Tariffs were firmly back in the spotlight this week after Donald Trump announced a 25% sales surcharge on all new cars sold in the US but not made in the US.
The new tariff comes into effect on 3 April and analysts have estimated it could increase new car prices by thousands of dollars, as well as forcing up prices of second-hand vehicles.
Shares in US carmakers General Motors (GM:NYSE) and Ford (F:NYSE) fell, while shares in Tesla (TSLA:NASDAQ) - which manufactures its US models in the US - rallied after months of poor performance.
In Europe, Volkswagen (VOW3), BMW (BMW), Mercedes Benz (MBG:ETR), Porsche (PAH3:ETR) and Continental (CONT:ETR) lost a combined €4.5 billion in market value on the day of the news.
The latest GDP figure for the fourth quarter of 2024 was slightly higher than expected at 2.4%, while core PCE (personal consumption expenditures) came in below expectations at 2.6%.
Meanwhile, the hotly-anticipated CoreWeave IPO (initial public offering) disappointed on Thursday (27 March).
Despite the backing of artificial intelligence chipmaker Nvidia (NVDA:NASDAQ), the float raised $1.5 billion rather than a hoped-for $4 billion, suggesting caution on the part of investors.
According to the Financial Times, CoreWeave sold 37.5 million shares at $40, whereas it had initially planned to sell 49 million shares for between $47 and $55 per share.
LYFT
Shares in US ride-hailing platform Lyft (LYFT:NASDAQ) sped 8% higher to $12.47 this week on news activist investor Engine Capital Management is pushing for a strategic and corporate governance overhaul.
Lyft’s shares have dramatically underperformed rival Uber (UBER:NYSE) over the past five years, the former plunging 55% versus a 180% gain for the latter.
Hedge fund Engine Capital has nominated two directors to Lyft’s board and is pressuring the company to rethink its strategic direction and improve corporate governance, with the company’s dual-class share structure a bone of contention.
Nevertheless, results for 2024 were encouraging revealing a 17% rise in gross bookings to $16.1 billion and a swing from losses of $340 million to net profit of $22.8 million.
‘2024 was a record-smashing year for Lyft,’ said chief executive David Risher. ‘Thanks to our industry-leading service levels, we helped 44 million people across the US and Canada get off their tuchuses. But we’ve got more to do. Our biggest competition is inertia.’
DOLLAR TREE
Investors looked past mixed fourth-quarter earnings at discount retailer Dollar Tree (DLTR:NYSE) on Wednesday (26 March), chasing the shares up as much as 10% on the sale of its struggling Family Dollar business to two private equity groups for $1 billion.
Dollar Tree purchased the business for $9 billion in 2015, outbidding rival Dollar General (DG:NYSE) in the process, but the business failed to gain traction amidst fierce competition from big-box retailers such as Walmart (WMT:NYSE).
Analysts at Evercore ISI described the sale as ‘truly addition by subtraction’ given the distraction of management time and poor performance of the business.
Chief executive Michael Creedon told shareholders: ‘I strongly believe selling Family Dollar and returning to our roots with an expanded assortment at Dollar Tree has created material value.’
Looking ahead, tariffs could present further headwinds for Dollar Tree with direct imports making up around 43% of the firm’s retail purchases, mostly from China, according to company filings.
Creedon said he believed the company’s potential pre-mitigation exposure was around $20 million per month.
LULULEMON
Shares in Canadian athleisurewear seller Lululemon (LULU:NASDAQ) plunged 11% to $304.5 in after-hours trading on 27 March as soft guidance overshadowed the yoga-pant purveyor’s forecast-beating fourth-quarter results.
For the quarter ended 2 February, Lululemon delivered a 13% jump in revenue to $3.61 billion and earnings per share of $6.14, ahead of the $3.57 billion and $5.82 analysts were looking for respectively.
Unfortunately, same-store sales growth of 3% was shy of the 5% Wall Street was calling for with Americas sales flat, while guidance for both the first quarter and full year was light of consensus.
The company reported slowing traffic in its US stores as consumers in its largest market pull in their horns amid high inflation and tariff-related uncertainties.
Chief financial officer Meghan Frank said: ‘We are pleased to deliver another solid year of performance in 2024 and surpass $10 billion in annual revenue for the first time. We look forward to building on our growth in 2025, while remaining agile as we navigate ongoing macro uncertainties.’
