Ford, Fanatics, and the Fed
Fanatics becomes the NHL's newest jersey supplier, Ford unveils new reporting methods and huge EV losses, and the Fed hikes rates among banking turmoil
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Highlights:
Fanatics signs a 10-year deal with the NHL for official on-ice rights.
Fed raises rates by 25 basis points as banking turmoil unfolds.
Ford unveils new reporting methods and losses of over $2 billion in EVs.
NHL announces Fanatics as jersey supplier
After a seven-year run with Adidas, the National Hockey League has tapped Fanatics to supply the league’s uniforms over the next ten years.
The NHL’s Commissioner Gary Bettman stated, “Fanatics is a sports industry market leader and with its proven track-record in e-commerce and retail operations ... our players and fans should look forward to what Fanatics will bring to the best uniforms in all of sports.”
Fanatics is spearheaded by former part owner of the Philadelphia 76ers in the NBA and New Jersey Devils of the NHL, Michael Rubin. The billionaire sold his stakes in both teams to free himself from conflicts of interest as he worked to scale Fanatics, and scale he did. The apparel company has made major moves such as the acquisitions of Topps and Mitchell & Ness.
This most recent move gives Fanatics nearly full access to the NHL’s over 90 million customers globally. Fanatics and the NHL’s relationship stretches back to 2018 when the company began supplying the league’s performance and training gear as well as headwear for players and coaches.
Rubin commented on the deal saying, “Everything we do as a company pushes the boundaries to create more highly engaged experiences and revolutionary products for fans, athletes, and partners, and I can’t wait to see our brand on official on-ice uniforms for the first time.”
Fed raises rate by 25 basis points
Rate Hike
On Wednesday the Federal Reserve announced it would raise the federal funds rate by 0.25%. The move comes amid an intense debate within the finance community surrounding the necessity of a rate hike given the stress the financial system has experienced over previous weeks.
On financial system stress, Powell commented that the system is “sound” and while the FOMC did consider pausing, they decided to raise given the stronger-than-expected data that came in prior to the events.
The Federal Open Market Committee (which enacts rate hikes) noted, “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.“ This is in contrast to the previous verbiage that stated “ongoing increases” could be appropriate to reduce inflation.
Jerome Powell, the Federal Reserve Chair, stressed “The process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.”
Interest rate outlook
The FOMC also released its projections for interest rates moving out to 2025. The projections can be taken with a grain of salt given they assume economic conditions stick to the script.
The Fed Dot Plot shows rates peaking at 5.1%, projecting just one more hike this calendar year. Median rates then fall to 4.3% in 2024, 3.1% in 2025, and 2.5% in the long run. These values are little changed from December 2022 projections.
Ford’s EV business lost $2 billion in 2022
Ford Motor Co. F 0.00%↑ revealed for the first time how each subset of vehicles has performed financially. This is part of the reorganization the auto manufacturer announced in March of 2022.
Ford unveiled updated versions of their 2021 and 2022 financial results with the company’s new customer-facing business units:
“Ford Blue” which houses gas-powered and hybrid vehicles
“Ford Model e” home to electric vehicles
“Ford Pro” serves commercial customers and governments
Additionally, investors will be given insights into:
“Ford Next” home to non-automotive mobility solutions and other tech
“Ford Credit” the automotive company's financial services subsidiary
As shown above, Ford displayed past years based on their updated reporting standards. These insights show how Ford lost over $2 billion while working to grow their EV lineup in 2022.
The question for shareholders now shifts to how will Ford get the “EV startup within [their] company” to profitability.
When will Fanatics IPO?
Should the Fed have raised interest rates?
Will Ford's new reporting method have any material impact on the business?
A Fanatics IPO won’t happen until late 2024, early 2025.
The IPO market is on shaky footing currently and economic worries might lead private companies away from that option (they go for seed round option.)
I do agree with the Fed's rate hikes, and would not be surprised if they raised another 25 basis points. I think we should also be paying attention to just how out of sync the bond market and Fed projections are on future rate hikes. With the Fed forecasting no cuts this year and the market forecasting several, someone will be wrong, and if it is the market, that won't be a good look for stocks. I do think the Fed sees bank failures as a sign of de-risking in the markets, and unless this threatens major institutions, won't let it stop them from raising.