April 21, 2024

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Exxon Commits $3 Billion to Emissions Project

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Environmentalists have long criticized Exxon Mobil for not doing enough about climate change.
Credit…Ben Torres for The New York Times

Exxon Mobil, which has long been criticized by environmentalists and some investors and elected leaders for not doing enough to curb climate change, said on Monday it would invest $3 billion over the next five years in energy projects that lower emissions.

The company said the first area it would work on is capturing carbon dioxide emissions from industrial plants and storing the gas so it does not enter the atmosphere, where it contributes to global warming. Many climate experts have said that such carbon capture and sequestration will be critical in the fight against climate change.

Exxon said it was creating a new business called ExxonMobil Low Carbon Solutions and is working on 20 carbon capture projects around the world, including in Texas, the Netherlands, Singapore and Qatar.

The moves comes as the Biden administration has promised to tighten regulations of the fossil fuel industry, increase fuel economy standards for cars and take other steps to reduce emissions of carbon dioxide and other greenhouse gases. Some institutional investors and environmental groups are also pushing Exxon and other companies to cut emissions from their operations and the use of their products.

Exxon in particular has been a frequent target of such campaigns because, unlike European oil giants like BP and Royal Dutch Shell, it has not invested in renewable energy or sought to set ambitious climate targets.

The announcement from Exxon came a few days after General Motors said it aimed to stop selling petroleum-powered cars and trucks by 2035 and only sell zero-emissions vehicles.

Robinhood’s users have embraced highly volatile stocks, which has forced the trading platform to dramatically increase the amount of money it deposits with the clearinghouse that processes its trades.
Credit…Tony Cenicola/The New York Times

Robinhood raised an additional $2.4 billion over the weekend, the trading app said on Monday, adding to the $1 billion it had to seek from its investors earlier last week.

“This round of funding will help us scale to meet the incredible growth we’ve seen and demand for our platform,” Robinhood’s chief financial officer, Jason Warnick, said in a post on the company’s website.

The infusion was led by Ribbit Capital and included other existing investors like Sequoia Capital, Robinhood said. The company called it “a strong sign of confidence.”

The online trading firm has been at the center of a trading frenzy over the video-game retailer GameStop and other stocks, which have risen substantially over the past week.

Driven by a surge of interest among amateur investors — many of whom congregate on the Wall Street Bets forum on Reddit — GameStop’s shares soared 1,600 percent in January.

The sudden wave of buying of shares and options contracts has squeezed hedge funds that had bet on the stocks to fall. But it has also created complications for Robinhood. As its users embraced highly volatile stocks, the trading platform was forced to substantially increase the amount of money it deposits with the clearinghouse that processes its trades.

On Thursday, an arm of the Depository Trust and Clearing Corporation, Wall Street’s main clearinghouse for stock trades, demanded $3 billion in additional collateral from Robinhood, to cover risky trades by its customers, according to Vlad Tenev, the trading app’s chief executive. That was “an order of magnitude” more than was usually required, Mr. Tenev said in a conversation with the Tesla chief executive Elon Musk on the social network Clubhouse. That demand was later reduced to about $700 million.

Even so, Robinhood said Thursday night it had raised $1 billion from existing investors. The firm also tapped a credit line of at least $500 million.

“This was nerve-racking,” Mr. Tenev said.

The Securities and Exchange Commission said last week it was “actively monitoring” the volatile trading around GameStock shares and other securities.
Credit…Carlo Allegri/Reuters

The GameStop strategy seems to have worked.

The headline-grabbing surge in the video game retailer’s shares last month came as a group of traders, organized on Reddit and other online forums, set out to inflict financial pain on Wall Street institutions. Those hedge funds had placed large bets against GameStop — a process known as shorting the stock. If the price rose enough they would be sitting on huge losses and, eventually, be forced to rush out of those positions in what’s called a short squeeze.

Data released on Monday suggests that this in fact is what has happened. Short interest in GameStop, a measure of the volume of bets against the stock, fell by more than half last week, according to the market-data firm S3 Partners.

“The GME short squeeze has begun,” wrote Ihor Dusaniwsky, a managing director at S3, referring to GameStop by its stock-trading symbol. He said the stock’s short sellers are now down more than $13 billion.

Many market watchers suspected as much last month, as they saw the price of GameStop surge from less than $20 a share to more than $400. After all, to “cover” a short — or close out the bet on a stock’s decline — an investor has to buy the shares, and if enough funds are clamoring at once to buy the stock as they seek to limit their losses it will surge, like GameStop’s did.

(That’s not to mention that a few large investors had to fess up to the losses. Most notably, Melvin Capital sustained a 53 percent loss for the month of January and needed to raise rescue capital from some other firms.)

But on Monday, shares of GameStop were retreating — likely the result of a number of factors including that the buying pressure by the short sellers might have eased up, for now. The shares fell about 31 percent.

The drop also came as some investors turned their attention to the market for silver, where the price of the precious metal jumped to the highest since 2013 and websites selling silver coins reported unusually high demand. And, the investors who were bidding up the GameStop stock o
n apps like Robinhood still faced trading restrictions that limited how much they could buy.

Does it mean the GameStop trade is over? It’s far too soon to know. For one thing, even if short interest has fallen by half, many of the small traders intend to stick with GameStop until every last short seller has thrown in the towel.

Unlike the fraud or manipulation that regulators like Gary Gensler are used to pursuing, the GameStop frenzy involves investors who have publicly acknowledged the risks they are taking.
Credit…Kayana Szymczak for The New York Times

The recent surge in GameStop’s stock — propelled by individual investors who banded together on Reddit — has put new pressure on the Biden administration’s pick for the top job at the Securities and Exchange Commission, Gary Gensler.

Mr. Gensler would inherit the agency as it faces calls to more tightly regulate online trading programs such as Robinhood that critics say enable unsophisticated investors to make risky financial bets, Deborah B. Solomon reports in The New York Times. But defenders of such platforms say they help flatten out inequities in the financial markets that have long favored deep-pocketed firms over average people. The S.E.C. said it was “closely monitoring” the situation in a statement.

“What’s going on with GameStop has almost nothing to do with GameStop as a company,” said Barbara Roper, director of investor protection for the Consumer Federation of America. “When you see the markets essentially turned into a video game or turned into a casino, that actually has some pretty serious repercussions for the way we use the markets to fund our economy.”

The question for Mr. Gensler, and the agency, will be what, if anything, they should do about concerns from people like Ms. Roper.

The S.E.C.’s role has traditionally been to ensure that companies disclose enough information for people to make informed investment decisions. But it does so by enforcing laws that were written before the advent of trading platforms such as Robinhood. Mr. Gensler’s first moves, those who know him say, will be investigating the GameStop surge to figure out who benefited, as there is speculation that it may have been fueled by some big funds after all.

AMC Entertainment Holdings is still on the list of companies restricted by Robinhood, the online brokerage firm, along with BlackBerry and GameStop.
Credit…Zack DeZon for The New York Times

Robinhood, the stock platform that put restraints on trading of shares like the video game retailer GameStop and the movie theater chain AMC after a frenzy of buying and selling last week, has decreased the number of companies with trading restrictions to eight from 50, according to an update on its website.

The brokerage firm, which has attracted millions of millennials by eliminating trading fees and making stock trading easy, said last Thursday that it would limit buying of the kinds of securities that set off an enormous rally in shares of GameStop, AMC and a number of other companies.

The move drew ire from investors, as well as leaders across the political spectrum — including Representative Alexandria Ocasio-Cortez, Democrat of New York; Senator Ted Cruz, Republican of Texas; and Senator Elizabeth Warren, Democrat of Massachusetts — who accused the platform of manipulating the market to favor big traders.

“It was not because we wanted to stop people from buying these stocks,” Robinhood said in a blog post, adding that the platform had to take steps to limit the securities because “the required amount we had to deposit with the clearinghouse was so large.”

Wall Street’s main clearinghouse for stock trades on Thursday demanded $3 billion in additional collateral, Robinhood’s chief executive, Vladimir Tenev, told Elon Musk in a conversation on the social network Clubhouse late on Sunday.

Robinhood removed barriers to some trades on Friday and said it had raised $1 billion to help ensure it had enough money to cover the transactions.

The platform increased the number of restricted companies to 50 before paring down the list, which includes GameStop, BlackBerry, AMC Entertainment Holdings, Express, Genius Brands International, Koss Corporation, Naked Brand Group, and Nokia.

Melvin Capital was a main player in the stock market drama over the video game retailer GameStop.
Credit…Nick Zieminski/Reuters

Melvin Capital Management, one of the hedge funds pilloried on social media message boards for its short-selling bets that GameStop shares would fall, lost 53 percent on its portfolio in January, a person familiar with the matter said.

A principal reason was the huge losses the firm suffered when small investors bid up the stock of GameStop. The Wall Street Journal first reported the amount of Melvin Capital’s loss.

Founded by Gabe Plotkin, a protégé of the hedge fund billionaire and New York Mets owner Steven A. Cohen, Melvin Capital had $8 billion in assets under management at the end of January. That amount included $2.75 billion that Mr. Cohen’s fund, Point72, and Citadel, another hedge fund, put into Melvin Capital, as well as fresh capital from new investors, the person said.

Hedge fund returns at Citadel fell 3 percent for the month, about a third of which was caused by a $2 billion investment it made in Melvin about a week ago, according two people briefed on Citadel’s results.

Melvin Capital exited its position in GameStop after having to raise additional funds, Mr. Plotkin confirmed to CNBC last week. The firm was a main player in the market drama set off by a group of day traders who have been bidding up a handful of stocks that Wall Street had given up on — forcing losses on big hedge funds.

The traders appear to be mostly small investors focused on a handful of stocks like GameStop and AMC Entertainment. But they have emerged as a new risk factor for large firms that had bet against those companies with what are known as short sales. While the financial damage on Wall Street appears so far limited to a number of firms, the
volatility shook the broader market. The S&P 500 fell 1.9 percent on Friday, finishing its worst week in three months.

Google has come under increasing scrutiny for its dominance in the digital ad market.
Credit…Elijah Nouvelage/Agence France-Presse — Getty Images

The owner of The Charleston Gazette-Mail and other West Virginia news publications filed a lawsuit in federal court on Friday against Google and Facebook, accusing the companies of profiting from “anticompetitive and monopolistic practices” that have damaged the newspaper business.

The publisher, HD Media, said the lawsuit was the first of its kind to be filed by a newspaper company. The suit is focused on the centrality of Google to the online advertising market, as well as an agreement between Google and Facebook that is the center of an antitrust lawsuit brought by 10 state attorneys general. It is estimated the two tech companies together accounted for more than half of all digital advertising spending in 2019.

“Google and Facebook have monopolized the digital advertising market, thereby strangling a primary source of revenue for newspapers across the country,” HD Media said in the suit, filed in U.S. District Court of the Southern District of West Virginia.

“There is no longer a competitive market in which newspapers can fairly compete for online advertising revenue,” the suit continued.

The rise of digital media has led to sharp drops in revenue for many newspaper companies, which once depended on print ads and print subscriptions to stay in business. More than one in four American newspapers shut down between 2004 and 2018, and tens of thousands of newsroom jobs have disappeared.

In addition to The Gazette-Mail, which in 2018 won a Pulitzer Prize for investigative reporting, papers owned by HD Media include The Herald-Dispatch and The Logan Banner.

“We invite every other newspaper in America to join this cause,” Doug Reynolds, the managing partner of HD Media, said in a statement on Friday. “We are fighting not only for the future of the press but also the preservation of our democracy.”

Tech companies have come under new scrutiny in recent months. In October, the Justice Department filed suit against Google, accusing the company of illegally protecting its monopoly over internet search and the digital advertising market. In two lawsuits filed in December, dozens of states accused Google of abusing its dominance of the online ad business and thwarting competitors in search.

Last month, the lyric-annotation company Genius Media and two left-wing magazines, The Nation and The Progressive, filed an antitrust lawsuit against Google — as well as its parent company, Alphabet, and a sibling company, YouTube — citing what the suit called “anticompetitive conduct” in the digital ad market.

Google referred a request for comment to a statement the company issued this month in response to a separate complaint. In the statement, the company said its ad business “helps websites and apps make money and fund high-quality content.” Facebook did not immediately reply to a request for comment.

A Bolt factory in Lake Orion, Mich., in 2018. G.M. plans to spend $27 billion to introduce 30 electric vehicle models by 2025.
Credit…Rebecca Cook/Reuters

Automakers are searching for the right response to General Motors’s announcement that it will aim to sell only zero-emission cars and trucks by 2035.

The reaction from automakers and oil and gas companies has so far been muted. But Washington is abuzz with corporate lobbyists complaining in private about what they saw as a calculated move to burnish the reputations of G.M. and its chief executive, Mary T Barra, even as the industry negotiates a new fuel-economy deal with the Biden administration, Neal E. Boudette and Coral Davenport report for The New York Times.

No other large automakers have set a target date for selling only electric vehicles, but many have moved in that direction.

  • Ford is spending billions to introduce battery-powered models. Customer deliveries of the first of them, the Mustang Mach E sport utility vehicle, started last month.

  • Volkswagen said last year that it planned to spend 73 billion euros, or $88 billion, on electric vehicles over the next five years.

The industry is afraid of losing market share to Tesla, the dominant electric carmaker, which is growing rapidly. Wall Street values Tesla at about $752 billion, about 10 times as much as G.M. Several start-ups, like Rivian and Lucid Motors, are hoping to follow Tesla’s footsteps this year.

And China’s decision late last year to require that most vehicles sold there be electric by 2035 is also critical because G.M. sells more cars in that country through its joint ventures than in the United States. And Britain, Ireland and the Netherlands have said they will ban sales of new gasoline and diesel cars starting in 2030.

Broadly, of course, the industry had been quietly gearing up for months for a possible change in the White House. Representative Debbie Dingell, Democrat of Michigan and a former G.M. executive, said in an interview, “I had been saying to all the autos: ‘When Joe Biden gets elected, your world will turn upside down. You’ve got to be at the table or else this thing gets jammed down your throat.’”

A senior G.M. executive, Dane Parker, said the company was not seeking to curry favor with the new administration. Its decision, he said, was based on a fundamental, dollars-and-cents analysis of where the auto industry is headed and the cars that it expects to become best sellers in the future.

Vlad Tenev, the chief executive of Robinhood, in 2016. Mr. Tenev was grilled by Elon Musk over trading curbs on shares of GameStop and other companies.
Credit…Brendan Mcdermid/Reuters

“This has been a very surreal weekend and week for me.”

So said Vlad Tenev, the chief executive of the online brokerage firm Robinhood, in a public conversation with — of all people — Elon Musk about the challenges his company has faced amid the run-up in stocks like GameStop’s, the DealBook newsletter reports.

Mr. Tenev opened up on the social network Clubhouse late on Sunday about what led Robinhood to impose curbs on trading shares in GameStop and other companies last week,
drawing outrage from customers and politicians alike.

Last Thursday, an arm of the Depository Trust and Clearing Corporation, Wall Street’s main clearinghouse for stock trades, had demanded $3 billion in additional collateral — “an order of magnitude” more than usual, Mr. Tenev said — to cover risky trades by its customers.

That demand was later reduced to about $700 million, but Robinhood was still forced to draw down credit lines from banks and raise $1 billion from existing investors.

“This was nerve-racking,” Mr. Tenev said.

Mr. Tenev said the clearinghouse’s decision was based on “an opaque formula,” but sought to dispel persistent rumors that Wall Street elites were behind the move. Mr. Musk, a noted provocateur on Twitter, asked whether “something really shady” was behind the collateral demand. “You’re getting into conspiracy theories a little bit,” Mr. Tenev answered, and added that other brokers were also asked to post additional cash.

“We had no choice, in this case,” Mr. Tenev said. “We had to conform to regulatory capital requirements.”

The Robinhood chief also disputed speculation that his brokerage firm had imposed the trading curbs to aid Wall Street partners, including the big financial firm Citadel, whose brokerage arm executes most of its trades and whose hedge fund had invested in a fellow investment firm that had been betting against GameStop’s share price.

When Mr. Musk asked whether Robinhood was “beholden” to Citadel, Mr. Tenev shot back, “That’s just false.”

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