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Netflix Stock Bombs After Critical Miscalculation

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Netflix’s share price, which had more than doubled since the start of the year, tumbled after the company admitted that subscriber growth is beginning to slow down. In a letter to shareholders, the company said subscriber growth between April and June had been 5.2 million—1 million below its prediction, CBS News reports. The company said it had “over-forecasted” subscriber numbers in the “strong but not stellar” quarter, reports Reuters. Shares dived nearly 14% in after-hours trading following the letter, wiping around $25 billion from the company’s market valuation.

McDonald’s Sued for $5M Over 2 Slices of Cheese

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They didn’t want cheese on their Quarter Pounders. They claim they had to pay for it anyway—a cost of up to $1—and now want $5 million for the trouble. That’s according to a new lawsuit filed by two Florida residents against McDonald’s, which should be used to such fights by now. It came after Leonard Werner says he realized McDonald’s was repeatedly charging him for a Quarter Pounder with Cheese, but giving him a cheese-less sandwich, as he requested. “I started talking with some lawyer friends, saying, ‘What’s the deal? They can charge for something I didn’t get?‘ It’s not right,“ Werner says, per the South Florida Sun-Sentinel. According to Werner, McDonald’s restaurant menus no longer feature a cheese-less Quarter Pounder, but its app menu does, at a reduced cost of 30 cents to $1.

Restaurant customers are therefore “being forced to pay for two slices of cheese, which they do not want, order, or receive, to be able to purchase their desired product,“ the suit says. One of the attorneys who filed the suit, which is seeking class-action status, explains people who order a Big Mac with items left off “are not entitled to a credit against the purchase price” because the burger is trademarked according to its ingredients, per the Miami Herald. He says that’s not the case with the Quarter Pounder, since a cheese-less option is sold. Another lawyer involved says up to 25 million customers may have been overcharged and could be eligible to receive $10 and a free sandwich should a judge side with the plaintiffs. McDonald’s doesn’t expect that to happen, claiming the suit is without legal merit.

McDonald’s dollar menu replacement fuels industry price war

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McDonald’s Corp., the world’s largest restaurant chain, unveiled its new value-priced menu on Monday, aiming to keep its lead in an industry that’s increasingly racing for the bottom. The lineup, set to go live on January 04, includes items such as chicken tenders, Happy Meals, sodas, triple cheeseburgers and the Egg McMuffin.

With visits to U.S. fast-food restaurants seen remaining flat next year, the major chains are jockeying for position and announcing discounts to keep diners’ attention. Taco Bell, the Mexican-themed chain owned by Yum Brands, is responding with what it calls its “biggest value push in company history.“

The new offering at McDonald’s, which will run alongside the regular menu at restaurants, is a balancing act for the Golden Arches. If items are priced too high, customers feel like they’re getting ripped off and head to competitors. But if the prices are too low, McDonald’s own franchisees will do the grousing.

That was the case with the company’s Dollar Menu, which was phased out in 2013. McDonald’s operators thought it weighed too heavily on profit margins, but the menu was popular with customers. And its absence was felt. The demise of the Dollar Menu was seen as a contributor to a sales slump that lasted two years.

This time around, McDonald’s thinks it has a formula that can keep franchisees happy. More than 90 percent of restaurant owners have signed up to participate in the program, according to Chris Kempczinski, who runs the company’s U.S operations.

“You have to make sure it’s something we can sustain,“ he said in an interview.

Andy Barish, an analyst at Jefferies, upgraded the stock to “buy” on Tuesday and raised his price target to $200, in part because the new value menu will help the chain continue to gain customers.

McDonald’s shares climbed as much as 2 percent to $174 in New York Tuesday, in the biggest intraday gain in more than two months. The stock had already climbed 40 percent this year through Monday.

McDonald’s announced in October that it was planning the menu, though it didn’t give details until Monday. The idea is to shore up a comeback built on the success of all-day breakfast and more targeted discounts like McPick 2 for $5.

When the new menu hits next month, customers will be able to get a handful of options for $1, $2 or $3. The cheapest items include sodas, McChicken sandwiches, a sausage burrito and cheeseburgers. The sausage McMuffin with egg is on the menu for $3, alongside a new chicken sandwich. And the company’s buttermilk chicken tenders, which sold out last month after a brief run, are returning to the menu – with an order of two costing $2.

One popular item that’s absent is french fries. Kempczinski said the company spent months trying to figure out the best way to construct the new menu and ultimately decided it was compelling without fries.

“We didn’t need fries to make it attractive,“ he said.

Taco Bell, meanwhile, is seeking to remain in the mix as McDonald’s and its burger rivals at Wendy’s and Burger King increasingly look for ways to appeal to the core fast-food customers looking for discounted fare.

Shares of owner Yum were little changed Monday at $83.32.

Taco Bell is reminding customers that it has a $1 menu with 20 items, and this lineup will be boosted by 20 more limited-time offerings in 2018. The menu will include nacho French fries and a new “stacker” quesadilla – beef and cheese in a folded flour tortilla.

“I think a lot of places begrudgingly try to figure out what food to serve at these price points,“ Brian Niccol, the chain’s chief executive officer, said in an interview. “We choose to lean into it.“

GM could launch its own autonomous ride-hailing service as early as 2019

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A General Motors executive said Friday that the company is rushing to launch autonomous vehicles for a ride-hailing service that could compete with Uber and Lyft, the latest example of how aggressively the legacy carmaker is pushing to stay at the forefront of automotive innovation.

GM says those robotic vehicles – battery-powered Chevy Bolts that are being developed by Cruise Automation, a subsidiary – will appear on American streets without a driver in 2019.

The company said vehicles will not have human backup drivers.

The ambitious timeline could place GM in an enviable position: with the unique ability to provide existing ride-hailing companies like Lyft or Uber with a growing fleet of autonomous vehicles or, better yet, to unleash their own service. Using their vast dealership networks, nationwide influence and manufacturing prowess, a GM-driven ride-hailing service may be positioned to leapfrog the Silicon Valley startups that have been trying to disrupt the auto industry. GM has invested $500 million in Lyft, which did not respond to a request for comment.

“We have been committed since we first started talking about our efforts and when we purchased a portion of Lyft to building self-driving cars that operate in a ride-sharing environment,“ Ray Wert, head of Storytelling and advanced technology communications at General Motors, said. “We’re very happy with how the technology is progressing and given that we feel we have the capability to move forward with one partner, many partners or no partners at all.“

“We will pick the solution that helps us achieve our mission of safely developing and deploying self-driving cars at scale,“ Wert added.

GM hasn’t said where it plans to launch autonomous ride-sharing fleets or how many vehicles they might include, but the company’s chief executive Mary Barra, said this week that they believe the “biggest opportunities are in the coastal areas.“

The car-maker is already testing autonomous vehicles on busy San Francisco streets – as well as in Phoenix and its hometown, Detroit. At those locations, engineers have a chance to refine the vehicle’s self-driving capabilities and the still-precarious rider experience ahead of the ambitious deadline. Instead of testing its vehicles on a closed course or a “simple suburban setting,“ Wert said, the company has opted to test the vehicles in an environment that resembles where they’ll actually be deployed. Real-world conditions, company officials believe, accelerate the technology and unlock economic opportunity.

“That’s why we’re committed to the aggressive timelines that we’re committed to,“ he said. “The faster we can do that the greater impact we can have on society.“

GM is far from the only traditional automaker investing in autonomous technology and ride-hailing services. Last month, Volvo announced plans to provide Uber with up to 24,000 vehicles for a fleet of driverless taxis that are expected to appear on American streets in 2019.

Google’s Waymo, German automaker Daimler and Ford are also developing self-driving cars that would be available for ride-sharing services.

GM considers autonomous vehicles the “biggest business opportunity since the creation of the internet,“ a market with with multitrillion dollar potential that goes hand-in-hand with electric vehicles.

In a note to clients Friday, Barclays analyst Brian Johnson wrote that instead of the “overly-aggressive timelines pushed by Tesla,“ GM’s ability to launch autonomous vehicles for a ride-sharing service now “seems possible.“

“The tech is real,“ he wrote, noting that GM’s vehicles will be “monitored by humans at a control center” and the company will benefit from their aggressive timeline.

After joining a test-drive in one of the prototypes, Johnson said the car was “impressive.“

“There were no disengagements,“ he wrote. “While the vehicle drove conservatively (i.e., taking time, strictly obeying speed limits, checking carefully at both sides before turning at an intersection), we’d also note that the driving environment was quite complex.“

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