange-traded fund have remained among the most popular individual bets since 2020.
Interest in risky and leveraged funds tied to tech and stocks like
Nvidia Corp.
has also swelled, a sign that investors have stepped in to play the wild swings in the shares.
It has been a fruitful bet for many. Tech stocks have been on the rebound of late, partly on investor hopes for a slower path of interest-rate increases in the months ahead. The Nasdaq gained 12% in July, its best month since April 2020, outperforming the broader S&P 500, which rose 9.1%.
Individual investor Jerry Lee says: ‘The market is severely undervaluing how much tech can actually play into our lives.’
Photo:
Peggy Chen
“I’m extremely bullish on tech,” said Jerry Lee, a 27-year-old investor in New York who co-founded a startup that helps people find jobs. “The market is severely undervaluing how much tech can actually play into our lives.”
In coming days, investors will be parsing earnings reports from companies such as AMD and
PayPal Holdings Inc.
for more clues about the market’s trajectory. Data on manufacturing and the jobs market are also on tap.
Mr. Lee said he recently stashed cash into a technology-focused fund that counts Apple and Nvidia among its biggest holdings, after years of pouring money into broad-based index funds. His experience working at firms such as Google has made him optimistic about the sector’s future, he said.
Gabe Fisher holds stock in Meta Platforms, Amazon and Alphabet.
Photo:
Ethan Kaplan
Even last week when many of the industry’s leaders, including Apple, Amazon and Alphabet, warned their growth is slowing, investors pushed the stocks higher and expressed confidence in the ability of the companies to withstand an uncertain economy. Apple logged its best month since August 2020, while Amazon finished its best month since October 2009, helped by a 10% jump in its shares on Friday alone.
Many investors also pounced on the tumble in shares of Facebook parent Meta Platforms. The stock was the top buy among individual investors on the Fidelity brokerage Thursday when it fell 5.2% in the wake of the social-media giant’s first-ever revenue drop. Tesla,
Ford Motor Co.
and leveraged exchange-traded funds tracking the tech-heavy Nasdaq-100 index were also widely traded that day.
Gabe Fisher, a 23-year-old investor near San Francisco, said he is holding on to stocks like Meta, Amazon and Alphabet.
“Even if these companies never grow at as fast of a pace, they’re still companies that are so relevant and so prevalent that I’m going to hold on to them,” Mr. Fisher said.
He said he also has a small position in
Cathie Wood’s
ARK Innovation Exchange-Traded Fund that he doesn’t plan to sell soon, even though the fund has lost more than half of its value this year.
Other investors have been turning to riskier corners of the market. Leveraged exchange-traded funds tracking tech have been the third- and fourth-most-popular ETFs for individual investors to buy this year, behind funds tracking the S&P 500 and Nasdaq-100 indexes. These funds allow investors to make turbocharged bets on the market and can double or triple the daily return of a stock or index.
Many individual investors have also turned to the options market to bet on tech. Bullish bets that would pay out if Tesla shares rose have been among the most widely traded in the options market, according to Vanda. Individual traders have spent more on Tesla call options on an average day this year than on Amazon, Nvidia and options tied to the Invesco QQQ Trust combined, according to Vanda. The firm analyzed the average premium spent on options that are out-of-the-money, or far from where the shares are currently trading.
Jeff Durbin, a 59-year-old investor based in Naples, Fla., said he regrets missing out on buying big tech stocks decades ago.
He has scooped up shares of companies like artificial intelligence firm
Upstart Holdings Inc.
and
Shopify Inc.
SHOP -3.01%
—and hung on despite their sharp swings. Shopify, for example, dropped 14% in a single session last week as it said it would cut about 10% of its global workforce. “It’s painful, but I missed out on things like Amazon and Netflix when they were cheap,” Mr. Durbin said. “Who is going to be the Amazon and Apple 20 years from now?”
Alphabet Inc. and Microsoft Corp. both reported results that missed Wall Street’s expectations Tuesday, but not only did investors not melt down, both actually saw their stocks rise in after-hours trading.
Amid troubling economic signs, tech stocks have been battered so far this year, and fears about a slowdown among Big Tech names had Wall Street on edge heading into this week. But the reactions to earnings misses Tuesday afternoon show that the fears and declines so far this year have resulted in a lowered bar for even the biggest of the Big Tech names.
Microsoft
MSFT,
-2.68%
missed on both revenue and profit expectations, and forecast that its cloud business, Azure, will grow about 43% in the September quarter, amid fears of slowing cloud growth. While the four-percentage-point deceleration from the previous quarter’s growth rate may have led to sharp declines in the past, Microsoft stock jumped as soon as the forecast was provided.
Google parent Alphabet
GOOGL,
-2.32%
GOOG,
-2.56%
reported an earnings decline for a second quarter in a row, and told analysts on its conference call that a slowdown by ad buyers impacted its second quarter. Yet Alphabet shares were up nearly 5% in after-hours trading.
“In context of the weakening macro backdrop, Alphabet’s Q2 results were decent, with close to in-line revenues across all key business segments,” wrote Colin Sebastian, an analyst with Baird Equity Research, in a note to clients, summing up the general view on Wall Street that things were not yet as bad as feared.
Much like the relief rally seen by Meta Platforms Inc.
META,
-4.50%
shares three months ago, however, this is a case of numbers that, while good enough to avoid tanking their stocks, still shouldn’t actually be seen as “good.” Both companies warned about the macroeconomy, and clearly each company has businesses that are slowing sharply right now.
In Alphabet’s case, revenue at YouTube, a recent star, grew a scant 3% in the second quarter, compared with 14.3% growth in the first quarter, due to overall advertiser pullbacks in spending and more competition from TikTok. Microsoft saw its PC business soften, as the big PC boom of the pandemic is over. The advertising slowdown is also affecting its LinkedIn business, while the Xbox business is slowing rapidly as the pandemic-fueled surge in videogames wears off.
But those stocks are not facing the wrath reserved for some smaller competitors. Last week, social-media company Snap Inc.
SNAP,
-3.22%
raised more fears among investors about internet ad spending, and its stock plunged as the overall economy battles with inflation, changing consumer patterns and higher interest rates.
Microsoft and Google were able to avoid the same fate, though it’s possible that it will just take longer for the slowdown to actually affect companies so large, and with dominant positions in important industries. But make no mistake, there is a slowdown, and it is affecting Big Tech, just maybe not to the degree that it will result in big chunks taken out of their gargantuan market caps — yet.
is cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth the technology company made during the pandemic, according to an internal memo.
Tobi Lütke,
the company’s founder and chief executive, told staff in a memo sent Tuesday that the layoffs are necessary as consumers resume old shopping habits and pull back on the online orders that fueled the company’s recent growth. Shopify, which helps businesses set up e-commerce websites, has warned that it expects revenue growth to slow this year.
Shopify’s shares fell 14% to $31.55 on Tuesday after The Wall Street Journal first reported on the layoffs. The shares have fallen more than 80% since they peaked in November near $175 adjusting for a recent stock split. The company reports quarterly results on Wednesday.
Mr. Lütke said he had expected that surging e-commerce sales growth would last past the Covid-19 pandemic’s ebb. “It’s now clear that bet didn’t pay off,” said Mr. Lütke in the letter, which was reviewed by the Journal. “Ultimately, placing this bet was my call to make and I got this wrong.”
The Ottawa-based company will cut jobs in all its divisions, though most of the layoffs will occur in recruiting, support and sales units, said Mr. Lütke. “We’re also eliminating overspecialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” he wrote. Staff who are being let go will be notified on Tuesday.
Shopify’s job cuts are among the largest so far in a wave of layoffs and hiring freezes that is washing over technology companies. Rising interest rates, supply-chain shortages and the reversal of pandemic trends, including remote work and e-commerce shopping, have cooled what was once a red-hot tech sector.
Shopify’s job cuts are the first big layoffs the company has announced since Tobi Lütke founded it in 2006.
Photo:
Cate Dingley/Bloomberg News
Netflix Inc.
cut about 300 workers in June as it deals with a loss in subscribers.
Twitter Inc.,
now mired in a legal standoff with
Elon Musk,
laid off fewer than 100 members of its talent acquisition team. Mr. Musk’s own company, electric-vehicle maker
Tesla Inc.,
late in June laid off roughly 200 people, after announcing it would cut 10% of salaried staff.
Other firms, including
Microsoft Corp.
and
Alphabet Inc.’s
Google, said they would slow hiring the rest of the year.
Tuesday’s announcement is Mr. Lütke’s first big move after Shopify’s shareholders approved a board plan to protect his voting power. The job cuts are the first big layoffs the company has announced since Mr. Lütke started the company in 2006.
Shopify’s workforce has increased from 1,900 in 2016 to roughly 10,000 in 2021, according to the company’s filings. The hiring spree was made to help keep up with booming business. E-commerce shopping surged during the pandemic, and many small-business owners created online stores to sell goods and services.
Shopify reported annual revenue growth of 86% in 2020 and 57% in 2021 to about $4.6 billion. However, the company reported a softening this year, and warned that 2022’s numbers wouldn’t benefit from the pandemic trends.
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In his memo on Tuesday, Mr. Lütke said, “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”
Shopify has been expanding its business in recent years to provide more services for merchants. It has developed point-of-sale hardware for retailers, launched a shopping app for its merchants to list products and created a network of fulfillment centers to ship orders for its business partners.
In May, Shopify agreed to buy U.S. fulfillment specialist Deliverr Inc. for $2.1 billion in cash and stock. It announced partnerships with Twitter in June and with YouTube earlier this month, allowing users to buy items that Shopify merchants post on those platforms.
Shopify is offering 16 weeks of severance to the laid-off workers, plus one week for every year of service.
joined forces with labor leaders to oust Chief Executive Officer
Herbert Diess,
who was in the midst of a push to turn the German auto company into a top maker of electric vehicles.
Mr. Diess will be succeeded by
Oliver Blume,
CEO of VW’s sports-car maker Porsche AG and long an ally of the Porsche-Piëch family that controls a majority of VW voting rights. Mr. Blume will retain his job running Porsche, which is slated for an initial public offering this autumn.
The departing chief executive had repeatedly clashed with unions, which hold half the seats on the German equivalent of the company’s board of directors. Until now he had retained the support of the family, heirs to the VW Beetle inventor, Ferdinand Porsche.
Mr. Diess was informed around midday Thursday that the company’s core shareholders and labor representatives had decided to fire him. The broader supervisory board learned of the decision at a meeting at around 4:30 p.m. Friday local time, according to a person familiar with the proceeding.
The sudden ouster comes after renewed internal strife over the slow progress developing core software for the company’s new generation of electric vehicles. The delays have caused the launches of some models to be pushed back, raising doubts among the Porsche-Piëch family about Mr. Diess’s ability to deliver on his promises, people familiar with the situation said.
Herbert Diess is leaving VW as it struggles in developing core software for its new generation of electric vehicles.
Photo:
Ralph Orlowski/Reuters
VW’s leadership crisis has plunged the company’s electric-vehicle strategy into uncertainty and has raised questions about the company’s governance, which is dominated by a triumvirate of family shareholders, the German state of Lower Saxony and the country’s biggest trade union.
“The hope of the supervisory board must be for new group CEO Blume to have more success in guiding the software strategy of the group,” Daniel Roeska, analyst at Bernstein Research, said in a note to clients. “However, it will take months to come up with a new plan, and creating unrest as the group is heading into a challenging 2023 is the wrong time, in our view.”
Mr. Diess couldn’t be reached to comment. Mr. Diess has said that before joining VW, he had turned down a job offer from
Elon Musk,
which has fueled speculation that he could join
Tesla Inc.
if he left VW.
Auto-industry CEOs around the world are wrestling with how best to transition to new technologies—much of which isn’t core to their companies’ expertise and requires different thinking, cost structures and skill sets.
Car executives are under pressure to get ahead of new rivals, many of them in Silicon Valley, which have deeper pockets and are unencumbered by a capital-intensive legacy business focused on making gasoline-powered vehicles.
In Detroit, the leadership at
General Motors Co.
and
Ford Motor Co.
have outlined bold moves in recent years to transform their operations, including the creation of new supply chains for batteries and the hiring of new kinds of talent. Ford this year took the unusual step of splitting its gas-engine and EV operations into two separate divisions, a move that executives have said will help it be more agile in its shift to new technologies.
Meanwhile, investors are aggressively betting on the EV space, trying to figure out who will be the next Tesla.
With gas prices on a wild ride, many consumers are exploring whether buying an electric vehicle could save them money in the long run. WSJ’s George Downs breaks down four factors to consider when buying a new car. Photo composite: George Downs
Mr. Diess has defined the industry’s challenge as shifting from banging metal into cars to developing the skills, resources and vision to create software-defined cars, vehicles that in many ways have more in common with an iPhone than a conventional car. His attempt to catch up with Tesla was hampered by difficulties turning VW into a developer of software, which is the heart of modern electric vehicles and future self-driving cars.
In recent weeks, people familiar with the company said it had rebooted its plan to develop a unified operating system for its cars after trouble delivering the code led VW’s Audi and Porsche brands to postpone the launch of new premium electric models.
It couldn’t be determined whether Mr. Blume would continue to pursue Mr. Diess’s strategy of keeping core software development in-house or whether he would turn to
Alphabet Inc.’s
Google or
Apple Inc.
as some rivals have.
In March, Mr. Blume said he and his management team met senior Apple executives for a meeting at which they discussed a range of potential projects. Mr. Blume disclosed no further details, and it couldn’t be determined what was discussed.
Ferdinand Dudenhöffer,
director of Center for Automotive Research in Duisburg, Germany, said it was to be expected that Mr. Blume would present a new software strategy for the company.
“This big issue of the software-defined car is a huge challenge for conventional auto makers,” Mr. Dudenhöffer said. “Either auto makers will become tech companies like Google, Apple and Microsoft, or they will become dependent on the tech giants.”
Mr. Diess survived several challenges to his position. In December, following a clash with labor representatives, directors stripped him of some of his responsibilities and reshuffled his management team. But this week’s move to push him out came suddenly and wasn’t linked to any single incident, people familiar with the decision said.
At the supervisory-board meeting on Friday afternoon,
Hans Dieter Pötsch,
chairman of the supervisory board and a key ally of the Porsche heirs, presented a deal reached previously with top officials of the IG Metall trade union in a smaller meeting.
The families and union leaders agreed to remove Mr. Diess in the belief that Mr. Blume, 54 years old, who became CEO of Porsche in 2015, would lead with more consensus among management and VW stakeholders, people familiar with the decision said. Mr. Blume, an engineer by training, has long been a favorite of the Porsche-Piëch families and union leaders as a successor to Mr. Diess. But Mr. Blume has repeatedly said he was happy at Porsche.
Once the controlling families decided Mr. Diess had to go, they approached Mr. Blume, people familiar with the family said, and urged him to take the job. Mr. Blume agreed, they said.
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“Blume is seen as someone with a more congenial personality and management style,” one of the people said. “He speaks to his colleagues on the executive board differently and has had success at Porsche.”
According to the people with knowledge of the decision, the Porsche-Piëch family concluded that Mr. Diess’s personality led to repeated conflict within the company and that he didn’t appear to have the software problems under control. While not the only issue that weighed on the family’s mind, the software troubles began to affect new models and eroded the confidence that Mr. Diess could get the issues under control.
Hours before his ousting, Mr. Diess, who will step down on Sept. 1, posted a holiday message to workers ahead of the summer breaks.
“After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break,” he wrote on LinkedIn. “Enjoy the break—we are in good shape for the second half.”
Mr. Diess joined VW in 2015 from
Bayerische Motoren Werke AG
, initially as chief of the VW brand. In that role, he began to lay the groundwork for VW’s electric-vehicle strategy, a plan that has seen VW’s brands, including Porsche, Audi, Seat, Škoda, Lamborghini and Bentley, develop core electric models with a plan to shift fully to EVs this decade.
Under Mr. Diess’s leadership, VW embarked on a plan to build battery cell manufacturing companies around the world to power its new generation of EVs. It recently announced that it would create a new company in the U.S. under the Scout brand to build rugged, off-road electric trucks and SUVs. The move is part of a focus to rebalance the company’s heavy reliance on the Chinese market, where it makes 40% of sales.
While union leaders have acknowledged Mr. Diess’s strategic vision and his achievement in transforming VW’s culture for the EV age, they have questioned his ability to execute, as highlighted by the software problems.
Daniela Cavallo,
the head of VW’s works council, has said Mr. Diess had failed to involve employees in key decisions. She criticized him on his warning to the supervisory board last year that 30,000 jobs at its flagship plant were at stake if VW failed to accelerate its EV shift.
In a statement, Ms. Cavallo said the VW group “wants to emerge strengthened from the historical change in the world of mobility in a leading position. However, it is also our aim that, despite the great challenges, job security and profitability remain equal corporate goals in the coming years.”
Mr. Blume joined Volkswagen in 1994 and has held management positions for the brands Audi, Seat, Volkswagen and Porsche.
“Oliver Blume has proven his operational and strategic skills in various positions within the group and in several brands and has managed Porsche AG from a financial, technological and cultural standpoint with great success for seven years running,” Mr. Pötsch said. VW said Mr. Blume would continue as chief executive of Porsche after a possible IPO.
—Christina Rogers contributed to this article.
Write to William Boston at william.boston@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com
has shed about 60 people while hitting the brakes on renting its cars to riders and consolidating its global operations team, according to people familiar with the matter and an employee memo reviewed by The Wall Street Journal.
The cuts covered less than 2% of staff and mainly affected employees who worked in operations, the people said. In a memo to some staff sent Tuesday, the company said it was folding the part of its business that allowed consumers to rent its fleet of cars on the app.
“Our road to scaling first party rentals is long and challenging with significant uncertainty,” according to the memo, sent by Cal Lankton, vice president of fleet and global operations at Lyft. Mr. Lankton wrote that conversations about exiting the business started last fall and “then accelerated as the economy made the business case unworkable.”
Lyft shares rose around 8% Wednesday to close at $14.70, while the tech-heavy Nasdaq Composite Index climbed less than 2%.
The company said it is going to continue working with big car-rental companies. Lyft’s car-rental business had five locations while it has car-rental partnerships with
Sixt
SE and
Hertz Global Holdings Inc.
in more than 30 locations, a spokeswoman said.
“This decision will ensure we continue to have national coverage and offer riders a more seamless booking experience,” the spokeswoman said in a statement.
The company also is reorganizing its global operations team, consolidating from 13 to nine regions and closing a location in Northern California and its Detroit hub, according to the memo.
Lyft joins other tech companies that are trimming staff or scaling back hiring plans as economic challenges cool the once-hot sector. The industry has been hiring at a rapid pace for years, but easy money is drying up and share prices have been plunging amid the reversal of some pandemic trends, high inflation, supply-chain shortages and growing worries about an economic slowdown.
Lyft’s stock has fallen more than 70% in the past 12 months compared with the less than 20% decline in the Nasdaq Composite Index.
In May, rival Uber Technologies Inc. said it would slow hiring. Its stock has halved over the same period.
Last week, Alphabet Inc.’s Google said it will slow hiring for the rest of the year while Microsoft Corp. cut a small percentage of its staff, attributing the layoffs to regular adjustments at the start of its fiscal year. Rapid-delivery startup Gopuff cut 10% of its staff last week, citing growing concerns about the economy.
Earlier this month,
Facebook
-parent Meta Platforms Inc.’s head of engineering told managers to identify and push out low-performing employees, according to an internal post. Snap Inc. Chief Executive
Evan Spiegel
recently told staff the company would slow hiring, warning that the economy “has definitely deteriorated further and faster than we expected.”
In May, Lyft President
John Zimmer
said in a staff memo the company planned to slow hiring, reduce the budgets of some of its departments and grant new stock options to some employees to make up for its eroding share price. At the time, Mr. Zimmer said the company didn’t plan to cut staff.
After enduring the pandemic, ride-share companies like Uber and Lyft are now facing a new world of high inflation, driver shortages, and dwindling passenger numbers. WSJ’s George Downs explains what they’re doing to try and survive. Illustration: George Downs
Write to Preetika Rana at preetika.rana@wsj.com and Emily Glazer at emily.glazer@wsj.com
U.S. auto-safety regulators have escalated their investigation into emergency-scene crashes involving
Tesla Inc.’s
TSLA 1.26%
Autopilot, a critical step for determining whether to order a safety recall.
The National Highway Traffic Safety Administration said in a notice published Thursday that it was expanding a probe begun last August into a series of crashes in which Tesla vehicles using Autopilot struck first-responder vehicles stopped for roadway emergencies.
The agency said it was upgrading its earlier investigation to an engineering analysis after identifying new crashes involving Autopilot and emergency-response vehicles.
NHTSA also said it has expanded its examination of Autopilot to include a wider range of crashes, not only those at emergency scenes. The agency said it would further assess how drivers interact with Autopilot and the degree to which it might reduce motorists’ attentiveness.
Forensic data available for 11 of the crashes showed that drivers failed to take evasive action in the two to five seconds before the collision, the agency said.
The investigation covers an estimated 830,000 Tesla vehicles made from 2014 to 2021, including the Model 3, Model S, Model X and Model Y.
NHTSA said in its filing that it has identified 15 injuries and one fatality related to the crashes.
Tesla didn’t immediately respond to a request for comment. The electric-car maker’s stock was up 2.5% in midday trading Thursday, following news of a strong bounceback in production at its plant in China.
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Autopilot, Tesla’s name for the advanced driver-assistance technology used in its vehicles, is designed to help drivers with tasks such as steering and keeping a safe distance from other vehicles. Tesla instructs drivers using the system to pay attention to the road and keep their hands on the wheel.
The electric-car maker has long maintained that driving with Autopilot engaged is safer than doing so without it. Tesla points to internal data showing that crashes were less common when drivers were using Autopilot. Some researchers have criticized Tesla’s methodology.
In opening its initial probe last year, NHTSA said that it had identified 11 crashes since early 2018 in which a Tesla vehicle using Autopilot struck one or more vehicles involved in an emergency-response situation. In its latest filing, the agency said it discovered six additional crashes involving Teslas and first-responder vehicles where Autopilot was in use.
U.S. safety regulators are probing crashes involving Teslas, suspecting the company’s Autopilot system might be involved. WSJ’s Robert Wall reports on how some motorists may mistakenly think Autopilot is a self-driving feature that doesn’t require their attention. (Video from 3/18/21)
The expanded probe of Autopilot is the latest sign that U.S. auto-safety regulators are getting more aggressive in scrutinizing advanced vehicle technologies that automate some or all of the driving tasks.
NHTSA is getting ready to release new crash data this month that will give the public its first detailed look at the frequency and severity of incidents involving what are known as automated driving or advanced driver-assistance features, The Wall Street Journal has reported.
More than 100 companies are subject to an agency order requiring them to report crashes in which such systems were in use. Among those included are operators of autonomous-car fleets, like
Alphabet Inc.’s
Waymo and
General Motors Co.
’s Cruise LLC.
The technology under scrutiny includes lane-keeping assistance and cruise-control systems that keep a fixed distance behind a leading car, as well as higher-tech systems such as features that can guide a car along highways with minimal driver input.
Autopilot has become a particular focus for U.S. regulators in recent years, prompted by incidents in which drivers have misused the technology, overriding safety functions to operate a vehicle without their hands on the wheel, for example. Some critics also said the term Autopilot risks giving drivers an inflated sense of the system’s capabilities.
NHTSA said in its latest filing that driver use or misuse of Autopilot doesn’t necessarily preclude the agency from determining whether the technology is defective.
“This is particularly the case if the driver behavior in question is foreseeable in light of the system’s design or operation,” NHTSA said. Auto makers are legally required to initiate a recall if a safety defect is discovered in their vehicles.
Separately, NHTSA has opened a broader investigation into several dozen crashes where advanced driver-assistance features are suspected to have played a role. While the probe covers vehicles made by any car company, incidents involving Teslas represent most of the cases under examination, including several with fatalities.
will slow hiring, reduce the budgets of some of its departments and grant new stock options to some employees to make up for its eroding share price, joining rival
Uber Technologies Inc.
UBER -9.38%
in outlining cuts as investor optimism cools on tech stocks.
President
John Zimmer
announced the measures Tuesday in a memo to staff.
“It’s clear from our discussions with other business leaders that every company is taking a hard look at how they respond to concerns about an economic slowdown and the dramatic change in investor sentiment,” Mr. Zimmer wrote in an internal memo viewed by The Wall Street Journal.
“Given the slower than expected recovery and need to accelerate leverage in the business, we’ve made the difficult but important decision to significantly slow hiring in the US,” he said.
That includes the company giving priority to fewer initiatives, not filling many of the current open roles and focusing hiring on roles deemed critical, such as those that support its core rides business, Mr. Zimmer said. He said there are no layoffs planned.
Lyft’s board met on Friday to discuss the cuts, said a person familiar with the meeting. Lyft began signaling to some employees recently that there would be a hiring slowdown and cutting of budgets, another person familiar said.
Lyft shares have lost more than 60% since the start of the year, more than double the decline of the Nasdaq Composite Index. After declining more than 15% Tuesday, Lyft shares were up less than 1.5% in after-hours trading after the Journal reported about the plans.
Uber Technologies also has outlined budget cuts. An Uber driver in Paris.
Photo:
Nathan Laine/Bloomberg News
Tech companies that powered the U.S. economy during the pandemic are suffering through a punishing stretch. Concerns about rising interest rates and the reversal of some pandemic trends that bolstered tech revenues have hit the share prices of
Peloton Interactive Inc.,
PTON -8.08%
Netflix Inc.,
Amazon.com Inc.
AMZN -3.21%
and others.
Last month Amazon reported the slowest quarterly revenue growth in about two decades. Netflix lost subscribers during its first quarter for the first time in more than a decade and signaled that losses are set to continue.
Apple Inc.
AAPL -1.92%
cautioned that the resurgence of Covid-19 in China could hinder sales.
The shares of
Snap Inc.
SNAP -43.08%
tumbled 43% Tuesday after it said in a Monday filing that revenue and adjusted pretax earnings for the second quarter will come in below the range the company projected barely a month ago due to weak advertising revenues. Other tech stocks that rely on digital advertising, including Google parent
Alphabet Inc.
GOOG -5.14%
and
Facebook
parent
Meta Platforms Inc.,
FB -7.62%
also fell.
After years of adding jobs at a rapid pace, some tech companies have been broadcasting that they think it is time to take a more cautious approach. The pullback by tech giants raises questions about the direction of the overall U.S. job market and economy.
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Meta, Peloton and Uber are among the tech companies that have announced they will slow hiring or re-evaluate their head count in recent weeks.
Among the other issues cooling the long-hot sector: inflation, labor shortages and supply-chain issues.
Uber and Lyft are struggling with a year-long driver shortage that has pushed fares to record highs. The elevated fares have partly resulted in fewer Lyft riders and fewer Uber trips compared with before the health crisis, though both companies’ first-quarter revenue outpaced prepandemic levels on the back of higher prices.
Lyft’s first-quarter results were overshadowed by a weaker-than-expected earnings outlook as the company said it would need to spend more money to incentivize drivers to return. Its stock tumbled more than 35% after the announcement, marking the biggest percentage drop in a single day since the company went public in 2019.
Earlier this month, Uber said it would cut spending on marketing and scale back on hiring as it focuses on turning a profit.
Both companies spent big for years to gain customers and market share. But their 2019 public offerings disappointed, with Wall Street increasingly wanting to see money-losing companies turn a profit.
“As we’ve seen and discussed, public market investors have continued to sharply shift their focus onto a potential recession and a company’s ability to deliver near-term profits,” Mr. Zimmer wrote in Tuesday’s memo.
He went on to write that “our near-term action plan will be focused on accelerating profits—whether we like it or not, that’s the ticket of entry in today’s market.”
Uber and Lyft have trimmed their losses, unloading costly divisions such as their self-driving units and cutting staff during the health crisis. Both companies turned a quarterly adjusted profit before certain expenses like interest, taxes and depreciation last year.
Uber said it expects to be cash-flow positive on a full-year basis this year. If it meets that goal, it would mark the first time the underlying operations of the ride-share and food-delivery giant generate more money than it spends.
Write to Preetika Rana at preetika.rana@wsj.com and Emily Glazer at emily.glazer@wsj.com
Google’s earnings shortfall is an indication of trouble across the online-advertising industry, and should scare investors in Facebook and other competitors.
Google parent company Alphabet Inc.
GOOGL,
-3.59%
GOOG,
-3.04%
reported first-quarter results Tuesday that were slightly shy of Wall Street estimates, with revenue at Google and YouTube both hit by the war in Ukraine and slower ad spending. The numbers weren’t the only problem, though: Wall Street analysts seemed especially disappointed in comments by Alphabet Chief Financial Officer Ruth Porat about a potentially slower second quarter and slowing revenue growth at YouTube.
Many analyst questions were around YouTube’s slowing growth rate, and whether or not the company was seeing more competition from TikTok. In the first quarter, YouTube revenue grew 14.39% to $6.9 billion, its slowest growth in the past five quarters. In the year-ago quarter, for example, YouTube revenue soared 48.7%.
Porat blamed Russia’s invasion of Ukraine; like many U.S. corporations, Alphabet suspended its business in Russia after it went to war with Ukraine. The loss of revenue from Russia was about a 1% hit on its overall revenue, executives disclosed.
“The war, that did have an outsized impact on YouTube ads relative to the rest of Google,” Porat said. “And that was both from suspending the vast majority of our commercial activities in Russia as well, as I noted earlier, the related reduction in spend primarily by brand advertisers in Europe.”
Analysts weren’t buying that explanation, sticking to questions about the rise of TikTok. One analyst said he has been hearing concerns about more competition from TikTok affecting YouTube’s mobile usage.
“We’ve seen significant investment in online video and there has been a ton of innovation, but there are 2 billion-plus logged-in viewers who visit YouTube every single month and more people are creating content on YouTube than we have ever seen before,” Alphabet Chief Executive Sundar Pichai rebutted.
In addition to YouTube, concerns about the general macroeconomic advertising environment and the outlook spooked some analysts. Porat said that in Google Services, the revenue growth rates in its advertising businesses benefited from lapping the COVID-related weakness in 2020.
“Obviously we will not have that tailwind for the rest of this year,” she said. “As discussed in prior calls, the largest impact from COVID on our results was in the second quarter of 2020, which means that in the second quarter of 2022, we will face a particularly difficult comp as we lap the recovery we had in the second quarter of 2021.”
Wall Street had been expecting Alphabet to weather the storm in the online-ads sector, where Apple Inc.’s
AAPL,
-3.73%
privacy changes to iOS have had a big impact on Facebook parent Meta Platforms Inc.
FB,
-3.23%
and other ad-based companies. Comments about its Google ad and search business are likely indicators that other internet companies could report even more disappointing results in the coming weeks, starting with Facebook on Wednesday.
In after-hours trading Tuesday, shares of Alphabet fell 4% at one point, though a major increase to its stock buyback plan — to $70 billion, up from $50 billion last year — likely helped its shares stave off much more damage, ending the session down 2.7%. Meta, which saw its stock dip nearly as much in Tuesday’s after-hours session, may not be so lucky.
If Alphabet is no longer a port in the storm, investors are going to have a tough time finding a better alternative among its few competitors.
U.S. stocks flipped higher Monday as government-bond yields retreated and investors took the opportunity to scoop up shares of beaten-down technology and other growth stocks.
The S&P 500 climbed 24.34 points, or 0.6%, to 4296.12 after dropping nearly 1.7% earlier in the session. The Dow Jones Industrial Average advanced 238.06 points, or 0.7%, to 34049.46.
The tech-heavy Nasdaq Composite Index rose 165.56 points, or 1.3%, to 13004.85.
Twitter
shares rose 5.7% after the social-media company accepted
Elon Musk’s
$44 billion takeover deal.
All three indexes had opened lower after Chinese shares suffered their worst selloff in more than two years as Beijing sticks to its zero-Covid strategy while faced with increasing cases in major cities. Oil prices fell, at one point dipping below $100 a barrel, before staging an afternoon rally.
A decline in bond yields signaled to investors that the Federal Reserve may not move to raise interest rates as aggressively as feared, investors said.
“Rates had been weighing against the market,” said
Jack Ablin,
chief investment officer of Cresset Capital. “Now what we’re seeing is a reversal of that trend.”
The yield on the benchmark 10-year Treasury note ticked down to 2.825% Monday from 2.905% Friday as investors sought safer assets to hold. Yields and prices move inversely.
“I think a lot of growth stocks have been punished too severely,” said
Brian Price,
head of investment management for Commonwealth Financial Network. “Part of what we’re seeing may be a reversal of that. Longer-term rates have just moved so far.
“The market is stepping back and assessing if they should have moved so fast. And falling interest rates tend to help growth stocks.”
Twitter rose $2.77 to $51.70.
Microsoft
climbed $6.69, or 2.4%, to $280.72, while Google parent
Alphabet
added $68.77, or 2.9%, to close at $2,461.48
Meantime, the S&P 500’s energy sector was the biggest decliner, falling 3.3%.
Schlumberger
fell $2.96, or 7.1%, to $38.69.
Halliburton
dropped $2.36, or 6.3%, to $35.33.
APA,
Apache’s parent company, slipped $1.63, or 4%, $39.08.
Investors are worried that strict policies China has in place to combat Covid-19 will further disrupt global supply chains. But the extended lockdowns, and a slowdown in China’s economy, also could crimp global demand for oil, investors said.
The Shanghai Composite and CSI 300 indexes fell 5.1% and 4.9%, respectively. Those were the largest single-day percentage declines for both benchmarks since February 2020, in the early days of the pandemic.
The offshore yuan fell about 1% to trade at about 6.59 per dollar. That was the lowest since November 2020, according to FactSet. The decline built on a selloff last week that ended months of relative stability.
As Shanghai remains locked down amid China’s biggest Covid-19 outbreak, residents are taking to social media to vent about a shortage of food or they are bartering with neighbors. Anxiety and hunger are prompting many to question Beijing’s pandemic strategy. Photo: Chinatopix Via AP
“The problem with inflation is it can get embedded and we see inflation getting quite sticky,” said
Sebastian Mackay,
a multiasset fund manager at Invesco. “What we’re seeing is a combination of the war in Ukraine and the lockdown in China causing supply issues.”
Limitation of movement in China also could sap demand for oil. Brent crude, the international benchmark for oil, fell 4.1% to $102.32 a barrel. Oil prices still remain near historically high levels due to concerns about disruptions to energy markets from Russia’s invasion of Ukraine.
In other corporate news, shares of
Coca-Cola
rose 69 cents, or 1.1%, to $65.94. The company said it logged higher sales for the latest quarter as demand held up in the face of price increases.
Advanced Micro Devices
added $2.55, or 2.9%, to $90.69 after a Raymond James analyst lifted his rating on the chip maker’s shares.
Elevated inflation has caused the Federal Reserve to increase efforts to combat it. Last week, Fed Chairman
Jerome Powell
signaled that the central bank is ready to tighten monetary policy more quickly and indicated that it was likely to raise interest rates by a half-percentage point at its meeting in May.
Money managers are worried that the Fed’s aggressive interest-rate increases could slow economic growth or even tip the economy into recession. This could lead to a situation where the Fed has to raise interest rates in the short term but cut them in the long term, Mr. Mackay said.
On Monday, the
Cboe
Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—approached its highest level since mid-March before retreating to 27.02.
The Dow Jones Industrial Average on Friday posted its worst one-day percentage change since October 2020.
Photo:
BRENDAN MCDERMID/REUTERS
Gold futures fell 2% to $1,893.20 a troy ounce. While gold is historically seen as an inflation hedge, it pays no yield, making it less attractive than government bonds in a time of rising interest rates. The cost of buying gold, which is denominated in dollars, also is more expensive for foreign investors when the dollar strengthens.
Overseas, the pan-continental Stoxx Europe 600 dropped 1.8%. South Korea’s Kospi declined 1.8%, and Japan’s Nikkei 225 contracted 1.9%.
How the Biggest Companies Are Performing
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Justin Baer at justin.baer@wsj.com
