The daily business briefing: December 28, 2022
Tesla shares continue to freefall, Southwest cancelations prompt DOT scrutiny, and more
Tesla shares continue tailspin
Tesla shares closed down 11 percent at $109.10 on Tuesday in what was the company's worst day in eight months and marked a more than two-year low for Elon Musk's electric vehicle maker. The stock has lost more than half its value since the start of October, and plunged 44 percent for December — "by far its worst month ever, as it had never fallen more than 25 percent in a single month," CNBC writes. Some investors blame Musk for "triggering the selloff because of his Twitter engagement, his Tesla stock sales, the potential for margin calls, and his off-color tweeting," Holman W. Jenkins, Jr., writes at The Wall Street Journal. The tailspin, which also followed a report of the company's plans to reduce production at its Shanghai plant, bumped Tesla out of the 10 biggest public companies in the U.S. this week. "At the same time that Tesla is cutting prices and inventory is starting to build globally in face of a likely global recession, Musk is viewed as 'asleep at the wheel' from a leadership perspective," wrote Wedbush Securities' Dan Ives on Tuesday.
DOT to investigate chaos at Southwest after airline cancels thousands more flights on Tuesday, Wednesday
Southwest Airlines canceled more than 60 percent of its flights for Tuesday and Wednesday as it continued to struggle to bounce back from ongoing "operational conditions" following the weekend's winter storms. "This is the worst round of cancelations for any single airline I can recall in a career of more than 20 years as an industry analyst," Atmosphere Research Group' Henry Harteveldt told The New York Times. Southwest said it could still be days before operations return to normal. While the weekend's storms were the catalyst for the problems, Southwest was "just not manned with enough manpower in order to give the scheduling changes to flight attendants, and that's created a ripple effect that is creating chaos throughout the nation," Lyn Montgomery, president of TWU Local 556, explained to CNN's Pamela Brown. The U.S. Department of Transportation tweeted that it was concerned by "Southwest's unacceptable rate of cancelations" and would investigate "if Southwest is complying with its customer service plan."
Russia to ban sale of oil to countries that impose price cap
Russian President Vladimir Putin announced Tuesday that Russia will ban oil sales for five months to countries that honor a price cap set by the West in an effort to hamper Moscow's stream of funds for its war in Ukraine. The $60-a-barrel price cap, which was reached by the U.S. and other G7 nations, Australia, and the EU, went into effect on Dec. 5. "The cap has been set close to the current price for Russian oil," CNBC writes, "but far below the prices at which Russia was able to sell it for much of the past year, when windfall energy profits helped Moscow offset the impact of financial sanctions." Russia said its ban will come into force on Feb. 1, 2023, and applies until July 1, 2023, and allows Putin to make exceptions in special cases. "All in all, this is a sign that Russia is in a vulnerable situation, needs oil revenues, and therefore cannot take drastic retaliation measures," Simone Tagliapietra, a senior fellow at the Bruegel think tank in Brussels, told The Wall Street Journal.
Stock in China's largest funeral home soars as Beijing walks back 'zero COVID'
Stock in China's largest funeral and burial services provider, Fu Shou Yuan, is skyrocketing as Beijing steps away from three years of strict zero-COVID policies. Since the end of October, stock in Fu Shou Yuan has risen 80 percent, with "significant traction" coming in "the past few days," according to Quartz: it rose by 22 percent on Dec. 23, and again by 10 percent on Dec. 27. Over the weekend, Beijing announced that it will stop publishing daily COVID-19 information as infection surges — local governments are counting hundreds of thousands of new cases a day — prompting the U.S. and other nations to consider new measures on travelers from China even as it walks back from its own strict quarantine restrictions. "[T]he sudden reversal of China's 'zero COVID' policy caught hospitals off guard," The New York Times' Isabelle Qian said.
GasBuddy predicts lower gas prices will last through 2023
Gas prices are expected to be lower in 2023 than they were in 2022, according to estimates by the fuel price tracking app GasBuddy — though prices could still hit $4 per gallon during the high travel season next summer, or potentially as soon as May. The lowest prices are expected in February when the national average is predicted to be $2.99 a gallon. All told, the 2023 expected national average is $3.49 per gallon, down from 2022's average of $3.96, when prices at one point hit a record average high of $5. Other analysts, however, have cautioned against too much optimism when it comes to the price at the pump: "Since the beginning of 2020, seven refineries, totaling almost 6 percent of U.S. capacity, have closed," writes Timothy Fitzgerald for The Wall Street Journal, adding: "Without the ability to process higher production, prices are likely to spike again next year."