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NHTSA slaps Ford with $165M fine for failing to timely issue recall. (00:24) GM’s Cruise to pay $500,000 fine for false report on San Francisco car crash. (01:37) Hims & Hers cut to underperform by BoA over Amazon competition. (02:48)
This is an abridged transcript of the podcast.
Ford (NYSE:F) runs into more issues with the National Highway Traffic Safety Administration (“NHTSA”) and has been hit with a $165M fine after the regulator found that the company delayed a recall of more than 620K vehicles and gave consumers inaccurate information regarding a faulty rear camera.
In August 2021, NHTSA discovered that the rearview cameras on Ford Explorer, Escape, and Edge SUVs, F-series and Ranger pickup trucks, Transit vans, and the Mustang, were prone to an electrical glitch that caused intermittent failure. The cameras were supplied by Magna Electronics (MGA).
The agency accused Ford (F) of failing to issue a timely recall for the affected vehicles and for not providing accurate and complete recall information as required under federal law. NHTSA’s fine against Ford is the second largest in NHTSA’s 54-year history, after the Takata airbag consent order.
Ford (FL) will be required to make an upfront payment of $65M, with an additional $55M deferred and $45M for performance obligations.
Cruise, GM’s (NYSE:GM) autonomous vehicle unit, has admitted to providing a false report involving a car crash and has agreed to pay a $500,000 criminal fine.
On October 2, 2023, a Cruise car in San Francisco ran over a pedestrian who had been thrown into its path by a vehicle driven by a human.
The Cruise vehicle stopped after running over the pedestrian, but did not detect that she was underneath the car. It then attempted to pull over to the side of the road, dragging her over 20 feet.
While Cruise filed a report with the National Highway Traffic Safety Administration describing the accident, it omitted reference to the secondary movement and dragging.
Cruise agreed to resolve the offense through a three-year deferred prosecution deal, which includes a $500,000 fine, implementing a Safety Compliance Program, and providing annual reports to the U.S. attorney’s office. If it fails to meet these requirements, the U.S. attorney’s office can proceed with prosecution of the offense.
The investigations brought on by the accident led to Cruise’s CEO and its co-founder resigning last year, as well as layoffs.
BofA has lowered its rating of Hims & Hers (NYSE:HIMS) to underperform from buy, citing Amazon’s (AMZN) push into the hair loss and erectile dysfunction treatment markets.
Shares of Hims & Hers (NYSE:HIMS) fell 24% on Thursday.
“Today HIMS generates 80%+ gross margins from its core hair loss/ED markets and the substantial operating leverage observed to date is directly from its ability to source drugs cheaply and sell them at nice mark-ups to more patients,” BofA wrote in its note.
The investment bank said it expects Amazon’s (AMZN) recently announced entrance into these markets to impact Hims’ (HIMS) ability to grow and capture new customers, along with how much it will be able to charge for the treatments.
BofA said it was lowering Hims’ (HIMS) revenue growth estimates by around 10ppt from 2025 to 2027 and reducing operating leverage.
The bank cut its price target from $32 to $18.
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Catalyst watch:
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Liberty Global (LBTYA) will spin off its Swiss telecoms operator Sunrise to shareholders. After the spin-off, Sunrise will be an independent publicly traded Swiss company, and Liberty Global will continue to own and operate its businesses in Belgium, Ireland, Slovakia, the U.K. and the Netherlands.
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The Oppenheimer AI Impact on Cloud & Communications Summit will include participation from Amdocs (DOX) and Extreme Networks (EXTR).
Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. Crude oil is down 1% at just shy of $68/barrel. Bitcoin is down 2.1% at $89,000.
In the world markets, the FTSE 100 is flat and the DAX is also flat. The market in India is closed for a holiday.
The biggest movers for the day premarket: Domino’s Pizza (DPZ) is up 8% after Berkshire Hathaway revealed a new $549M stake in the pizza chain. According to a Thursday portfolio update, Berkshire Hathaway, led by renowned investor Warren Buffett, acquired nearly 1.3M shares of Domino’s by the end of September, representing a 3.7% ownership in the pizza-delivery company.
On today’s economic calendar:
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