The daily business briefing: April 20, 2023

1. Tesla shares drop as price cuts dent profit

Tesla shares fell 5 percent in after-hours trading Wednesday after the electric-vehicle maker reported disappointing quarterly earnings. Tesla reported a first-quarter gross margin of 19.3 percent, falling short of the 22.4 percent analysts polled by Refinitiv expected. A series of price cuts — the latest of which Tesla announced hours before reporting its results — aimed to boost sagging demand and safeguard Tesla's dominance in the EV market, but they contributed to a 24 percent decline in first-quarter profit. Analysts said Tesla might have to continue cutting prices to fend off competition, particularly in China. That will continue to erode its margins, Canaccord Genuity analyst George Gianarikas said in a broker note, but it will "prove a headache to competitors" still struggling to make a profit.

Reuters

2. House Republicans introduce proposal to raise debt ceiling, cut spending

House Republican leaders on Wednesday introduced their plan to raise the debt limit in exchange for federal spending cuts. The bill, called the Limit, Save, Grow Act, would keep discretionary spending levels in the next year at 2022 levels, and cap spending growth at 1 percent annually, House Speaker Kevin McCarthy (R-Calif.) said. The legislation would reclaim unspent COVID-19 relief money and block some of President Biden's initiatives, including forgiving some student loans and providing new clean-energy subsidies. The GOP plan would raise the debt ceiling by $1.5 trillion or until March 31, 2024, whichever comes first. Democrats want to raise the debt limit with no conditions to avoid a catastrophic default on the country's debt, accusing Republicans of holding Americans hostage.

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The Wall Street Journal The Washington Post

3. Home prices fell sharply in March

The median U.S. home price fell 3.3 percent to $400,528 in March, the biggest annual decline since 2012, real-estate brokerage Redfin reported Wednesday. The decline came as high mortgage rates, which have increased as the Federal Reserve raises interest rates to fight high inflation, have forced many buyers out of the market. A scarcity of people shopping for homes has sharply reduced demand in once-booming markets like Boise, Idaho, Austin, Texas, and Sacramento, California. Just over 28 percent of homes sold nationwide fetched more than the list price last month, down from 54.1 percent last year. "This year's spring home buying season is lackluster," said Redfin Chief Economist Daryl Fairweather.

Cnet Redfin

4. Florida board makes move to 'void' Disney changes

The board Florida Gov. Ron DeSantis (R) appointed to oversee government services in the area that includes Disney World told its lawyers to prepare a resolution to "void" provisions the Walt Disney Company put in place before the new panel took over to limit what it could do. Disney pushed through the changes in open, advertised public forums, but the new board members weren't aware, expressing outrage when they took over and found out. Disney, one of the state's biggest employers and taxpayers, has been feuding with DeSantis since expressing opposition to his Parental Rights in Education legislation, which critics call the "don't say gay" law, and halting political donations in Florida.

The New York Times

5. Facebook starts second round of layoffs

Facebook-parent Meta started its second round of layoffs on Wednesday, telling North America employees to work from home as it cut 4,000 jobs under a plan that will eventually eliminate 10,000 positions. The reductions, part of what CEO Mark Zuckerberg has said would be the company's "year of efficiency," will affect employees at Facebook, Instagram, WhatsApp, and the company's Reality Labs virtual reality division. Meta employees criticized management and said the layoffs were destroying morale as people tried to hang onto their jobs and wondered if they would be next to go. "It's about to be Hunger Games out here," one Meta employee wrote on the Blind social media app, according to the New York Post.

Bloomberg New York Post