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Pedestrians walk past the Tesla Motors official authorized car dealer store in Hong Kong.

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Is the first electric-vehicle recession here, or coming soon?

As electric-car stocks plummeted in late 2022, the rout evoked comparisons to the dot-com stock bust two decades ago. Like the internet industry then, the EV industry boasts companies, notably Tesla,  that look like long-term winners, but it is also made up of young companies that may not have the cash to ride out a downturn, as well as in-between players like Lucid Group, Fisker and Rivian Automotive, that have done their best to prepare, and whose fate may depend on how bad things get.

With the economy at an inflection point between receding inflation fears and broad expectation of a recession beginning in 2023, the market doesn’t know what to make of moves like Tesla’s big price cuts, first in China and then on Jan. 13, in the U.S. and Europe. Analysts like Guggenheim Securities’ Ronald Jesikow said it could push Tesla’s profit margins 25% lower than Wall Street consensus and drain profits from all of Tesla’s competitors. But optimists like Wedbush analyst Dan Ives think it’s the right, aggressive move to jumpstart the EV transition amid macro uncertainty.

“Many dot-coms didn’t make it,” Ives said. “There’s no stress test for a severe recession for an industry that’s in its infancy.” 

What happens next — whether battered EV stocks rebound, whether young companies that need more funding will be able to get it, and whether the sector becomes the jobs engine Washington was counting on when it passed the Inflation Reduction Act last summer, laden with tax credits for EVs — depends on the economy first, and the markets second.

The “first EV recession” theme comes with a big if – that there is a recession in the first place, either here or in China, where Tesla sales dropped 44 percent in December from November levels as the government there continued struggling to contain Covid-19. 

In the U.S., most economists and CEOs think a recession is likely this year, though the market gains of the last week may reflect the beginnings of a change in the investor outlook, with more believing in the “soft landing” narrative for the economy. One holdout, Moody’s Analytics chief economist Mark Zandi, forecasts a months-long “slowcession” where growth doesn’t quite turn negative. Either scenario would likely hurt car sales in general, which were the worst in a decade in the U.S. last year, but where some auto executives are now slightly more confident about a rebound, though the EV outlook among the automakers has become more cautious in the short-term. But either scenario may be too pessimistic if the economy responds positively to now-slowing inflation.

The outlook from China, home to more than half of the world’s EV sales, according to Clean Technica, is at least as murky. Manufacturing moved into negative-growth territory late in the year and housing prices are falling, but the International Monetary Fund says China will avoid a recession and grow its economy by 3.8% this year. That would be half of 2021’s clip and slightly below China’s pace last summer, when the nation began to cope with new Covid-related shutdowns. China is now pushing to reopen its economy amid the pandemic. 

Tesla’s 2023 world is like Amazon and eBay’s 2000

A recession, if it happens, doesn’t necessarily mean EV sales will fall. Most models saw big sales gains last year in both the U.S. and Asia. It’s more a question of whether EV companies will grow fast enough to keep adding jobs, and for companies beyond Tesla to turn profitable when investors expect them to — or before they run out of cash they raised to fund startup losses.

That sets up a dynamic a lot like the one that confronted dot-com companies like Amazon and eBay as 2000 blended into 2001: A web-stock selloff was well-underway then, just as EV companies like Tesla, Fisker and Lucid fell sharply last year — 65 percent for Tesla, 54 percent for Fisker and 82 percent for Lucid. Then as now, weaker players like today’s EV makers Lordstown Motors, Faraday Future and Canoo were scrambling to avoid running out of cash as an economic slowdown loomed, either by cutting costs or raising more money from investors.

“We look at a combination of balance sheet stability and ability to raise more capital,” said Greg Bissuk, CEO of AXS Investments in New York, which runs an exchange-traded fund that uses swaps to deliver the opposite of Tesla’s daily return — in essence, usually a near-term bet that the shares will drop. “We think it will be rocky,” he said, specifically referring to the middle-tier EV makers.

But at the same time, revenue at dot-com companies kept rising fast, and the businesses that were  destined to survive began to turn profitable between 2001 and 2003. Today, EV sales in China are rising, even as Covid continues to hamper its economy, and EVs posted a 52% sales gain in the U.S. At year-end, EVs had 6% of the U.S. light-vehicle market, compared to 1 percent of U.S. retail sales being online in late 2000.

Slower growth isn’t no growth

For EV makers, the likely impact of a recession is slower growth, but not the negative growth the overall economy experiences in a downturn, as new technology keeps gaining market share. 

The best-positioned EV maker is still Tesla, said CFRA Research analyst Garrett Nelson. With the company still expected to have generated about $4 billion in late-2022 cash flow when it reports fourth-quarter earnings Jan. 25, and having had about $21 billion at the end of the third quarter, it’s not in danger of a cash burn, Ives said.

“We think the stock rebounds quickly this year,” Nelson said, calling Tesla his top pick among all auto makers, and noting that CFRA economists don’t expect a recession. It trades at 24 times this year’s profit estimates, which in turn only call for 25% profit growth, numbers that are modest for a growth company with room to keep expanding fast.

Tesla shares will bounce back despite poor delivery numbers, says shareholder Gary Black

After the price cut, Nelson said the company will see narrower profit margin but will sell more cars.

“It should widen the company’s competitive advantage and make many more Tesla vehicles eligible for the $7,500 federal EV tax credit,” Nelson said.

The just-enacted price cut pulled the most-popular Model Y vehicles under the price maximum for tax-credit eligibility in the 2022 Inflation Reduction Act.

Tesla has its own issues, with sales growth having slowed late in the year. Fourth-quarter units were up 32%, down sharply from earlier in the year, missing Wall Street estimates for a second straight quarter. CEO Elon Musk’s antics as the new lead owner of Twitter raise concerns about how closely Musk is watching the store, and how quickly he may respond if Tesla’s decline accelerates, Ives said.

“The biggest [issue] is Twitter,” Nelson said. 

On the plus side, this year’s earnings estimates assume no contribution from the Cybertruck, which Tesla is again promising to launch late this year, after being delayed since 2021. And Goldman Sachs analyst Mark Delaney wrote Jan. 2 that vehicle deliveries should reaccelerate by midyear, helped by lower cost structures at Tesla’s newer factories and a pickup in Chinese sales.  

“Now is a time for leadership from Musk to lead Tesla through this period of softer demand in a darker macro, and not the time to be hands off, which is the perception of the Street,” Ives said. “This is a fork-in-the-road year for Tesla, where it will either lay the groundwork for its next chapter of growth or continue its slide.”

Cash burn and the rest of the EV market

In the middle, Lucid, Rivian and Fisker make up a range of higher-risk possibilities that may well turn out fine in the end. But Tesla’s price cutting may cause them problems: Fisker’s stock dropped almost 10% on its rival’s announcement, since Tesla’s move puts the Model Y’s price closer to that of the Fisker Ocean, whose middle tier is around $50,000.

Of the three, Rivian has the most cash on hand, with short-term investments at $13.3 billion as of the end of the third quarter. Fisker had $829 million, and Lucid had $3.85 billion.

Each company is still burning cash, posing the question of whether they have enough to survive a downturn. Fisker lost about $480 million in cash flow in the 12 months ending in September, and invested another $220 million, meaning its cash would last between one and two years if its losses and investment didn’t slow.

“Our commitment to a lean business model has given us a solid balance sheet, which we have supported with disciplined management of our cash,” CEO Henrik Fisker said in a statement to CNBC. “We are in good shape to manage future economic challenges and to act on opportunities.”

Lucid spent over $2 billion in the first nine months of 2022 on operating cash flow losses and capital investment, and says its cash will cover its plans “at least into the fourth quarter of 2023,” according to its third-quarter earnings call. Lucid’s recent production and delivery numbers did beat expectations, albeit expectations that had already been lowered.

Rivian’s stockpile is more than two years’ worth of recent cash-flow losses and investment. 

All three companies, which declined or didn’t respond to on-the-record interview requests, can also extend their cash runway by raising more capital and, indeed, at least two of them have already begun to do so. Lucid raised another $1.515 billion in December, mostly from Saudi Arabia’s Public Investment Fund, while Fisker has filed to raise $2 billion from an ongoing shelf registration at the Securities and Exchange Commission and has so far raised $116 million.

EV maker Lucid to accelerate plans with its Saudi Arabia factory

All three should also give financial guidance for 2023 during earnings season, including updates on their capital spending, and on whether cash-flow losses will narrow as they begin to ship more vehicles.

Fisker began shipping its initial model, the Fisker Ocean, only in mid-November, and plans to ship a less-expensive SUV called the Fisker PEAR next year. Rivian, hampered by parts shortages due to Covid-driven supply chain issues, missed its 2022 production target of 25,000 vehicles by less than 700. It hasn’t yet said how many cars it will ship this year. Rivian also paused a partnership with Mercedes in November, ending for now a plan to co-develop commercial vehicles. Rivian said it would concentrate on its consumer business and other commercial ventures, primarily a deal to sell delivery vans to Amazon, that offer better risk-adjusted returns. That move will help avoid pressure on the startup’s capital base.

Business plans for the future, little current business

Lower on the food chain are companies like Faraday Future Intelligent Electric, Canoo and Lordstown Motors, which went public via mergers with Special Purpose Acquisition Companies, or SPACs, and have lost most of their equity value since. 

Lordstown in November announced a fresh investment by Foxconn, the contract manufacturer that will own 19.9% of Lordstown after the deal, including preferred stock, to help scale up production of its initial pickup truck and bolster the $204 million in cash on its balance sheet. Foxconn has agreed to make Fisker vehicles in Lordstown’s Ohio factory, which Foxconn bought in May, for launch in 2024. It issued a going-concern warning in 2021, before raising money from Foxconn.

“The new capital from Foxconn doesn’t change our focus” on cost containment, Lordstown CFO Adam Kroll said, arguing that the Foxconn deal will slash Lordstown’s capital needs. “We continue to execute a playbook of prudence and discipline.”

Companies like Faraday, Canoo and Lordstown that need to raise more capital could find the path blocked by a more-skeptical capital market than the one that financed them during the special-purpose acquisition company boom, CFRA’s Nelson said. Weaker players include Electro Mechanica, which has proposed a solo EV but hasn’t shipped it in scale yet, British commercial-vehicle maker Arrival, and Green Power Motor, a Canadian electric bus maker, he said. He even includes Fisker, Lucid and Rivian among those at risk from tighter markets.

“They had a business plan but no business, and they got absurd amounts of capital,” Nelson said. “In our opinion, you’ll see many additional bankruptcies, but the market will return to balance. But it’s hard to imagine we’ve seen the bottom.” 

But Nelson does believe the electric car boom is for real — indeed, he says Tesla is the year’s best bet in the overall auto industry. A note of skepticism: After the dot-com boom and bust, Amazon.com began rising off its lows in 2002, rising tenfold by 2008, but didn’t leave its 1999 highs behind for good until 2010. EBay recovered faster but couldn’t sustain its momentum. 

Ives said the Inflation Reduction Act, which offers tax credits of  $7,500 for electric cars costing less than $55,000 and SUVs or pickups selling for $80,000 or less, may throw the industry a lifeline as companies arrange to do enough domestic manufacturing to qualify all of their vehicles. Arrival, citing IRA credits of up to $40,000 for buyers of commercial vehicles, said in November that it is refocusing its London-based company on the U.S. market.

“The pressure in 2023 is less about EVs than the overall macro environment,” Ives said.  “The IRA is not a small point.”

That’s not lost even on Bassuk, who emphasizes that his fund is about helping exploit short-term weakness in the market’s view of EVs. Long-term, he says, EVs are coming, recession or not.

“Those with the capital to get through 2023, we’d bet the farm on,” he said.

CNBC is now accepting nominations for the 2023 Disruptor 50 list – our 11th annual look at the most innovative venture-backed companies. Learn more about eligibility and how to submit an application by Friday, Feb. 17.

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How Facebook Marketplace is keeping young people on the platform

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How Facebook Marketplace is keeping young people on the platform

Meta‘s Facebook’s influence remains strong globally, but younger users are logging in less. Only 32% of U.S. teens use Facebook today, down from 71% in 2014, according to a 2024 Pew Research study. However, Facebook’s resale platform Marketplace is one reason young people are on the platform.

“I only use Facebook for Marketplace,” said Mirka Arevalo, a student at Buffalo University. “I go in knowing what I want, not just casually browsing.”

Launched in 2016, Facebook Marketplace has grown into one of Meta’s biggest success stories. With 1.1 billion users across 70 countries, it competes with eBay and Craigslist, according to BusinessDasher.

“Marketplace is the flea market of the internet,” said Charles Lindsay, an associate professor of marketing at the University of Buffalo. “There’s a massive amount of consumer-to-consumer business.”

Unlike eBay or Etsy, Marketplace doesn’t charge listing fees, and local pickups help avoid shipping costs, according to Facebook’s Help Center.

“Sellers love that Marketplace has no fees,” said Jasmine Enberg, VP and Principal Analyst at eMarketer. “Introducing fees could push users elsewhere.”

Marketplace also taps into the booming resale market, projected to hit $350 billion by 2027, according to ThredUp.

“Younger buyers are drawn to affordability and sustainability,” said Yoo-Kyoung Seock, a professor at the College of Family and Consumer Sciences at the University of Georgia. “Marketplace offers both.”

A key advantage is trust; users’ Facebook profiles make transactions feel safer than on anonymous platforms like Craigslist, according to Seock.

In January 2025, eBay partnered with Facebook Marketplace, allowing select eBay listings to appear on Marketplace in the U.S., Germany, and France. Analysts project this will drive an additional $1.6 billion in sales for eBay by the end of 2025, according to Wells Fargo.

“This partnership boosts the number of buyers and sellers,” said Enberg. “It could also solve some of Marketplace’s trust issues.”

While Facebook doesn’t charge listing fees, it does take a 10% cut of sales made through its shipping service, according to Facebook’s Help Center.

Marketplace isn’t a major direct revenue source, but it keeps users engaged.

“It’s one of the least monetized parts of Facebook,” said Enberg. “But it brings in engagement, which advertisers value.”

Meta relies on ads for over 97% of its $164.5 billion revenue in 2024.

“Marketplace helps Meta prove younger users still log in,” said Enberg. “Even if they’re buying and selling instead of scrolling.”

By keeping users engaged, Marketplace plays a key role in Facebook’s long-term strategy, ensuring the platform remains relevant in a changing digital landscape.

Watch the video to learn more.

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Hinge Health to go public as soon as April, source says

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Hinge Health to go public as soon as April, source says

Hinge Health’s TrueMotion feature.

Courtesy: Hinge Health

Digital physical therapy startup Hinge Health is gearing up to file for an initial public offering, potentially as soon as next week, CNBC has learned.

Hinge Health helps patients with musculoskeletal injuries ranging from minor sprains to chronic pain recover from the comfort of their own homes. Its IPO has been a highly-anticipated exit within the battered digital health sector, which has been reeling from the aftermath of the Covid-19 pandemic.

The IPO could happen as early as April, but timelines might still change due to uncertainty around tariffs, according to a person familiar with the matter. Hinge Health, which contracts with employers, generated $390 million in revenue in 2024, had $45 million in free cash flow and hit gross margins of about 78%, the person said.

The San Francisco startup has raised more than $1 billion from investors like Tiger Global and Coatue Management. Hinge Health had a $6.2 billion valuation as of October 2021. Physical therapy is estimated to be a roughly $70 billion market by the end of the decade.

A spokesperson for Hinge Health declined to comment.

Hinge Health CEO Daniel Perez and Executive Chairman Gabriel Mecklenburg co-founded the company in 2014 after they were frustrated by their own experiences with physical rehabilitation, according to the company’s website.

Members of Hinge Health can access virtual exercise therapy and an electrical nerve stimulation device called Enso that’s designed to serve as an alternative to pain medications like opiates. The company has been using generative artificial intelligence to scale its care team in recent years.

The company competes directly with other digital health startups like Sword Health, but Hinge Health is about four times larger than is closet competitor, the person said.

Investors will be watching closely to see whether Hinge Health’s IPO serves as a positive bellwether for the sector.

Bloomberg reported Hinge Health’s IPO plans earlier on Friday.

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Tesla shares have declined every week since Elon Musk went to Washington

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Tesla shares have declined every week since Elon Musk went to Washington

Elon Musk speaks during the first cabinet meeting hosted by U.S. President Donald Trump, at the White House in Washington, DC, U.S., February 26, 2025.

Brian Snyder | Reuters

Tesla’s stock has never had a stretch this red.

For seven straight weeks, since Elon Musk went to Washington, D.C. to join the Trump administration, shares in his automaker have declined, closing on Friday at $270.48. It’s the longest such losing streak for Tesla in its 15 years as a public company.

Tesla shares finished the week down more than 10% and at their lowest level since Nov. 5, Election Day, when they closed at $251.44. Since the stock peaked at almost $480 on Dec. 17, Tesla has lost well over $800 billion in market cap.

Several Wall Street firms this week, including Bank of America, Baird and Goldman Sachs, cut their price targets on Tesla.

In slashing their target from $490 to $380, analysts at Bank of America cited concerns about the company’s falling new vehicle sales and the lack of a recent update from Musk on a “low-cost model.”

Goldman Sachs, which cut its price target on the stock to $320 from $345, also pointed to falling electric vehicle sales for Tesla in the first two months of the year across several markets in Europe, China and parts of the U.S.

The Goldman analysts noted that Tesla faces, “a tough competitive environment for FSD” in China, where key competitors “do not generally require a separate software purchase for smart driving features.” FSD, or Full Self-Driving (Supervised), is Tesla’s partially automated driving system, which the company sells as a premium option in the U.S.

Baird added Tesla to its “bearish fresh picks” this week, with analysts at the firm writing, production downtime” will complicate “the supply-side of the equation” for Tesla as the company shifts to manufacturing the new version of its Model Y SUV.

Elon Musk stands as he is recognized by U.S. President Donald Trump during Trump’s address to a joint session of Congress at the US Capitol in Washington, DC, on March 4, 2025.

Saul Loeb | Afp | Getty Images

But Wall Street isn’t just concerned about fundamental metrics like sales and production figures. Investors are also trying to assess how much Musk’s politics and work in the White House will pressure Tesla, and for how long.

“Musk’s involvement with the Trump administration adds uncertainty to the demand-side,” Baird analysts wrote.

Before taking on his role as advisor to President Donald Trump, and the leader of the so-called Department of Government Efficiency (DOGE), Musk was already heading up his many private ventures, including artificial intelligence startup xAI, social media company X and aerospace and defense contractor SpaceX.

Concerned bulls

Now Musk, the world’s wealthiest person, has become the public face of the Trump administration’s effort to dramatically reduce the federal government’s workforce, spending and capacity. Meanwhile, he continues to post incendiary political rhetoric on X, slamming judges whose decisions he doesn’t like, and promoting false Kremlin talking points about Ukraine President Volodymyr Zelenskyy.

Anti-Musk and anti-Tesla sentiment have been rising in the U.S. and Europe, with an outburst of protests and suspected criminal acts of arson and vandalism at Tesla facilities.

Even the most bullish analysts, and many fans, have had to acknowledge the impact of Musk’s politics on the desirability of Tesla and its products to a wide swath of customers and investors.

EV advocates at Cleantechnica, which has long promoted Tesla on its site, ran an ethics-focused column on Thursday asking if Tesla owners should sell their cars, and contemplating whether the Tesla board should fire Musk as CEO.

Musk and Tesla didn’t immediately respond to requests for comment.

In a note out Friday, Wedbush Securities’ Dan Ives wrote, “Tesla bulls find themselves with their back against the wall facing global negative sentiment around Musk/DOGE and the Trump Administration.” He called it a “gut check moment for the Tesla bulls (including ourselves).”

Wedbush said it’s using the selloff as an opportunity to add Tesla to its “Best Ideas” list, and set its 12-month price target at $550.

“The best thing that ever happened to Musk and Tesla was Trump in the White House as this will create a deregulatory environment with a federal autonomous roadmap central to the Tesla golden strategic vision,” the firm wrote.

The Tesla bulls see the potential for the company to soon launch affordable new model EVs, a robotaxi and driverless ridehail service, and to deliver humanoid robots capable of factory work in the not-too-distant future. Ives said he expects Musk will become more focused on Tesla and his other companies in the second half of 2025.

Analysts at TD Cowen are also optimistic. In a note on Thursday, they wrote, “Tesla now appears to be in the early innings of a major 2025-26 product cycle, one that we believe could re-invigorate volume growth and boost overall share price sentiment.”

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