Financial News Bursts: What Happened? Week of April 10th, 2023

By Chika


Last Updated: April 13, 2023


Bankruptcy filings, fraud charges, and the death of an enigmatic tech CEO.

Here's a rundown of news that made headlines in investment circles last week.


Virgin Orbit closes shop.

Richard Branson’s Virgin Orbit Holdings Inc. has filed for bankruptcy.

This, after the satellite-launch venture said it wasn’t able to secure sufficient funding to continue in what has become a hypercompetitive market. 

Just three months ago, Virgin Orbit was poised to make history by delivering the first satellites into orbit from the U.K. However, the high-profile launch which had satellites and rockets from the United States, United Kingdom and other countries ended in the destruction of its satellite payload.

Mr. Branson has reportedly refused to commit any more financial resources after investing $1 billion in the start-up. The company’s burn rate before its bankruptcy was near $50 million a quarter. 

The company has halted operations and laid off nearly all of its staff, including its CEO Dan Hart.

In 2021, the company was valued close to $4 billion. Today, Virgin Orbit is valued less than $100 million.



Tesla lowers price for 5th time since January.

Electric vehicle company Tesla has lowered price for its automobiles for the 5th time so far this year.

Tesla extended its discount drive on its electric vehicles in the United States between 2% and nearly 6%.

  • Prices on both versions of the Model 3 sedan were reduced by $1,000.
  • Price on its Model Y crossover was cut by $2,000.
  • Prices on both versions of its more expensive Model S and Model X were slashed by $5,000.

The fifth such cut in Tesla’s largest market since the start of the year comes as the United States prepares to adopt tougher standards this month that are expected to limit Electronic Vehicle (EV) tax credits. Analysts and investors caution that this could hurt profitability.



Brands increase TikTok spending despite threat of US ban.

Despite the possibility of an imminent US ban, advertisers are increasing their spending on TikTok.

Big US brands continue to support the short-form video app amidst calls from the US government for a moratorium and growing security concerns from governments around the world.

In March, advertising on TikTok increased by 11% in the United States, with Pepsi, DoorDash, Amazon, and Apple among the top spenders.

TikTok is owned by the Chinese corporation ByteDance.

Legislators from the United States interrogated its chief executive last month regarding national security concerns related to its Chinese ownership. Beijing has stated that it would "vehemently" oppose any effort to separate the US branch of TikTok from its Chinese proprietors.



Cash App founder fatally stabbed in San Francisco.

Cash App founder, Bob Lee has passed away after a fatal stabbing incident.

The attack took place in the early hours of Tuesday April 4, 2023 in Rincon Hill, a neighborhood just south of San Francisco’s financial district near Google’s office and Oracle Park. The police have yet to make an arrest.

43-year old Lee launched Cash App when he was Chief Technology Officer at Square (now Block). He was also Chief Product Officer of MobileCoin

Lee’s death comes amid growing concern about crime in San Francisco. Rates of homicide and aggravated assault increased during the coronavirus pandemic, according to official statistics.



Earnings season kicks off.

Earnings season is set to kickoff amidst a brewing storm of bank runs, fed interest rate hikes and falling corporate profits.

US companies will be facing a stiff test with analysts expecting companies in the S&P 500 to report a second consecutive decline in quarterly earnings. 

Q1 2023 profits are projected to drop 6.8% from the same period a year earlier. If this happens, it would be the steepest decline in earnings since Q2 2020, when the pandemic resulted in a 32% profit contraction.



Bank run: Hedge funds made $7 billion during turmoil.

While banks stocks were in turmoil, hedge funds made a killing betting against them.

According to data from Ortex, hedge funds made more than $7 billion in profits. This is their biggest such haul since the 2008 financial crisis. The loot came from shorting bank stocks such as SVB, First Republic and Credit Suisse, the three banks at the epicenter of the bank runs.

Hedge funds made estimated total profits of about $1.3 billion from short positions taken against SVB.

A further $848 million in gains came from bets against First Republic, while $684 million was made from shorting Credit Suisse. Profits from short positions across the US and European banking sector as a whole totaled $7.2 billion.



Frank founder arrested for fraud.

The United States Justice Department charged Charlie Javice, founder of college financial planning platform Frank, with defrauding JPMorgan Chase of $175 million. 

Javice, once named one of Forbes' 30 Under 30 is facing four counts.

  • one count of conspiracy to commit bank and wire fraud
  • one count of wire fraud against a financial institution
  • one count of bank fraud
  • one count of securities fraud

Each of these charges carries a maximum penalty of 30 years in prison.

Javice is accused of inflating the number of users on Frank which led the bank to acquire the startup in 2021. Prosecutors allege Javice represented to JPMorgan that Frank had 4.25 million customers when it had only 300,000.

Javice was released on a $2 million bond by a federal court in Manhattan on Tuesday afternoon.

Photo by Pixabay


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