What Happened in Finance? Quick News Bites for April 24th, 2023

By Chika


Last Updated: April 27, 2023


We've collected some of the top stories of the week from the finance and investment world. Grab these quick news bites to get an overview!

Bath & Beyond files for bankruptcy protection, as uncertainty in US crypto regulations forces crypto firms to ponder relocating from the US.

Price reductions begin to hurt Tesla's earnings while Twitter ignites uproar among celebrities who lost their blue check marks. 

All eyes are on Wall Street this coming week as tech companies begin to roll out earnings reports. Here's a rundown of headline financial news this week.



Bed Bath & Beyond Files for Bankruptcy.

After years of losses and unsuccessful recovery strategies left its business cash-strapped, Bed Bath & Beyond filed for bankruptcy protection. The retailer filed for Chapter 11 bankruptcy in New Jersey, stating that it intends to shut every one of its retail outlets.

For months, Bed Bath & Beyond issued bankruptcy warnings. It delayed filing for bankruptcy by agreeing to an extraordinary $1 billion financing arrangement with a hedge fund in February. After scrapping the agreement, it sought to obtain $300 million from other investors this month.

However, it was able to secure $240 million in financing from Sixth Street Specialty Lending Inc. to continue operating during the bankruptcy process. Albeit, this may have come a little too late for the struggling retailer. 

Bed Bath & Beyond, once a pop-culture sensation, has long struggled to fill its stores and has been losing customers to competitors. KitchenAid mixers and other major brands were replaced with private-label products, further alienating suppliers and customers.



Crypto's Future in the US? Coinbase Threatens to Leave.

If the regulatory landscape for cryptocurrencies in the United States is not clarified, Coinbase CEO Brian Armstrong has said that the cryptocurrency exchange may consider leaving the United States.

"Anything is on the table, including relocating or whatever is necessary," Armstrong said after former U.K. Chancellor George Osbourne asked whether he could see Coinbase leaving the U.S. at Fintech Week in London.

Armstrong contrasted the regulatory structures in the UK, where the Financial Conduct Authority (FCA) oversees both commodities and securities, with those in the US, where the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) are different organizations.

"I think the U.S. has the potential to be an important market for crypto, but right now we are not seeing that regulatory clarity that we need," he said. "I think in a number of years if we don't see regulatory clarity emerge in the U.S. we may have to consider investing more elsewhere in the world."

"You don't have this unfortunate thing happening where the CFTC and the SEC are having a turf battle," he said. "We actually have contradictory statements from the heads of the CFTC and the SEC coming out almost every few weeks. How's a business going to operate in that environment? We just want a clear rulebook."

Armstrong made his remarks just a few weeks after Bittrex, a rival exchange, said that it will be leaving the United States by the end of April due to, "the current U.S. regulatory and economic environment."

In March, Bittrex got a Wells Notice, a notification that the SEC Enforcement Division has discovered evidence of legal infractions. On Monday, the SEC filed legal action against the exchange.



Tech Stocks to Headline This Week's Earnings Report.

Technology companies including Google parent Alphabet Inc. and Amazon highlight a busy earnings week amid concerns about the U.S. economy.

Other tech heavyweights on tap to report include software company Microsoft, Facebook owner Meta Platforms Inc., and chip maker Intel Corp. 

The coming reports will provide clues to investors about how companies fared in the first quarter of 2023 as the recent banking crisis, continuing layoffs in sectors such as technology, and inflation weighed on the economy.



Tesla’s First-Quarter Margins Hit by Series of Price Cuts.

Tesla's stock plummeted by 10% on Wednesday after the company reported lower-than-expected margins.

Tesla's gross profit margin decreased to its lowest level in 13 quarters as the electric car company implemented a number of price reductions. 

Despite a 24% increase in sales from the previous year, the producer of electric vehicles saw its earnings per share decline by 21% as it shifted its attention to retaining market share while the auto industry contracted.

Tesla has dropped prices for its U.S. models by 14% to 25% this year. Tesla models sold for an average of $46,000 in the first quarter, down from about $52,000 in the same quarter last year.



Fed May Keep Raising Interest Rates Despite Expecting a Recession

Stubbornly high inflation and tight labor markets led Federal Reserve officials to signal they could raise interest rates at their next meeting, despite a greater likelihood of a recession later this year.

For the first time since officials began lifting rates a year ago, the Fed staff forecast presented at the meeting anticipated a recession would start later this year due to banking-sector turmoil.

Previously, the staff had judged a recession was roughly not as likely to occur this year.

The fallout from the failures of two midsize banks led Fed officials to consider skipping a rate increase at their meeting last month. But they concluded regulators had calmed stresses enough to justify a quarter-point rate rise, according to minutes of the March 21-22 gathering released Wednesday.



Twitter Starts Removing Blue Checkmarks From Non-Paying Users

Non-paying verified users on Twitter began losing their blue check marks, as the social media platform transitioned away from its previous authentication system in favor of paid subscriptions.

Elon Musk, the current owner of Twitter, is attempting to increase Twitter's subscription revenue by requiring users to pay for verification and other features. As a result, he is removing legacy checkmarks. 

Before the change went into effect, some celebrity users criticized the decision, stating that they did not intend to pay and expressing concerns about potential impersonation.

Chrissy Teigen, Mark Hamill, Dionne Warwick, and "Seinfeld" actor Jason Alexander are among the celebrities who stated they wouldn't subscribe if legacy verification was removed. 

Photo by Kaboompics .com



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