Lastly, Wall Street analysts remain majority bullish on Birkenstock (BIRK) while initiating coverage almost a full month after the German footwear brand's IPO.
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- Citigroup reportedly considering job cuts of at least 10% in several major businesses. CEO Jane Fraser has been working to cut costs and previously said in September that layoffs would be coming. We saw shares they're down, just slightly about 5/10 of a percent.
Josh, this is based off of reporting from CNBC, they've put that 10% number out there. That's new. We know that Jane Fraser since she took over in 2021 has really been assessing the landscape here for what is the third largest bank. It is all about returns for investors, they haven't gotten that. And when you consider the current landscape, at least, the thinking reported by CNBC is that you've got to go with the cost cutting because there are not a lot of levers they can pull if they're talking about 11% to 12% return, which is what Jane Fraser has announced in terms of the goal or target.
- Yeah, so the CNBC is saying, listen, it could be at least 10%, and Citi has about 240,000 employees, so that would be obviously a pretty deep cut. It sounds like we probably won't know for sure, Akiko, until about Fraser's plan here until the bank announces Q4 earnings in January.
But remember, Fraser vowed to boost Citigroup's returns to at least 11% in the next few years. Mike Mayo-- Wells Fargo, we know Mike very well. He was telling CNBC on this report, not one investor I've spoken to thinks they'll get to that return target in '25 or '26 he says, and if they can't generate returns above their cost of capital, which is typically around 10%, they have no right to stay in business. So Mike talking tough. That's why we like Mike.
- Tough words.
- Yeah, tough words. All right, moving on, let's switch gears here EV giant Tesla reveals Giga Berlin may build its long awaited cheap electric vehicle. This comes as Tesla workers in Germany may be getting a raise as union pressures rise. Shares here in today's trade, were down about 3/10 of a percent.
Meanwhile, EV maker Lucid may be forced to slow production as losses mount. That's according to Bloomberg Intelligence. So a couple different EV stories today. The Tesla one was interesting, he goes this is basically a more affordable Tesla could be on the way. Reuters saying Tesla will produce a new model, it's going to cost about $27,000.
We didn't actually get any kind of timeline here of when production would actually start, but I guess you could argue-- you could see the strategy of it. You could bring it out, like in Germany where the economy sort of just kind of limping along there. If you had a more affordable car, in theory, at least, maybe that finds demand.
- I mean, there is a broader threat that's happening in the EV space and as Frey kind of touched on it before the break where she was talking about lithium prices coming down. It is about softening EV demand. For Lucid, it's become even tougher, if we pivot to the other EV name we're watching today because consumers are turning more cautious. We're talking about a car that is well above $70,000.
Lucid reporting just 1,457 deliveries for the third quarter. They've gone ahead with promotions, they've tried to be really aggressive in some of these price cuts. It's going to be an interesting call tomorrow when they report those results because things are not necessarily looking great in this space.
- Yeah, right.
- Tesla is more sort of a mass vehicle. Lucid is very, very select when you think about the higher price point that they offer, it's not just about softening demand. But consumers are not going to be taking on a loan with higher rates as well.
- Yeah, you bring up really. The sentiment does-- it has shifted. Because as you point out, so you have this demand issue higher rates, you slashed prices, but of course, that has pressured profit margins and you've really seen investors react when you look at the stocks of some of these names going forward here.
- Let's talk about another brand that Josh and I like to wear-- Birkenstocks. Analysts are initiating their coverage on Birkenstock less than a month after its IPO. Wall Street brokerages largely giving the shoe manufacturer their top ratings. Morgan Stanley saying the positives are largely priced in. Specifically looking at JP Morgan here overweight rating, equivalent of a buy with a target of $48.
BMO Simeon Siegel coming out with an outperform stock. He's saying, our outperform rating, I should say $50 price target. UBS is Jay Sole, which by the way, has the best name for any analyst who covers shoes. What a few, analysts, who are a little more cautious with a hold call saying this is largely about valuation that yes, there is growth potential here for the company, but that's already been priced into the stock.
- Yeah, I'm a big Birkenstock guy, as you know. I have two pair. But just so America understands. Akiko actually has four pair, which puts me to shame, obviously. I mean, I thought I was a Birkenstock guy, but I didn't come close.
- I mean, four pairs. There's a lot of collaborations that come out. A lot of opportunity. Some of these are very limited. The exclusive Birkenstocks are the ones--
- Let me ask you. When you move up the exclusivity ladder, does it stay comfortable, though? Are they so--
- It's the same Birkenstocks.
- So same deal?
- That's what's great. You've got a premium brand--
- The fashion and the comfort. All in one.
- There you go. And then you have an excuse to wear those Birkenstocks. You can say like, it's a brand collaboration.
- Yeah. Last question. Do you wear yours with socks? That's always the question.
- No, no. I'm not there yet.
- I'm there. I'm married so it's fine. It doesn't matter. Yeah.
- In the winter. In the winter, I don't know.