Market News: SVP Crisis, FirstGroup Raises Profit Guidance, BP CEO’s Pay Doubles, Disney+ to Raise Prices

SVB Financial Group Seeks Fresh Capital

SVB Financial Group has seen shares drop 44% to $58.91 in premarket trading on Friday as it rushes to raise fresh capital. The sell-off comes after the company revealed it would book a $1.8 billion after-tax loss on sales of investments and seek to raise $2.25 billion by selling common and preferred stock. The banking sector has been hit by fears that other institutions will be forced to take losses to raise cash, with the four biggest US banks losing $52 billion of market value on Thursday alone. European banks also saw a sell-off, with Deutsche Bank stock falling 8% and Société Générale and HSBC both dropping 5%.

European Banks Hit by US Sell-Off

European banks saw a dip in their shares on Friday following the $52.4bn sell-off of US bank shares. Deutsche Bank (XE:DBK) experienced an 8% drop in its stock, while Société Générale and HSBC (LSE:HSBC) both fell 5%. The sell-off in US bank shares was triggered by losses at Silicon Valley Bank, a small technology-focused lender that revealed a $1.8bn loss on the sale of securities. As a result, investors feared the value of banks’ bond portfolios and falling deposits, leading to sell-offs of JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) shares. The Stoxx Europe 600 Banks index plunged by up to 4.5% on Friday, hitting its lowest point in over a month.

FirstGroup Raises Profit Guidance

London-listed FirstGroup (LSE:FGP) has raised its profit guidance as the number of people using public transport over the winter exceeded expectations. The company said its profit would be ahead of previous expectations for its 2023 financial year, which ends in March. Analysts had forecast an adjusted operating profit of £137.4mn for 2023. Bus passenger volumes have returned to 83% of 2020 levels, driven partly by government initiatives including a £2 fare cap in England and free bus travel for people under 22 in Scotland.

BP CEO’s Pay Doubles

BP (NYSE:BP) CEO Bernard Looney’s pay more than doubled to £10mn last year after the company delivered a record $28bn in profits. The pay package included a base salary of £1.27mn, an annual bonus of £2.37mn paid in cash and shares, and a long-term share award worth £6.01mn for performance over the past three years. The remuneration committee reduced the annual bonus and long-term share award by a combined £746,000 due to four fatalities at BP facilities during the year.

Disney+ Plans to Achieve Profitability

Disney (NYSE:DIS) CEO Robert Iger has revealed plans to achieve profitability in the company’s streaming business, hinting that Disney+ could raise prices and begin licensing its streaming content to competitors. Iger said he was “extremely bullish” on Disney+, but predicted that subscriber growth would slow as the industry pivots to a focus on profits.

G4S Executives’ Prosecution Abandoned

The Serious Fraud Office has abandoned its prosecution of three former executives at outsourcer G4S (LSE:GFS) for allegedly defrauding the British government over a prisoner-tagging contract after delays left the case in turmoil almost a decade after it began. The SFO had charged Richard Morris, Mark Preston, and James Jardine, former executives in G4S’s care and justice business, with seven offences of fraud each relating to allegedly false representations made to the Ministry of Justice between 2009 and 2012.

SEC Holds Execs Accountable

The Securities and Exchange Commission (SEC) has been cracking down on executives who manipulate financial results to meet targets, resulting in several high-profile cases in recent months. As companies face increasing pressure to report strong earnings, the SEC’s EPS Initiative uses data-driven analytics to detect earnings manipulation. The initiative has already led to enforcement actions against six companies and numerous individuals, including five former or current chief financial officers. The SEC is particularly focused on holding individuals accountable to deter future misconduct, even for seemingly minor accounting adjustments that could result in legal action.

Options Trading Surges During Pandemic

American options trading has surged since the start of the COVID-19 pandemic, with daily trades reaching record highs. The number of options traded per day rose from 20 million to 30 million in early 2020 and spiked again to 40 million in early 2021, driven in part by the GameStop (NYSE:GME) frenzy. Retail traders have been active in the options market, with a forthcoming paper in the Journal of Finance revealing that they account for 48% of trading volume, buying twice as many calls as puts. However, institutional investors still dominate trading in puts, which are bets that a security’s price will fall and can be used to limit risk, particularly on market indices.

FTC Investigates Twitter Compliance

Twitter Inc. faces significant legal risks as the Federal Trade Commission (FTC) investigates the company’s compliance with a 2011 order and new, more-intrusive sanctions agreed to in a $150 million settlement last year. The FTC is scrutinizing Elon Musk’s involvement in high-profile decisions, including massive layoffs, changes to Twitter’s features, and sharing internal company records with journalists. Unlike most private companies, Twitter is under an FTC order due to previous violations of user privacy and security. The investigation highlights the potential consequences of breaking FTC orders and raises questions about Musk’s influence over the company’s strategic direction.

German States Reconsider Palantir Use

German states are reconsidering the use of Palantir’s (NYSE:PLTR) software amid mounting concerns over data privacy. The US tech firm’s expansion plans in Europe are being hampered as two German states, Bavaria and North Rhine-Westphalia, revealed they are reassessing their use of Palantir’s software. This follows a recent ruling by Germany’s Federal Constitutional Court that deemed laws permitting data mining by police forces to be too wide-reaching and an infringement of individuals’ privacy. The decision has already prompted Hamburg and Hesse to overhaul their use of Palantir’s software.