2 Major Catalysts for Tesla Stock Next Year

guardianpub on December 13, 2022

After getting crushed in 2022, could shares bounce back next year?

Tesla (TSLA -6.27%) shares have been hammered this year. The stock is down more than 50% year to date. Investors seem worried about the company’s potential to continue growing sales so rapidly during a tough macroeconomic environment.

While it’s impossible to know which way the stock price will move next year, there are a couple of reasons to believe the stock could attract some positive attention. Two catalysts are on the horizon that could excite investors: soaring sales in the company’s energy business and the long-awaited launch of the Cybertruck.

Tesla’s energy storage business

While Tesla’s 42% year-over-year growth in vehicle deliveries in the third quarter was impressive, one smaller part of its business was growing meaningfully faster. The company deployed 1,100 megawatt-hours of energy storage, up 62% year over year. This was “by far the highest level” of energy storage deployments the it has ever achieved, Tesla said in its quarterly letter to shareholders. Yet demand for these products, management said, is still trending ahead of supply.

To better address the fast-growing market for its energy storage business, Tesla said, it was ramping up production at its factory in Lathrop, California.

The momentum in this business seems to have continued into Q4. Indeed, the company announced on Dec. 9 that it deployed 100 megawatt-hours of energy storage capacity in a single project in Belgium.

Cybertruck

While the energy storage business is important to Tesla, it’s still small in relation to overall revenue. In Q3, for instance, automotive revenue accounted for about $18.7 billion of the $21.5 billion in total revenue. For this reason, the company’s vehicle plans are likely to be the biggest driver of sales.

This is why investors should be watching Tesla management’s comments on Cybertruck closely. The long-awaited all-electric truck is in its “final lap” of preparation before the company can begin production, said CEO Elon Musk during the third-quarter earnings call. The vehicle is expected to enter production sometime around the middle of 2023, according to management.

Tesla initially planned to begin production of the Cybertruck in late 2021. But global supply chain challenges in the automotive market and worse-than-anticipated logistics constraints led Tesla to prioritize production growth of existing models, repeatedly delaying the Cybertruck’s launch.

It’s always possible that the Cybertruck’s launch will get delayed again. But its move to market does seem to be close enough for investors to start giving more weight to the vehicle’s sales potential in their analysis. Putting the hype for the vehicle into context, Tesla had garnered an estimated 1.5 million reservations for the vehicle by November 2022.

The pickup truck market, of course, is nothing to sneeze at. The global pickup truck market was estimated at $223 billion in 2021, according to Grand View Research. The research firm estimates that North America makes up around three-fourths of this market.

While there are a number of catalysts for Tesla’s business and the stock, these two items could be notable drivers in 2023 and beyond.

Source: fool.com

United Airlines buys 100 Boeing 787 Dreamliners ‘with options to purchase 100 more’

guardianpub on December 13, 2022

United Airlines will be flying into the next decade with wind behind more Boeing wings.

The carrier has placed an order for 100 of Boeing’s top-of-the-line 787 Dreamliners with options to purchase 100 more. In a press release, United described the purchase as “the largest widebody order by a U.S. carrier in commercial aviation history” and expects to take delivery between 2024 and 2032.

United also exercised options to purchase 44 Boeing 737 Max aircraft for delivery between 2024 and 2026.

The company says the orders will lead it to hiring 15,000 new employees in 2023.

“United emerged from the pandemic as the world’s leading global airline and the flag carrier of the United States,” United CEO Scott Kirby said in a statement. “This order further solidifies our lead and creates new opportunities for our customers, employees and shareholders by accelerating our plan to connect more people to more places around the globe and deliver the best experience in the sky.”

United previously stated it would end 2022 with 68 Dreamliners in service.

“With this investment in its future fleet,” Boeing Commercial Airplanes CEO Stan Deal stated, “the 737 MAX and 787 will help United accelerate its fleet modernization and global growth strategy.”

The news is a welcomed development to both companies investor base.

For United, the influx of new aircraft will allow it to boost profits over time by reducing its operating costs and offering more premium priced seating.

The announcement highlighted the 787 Dreamliner’s “greatly improved maintenance and fuel burn economics” as key to “improving” its overall cost profile.

As for Boeing, the world’s largest aerospace company could use any win.

The company continues to attempt a turnaround under CEO Dave Calhoun after dealing with manufacturing issues related to the 737 Max. And last week, despite months of lobbying by Boeing, lawmakers declined to add an extension for Boeing to the annual defense spending bill that would have put new safety systems on the 737 Max-7 and 737 Max-10.

United’s announcement of the big purchase noted that the airline “continues its unprecedented effort to upgrade the interiors of its existing fleet.”

Source: finance.yahoo.com

Gold slips as dollar firms to kick start major data week

guardianpub on December 12, 2022

Gold prices fell on Monday as the U.S. dollar firmed ahead of key inflation data, with investors awaiting the Federal Reserve policy meeting for more clues about its rate-hike stance.

Spot gold slipped 0.4% to $1,788.69 per ounce, as of 0714 GMT. U.S. gold futures were down 0.6% at $1,799.10.

The dollar index rose 0.3%. A stronger greenback makes dollar-priced bullion more expensive for overseas buyers. [USD]

“It’s a big week for markets with U.S. inflation and Fed meeting… We’ll see lower levels of volatility and fickle price action as investors become wary of front-running the events,” said Matt Simpson, a senior market analyst at City Index.

Tuesday’s U.S. Consumer Price Index (CPI) data and the Fed’s final meeting of 2022 scheduled on Dec. 13-14 will be keenly watched by investors.

Traders are pricing in a 93% chance of a 50-basis-point rate hike by the Fed.

“Gold could benefit if it’s a softer CPI as it would raise hopes of a less aggressive Fed… A slower (rate hike) trajectory should benefit gold and see it head for the $1,824 high,” Simpson added.

Lower rates tend to boost gold’s appeal as it decreases the opportunity cost of holding the non-yielding bullion.

U.S. producer prices rose slightly more than expected in November amid a jump in the costs of services, but the trend is moderating, with annual inflation at the factory gate posting its smallest increase in 1-1/2 years.

U.S. Treasury Secretary Janet Yellen on Sunday forecast a substantial reduction in U.S. inflation in 2023.

Additionally, the European Central Bank (ECB) and the Bank of England (BoE) are also set to announce rate hikes this week, as policymakers continue their battle against inflation.

Spot silver lost 0.2% to $23.42, platinum fell 0.6% to $1,016.16 and palladium ticked 1% lower to $1,931.07.

Source: reuters.com

Toyota Halts Car’s Sales and Production for U.S.

guardianpub on December 12, 2022

Toyota stops sales and production for this auto in the U.S. market.

Toyota is known for a lot of different things, mainly automobiles, but the company also makes sewing machines, forklifts, robotics, boats and even houses. Of course, the main line of business Toyota handles is automobiles.

While being a true leader in the automobile industry, Toyota has dealt with its own setbacks. Toyota launched a subsidiary car brand Scion in 2003 to try to capture a younger buyer’s market, but in the end, Toyota decided that it did not need an entire separate brand to bring in younger customers, and that was the end of the Scion in 2016.

James Jacobs with HotCars.com lists the most notable models that Toyota has discontinued like the Toyota FJ Cruiser, a replacement of the Land Cruiser. While Toyota still makes the FJ Cruiser, it is not available in the U.S., but it is available in Australia. Toyota also dropped the Venza, citing poor sales performance among other reasons. Other models discontinued by Toyota include the Supra, Cresta, 2000GT, Soarer, Celica, MR-2, Solara, and the Carina.

Pulling the Plug on the C-HR

Failure is just a part of doing business. Knowing when to pull the plug is also part of business. Toyota debuted the Compact High Rider or Cross Hatch Run-about C-HR, a compact crossover SUV in 2016. The car was available in an all-wheel drive and a front wheel drive. Toyota sold the C-HR in Europe, Japan, Australia, South Africa, China, Taiwan, Southeast Asia, and North America.

According to CarandDriver.com, Toyota is pulling the plug on selling the Toyota C-HR in the U.S. and Canada as it ends production for North America in 2022. While you won’t be able to get the Toyota C-HR in North American, it will still be sold in Europe.

Not To Be Replaced

“Effective following the 2022 model year, Toyota will discontinue sales of the C-HR in the U.S. and Canada,” Toyota said in a statement sent to MotorTrend.com regarding the elimination of the C-HR. “We are constantly evaluating our product lineup and we remain committed to the compact SUV segment. With the recent introduction of the Corolla Cross and Corolla Cross Hybrid, two great products that offer a great combination of utility and efficiency, and the best-selling RAV4, we are providing multiple options for compact SUV buyers.”

The C-HR is kind of a different beast all together, as it’s not a coupe, it’s not an SUV and it’s not a hatchback. What’s for certain is that it was not popular enough to be sold in the U.S. The Toyota Corolla Cross is the best option in the U.S. for a hybrid mix of not quite an SUV, not quite a hatchback. The Toyota Rav-4 is also still available, but that is much bigger than the smaller hybrid cars out there.

MotorTrend also said that the end of the Toyota C-HR also brings the end to the Scion chapter. VehicleHistory.com’s William Byrd stated that Scion brand allowed Toyota to innovate and create without feeling the pressure of being in the Toyota line up. The pressure to deliver value, reliability and style to the masses was not on Scion, as it was a unique car brand trying to allow consumers a chance to drive their individuality on the roads. Oddly enough, Byrd remarked that while Scion was supposed to market to the younger generation, most of the current owners of the Scion brand are much older than the original target audience.

Source: thestreet.com

Disney+ launches new ad tier — why it could be a $3 billion opportunity

guardianpub on December 9, 2022

Disney’s ad tier officially launched Thursday as the media giant looks to curb accelerating streaming losses.

“We expect Disney to generate anywhere from about $500 million to even up to $1 billion dollars in ad-supported revenue on the Disney+ product in their first year of operation,” told Geetha Rangathan, analyst at Bloomberg Intelligence.

Rangathan said ad-supported revenue rise by up to $3 billion over the next three years, reiterating her confidence in the media giant amid its early streaming success.

“This is a company that has added about 40 million to 45 million subscribers year after year on their Disney+ product— that’s just some staggering growth, and it’s expected to grow even further with this new ad supported tier.”

Revenue within Disney’s direct-to-consumer division has grown over the years amid the jump in subscribers. For full-year 2020, DTC revenue came in at $10.55 billion before surging to $16.32 billion in 2021 and $19.56 billion in 2022. Advertising revenue for Disney’s DTC unit rose from $2.36 billion in 2020 to $3.73 billion in 2022.

The new offering — which comes one month after Netflix’s (NFLX) much-anticipated ad-supported debut — costs $7.99 per month, $3 less than the ad-free version of Disney+ which now costs $10.99 per month.

The ad load will be conservative at first, roughly 4 minutes of ads per hour or less, according to the company. That’s about half of Hulu’s 8 minute-per-hour ad load and even less compared to linear television’s 15 minute-per-hour standard.

Disney added, at least for now, there will be no commercials featuring alcohol or competitor content, as well as no political ads.

According to a new study by Kantar Research, about 1 in 4 current Disney+ subscribers will trade down to the ad-supported version — translating to roughly 46 million of the streamer’s total 164 million user base.

Rangathan, meanwhile, suggested anywhere from 20% to 30% of the U.S. subscriber base could trade down, although that number could edge higher given the success of Hulu’s ad tier.

“Almost 70% to 75% of Hulu’s subscriber base is on the ad-supported version, so ads have been a huge hit with Hulu,” the analyst said. “I think it’s going to be a little bit different with Disney+, but we can expect to see at least a third of the user base convert to that ad-supported product over time.”

Industry experts argue offering lower-cost, ad-supported options are still an important hedge against churn — something all streamers want to avoid amid increased competition.

Iger’s shift toward profitability

As Disney looks to leverage its ad tier, recently returned CEO Bob Iger hopes the debut can help soften unfavorable investor sentiment, as Disney shares are off more than 40% since the start of the year.

In its most recent fiscal year, losses for Disney’s direct-to-consumer unit, which includes Disney+, Hulu, and ESPN+, totaled $4 billion.

Iger, who spoke to employees at a company-wide town hall last week, noted a strategic shift towards profits is currently underway, revealing there are currently no plans to reverse the hiring freeze implemented by Bob Chapek earlier this month as he continues to evaluate Disney’s current cost structure.

 

Source: finance.yahoo.com

Exclusive-Twitter to introduce new controls for ad placements -email

guardianpub on December 9, 2022

Twitter Inc will roll out new controls as soon as next week to let companies prevent their ads from appearing above or below tweets containing certain keywords, the social media platform told advertisers in an email on Thursday.

The new controls are part of Twitter’s effort to reassure and lure back advertisers that have pulled ads off the platform since it was purchased in October by billionaire Elon Musk, amid reports from civil rights groups that hate speech has risen since the acquisition and after several banned or suspended accounts were reinstated.

Twitter earns nearly 90% of its revenue from selling digital ads. Musk recently attributed a “massive drop in revenue” to civil rights organizations that have pressured brands to pause their Twitter ads.

In a call on Thursday with an advertising industry group, a Twitter representative said the platform was considering bringing its content moderators, many of whom are contracted through third-party vendors, in-house, according to a source familiar with the remarks.

The Twitter representative said bringing content moderators in-house would allow the platform to invest more in moderation for non-English languages, according to the source.

The comments come after Twitter’s new head of trust and safety, Ella Irwin, told Reuters that the platform would lean more heavily on automated content moderation. Irwin also said that Twitter’s recent layoffs, which cut 50% of staff, did not significantly hurt its moderation team and those working on critical areas like child safety.

The email to advertisers on Thursday, which was reviewed by Reuters, said a revamped version of Twitter’s subscription service called Twitter Blue would begin rolling out on Friday.

The subscription will allow accounts to receive a verified check mark. Accounts for individuals will get a blue check, while gold and gray check marks will denote business and government accounts, according to the email.

The subscription price will be $7 per month on the web and $11 per month on Apple devices, the email said.

Twitter also told advertisers that it removed ads from profiles mentioned in a Washington Post article on Tuesday, which reported that ads had appeared on the Twitter accounts of white nationalists.

Snap Inc, which owns photo messaging app Snapchat, has paused its advertising on Twitter while it investigates the issue, a spokesperson told Reuters.

The accounts were not part of “amnesty reinstatements,” Twitter’s email said, referring to Musk’s tweet last month that Twitter would reinstate suspended accounts that have not broken the law.

“We will not be reinstating bad actors, spam accounts and users that engaged in criminal/illegal activity,” Twitter’s note to advertisers said.

Source: finance.yahoo.com

The GameStop turnaround promise is failing

guardianpub on December 8, 2022

GameStop Chairman Ryan Cohen and CEO Matt Furlong promised to turn the gaming retailer into one of operational excellence and amazing store experiences while cashing in on new opportunities like crypto and NFTs.

More than a year into their collective and rather secretive leadership, the entire experiment is beginning to look like an utter failure — underscoring longtime Wall Street concerns about the company’s business model such as too many costly physical stores in dying malls and shifts to digital gaming.

Not helping GameStop’s turnaround efforts is a complete crash in the once thriving digital asset market that Cohen and Furlong were banking on.

The realities of this underwhelming turnaround story were on grand display in GameStop’s third quarter earnings out Wednesday evening. The damage came in two forms.

First, another dreadfully poor quarter of financials:

  • Net sales -8.5% year over year.
  • Sales down in the hardware/accessories and software businesses — these businesses have represented about 82% of GameStop’s year to date sales.
  • Sales down in the United States, Canada, Australia, and Europe.
  • Gross profit margins unchanged year over year.
  • $95 million adjusted operating loss. Year to date, GameStop has lost $354.9 million on an adjusted operating basis.
  • Total cash of about $1 billion, down from $1.4 billion in the year ago quarter.

The other aspect — which is now only taking form — is GameStop dialing back the capital its investing to alter the course of its business longer-term. The pivot amounts to a complete about-face after several ugly quarters that have sent the volatile stock price plunging 40% in 2022.

“Today, we’re in the process of aligning corporate costs to our go-forward needs after completing the majority of necessary upgrades to our systems, fulfillment capabilities and overall foundation,” Furlong said in another relatively short — 8 minutes — earnings call. “A large portion of our cost cuts will stem from reductions in corporate headcount that have been made during the back-half of this calendar year. In some cases individuals who helped us complete key initiatives have left on their own accord and are not being replaced. In other cases, we’ve made the decision to eliminate or streamline parts of the organization, where we can leverage the work completed over the past 18 months to operate with increased efficiency.”

This fresh round of cost-cutting is a clear sign of retreat by GameStop, an indication if you will that the company wants to start showing some bottom line wins for investors (which include Cohen) at the expense of any grand turnaround vision.

Furlong, a former Amazon exec, added that the company’s “two overarching priorities” would be “achieving profitability in the near-term and driving pragmatic growth over the long-term.”

In other words, the fledgling video game retailer is breaking the promise by Cohen and Furlong to reimagine GameStop. The GameStop faithful still supporting the company would be wise to recognize that the company’s meme stock-era thesis is unraveling in real-time.

Source: finance.yahoo.com

Social Security’s Biggest Raise in 41 Years Comes With an Unpleasant Surprise

guardianpub on December 8, 2022

The largest nominal-dollar increase for Social Security checks in history comes with a downside.

Every month, close to 66 million people — mostly retired workers — receive a Social Security benefit. Although this monthly payout isn’t particularly large, with the average retired worker bringing home $1,677 a month as of October 2022, it’s nevertheless a vital source of income for many seniors.

Since 2002, national pollster Gallup has surveyed retirees to decipher how important Social Security income is to making ends meet. Over those two decades, only 9% to 18% of respondents have proclaimed that it’s “not a source” of income they rely on.

With this in mind, it should come as no surprise that the annual cost-of-living adjustment (COLA) announcement from the Social Security Administration is the most-anticipated event every year.

Social Security’s cost-of-living adjustment is an inflation-fighting tool

Social Security’s COLA is a mechanism that’s designed to ensure beneficiaries don’t lose their purchasing power to the rising price of goods and services (inflation). If important expenditures become costlier for retired workers, monthly benefits should increase in lockstep on an annual basis.

For the past 47 years, Social Security’s cost-of-living adjustment has been determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is an index that accounts for the price changes of a large predetermined basket of goods and services. Each of the major and minor price categories within the CPI-W have specific weightings that allow the index to be expressed as a single number. The makes it easy to determine if aggregate prices have risen or fallen when comparing to a specified period.

Calculating Social Security’s COLA is actually really easy. Only the CPI-W reading from the third quarter of the current year (July through September) and previous year are used. If the average CPI-W reading in the third quarter of the current year is higher than the comparable period of the previous year, beneficiaries can expect a raise in the following year commensurate with the year-over-year percentage increase.

In 2023, Social Security recipients are looking at their biggest raise in 41 years.

The largest nominal-dollar benefit increase in history is on its way

Although the U.S. inflation rate peaked at a more than four-decade high of 9.1% in June, it didn’t exactly trail off much in the third quarter. When the final numbers were tallied, the Social Security Administration announced an 8.7% cost-of-living adjustment for 2023.

On a percentage basis, this is the largest year-over-year increase in benefits since 1982. Meanwhile, on a nominal-dollar basis, it’ll represent the biggest year-over-year boost in Social Security’s storied history. The average retired worker is expected to see their monthly Social Security check increase by $146 next year.

Normally, a big COLA wouldn’t be great news. After all, the reason a sizable COLA is being passed along is because the price for a large basket of goods and services has soared. In most years, inflation tends to eat up most, or all, of the cost-of-living adjustment passed along to beneficiaries.

Interestingly enough, 2023 will feature a unique scenario that’s only occurred twice since the century began. Due to a year-over-year decline in Medicare Part B premiums — Medicare Part B is the segment of Medicare that covers outpatient services — retired workers aged 65 and up who’ve signed up for traditional Medicare will get to keep more of their Social Security raise in the upcoming year.

But in spite of this rare occurrence, there’s an unfortunate surprise that awaits a majority of retired workers receiving a Social Security check next year.

An unpleasant surprise awaits most retired workers in 2023

While the largest cost-of-living adjustment in 41 years probably sounds great on paper, it also means that an even larger number of Social Security recipients (especially retired workers) will be subject to the taxation of benefits for the 2023 calendar year. Yes, Social Security income can be taxable.

Nearly four decades ago, in 1983, the Social Security program’s asset reserves (the excess cash built up since inception) were running dangerously low. Congress passed and then-President Ronald Reagan signed the Amendments of 1983 into law. This was the last major bipartisan overhaul of Social Security, and it, among other things, introduced the taxation of benefits to raise additional revenue.

When this new law went into effect in 1984, half of a single filer’s Social Security benefit would be exposed to the federal tax rate if their modified adjusted gross income (MAGI) plus one-half of benefits surpassed $25,000. For couples filing jointly, the income threshold was anything above $32,000. In 1984, in the neighborhood of 1 out of 10 Social Security recipients/couples were subjected to this tax.

In 1993, the Clinton administration introduced another tier of taxation. Up to 85% of Social Security benefits became taxable at the federal rate, using the same MAGI plus one-half benefits formula, if a single filer or couple filing jointly respectively topped $34,000 and $44,000.

The problem is that these income thresholds have never been adjusted for inflation. As COLAs have grown over time, more retired workers are being exposed to federal and possible state-level taxation on their benefits. An 8.7% cost-of-living adjustment in 2023 will undoubtedly introduce some retirees to their first taste of federal taxation on their benefits, as well as increase taxation for those who already pay Uncle Sam each year.

It’s an unpleasant surprise in a year when Social Security checks are set to soar.

Source: fool.com

Jamie Dimon says Americans are spending all their money because of inflation—and that could tip the U.S. into a recession next year

guardianpub on December 7, 2022

Jamie Dimon is worried that U.S. consumers could spend away their savings as inflation continues to bite, sending the economy into a recession next year.

The JPMorgan Chase CEO said on Tuesday that consumers still have $1.5 trillion more “in their checking accounts” than they did prior to the pandemic, but warned that that may not last.

Americans are spending 10% more than they did a year ago due to inflation and rising interest rates, Dimon said, and they’re tapping into their savings to do so.

The personal savings rate—which measures consumers’ savings as a percentage of their disposable income—fell to just 2.3% in October, well below the over 9% figure seen before the pandemic.

“Inflation is eroding everything,” Dimon told CNBC. “[T]hat trillion and a half dollars will run out sometime midyear next year. So when you’re looking out forward, those things may very well derail the economy and cause the mild or hard recession that people worry about.”

Dimon has warned since May that the U.S. could experience a recession next year as consumer spending falters, arguing that economic “storm clouds” could turn into a full-blown “hurricane.”

“There’s storm clouds. It could mitigate; it could be a hurricane. We simply don’t know, and as a risk manager I prepare for both,” he said on Tuesday, repeating his previous warnings.

At the Fortune Global Forum last month, Dimon broke down his view on the odds of a U.S. recession to Fortune CEO Alan Murry.

“I think there’s about a 5% chance of a soft landing…maybe about a 30% chance of a mild recession, and maybe a 30% chance of a harder recession—think a possibility of 6% unemployment,” he said. “And then I think there’s another 30% chance of something else—maybe stagflation or something we don’t expect.”

While Dimon warned about consumers’ fading spending power and a potential recession in 2023 this week, he also noted that the U.S. is in a good position relative to its peers.

“The United States economy is the strongest economy in the world today. So we should celebrate that a little bit,” he said.

U.S. consumers and the labor market have been surprisingly resilient over the past few months, despite some of the most aggressive interest rate hikes in history.

Consumer spending rose 0.5% in October month to month when adjusted for inflation—the biggest increase since January. Americans also spent a record $11.3 billion on Cyber Monday. And the U.S. economy added 263,000 jobs last month, with the unemployment rate sticking near pre-pandemic lows at 3.7%.

Dimon argued the main risk to the economy may come from issues abroad, however, including fracturing supply chains, rising commodity prices, and war.

“There’s a lot of geopolitical upheaval,” he said, adding that emerging-market countries will pay a “heavy price” for high commodity prices, rising interest rates, and the strong dollar. “I don’t think we’ve seen that kind of turmoil in the global world in a long time.”

Dimon isn’t the only business leader preparing for the possibility of an economic hurricane. Some 98% of CEOs expect a recession could hit the U.S. within the next 12 to 18 months. And top economists, like Queens’ College, Cambridge president Mohamed El-Erian, have warned that the economy is not just on the cusp of a recession but “in the midst of a profound economic and financial shift.”

Source: finance.yahoo.com

HBO Max returns to Amazon Prime after year-long dispute

guardianpub on December 7, 2022

Warner Bros. Discovery’s (WBD) HBO Max — home to popular shows like “The White Lotus” and “Mare of Easttown” — is back on Amazon Prime Video Channels (AMZN).

On a Tuesday, the two companies announced Prime customers can once again sign up for HBO Max for $14.99 per month, the same price available through other platforms.

Under the new multi-year pact, subscribers will automatically be opted into the soon-to-be combined HBO Max/Discovery streaming service — reportedly set to be named “Max” — which is expected to launch next spring. Terms of the deal were not disclosed.

HBO Max, previously a premium add-on, dropped off of Amazon Prime’s service in September 2021 after then-parent company AT&T (T) failed to reach an agreement to extend distribution.

At the time, executives at AT&T wanted more control over the direct-to-consumer relationship, in addition to more access to viewership data. The decision alienated a reported 5 million HBO Max subscribers, who were left without access and did not re-sign up through the glitchy HBO Max app.

Warner Bros. Discovery CEO David Zaslav picked up conversations with Amazon shortly after the company’s merger in hopes of striking a new deal.

Warner Bros. Discovery shares initially moved higher on the news, rising about 3%, but were lower along with broader markets in morning trading.

“Warner Bros. Discovery is committed to making HBO Max available to as broad an audience as possible while also advancing our data-driven approach to understanding our customers and best serving their viewing interests,” Bruce Campbell, chief revenue and strategy officer at Warner Bros. Discovery, said in a statement.

Warner Bros. Discovery, which does not break out specific HBO Max subscriber numbers, saw subscriber growth miss expectations in the third quarter despite “House of the Dragon’s” record-breaking success.

The company reported 2.8 million net subscriber additions in Q3, fewer than the 3 million that were expected, reporting a total of 94.9 million paying users across its DTC division. Management has guided to a long-term target of 130 million paying users by 2025.

Warner Bros. Discovery shares have dropped more than 50% since the start of the year amid restructuring charges, macroeconomic challenges, further subscriber losses in linear television, and a slowdown in advertising.

Layoffs have also hit the company — most recently at CNN — as Zaslav doubles down on streamlining the debt-ridden business.

 

Source: yahoo.finance.com