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Good morning readers. TikTok just took one step closer to getting banned in the U.S.. Yesterday, the Senate advanced a package to provide billions in aid to Israel, Ukraine and Taiwan. Tied to that bill? Several other foreign policy proposals, including a measure to force TikTok parent company ByteDance to sell the social media platform or face a national ban of the app. “It is unfortunate that the House of Representatives is using the cover of important foreign and humanitarian assistance to once again jam through a ban bill that would trample the free speech rights of 170 million Americans,” a TikTok spokesperson said Saturday following the House’s passage of the bill. The bill is now off to President Biden who’s almost certain to sign it into law.

Let’s jump into today’s storylines.

In today’s digest:

• Tesla stock sores despite missing estimates

• Headline Hustle: Tabloid publisher testifies on Trump ‘catch-and-kill’ deal, FTC bans noncompete clauses nationwide, Caitlan Clark signs $28 million sneaker deal with Nike

• Doping is under the microscope heading into the Paris Olympic Games

• Pulse Points: What’s Trending

TECH

Tesla's slumping revenue doesn't stop Musk from shifting gears

Tesla's latest earnings report came with a 9% drop in first-quarter revenue, the biggest dip since 2012, thanks to ongoing price cuts and fewer car sales. But while the electric vehicle giant missed Wall Street's estimates, the stock still surged in after-hours trading when CEO Elon Musk hinted at something big.

Why did the stock surge?

Investors have their hopes pinned on Tesla's new affordable EV models, which Musk says could start production much sooner than expected—possibly in early 2025, if not by the end of this year. This unexpected twist boosted investor confidence, despite the disappointing financials.

Here's what the company reported compared to what analysts expected, based on a survey by LSEG:

• Earnings per share: 45 cents adjusted vs. 51 cents expected

• Revenue: $21.30 billion vs. $22.15 billion expected

Revenue fell from $23.33 billion a year earlier, with net income dropping 55% to $1.13 billion. The decline was even steeper than during the Covid-19 disruptions in 2020. Tesla's automotive revenue slid 13% year over year to $17.38 billion.

Price cuts, layoffs, and challenges

Tesla's been slashing prices on its vehicles, trying to stay competitive amid slowing EV sales and strong rivals, particularly in China. Despite this, gross profits dropped 18% in the first quarter, partly due to price cuts and the restructuring that led to over 10% of the workforce being laid off.

Musk also mentioned Tesla's continued investment in AI infrastructure and hinted at a deal with “one major automaker” to license its Full Self-Driving (FSD) technology. This partnership could add much-needed revenue streams for Tesla, given its rocky first quarter.

The road ahead. Musk tried to put a positive spin on the situation, stating that "Q2 will be a lot better." Tesla plans to fully utilize its current production capacity and aims for more than 50% growth over 2023 before investing in new manufacturing lines. But with the challenges stacking up, Tesla has its work cut out to get back on track. Whether Musk can steer the company through this rough patch remains to be seen.

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IN THE KNOW

Headline Hustle

🤫 Tabloid publisher testifies on Trump ‘catch-and-kill’ deal. In the ongoing trial involving former President Donald Trump, tabloid publisher David Pecker testified about a clandestine deal made with Trump and his lawyer Michael Cohen nearly a decade ago to suppress potentially damaging stories about Trump. The arrangement, aimed at influencing the 2016 election, involved the practice of "catch and kill" to silence individuals with negative tales about Trump. Pecker's testimony, corroborating Cohen's previous accounts, sheds light on the alleged criminal conspiracy orchestrated by Trump, Cohen, and Pecker. As the trial progresses, Pecker's testimony is expected to provide crucial insights into discussions surrounding hush-money payments to individuals like Stormy Daniels.

🤝 FTC votes to ban noncompete agreements for most workers. The Federal Trade Commission (FTC) has taken a significant step by voting 3-2 in favor of a nationwide ban on noncompete agreements. President Joe Biden has voiced support for the move, emphasizing workers' rights to choose their employers freely. The new rule, once implemented, will invalidate existing noncompetes for all employees except senior executives earning above a certain threshold and holding policy-making roles. The FTC says the reason behind the rule is that noncompete clauses stifle wage growth, hinder innovation, and constrain economic dynamism.

👟 Caitlan Clark signs $28 million sneaker deal with Nike. Caitlin Clark is poised to debut her own Nike sneaker in the WNBA, reports say. After dominating college basketball and landing the top WNBA draft pick, Clark is reportedly signing an eight-year, $28 million deal with Nike. While Nike has not commented, Clark's endorsements, including State Farm and Gatorade, are valued at $3 million. These deals will be crucial, given her rookie WNBA salary of $76,535, significantly lower than top NBA picks. Nike's move underscores efforts to boost its women's sports segment.

SPORTS

Doping drama dips into the deep end as Paris Olympics loom

A scandal over 23 Chinese swimmers testing positive for a banned substance before the 2021 Tokyo Olympics has reignited the debate about global anti-doping measures, casting a shadow over the upcoming Paris Games.

The swimmers tested positive for trimetazidine, a heart drug, during the Chinese national championships in early 2021, but were allowed to continue competing after Chinese officials cleared them and the World Anti-Doping Agency (WADA) decided not to pursue the matter.

Here's where it gets messy

China’s anti-doping authority, Chinada, claims the athletes ingested the drug unintentionally through tainted food at a hotel. WADA, unable to investigate on the ground due to Covid-19 restrictions, accepted this explanation. Critics, however, aren’t buying it. Many question how a prescription drug ends up in a kitchen hotel to begin with. And probably the more important question, why wasn’t WADA more aggressive in its investigation?

The lack of clarity has sent shockwaves through the Olympic community, raising concerns about WADA's credibility and the integrity of the Games.

• U.S. Anti-Doping Agency (Usada) chief executive Travis Tygart didn't mince words, accusing WADA of sweeping the positives under the carpet and failing to enforce global rules.

• In response, WADA called Tygart's remarks "completely false and defamatory," stating that they acted appropriately under difficult circumstances.

The fallout. The 23 Chinese swimmers accounted for half of China's Tokyo team and five out of six medals, including all three golds. This revelation has reignited worries about anti-doping authorities being too lenient, especially given the Russian doping scandal's ongoing legacy. WADA insists that the low levels of trimetazidine detected in the Chinese swimmers' tests were consistent with accidental ingestion and did not improve performance.

SNIPPETS

Pulse Points

• Google announced it will not meet its end-of-year target to change advertising delivery in Chrome due to challenges in aligning feedback from the industry, regulators, and developers, delaying the elimination of third-party cookies.

• Major AI companies such as OpenAI, Meta Platforms, and Google have agreed to implement new safety measures to protect children from exploitation and strengthen their current defenses.

• X, previously known as Twitter, is set to launch a dedicated TV app for video content, with an interface similar to YouTube, as announced by CEO Linda Yaccarino.

• Amazon has launched a new unlimited grocery delivery subscription for Prime members and EBT cardholders in the U.S., available in 3,500 eligible cities and towns.

• A new Mozilla study reveals that dating apps are increasingly collecting more data and compromising privacy, particularly to attract Gen Z users, according to their latest report.

• Microsoft has launched Phi-3 Mini, the first in a series of three planned lightweight AI models.

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