GM Money Masters, 👋
With just two months left in the year, we’re willing to bet you’re already gearing up and making plans for 2024. Here’s to looking ahead! 🥂
In today’s newsletter, it’s a tale of two cities. While Tesla recently scored a major win, it’s still raining Ls at X (Twitter).
Speaking of EVs, Toyota is doubling down on its investment in EV batteries at a time when most companies are pulling back.
AI regulations might also be coming to the US faster than expected after President Biden signed an executive order on artificial intelligence. In not-so-surprising news, there are whispers that WeWork might be on the brink of filing for bankruptcy.
Let’s dive into the details.
MONEY MASTERY BRIEF
- Musk Can’t Win It All
- Toyota Pumping More Money Into EVs
- WeWork Might File for Bankruptcy
- Biden Signs Comprehensive Executive Order on AI
📉 Elon Musk Can’t Win It All
If you’re planning to bring an action against Tesla (NASDAQ: TSLA) over issues relating to the self-driving ability of its vehicles, your chances of winning just got slimmer. The jury in Riverside County, California, voted in favor of the EV maker in the first US trial involving an autopilot vehicle causing a fatal crash.
They found no software defect in the car and voted 9-3 to side with Tesla. This is the second major win for the company this year over its autopilot feature, but there are still several other lawsuits and even federal investigations over the same technology. Still, it was a much-needed win for Tesla, as its stock has struggled for weeks.
Meanwhile, Musk won’t be grinning cheek to cheek. A recent report shows that the value of X (formerly Twitter), which Musk paid $44 billion for, has dropped to $19 billion. That’s a $25 billion write-off in one year. Even though X has not confirmed the drop in valuation, it was reflected in its internal memo offering stock grants to employees at that price.
One year down, tons of iterations after, and Musk is still trying to make X profitable. But his plan to build it into the financial everything app might be all it takes to pull that off. Even the world’s richest man can’t afford to lose billions for too long.
🔋 Toyota Charging Ahead With EV Dreams
At a time when most automakers are pulling back on EV investments, one company is going all in. Toyota announced that it will invest $8 billion into its plant in North Carolina. The plant is scheduled to start operation in 2025, and the company expects to have an electrified option for all Lexus and Toyota vehicles.
With the new investment, Toyota has committed $13.9 billion to the factory, producing batteries for Toyota-made EVs and other hybrid electric vehicles. Eight production lines would be added to increase factory lines to ten. The timing is peculiar because rival car makers like Ford and GM have pulled back on EV investments. Even Tesla is reconsidering building a GigaFactory in Mexico.
While most automakers are trimming their EV investments due to reduced demand and the quest for profitability, Toyota seems to be looking at the market from a different angle. It could be that Toyota is more into hybrids than pure EVs, and hybrids will always use batteries. Currently, Toyota has 26 hybrid choices but only two pure EVs.
Another reason could be that Toyota’s new CEO, Koji Sato, wants to live by that Warren Buffet quote, “Be afraid when they’re greedy and greedy when they’re afraid.”
😖 Things Aren’t Working For WeWork
If recent reports are to be believed, WeWork might soon stop working. The company that provides flexible workspace for corporations might soon file for bankruptcy. Should this happen, it would not be shocking, given how long the company has spent teetering on the brink of collapse.
WeWork has faced a plethora of challenges since the beginning of time, and not even going public via a SPAC in 2021 has helped to reverse its fortunes. The company has struggled with a massive debt pile, recurring losses, and corporate governance issues. The emergence of remote work in 2020 further compounded its problems.
However, while more workers return to the office, the company’s fortunes have not changed. Given that Softbank has pumped billions into the company since its inception, it’s unlikely to find more money lying around to save it. WeWork missed interest payments to bondholders last month, causing the SEC to give it a 30-day ultimatum to repay.
For everyone who invested in WeWork, it represents a big loss. With its shares dropping to $1.21, the company is now valued at $121 million, far from the $47 billion valuation in January 2018 when it raised $1 billion in its Series H funding round. Who said NFTs are the worst thing you can invest in?
🤖 Biden’s Bold Move to Tame The AI Beast
Since ChatGPT made AI the coolest kid on the tech block, everyone has not stopped talking about its potential dangers. Even Christopher Nolan compared it to the atomic bomb, and that’s the guy who directed Oppenheimer. President Joe Biden has been listening to all those concerns and finally acknowledged it by signing an executive order on Artificial intelligence.
The executive order is comprehensive, so here’s a quick summary of its components:
- Creating new safety and security standards for AI
- Protecting consumer privacy
- Advancing equity and civil rights by providing guidance to avoid AI discrimination
- Protecting consumers by evaluating potentially harmful AI-related healthcare practices
- Supporting workers by researching implications on the labor market
- Promoting innovation and competition with more grants for AI research
- Working with international partners for global AI standards
- Developing guidance for federal agencies use and procurement of AI
To achieve all these, the White House has enlisted the assistance of several agencies, including the National Institute of Standards and Technology, the Commerce Department, the Department of Health and Human Services, and more. One key point in the order is that AI companies now have to label and watermark AI-generated content.
As you can see, the order is pretty encompassing. Don’t get too excited. Executive orders aren’t everything. It’s still up to Congress to properly regulate the sector. Regulating AI is a global issue, with China already imposing rules, the EU finalizing its laws, and The UK hosting an AI Safety Summit this week that would have world leaders, including US Vice President Kamala Harris, in attendance.
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“We know that making it the default will lead to increased usage of our products and services, particularly Google search in this case. So, there is clear value in that and that’s what we were looking for.”
– Sundar Pichai, Google CEO, explains why the company pays up to $26.3 billion to make its search engine the default on mobile devices and browsers.
According to him, the default placements can be very valuable when done right, and its deal with Apple is a good example of placement done correctly.
$130 billion. This is the amount paid by American cardholders in interest and fees for 2022. This is according to a study by the Consumer Financial Protection Bureau (CFPB). Credit card companies charged $105 billion as interest and $25 billion as fees. Given that Americans’ credit card debt is now over $1 trillion, the next CFPB report could break this record.
The White House has reported an increase in ransomware attacks in 2023. The deputy national security advisor Anne Neuberger said that government data shows a 45% increase in ransomware attacks in the first half of 2023 compared to the last half of 2022. Full story
YouTube is trying to prevent users from using Ad blockers by stopping them from watching videos until they disable the ad blockers. According to reports, the platform now warns users that they will be blocked from seeing more videos after watching three without disabling their Ad Blockers. So, you either pay for the premium subscription or watch ads, no in between. Full story
BNPL startup Tabby has raised $200 million in its Series D funding round, valuing it at $1.5 billion. The startup, based in Riyadh, targets Middle East customers and is the first fintech unicorn in the Gulf region. Its valuation and fundraising come when similar platforms focusing on Western customers, such as Klarna and Affirm, are cutting their valuations. Full story
The days of posting (tweeting) to a small group of friends on X (Twitter) have ended, with the platform shutting down the Circles feature. During its lifetime, Twitter Circle allowed users to limit their audience. But it wasn’t perfect, as some posts meant for the Circle reached a wider audience. Maybe that’s why X decided to sunset it. Full story
Shield AI, a startup developing autonomous drones and aircraft, has raised $200 million in a new funding round that takes its valuation to $2.7 billion. Existing investors, S. Innovation Technology Fund (USIT) and Riot Venture, led this new round, and the fund would go towards scaling the military and defense tech the company is building. Full story
You might not know this, but Apple (NASDAQ: AAPL) shot the video for its recent Scary Fast event entirely on iPhone 15 pro max. That includes aerial drone shots as well. The Scary Fast event saw Apple launch its latest iMacs and MacBook Pros with M3 chips. But the big flex was pre-recording the video for the event entirely with its product, showing what is possible with its latest iPhones. Full story
The S&P 500 fell for the third month in a row. This is its longest losing streak since COVID-19 started in March 2020. The index is down 9.4% in the three months. The Nasdaq Composite is also down 11. 3% in that period. Not a good time for stocks.
The UAW strike against America’s Big Three automakers is nearing an end after the three companies reached a tentative agreement with the Union. It’s still dependent on the union members voting to approve the deal. But it highlights some of the wins for labor this year.
With this strike now likely to end, which labor union will reach a deal with its employers next?
Let us know by replying to this email.
Thanks for reading, and may your investments thrive. 🙂
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