The market for initial public offerings (IPOs) has struggled to see the same enthusiasm it had in 2021, when 397 offerings raised $142.4 billion in proceeds. While 2026 has gotten off to a slow start — 71 IPOs have raised $35.7 billion — a string of highly anticipated offerings is signaling renewed excitement for IPOs.

First up was the SpaceX IPO, Elon Musk's space and exploration company going public in the largest offering ever and SPCX stock now trading on the Nasdaq.

The Kiplinger team is reported on the SpaceX IPO, bringing you the news and our expert analysis of what this means for the stock market, the economy and your money. Scroll for the updates.

Should You Buy SPCX Stock? | Hot Upcoming IPOs to Watch | The Space Sector Prepares to Blast Off

What is SpaceX?

Elon Musk founded SpaceX in 2002, intending to lower costs for space launches and eventually build a livable colony on Mars. The company had its first successful space launch in 2008 and has since had more than 650 total launches. It also wants to build data centers in space.

"A key to its success has been a relentless focus on innovation," writes Kiplinger contributor Tom Taulli in his feature on the hottest upcoming IPOs to watch for. "The company's breakthroughs include reusable orbital rockets, which have greatly reduced the costs of space flights; vertical rocket landings; and onboard autonomous systems."

In 2015, SpaceX moved to diversify its revenue stream with Starlink, a satellite internet project that today provides coverage to roughly 10 million customers across 160 countries and territories. It also has contracts with the U.S. Department of Defense to provide satellite service through its Starshield segment to government and military organizations, including with Ukraine during its war with Russia.

Geopolitical conflicts are increasing the demand for satellites, and the conflict in the Middle East shows "how space tech is crucial for missile warning and tracking, communications, surveillance, drone and vehicle connectivity, and more," writes John Miley, senior associate editor at The Kiplinger Letter.

SpaceX also bought xAI, Musk's artificial intelligence (AI) company that owns X (formerly Twitter), in February 2026 in an all-stock deal valued at roughly $250 billion. In May, Musk announced that xAI is fully absorbed by SpaceX and will rebrand as SpaceXAI.

According to its S-1 filing, which became publicly available on May 20, SpaceX had revenue of $4.7 billion in the three months ended March 31. It also incurred a loss from operations of $1.9 billion and had adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.1 billion.

In 2025, the company's revenue totaled $18.67 billion, while adjusted EBITDA arrived at $6.58 billion.

SpaceX is poised to benefit from surging growth in the global space economy, which is expected to reach $1 trillion by 2034, according to Novaspace, up from $626 billion in 2025. "The U.S., led by SpaceX launching 85% of spacecraft into orbit and its Starlink Internet service, reaps most of the business," says Miley.

- Karee Venema

Space is hard

One thing I've heard over and over again from space analysts, investors and executives: "Space is hard."

The industry mantra may seem like a tired cliché or even an excuse for mishaps and bad business decisions, but it's true. The incredibly capital-intensive industry requires extraordinary feats of engineering and technology. Things can go wrong suddenly, as seen in the recent explosion during a Blue Origin engine test. Funding could dry up as timelines get extended and revenue is slow to appear.

So, when looking at the space sector, keep in mind that delays are common and outright failures happen. Or, to echo another industry cliché, it's literally rocket science.

- John Miley

How to buy the SpaceX IPO

Allocations of IPOs — especially hot ones — typically go to institutions and wealthy investors. This is a way for investment banks and brokerages to reward their best clients. This usually means that allocations for retail investors are small, say 5% to 10% of the number of shares issued.

But with the upcoming SpaceX IPO, the script will be different. The company has set the allocation up to 30%, or about $23 billion in market value.

Here are the brokerages that have been assigned to distribute the shares:

• E*Trade
• Fidelity
• Schwab
• SoFi
• Robinhood

Each firm has its own requirements. Yet there is a general process for retail investors to buy SpaceX shares.

• Investor questionnaire: You will need to fill out a form that gauges whether you meet the firm's eligibility criteria. This might include an account minimum, investor experience and risk tolerance.
• Offer: The firm will provide access to SpaceX's prospectus, which is the disclosure document for the IPO. You will then submit an indication of interest or conditional offer — that is, the number of shares you want to buy. This is for a price range. When the IPO is priced, which typically happens the night before the public offering, you will confirm the indication of interest.
• Allocation: On the day of the IPO, the firm will notify you if you received shares.

Keep in mind that you are not guaranteed to receive shares. If there is substantial demand for the offering, there may not be enough for the retail investors who submitted their indications of interest. Furthermore, each firm will have its own procedures for allocations. For example, if an investor "flipped" a prior IPO, which is when they sold shares soon after the offering, they may not get an allocation.

Then again, some firms have fairly straightforward approaches. In the case of Robinhood, it's solely based on a random allocation.

- Tom Taulli

What is the SpaceX IPO share price?

On June 3, SpaceX updated its S-1 filing to show that it priced its offering at $135 per share. Based on the roughly 555.6 million Class A shares it is selling, SpaceX will raise $75 billion, easily making it the biggest U.S. IPO ever. Chinese tech conglomerate Alibaba Group Holding (BABA) currently holds that title, having raised $4.6 billion in its March 2021 offering.

Most companies offer a price range for their offering in the week or so leading up to their IPO and then set a final price the night before their stock begins trading on public markets. And SpaceX could change its price later today, but it's widely expected that the $ 135-per-share price set by CEO Elon Musk last week will be the final offer.

There are likely several reasons for this, including Musk's likely desire to take SpaceX public on his terms.

Additionally, there's massive demand for SpaceX shares. According to some estimates, the IPO is 3.3 times oversubscribed, meaning demand for SPCX stock has more than tripled the number of shares available for purchase. This suggests that shares could see a big first-day pop given the supply-demand imbalance.

- Karee Venema

The SpaceX IPO is increasing excitement around the space industry and consolidation could be coming

Similar to the AI industry, there's immense excitement about space, supercharged by SpaceX's IPO. That's led to venture capitalists betting big on a growing number of start-ups.

Generally speaking, there are too many companies, even as the overall global market is poised to grow. Look for a wave of consolidation as things shake out over the next three to five years.

SpaceX's dominance could be a driving force in this trend as it aggressively seeks to control both traditional and new markets. When SpaceX decides to get involved in a particular segment of space, its competitors get nervous.

- John Miley

SpaceX will not be fast-tracked into the S&P 500

Several exchange operators have recently changed their rules to fast-track inclusion for mega-cap IPOs, including SpaceX.

Nasdaq (NDAQ), for instance, unveiled new "fast entry" rules in early May that allows it the ability to accelerate the time frame in which large companies are added to its Nasdaq-100 Index. Previous rules required that a company wait up to a year before being included in the index, but its new requirements lower the eligibility for inclusion to just 15 days.

"That's important for a number of reasons," explains Kiplinger contributor Dan Burrows in his feature on the Nasdaq's new fast entry rules. "For one thing, the delay stops hedge funds from front-running ETF investors. Under the new rules, hedge funds could buy the stock on the day of the IPO, then flip it to passive investors just 15 days later. That's basically a wealth transfer from long-term index investors to fast-money pros."

Additionally, it forces institutional investors to buy SpaceX shares once the company is included in the indices their index funds track.

But one index that SpaceX will not be allowed fast entry to is the S&P 500. "Based on S&P DJI's Index Committee review of the markets and after consideration of responses received from a wide range of market participants, no changes will be made to the eligibility criteria including financial viability screens, seasoning period, or minimum IWF, for the S&P 500, S&P MidCap 400, or S&P SmallCap 600 as a result of the S&P Dow Jones Indices consultation on the treatment of MegaCap companies," wrote S&P Dow Jones Indices in a June 4 release. "Accordingly, there will be no changes to existing methodology for this index family."

Specifically, S&P Dow Jones Indices chose to keep several rules in place, including one that requires a company to trade on a major exchange for 12 months before being considered for inclusion in an index.

So, while SpaceX shares will likely make their way into several index funds within the next several weeks, they will not be in S&P 500 ETFs for at least the next year.

- Karee Venema

Related content: Invested in Index Funds? Here's What You Need to Know About Mega-Cap IPOs

Just how dominant is SpaceX as a company?

To underscore SpaceX's dominance, consider that it had 165 launches in 2025, vastly more than any other rocket launcher, and launched 85% of global spacecraft into orbit. Its small satellite constellation, Starlink, is by far the leader in
internet speed and customers.

Unlike many space companies of years past, SpaceX is vertically integrated. It makes its own satellites, antennas, rockets, engines and all sorts of other equipment. It will build its own AI satellites, and plans to even start making its own computer chips through a partnership with Intel (INTC). Controlling all aspects of the business gives it an ongoing edge.

Perhaps an underappreciated competitive threat to SpaceX's Starlink is Amazon's (AMZN) upcoming Leo broadband service. I've tracked Amazon's planned mega-constellation over the years, and my impression is that they are very serious about winning consumers, businesses and governments.

Amazon has deep pockets and is touting how its Leo broadband service will integrate with its AWS cloud computing business. It could even offer discounted broadband for Amazon Prime subscribers.

Of course, Amazon must rely on outside rocket companies, including SpaceX, to get thousands of its satellites into orbit.

Blue Origin, which is owned by Amazon founder Jeff Bezos, could help if it starts launching a lot more in the coming years.

But Blue Origin only had two launches last year, failed to put AST SpaceMobile's satellite into orbit in April and had a massive launchpad disaster last month.

– John Miley

What Renaissance Capital's Avery Marquez is expecting from the SpaceX IPO

Few IPOs arrive with the level of anticipation surrounding SpaceX. The company's scale, brand power, retail investor interest and unusual deal structure have already made it one of the most talked-about offerings in recent memory. But the IPO also comes with significant complexity, from expected volatility and staged lockup releases to the possibility of fast-tracked index inclusion.

For perspective on what this could mean for investors and the broader IPO market, I spoke with Avery Marquez, director of Investment Strategies at Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs.

Your thoughts on the prospects for the IPO?

It's hard to contest the general consensus that this will be a hot deal. Forgoing the typical range for a set price is a solid indicator that the deal is already covered, or at least that the company and underwriters are confident in the massive demand this is expected to generate.

Early trading will likely be very volatile, especially with such a large portion expected to go to retail. I've seen reports still indicating up to 30%. I believe the extensive lockup release schedule and "forced buying" by indexes fast-tracking inclusion will also lend to some interesting trading dynamics in the first few weeks and months.

How does this compare to other large IPOs?

I'm partial to say that there is no real comparison. You can look at something like Saudi Aramco, which is the closest example in size, but the dynamics were quite different, given the government involvement and the market's relative opacity (though worth noting that the Tadawul is more transparent now than back in 2019).

In the U.S., Facebook — now Meta Platforms (META) — may be worth comparing, given the size, governance structure and disruptive tech pitch. But the months of hype leading up to the IPO, the intricacies of SpaceX's business, the sheer number of moving parts make this a wholly unusual deal.

What about the lock-up? Implications?

SpaceX's lockup is one of the most complex I've ever seen. Given the float dynamics, it could be framed as a bid to control that potential flow, or maybe it's just a way to give early investors liquidity before the standard 180 days. I do wonder how much overlap there will be between the release schedule and the schedule of indices that will now be fast-tracking inclusion.

How important is this IPO? What might it mean for the expected IPOs of OpenAI and Anthropic?

It's difficult to point to this as a bellwether for broader IPO activity, given how unusual the deal is. It will be a test of demand at scale, however, which will be particularly important for OpenAI and Anthropic, given how much capital they are expected to raise at IPO. Overall, it's going to be a historic test for the IPO market and will show us how much hype or FOMO is being baked into these high-profile names right now.

- Tom Taulli

Blue Origin explosion highlights the challenges facing a heavy launch

As SpaceX moves from the reusable Falcon 9 to the much bigger Starship, it's worth noting the unique challenges of heavy launchers. Starship is nearly 400 feet tall, while Falcon 9 is 230 feet tall. Starship can lift far heavier payloads, but that requires more powerful engines.

The challenge of a heavy launch was on display during the recent Blue Origin explosion. Its New Glenn rocket is also a heavy launcher. After the incident, NASA Administrator Jared Isaacman said on X, "Spaceflight is unforgiving and developing new heavy-lift launch capability is extraordinarily difficult."

In May, Elon Musk said on X that he was confident about Starship's road to commercialization: "The Starship production pipeline is full and will complete roughly 10 more ships and about half that number of boosters this year, so, if something goes wrong, it will not be a major setback, unless the launch stand is destroyed."

Back in 2020, Musk already had a clear view of Starship's importance, saying it "needs to be reusable and rapidly so, designed to be relaunched an hour after landing with zero nominal work."

- John Miley

Elon Musk reveals space's first space-based AI data center

In a video posted on X, Elon Musk talked about his vision for space-based AI data centers. The first one is called the AI1 satellite, which is expected to be 230 feet long and provide 120 kilowatts of compute power.

The AI1 satellite is based on the core foundation of the Starlink V3 system. According to Musk: "The AI satellite is much simpler than a Starlink satellite. The AI satellite is essentially a lot of solar cells, you still need some laser links, but you don't have all of the super complex antennas that you have on a Starlink satellite. The easier one to design for is the AI satellite."

The AI1 satellite is also expected to include Nvidia (NVDA) GPUs to power the AI processing.

In terms of timing, SpaceX expects to launch demonstration versions of the system in late 2027. So it could easily be a few years until the company generates any revenue from this program.

And Musk has a tendency to overpromise.

Still, space-based data centers are likely to gin up lots of excitement for investors. Land-based systems consume enormous amounts of power and are increasingly running into backlash from communities concerned about electricity demand, water usage, noise and local infrastructure strain. But in space, a data center could tap solar power directly and avoid many of these earthly constraints.

- Tom Taulli

SpaceX's big bets won't come in a hurry

The entire space ecosystem hinges on the success of Starship driving down launch costs. Some space business ideas only pencil out if launch costs are lowered to a certain point.

SpaceX has dreams of launching Starships daily or even hourly to send 1 million AI data centers into space. But how much it costs SpaceX to launch Starship and the price it charges outside customers are different. It may use most or all of Starship's capacity on its own orbital data centers.

While SpaceX has drastically lowered launch costs with its reusable Falcon 9, it's not passing all those savings over to customers, since it controls the market. Still, it does continue to have good relationships with all its customers.

Other launchers include Rocket Lab, Arianespace, United Launch Alliance and Firefly Aerospace. Rocket Lab ranked second globally in commercial launches last year with 18.

SpaceX takes the long view and dreams big. I often remind readers that SpaceX is 24 years old. Starlink was announced in 2015, and the first satellites were launched in 2019. It took a long time for SpaceX to get to this point.

When you look over SpaceX's prospectus and investor presentation, you see plans that could take years or decades to happen, including a mission to Mars. SpaceX will keep betting big on missions that will take a long time to pan out, using money from today's successes to fund tomorrow's dreams. Such a strategy carries inherent risk.

Consider that Musk has said, "The whole purpose of SpaceX is to help make life multiplanetary."

- John Miley

Hyperliquid SpaceX perpetual futures signal a big premium to IPO price

Perpetual futures on Hyperliquid, a decentralized blockchain-based trading platform, showed SpaceX shares trading around $168 at last check — a nearly 25% premium to the $135 IPO price. Still, that's down more than 6% from where the SpaceX "perp" was trading a month ago.

Hyperliquid has become a place for traders to speculate on assets such as cryptocurrency and commodities without actually owning them.

"Perpetuals never expire and users can hold positions indefinitely," explains BofA Securities analyst Julie Hoover. "Because there is no maturity, venues employ a funding-rate mechanism to keep perp prices anchored to the spot price. Volume on perps has tripled from ~$30T in 2023 to ~$93T in 2025."

According to BofA, Hyperliquid, in particular, has become popular for its pre-IPO pricing markets. "Like prediction markets gained popularity for calling the U.S. Presidential election, people argue that Hyperliquid is having their moment for accurately predicting IPOs."

If Hyperliquid's pre-IPO pricing of SpaceX perps is accurate, shares could be poised for a big jump when they first start trading.

- Karee Venema

SpaceX's unconventional IPO pricing

Elon Musk has always had a penchant for being unconventional. It has certainly been key to his many successes and his enormous wealth. So it should be no surprise that the SpaceX IPO has taken a different path from the traditional Wall Street playbook.

In a typical IPO, the company and its underwriters set an initial price range, conduct a roadshow, collect orders from investors and then determine the final price based on demand. This process is called "book building." It's a way to gauge investor demand. If the demand is strong, the company will set the deal at a higher price and vice versa.

The SpaceX IPO, on the other hand, has used a fixed price approach. According to Reuters, SpaceX set the IPO price at $135 per share, with plans to sell 555.6 million shares and raise about $75 billion. This would value the company at roughly $1.77 trillion.

The valuation was likely based on SpaceX's own internal assessment of the business and its long-term opportunities. But this was not just about traditional metrics such as revenue, earnings or comparable companies. A big part of the valuation was probably the "Musk factor." He has a long track record of making money for investors, and he has built a large base of loyal retail followers.

Still, the approach carries risks. The IPO is massive, the valuation is aggressive and the markets have been volatile lately. Even for a company like SpaceX, that makes the debut far from risk-free.

- Tom Taulli

The economics of AI data centers

Orbital data centers are unproven, though some companies have already launched prototypes. The economics of AI data centers in space is a big question mark. Can they really compete with terrestrial data centers? SpaceX certainly thinks so.

Consider the vast scale Elon Musk is talking about. Nearly 2,200 tons were launched into orbit in 2024. During a presentation this year, Musk talked about launching 10 million tons into orbit per year to put a terawatt of compute into space yearly.

Sound impossible? Musk's response: "We're confident this is feasible. No new physics or impossible things are required to get there."

Musk also envisions humanoid robots manufacturing satellites on the moon and then using electromagnetic mass driving to send them into orbit. Pursuing these ventures will be enormously expensive.

- John Miley

SpaceX confirms IPO pricing

Shortly before the close on Thursday, SpaceX set its final pricing for its initial public offering, confirming (PDF) that it will sell 5.6 million shares at $135 apiece.

The company also said that it will grant its underwriters a 30-day option to buy up to 83.3 million additional shares of its Class A common stock.

At $135 per share, SpaceX is poised to raise $75 billion in its offering, which will make it the largest IPO ever, easily exceeding the current record holder — Alibaba Group Holding (BABA) and its $21.8 billion offering in 2014. It will also give the company a $1.75 trillion valuation, making it the seventh-largest U.S. company by market cap and just ahead of Musk's other public company, Tesla (TSLA).

- Karee Venema

Stocks close higher ahead of SpaceX's market debut

Stocks closed higher Thursday after President Donald Trump walked back a threat to strike Iran "VERY HARD" on Thursday night and take "total control" of its oil and gas assets.

"Based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved," Trump posted on Truth Social, "I have, as President of the United States of America, cancelled the scheduled strikes and bombings against Iran this evening."

A rebound in chip stocks also helped the broader markets bounce back from early week losses, though AI stock Oracle (ORCL) tumbled sharply after its earnings report on cost concerns.

By the closing bell, the blue-chip Dow Jones Industrial Average was up 1.9% at 50,848, the broad-based S&P 500 was higher by 1.8% at 7,394, and the tech-heavy Nasdaq Composite had added 2.5% at 25,809.

Read more: Dow Adds 929 Points on New Signs of Peace: Stock Market Today

That's it from us today. Join us tomorrow for more updates and insight into the SpaceX IPO.

Stock futures point mostly higher on SpaceX day

The main equity indexes are trading mostly higher ahead of SpaceX's (SPCX) market debut.

At last check, futures on the blue-chip Dow Jones Industrial Average are up 0.3% and the broader S&P 500 are 0.1% higher. Futures on the Nasdaq-100 are down 0.3% lower, though, as Adobe (ADBE) slumps after earnings.

SpaceX gets mixed reviews from Wall Street

One reason there have been few analyst reports on the SpaceX IPO is that the company hired 23 banks for the offering. Keep in mind that they are under strict conflict-of-interest rules and must endure a 25-day quiet period.

But this week, several interesting reports from analysts surfaced that were not part of the IPO syndicate. On the bullish side, New Street Research set a $165 price target on SpaceX shares, representing a 22% premium to the IPO price. This is based on a $195 billion revenue projection for 2030.

Additionally, Oppenheimer initiated coverage on SPCX stock with a Buy rating. The price target: $190.

But Morningstar published a report that was quite bearish. Analyst Nicolas Owens puts the valuation on SpaceX at only $63 per share, or a 53% discount to the IPO price.

"Our valuation is the result of mathematics more than skepticism," says Owens. "With such a wide range of possible outcomes for the company's financial future, we created forecasts and valuations for three scenarios and probability-weighted them."

- Tom Taulli

What time will SpaceX stock start trading?

SpaceX stock will likely start trading on the Nasdaq this afternoon. New stocks typically make their market debut after lunchtime, so look for shares to open for trading around 1 pm to 2 pm Eastern Standard Time.

SpaceX IPO will boost funding and attention to space stocks, but investors must be aware of risks

Related to Elon's vision of a Mars mission and taking the long view, here's a quote I have in my notes from a keynote I attended at the 2020 satellite conference in Washington, D.C.: "I hope I'm not dead by the time people come to Mars. If we don't improve our pace of progress, I'm definitely going to be dead before we go to Mars. If it's taken us 18 years to get people to orbit, we have to improve our pace of innovation a lot."

With a huge amount of funding from the IPO, there's no doubt the intense focus on pushing the "pace of progress" will only accelerate.

As I wrote in April, SpaceX's stock listing will bring a new wave of capital to the entire sector, including from a flood of retail investors. Investors in the space sector are bullish about SpaceX's unprecedented stock listing.

The IPO is an "inflection point" for the space industry, said Michael Mealling, general partner at Starbridge Venture Capital, at SatShow. Mark Boggett, CEO of Seraphim Space, said it will pull up valuations across the entire sector.

The heightened attention means that more Wall Street analysts will start covering the sector as space companies are included in more stock funds and more space companies go public.

Investors should know that space stocks can be risky, requiring due diligence, and that the frenzy among investors could outpace the reality of individual businesses.

"I am a little concerned about public market investors looking at the space sector and not understanding the level of risk," said Mealling. "Not every company that goes public is a good company." Mealling also said that having lived through the dot-com bubble of the late 1990s, "I hope we don't replicate that."

- John Miley

Neuberger Berman's Daniel Hanson on why SpaceX fits a quality equity strategy

Daniel Hanson, manager of the $2.1 billion Neuberger Berman Quality Equity Fund (NBSLX), has delivered strong results, with the fund generating an average annual return of 24.2% over the past three years. One of the more distinctive parts of the portfolio has been its pre-IPO investment in SpaceX.

I had a chance to interview Daniel and here's what he had to say:

When did you start buying SpaceX? What were the factors for making the investment? What is the current allocation?

We established the NBSLX position in SpaceX in the second half of 2023 at a company valuation of $150 billion, based on SpaceX's alignment with the Quality Equity investment philosophy. I look for 3 criteria for any Quality Equity investment, all of which SpaceX is aligned with: strong profitable growth, an entrepreneurial management team and an ownership culture. It also has a clear business purpose. The NBSLX fund's pre-IPO private allocation was approximately 7%.

What's your bullish case for the next few years? Drivers?

SpaceX comprises three distinct leadership mega-cap businesses, each of which has a promising growth outlook.

First is the launch business, where SpaceX has an unmatched global lead with the Falcon 9, and exceptional upside with the Starship program.

Second is the Starlink business, currently with 11 million subscribers and rapid growth prospects to add tens of millions of incremental subscribers.

Third is the xAI business, which has both leading proprietary initiatives, including 500 million+ monthly active users on Grok and X.com, with highly profitable third-party data center compute contracts with the likes of Anthropic and Alphabet (GOOGL). There is also its market-leading ambitions to commercialize orbital data centers in the coming years.

Besides SpaceX, does your firm have any other private investments?

Yes, Neuberger has a large private equity business.

The Neuberger Berman Quality Equity Fund was the only direct private pre-IPO owner of SpaceX at Neuberger due to the strong track record of the SpaceX team and the alignment of the business with the Quality Equity investment approach.

- Tom Taulli

How worried should investors be about the "Musk Effect"?

Perpetual futures are indicating a big jump for SpaceX stock when it begins trading this afternoon, last seen trading near $180 — 33% above the IPO price.

Part of this is likely due what many refer to the "Musk Effect. As I told CNET, Elon Musk has the tendency to stoke enthusiasm given the number of extraordinary things he's done, and we're seeing that in the excitement surrounding the SpaceX IPO.

"I don’t think the 'Musk Effect' is some made-up premium ... it's backed by execution over and over again," says David Fetherstonhaugh, senior vice president and investment strategist at VistaShares. "There is something real there."

For SpaceX, specifically, Fetherstonhaugh points to the company's aggressive launch cadence over the past several years. "SpaceX did 25 launches in 2020. Then 31. Then 61. Then 96. Then 134. Then 165 last year. At some point, that is not a cool stat anymore. He is actively pushing the boundaries of multiple industries."

And impressive growth in Starlink revenue, which jumped 50% year over year in 2025, will help fund SpaceX's other initiatives.

Fetherstonhaugh admits that the SpaceX IPO is not cheap, but says that "no other public company that gives you this combination of launch, satellites, connectivity, and full-stack control of space infrastructure." So, if you buy SPCX stock, you're "paying up for execution, speed, and the possibility that the market is much bigger than investors originally thought."

However, buyers should know that the "Musk Effect" goes both ways. Folks were quick to sell Tesla shares and stop buying Tesla cars in early 2025 in part because of a backlash related to Musk's actions and commentary when he was head of the Department of Government Efficiency (DOGE).

As Fetherstonhaugh cautions, "anything tied to Musk is going to come with volatility."

- Karee Venema

Elon Musk's net worth could top $1 trillion today

Elon Musk has long held the title as the richest person in the world, but he cemented that status following SpaceX's blockbuster IPO, which will likely make him the first-ever trillionaire once SPCX stock begins trading, on paper at least.

At last check, Forbes had Elon Musk's net worth at $981.1 billion. We'll check this again at the end of the day.

The energy impact on orbital data centers

I'm still skeptical of orbital data centers technically working in a lot of ways. But the economics is an even bigger question. How the heck do you get the cost equivalent or better than Earth-based data centers?

I wrote a story about why AI dominance is measured by energy, and it's true AI models get better with more data, parameters and compute. That takes massive amounts of energy. There's no real sign that it's slowing, but in a decade, could there be some energy-efficient breakthrough? Or more efficient models? Or demand dies down? Seems possible and that would mess with orbital data center business models. They also require very low launch costs.

I read an interesting article that if Starship launched hourly, it would be a huge pollution issue. Because Starship is so enormous, it requires far bigger engines that create massive amounts of pollution. That's not an issue now with 10-20 heavy launches per year. But if you do 100s of heavy launches? I guess it could be an issue.

- John Miley

SpaceX stock opens above IPO price

SpaceX (SPCX) stock has officially begun trading on the Nasdaq, with shares opening at $150 per share, more than 11% above the IPO price.

At last check, shares were seen near $157 after hitting an intraday high of $162.98 (as of 11:55).

SpaceX IPO governance: why Elon Musk's control could become a bigger investor issue

The buzz surrounding the SpaceX IPO has focused mostly on the company's massive valuation, retail investor demand and the potential for one of the largest public offerings in market history. But there has been much less attention on a critical issue for investors: corporate governance.

Alon Kapen, a partner and corporate transactional lawyer at Farrell Fritz P.C., has reviewed SpaceX's S-1 and sees several provisions that stand out. Here's what he had to say:

What are some of the key governance issues?

I'd say the concentration of control is the major governance issue here. SpaceX's governance structure seems designed to ensure that Elon Musk retains authority over the company's strategic direction, even as public shareholders come in.

The mechanism for effectuating this level of control begins with SpaceX's dual-class share structure, in which Musk's Class B shares carry 10 votes each, versus one vote per Class A share sold to the public. The structure results in Musk controlling 85% of SpaceX's voting power despite holding only approximately 42% of its equity.

Also, Musk can only be removed from his roles as CEO, CTO and chairman by a vote of Class B shareholders, which he controls.

Another key governance issue is dispute resolution. SpaceX has adopted a mandatory binding arbitration clause for all shareholder disputes, and I believe it's the first major U.S. company to do so in a public offering. Shareholders must "irrevocably and unconditionally" waive the right to a jury trial and are prohibited from bringing class actions against the company or its directors, officers or controlling shareholders.

Finally, SpaceX reincorporated in 2024 from Delaware to Texas. Texas imposes greater procedural hurdles for initiating tender offers, proxy contests and shareholder proposals, making it more difficult for activists to wage activism campaigns such as removing directors or officers.

How does SpaceX's governance compare to other tech companies?

SpaceX's dual-class capital structure certainly fits within a broader pattern of founder-led companies where insiders retain supermajority control post-IPO. Think Facebook, Snap, Google and Tesla where dual-class shares preserve founder authority beyond an IPO. But unlike SpaceX, at least most of those companies had built in sunset provisions.

Might SpaceX's governance approach influence other companies? Or is this more of a special situation?

I think it's both. SpaceX is obviously a special situation. It has a national security dimension that arguably gives regulators reason to defer to management continuity. That makes it hard to generalize. But it could still reinforce an ongoing trend of founders pushing for dual-class structures and extending control post-IPO.

If SpaceX goes public with aggressive founder control preservation mechanisms and the stock performs well, it will be harder for investors to push back on the next company that tries it.

Ultimately, SpaceX can justify its structure because of its track record and unique positioning with governments. Without those factors, though, companies trying to duplicate their governance model would likely face significant investor pushback.

- Tom Taulli

Why history points to a rough road for SpaceX stock

The SpaceX IPO may be one of the most anticipated public offerings in years. But a recent Truist study offers a cautionary reminder: big-name IPOs often come with severe volatility. The study looked at 30 major IPOs and found that the average maximum drawdown in the first year was 55%. Even more striking, the best case still involved a 20% decline, while the worst fell 90%. While the average 12-month return was positive, the median return was negative.

This could be an ominous sign for early SpaceX investors. The company has enormous promise, but the hype is already intense. That alone can create a valuation that is difficult to sustain once the stock begins trading and investors start scrutinizing the numbers.

SpaceX is also a complicated business. It is not just a rocket company. It includes launch services, Starlink broadband, Starship development, an AI-related segment and even X (the social media platform formerly known as Twitter). Each has different risks, economics, capital needs and timelines. That complexity could make it harder for public investors to value the company, especially if one segment disappoints.

Then there is the lock-up issue. Many early employees, executives and investors are sitting on enormous gains. Once they are allowed to sell, the temptation to unload shares could be strong.

This does not mean SpaceX will fail as a public company. But it does suggest that the first year could be far more volatile than the launch-day excitement implies.

- Tom Taulli

Tesla trades lower as SpaceX stock soars

While SpaceX stock is higher in afternoon trading on Friday, Tesla (TSLA) shares were last seen in negative territory, down 0.2%.

Elon Musk's other publicly traded company has struggled on the price charts in recent months and is down more than 11% for the year to date.

But in the longer term, Tesla has been a strong performer. Over the past 15 years, for instance, the consumer discretionary stock has averaged an annual gain of 43%, outperforming the broader S&P 500 by more than 28 percentage points.

And Wall Street is generally upbeat on Tesla's outlook. Of the 47 analysts covering the stock who are tracked by S&P Global Market Intelligence, 23 say it's a Buy or Strong Buy, 18 have it at Hold and six rate it a Sell or Strong Sell. This works out to a consensus Buy recommendation.

Meanwhile, the average 12-month price target of $420.55 represents implied upside of nearly 6% to current levels.

- Karee Venema

SpaceX IPO mints one new trillionaire, thousands of new millionaires

Elon Musk is officially a trillionaire, on paper at least. With SpaceX stock trading near $165 per share at last check, Musk's net worth has swelled to $1.1 trillion, up $88.7 billion from yesterday.

However, Musk isn't the only person who has seen their net worth swell today. According to The New York Times, roughly 4,400 current and former SpaceX employees who held onto their early shares are poised to become millionaires in the aftermath of the blockbuster IPO.

And 400 of those people are expected to see their wealth jump past the $100 million marker.

- Karee Venema

What Wall Street is saying about the SpaceX IPO

There was no shortage of analyst notes released today about the SpaceX IPO. Here's a small sampling of what Wall Street has to say, edited at times for brevity:

"Everyone thinks of SpaceX as a rocket company. Increasingly, that’s the wrong lens. In a matter of months, SpaceX has become the world's largest and most profitable AI neocloud, and over the next year, that business will contribute more profits than launches or satellite internet." - Nicholas Anderson, portfolio manager at Thornburg Investment Management

"It's important to take some of the projections with a grain of salt. Elon has talked about a total addressable market of $28.5 trillion. Interestingly, the majority of that opportunity is tied to what is currently the company's cash incinerator — the AI segment of the business. We're also expecting a merger with Tesla in 2027 or 2028, so it's possible to envision a scenario in which not only the company's market capitalization, but also its revenue growth, becomes exponential. Right now, it's difficult to even quantify the potential scale." - Nancy Tengler, CEO and CIO at Laffer Tengler Investments

"This is not just an IPO — it's a major liquidity event for venture capital, with significant upside potential but elevated valuation, governance, and volatility risks." - Kaush Amin, Managing Director and Head of Private Market Investing at U.S. Bank Asset Management

"We have a negative outlook given dependence on unproven outcomes including Starship commercialization, orbital AI compute, and xAI monetization. While Starlink remains the strongest business, it faces risks from capacity expansion needs, regulatory approvals, and competition from terrestrial broadband and other LEO systems. We believe the market assigns too much value to future optionality and insufficient discount to execution risk." - Keith Snyder, Senior Equity Analyst at CFRA Research

"What's worth watching more closely is what comes after SpaceX. The upcoming IPO pipeline may look like a celebration of the AI boom, but looking at trader sentiment, it could have the makings of a late-cycle rush. As the company dominates commercial launch and Starlink continues to scale, analysts at New Street Research are already projecting 22% upside within 12 months of listing. The risks here aren't necessarily that SpaceX is a bad investment, but that a $1.77T entry point leaves very little margin for error, and that the retail enthusiasm surrounding it could produce the kind of volatility that shakes out investors before things play out in the long-term." - Stephen Callahan, Trading Behavior Analyst at Firstrade

- Karee Venema

SpaceX becomes the sixth largest U.S. company by market cap

At last check, SpaceX stock is trading near $170 per share, giving Elon Musk's space and exploration company a market valuation of $2.22 trillion. This makes SpaceX the sixth-biggest U.S. company by market cap, behind Nvidia (NVDA), Alphabet (GOOGL), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN).

Tesla (TSLA), Elon Musk's other publicly traded company, is the eighth-largest U.S. company by market cap, with a valuation of $1.51 trillion.

"SpaceX is not your typical mega-cap company," says Matt Britzman, senior equity analyst at Hargreaves Lansdown. "Investors are being asked to underwrite an investment case and product roadmap that stretches well beyond the time horizon for your typical trillion-dollar-club business."

Britzman adds that traditional valuation tools can help frame the debate on a stock, "but they only go so far when so much of the story depends on future breakthroughs, new markets and successful execution across several ambitious areas at once."

As such, he cautions that this creates both opportunity and risk, and "investors would do well to be mindful of both sides of that coin."

- Karee Venema

SpaceX enjoys a peaceful launch

The main equity indexes were mixed this morning, ahead of the debut of Elon Musk's SpaceX as a publicly traded company.

SpaceX (SPCX) started trading at about 11:45 am Eastern Standard Time and immediately popped 11.1% from its $135 offering price to $150. SPCX closed up 19.2% at $160.95, making Elon Musk the world's first trillionaire.

Meanwhile, all three main indexes rallied on firmer word of a potential agreement between the U.S. and Iran that would open the Strait of Hormuz.

By the closing bell, the blue-chip Dow Jones Industrial Average was up 0.7% at 51,202, the broad-based S&P 500 was higher by 0.5% at 7,431, and the tech-heavy Nasdaq Composite had added 0.3% at 25,888.

– David Dittman

Read more: Stocks Pop on SpaceX IPO, Hormuz Peace Plan: Stock Market Today

When Elon Musk took Tesla (TSLA) to market in June 2010, the electric vehicle maker raised more than $226 million in its initial public offering (IPO).

That pales in comparison with General Motors (GM), which raised roughly $20 billion in its November 2010 offering, when the automaker returned to the public markets after filing for Chapter 11 bankruptcy in 2009.

Tesla has grown into a trillion-dollar company and the biggest U.S. automaker by market capitalization. The stock has also averaged an annual return of 42% since it began trading, outpacing the broader S&P 500 by 31 percentage points.

Musk, however, has had his redemption on the IPO stage, with the entrepreneur taking SpaceX, his space exploration and satellite company, public in what is the biggest IPO ever.

What is SpaceX?

Elon Musk founded SpaceX in 2002, intending to lower costs for space launches and eventually build a livable colony on Mars. The company had its first successful space launch in 2008 and has since had more than 650 total launches. It also wants to build data centers in space.

"A key to its success has been a relentless focus on innovation," writes Kiplinger contributor Tom Taulli in his feature on the hottest upcoming IPOs to watch for. "The company's breakthroughs include reusable orbital rockets, which have greatly reduced the costs of space flights; vertical rocket landings; and onboard autonomous systems."

In 2015, SpaceX moved to diversify its revenue stream with Starlink, a satellite internet project that today provides coverage to roughly 10 million customers across 160 countries and territories. It also has contracts with the U.S. Department of Defense to provide satellite service through its Starshield segment to government and military organizations, including with Ukraine during its war with Russia.

Geopolitical conflicts are increasing the demand for satellites, and the conflict in the Middle East shows "how space tech is crucial for missile warning and tracking, communications, surveillance, drone and vehicle connectivity, and more," writes John Miley, senior associate editor at The Kiplinger Letter.

SpaceX also bought xAI, Musk's artificial intelligence (AI) company that owns X (formerly Twitter), in February 2026 in an all-stock deal valued at roughly $250 billion. In May, Musk announced that xAI is fully absorbed by SpaceX and will rebrand as SpaceXAI.

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

According to its S-1 filing, which became publicly available on May 20, SpaceX had revenue of $4.7 billion in the three months ended March 31. It also incurred a loss from operations of $1.9 billion and had adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.1 billion.

In 2025, the company's revenue totaled $18.67 billion, while adjusted EBITDA arrived at $6.58 billion.

SpaceX is poised to benefit from surging growth in the global space economy, which is expected to reach $1 trillion by 2034, according to Novaspace, up from $626 billion in 2025. "The U.S., led by SpaceX launching 85% of spacecraft into orbit and its Starlink Internet service, reaps most of the business," says Miley.

When is the SpaceX IPO date?

SpaceX confidentially filed its IPO paperwork with the SEC in early April — and in late May, it filed its prospectus which revealed that Musk will own roughly 42% of the company's equity and control about 80% of the total voting power.

On Thursday, June 11, SpaceX confirmed a fixed per-share price of $135 ahead of its IPO and said it will sell 555.6 million shares. In its S-1 filing, the company said that 5% of common stock will be reserved for "certain employees and persons" to purchase at the offering price. And reports suggest roughly 20% was made available to retail investors, a higher-than-usual amount for IPOs.

At $135 per share, SpaceX raised $75 billion in its offering, making it the largest U.S. IPO ever, easily exceeding the previous record holder — Alibaba Group Holding (BABA) and its $21.8 billion offering in 2014. It also surpassed Saudi Aramco as the biggest global IPO ever.

The SpaceX IPO occurred on June 11, and SPCX stock made its market debut on the Nasdaq on June 12. Shares opened at $150, hit a session high of $176.52, and settled at $160.95.

SpaceX's market valuation at Friday's close was $2.105 trillion, making it the sixth-largest U.S. company by market cap.

Should you buy the SpaceX IPO?

"An initial public offering enables a private company to 'go public,' or start trading in public markets, by issuing its own shares on a stock exchange for the first time. In this way, any investor can buy shares and the company can raise capital to grow," Taulli writes in his article, "What Is an Initial Public Offering (IPO)?".

But buyer beware: IPOs can be volatile — especially for retail investors. In the "froth and frenzy, opportunities mix with peril," writes David Milstead, senior associate editor at the Kiplinger Personal Finance magazine. "The safest course may be to wait for companies to settle in some months after their debut, after one or two quarterly earnings reports."

Investors should also be aware of the Musk Effect, which refers to the impact Elon Musk's actions and commentary have had on Tesla — both on and off the price chart. As one example, Tesla's revenue and share price slumped in early 2025, in part because of backlash related to Musk's time at the Department of Government Efficiency (DOGE).

Another reason to possibly hold off on buying SpaceX stock is the Nasdaq's new "fast entry" rule that speeds the process of adding new companies to its Nasdaq-100 index.

"Under the new rules (PDF), which went into effect on May 1, newly public megacaps would be eligible for inclusion after just 15 trading days – and with only five days of prior market notice," writes Kiplinger contributor Dan Burrows.

Given that "a longer waiting period informs price discovery," Burrows explains, "it's fair to say passive investors won't be getting the best price" on these newly public companies.

The bottom line: Whether you buy the SpaceX IPO comes down to your own risk tolerance and personal investing goals. If you decide to buy shares of SpaceX stock when it first begins trading, do so in a small amount that you can afford to lose and have a trading plan in place.

Related content

• How to Invest in Companies Before They Go Public
• The Riskiest S&P 500 Stocks Right Now
• An Investing Pro's Advice on Managing Risk
• The Best Tech Stocks to Buy

Tesla (TSLA) shareholders overwhelmingly approved a new pay package for CEO Elon Musk that could be worth up to $1 trillion.

The compensation comes with some fairly steep hurdles that the electric vehicle maker will need to surpass in order for Musk to collect, which could have big implications for the Magnificent 7 stock.

While Musk's 2018 pay package is currently in litigation, in early September, Tesla's board of directors outlined a new 2025 CEO pay package. The board also specified specific targets that must be hit for Musk to earn the full compensation of 423.7 million shares of Tesla's common stock.

The shares will be distributed in 12 lots of 35.3 million apiece as certain market cap milestones are met in the next decade — the first being $2 trillion and the last being $8.5 trillion. TSLA closed on November 6 with a $1.5 trillion market capitalization.

There are also 12 operational milestones that need to be reached for Musk to reap his rewards. These include 20 million Tesla vehicles delivered, 1 million robotaxis in operation and four consecutive fiscal quarters of $400 billion in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

In its most recently reported quarter, Tesla delivered just shy of 498,000 vehicles and reported adjusted EBITDA of $4.2 billion.

If Musk meets these milestones, he could own up to 25% of Tesla, up from his current 13% ownership.

"We are, and have always been, a company that thinks bolder, acts faster and strives for a better future," the board wrote. "We believe that Elon's singular vision is vital to navigating this critical inflection point," and "retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history."

How did Tesla shareholders vote on Musk's pay package?

Musk's new pay package required shareholder approval, and they overwhelmingly voted to support it. Tesla said more than three-quarters of stakeholders voted yes on the measure.

Nancy Tengler, CEO and CIO of Laffer Tengler Investments, says her firm voted for the pay package.

"I like having my incentives aligned with the CEO. If he's going to get shares, his incentive is to increase the value of those shares. That works for me as a shareholder," she says. "What we saw in the last round with his pay package was that he hit some ridiculous goals no one thought he could hit — and he's never been paid for it because it's been tied up in court. That, to me, is just wrong."

But there were some high-profile dissenters. Norway's sovereign fund, which is managed by Norges Bank Investment Management (NBIM) and owns a 1.1% stake in Tesla as of June 30, recently said that it voted against the pay package.

"While we appreciate the significant value created under Mr. Musk's visionary role, we are concerned about the total size of the award, dilution and lack of mitigation of key person risk — consistent with our views on executive compensation," NBIM posted on its website.

What does approval mean for Tesla stock?

Wedbush analyst Daniel Ives expected Musk to get "overwhelming shareholder approval" for the pay package despite opposition from various shareholders. A yes vote "sends a loud and clear message to Elon being 'wartime CEO' during this most important chapter of growth in Tesla's history as the AI revolution is here."

Ives has an Outperform rating on Tesla stock and a Street-high $600 price target, representing implied upside of 35% to current levels. If Tesla reaches the top market cap goal, the stock will top $2,000 based on the current number of shares outstanding.

As a group, Wall Street is split when it comes to the Tesla. Of the 46 analysts covering the stock who are tracked by S&P Global Market Intelligence, 15 say it's a Strong Buy, five have it at Buy, 17 call it a Hold, and 10 rate it a Sell or Strong Sell.

Needham analyst Chris Pierce is one of those with a Hold rating on the consumer discretionary stock.

"TSLA continues to demonstrate operational discipline and long-term leadership across electrification and energy storage, but we see the stock as fairly valued against our already aggressive longer-term full self-driving (FSD) and robotics estimates," wrote Pierce in an October 23 note.

Related content

• Stock Picks That Billionaires Love
• The Richest People in the World as 2024 Ends
• Average Net Worth by Age: How Do You Measure Up?

The IRS has gone through unprecedented changes this year, and some developments orchestrated by the Trump administration have aggravated existing challenges.

The National Taxpayer Advocate, Erin Collins, released her fiscal year 2026 Objectives Report to Congress. While the government watchdog noted that the 2025 filing season was successful, there are several problem areas the agency has struggled to address.

These include refund delays for victims of identity theft, a lack of transparency on the agency's modernization strategy, and workforce challenges. Some of these problems are just the tip of the iceberg, but they can impact your experience as a taxpayer — with some folks already facing doubt as to how to address their taxpayer questions.

Here’s more of what you need to know about what to expect when tax season rolls around.

IRS Taxpayer Advocate Report cites several issues

While the 2025 tax season is over, a shrinking workforce and a lack of stable leadership in the IRS this year are starting to show cracks in the foundation of the agency. Research projects and modernization efforts are being suspended, and some folks are still waiting on refund delays.

These challenges can potentially worsen if the GOP keeps in promise to sunset programs like IRS Direct File, reduce allocated funding, and continue to cut down the workforce.

“As a recently retired IRS employee (took the Deferred Resignation Program) and an incredible 35-year career, it saddens me to see our agency suffer the personnel loss of hard-working and knowledgeable people,” wrote Martiza Flores-Travanti on LinkedIn, explaining that she’s had more friends and acquaintances unable to resolve issues with the IRS.

“I’m afraid we will all be receiving the ‘phone from a friend’ calls,” Flores-Travanti added. “The services to everyday Americans is diminishing. AI can’t do it all!”

IRS workforce challenges

The IRS started the year with a headcount of over 102,000 federal employees, and six months into 2025, that figure has dropped to just 75,702.

The changes to the agency came almost as soon as President Donald Trump was sworn into office, and created Elon Musk’s led Department of Government Efficiency (DOGE). The tech billionaire’s external government entity was tasked with dismantling federal agencies and other spending.

As reported by Kiplinger, the layoffs at the IRS impacted nearly every division. By the end of the 2025 tax season, more than 25% of the agency’s workforce had been cut down via layoffs, buyouts, or attrition.

Not to mention, this year, the IRS has been operating without consistent leadership.

• The agency had five commissioners or acting commissioners during the first four months of the year.
• Many of its most experienced leaders chose to leave the agency voluntarily.
• This left the agency with fewer frontline employees and managers with less experience to carry out the tax season.
• Trump’s controversial pick for Commissioner was just recently confirmed well past the 2025 tax season and had previously advocated for abolishing the IRS.

Taxpayer Services lost 1,836 during Trump’s first deferred resignation offer, and another 4,896 in its second resignation offer. A total of 829 cut ties with the IRS through a voluntary early retirement or voluntary separation incentive program.

The areas impacted, like Taxpayer Services, are responsible for processing tax returns, answering taxpayer phone calls, and more.

Already, the lack of IRS employees has caused important projects to be suspended. The agency sent a notice on July 1 that its Joint Statistical Research Program (JSRP) is on hold due to “unforeseen circumstances.” That division was designed to support research projects and use tax microdata to address tax administration research questions.

“Due to current staffing limitations, Statistics of Income (SOI) is unable to provide the necessary support for new projects,” the memo said.

The Trump administration plans a 20% reduction in appropriated IRS funding next year, which would amount to an overall 37% reduction in funding after counting the decrease in supplemental funding from the Inflation Reduction Act (IRA).

For now, all federal hiring efforts have been paused by the Trump administration. The Taxpayer Advocate recommends lifting the hiring freeze and providing a direct hire authority so Taxpayer Services can hire “essential filing season employees” this summer, and onboard them in time for the 2026 filing season.

Identity theft remains a weakness

The last problem you want to deal with as a taxpayer is having your identity stolen. What’s worse: getting that issue resolved will take years.

The IRS has promised over the past 18 months that it’s been working to resolve the Identity Theft Victim Assistance (IDTVA) cases, but the backlogs continue to this day. The agency handles two types of identity theft cases.

1. Potentially fraudulent. These are cases that the IRS processing filter flags as a risk. Taxpayers whose returns were incorrectly flagged must authenticate their identity to receive their refunds. The process can take several months to be resolved.
2. Stolen identity. These cases involve an individual stealing a taxpayer’s identity and Social Security number to file a tax return.

By the end of the 2025 filing season, the IRS had about 387,000 second-category cases in inventory, according to the NTA. These cases take an average of 20 months to resolve.

Some of the delays are also linked to a lack of personnel handling IDTVA cases. As reported by Kiplinger, the agency has been known to siphon employees from various departments to help Taxpayer Services during the filing season. This year was no different.

The IRS planned on siphoning identity theft personnel to assist Taxpayer Services in answering phone calls. Now, as both departments' workforce has been cut further, there’s no telling how Trump’s downsizing of the agency will impact pending IDTVA cases.

“Apart from the time and frustration these delays cause, victims entitled to refunds are waiting nearly two years to receive them,” wrote Collins. “We found these delays disproportionately affect vulnerable populations dependent on their refunds to meet basic living expenses.”

IRS modernization plan?

The IRS has relied on an outdated technology system for decades, with some “legacy” equipment dating back more than 25 years.

It’s not a new problem area by any means, and the IRS has acknowledged it has to modernize its systems. However, recent budgetary challenges and a shift in priorities, driven by Elon Musk’s Department of Government Efficiency (DOGE), have led to the suspension of some ongoing modernizing initiatives.

Before DOGE made a splash at the IRS, the agency had made notable strides to update its systems, enhancing online account features, increasing cybersecurity protocols, and launching new online tools like IRS Free File (which is now on the GOP chopping block)..

Musk’s DOGE, in partnership with the Treasury Department, believes that the IRS can effectively automate much of the agency’s work currently performed by employees. However, using AI to substitute employees has raised some concerns.

For instance, there’s no telling how AI can ensure fair compliance, provide quality service, and safeguard taxpayer privacy, according to the Taxpayer Advocate. So far, the IRS has no clear plan on how it will modernize its systems — another pain point for future taxpayer experience.

“Without such transparency, there is a real risk these initiatives could stall or deviate from their intended outcomes,” wrote the NTA.

What’s been long overdue is the digitization of paper. The IRS continues to buckle under the strain of paper returns, even during the 2025 tax season.

• The agency estimates that it would receive roughly 43 million paper tax returns and 19 million paper information returns in 2025.
• It also sends nearly 170 million paper notices to individual taxpayers and receives millions of mailed responses.
• For some taxpayers, any delays can lead to slower refunds.

While the IRS launched its Paperless Processing Initiative in 2023, the agency failed to meet its goal of digitally processing all paper-filed returns by the 2025 filing season.

“I often remarked that paper is the IRS’s kryptonite, and the IRS is buried in it,” wrote Collins, before adding that paper continues to be a vulnerability that “continues to hinder the agency’s effectiveness.”

Bottom line for the IRS

The IRS has undergone significant changes this year that can impact you as a taxpayer.

The 2025 tax season was “the smoothest yet,” as most taxpayers received their refunds without significant delays. As of April, the agency received over 140 million individual income tax returns and processed 138.1 million individual returns. Additionally, some 86 million refunds had been delivered, with an average refund of $2,942.

Still, nearly 3.4 million returns had been suspended due to errors, potential identity theft, or other issues. These delays add to other backlogs that still linger from past tax filing seasons:

• Some Employee Retention Credit (ERC) claims have remained pending since the pandemic.
• Identity theft cases can take up to two years to be resolved.
• Republican lawmakers want to eliminate IRS Direct File, a free filing service that relieves processing burdens for the agency's employees.

Here’s the latest on IRS changes:

• IRS Layoffs Spark Delays, Doubt This Tax Season
• IRS Shakeup: What Trump’s Commissioner Pick Could Mean for Your Taxes
• Trump Plans to Terminate IRS Direct File program

It's the most bullish day of the year, according to data compiled by one technical analyst. Still, all three major U.S. equity indexes opened lower to start the third quarter and the second half of 2025 after two of them closed the second quarter and the first half at record highs.

The fate of President Donald Trump's Big Beautiful Bill and fiscal policy tops tariffs and trade policy as the main narrative for the moment, with significant effects across multiple sectors.

Vice President J.D. Vance broke a 50-50 tie in the Senate shortly after noon, a vote that sends the president's signature legislation back to the House of Representatives ahead of a Trump-declared Fourth of July deadline.

The Dow Jones Industrial Average surged well into the green early and held its gains due to strength in health care and materials stocks, while technology and communication services stocks weighed on the S&P 500 and the Nasdaq Composite.

"No other day of the year exhibits this amount of across-the-board strength," writes Stock Trader's Almanac Editor Jeffrey Hirsch, "which supports the case for declaring the first trading day of July the most consistently bullish day of the year over the past 21 years."

UnitedHealth Group (UNH, +4.5%), Amgen (AMGN, +4.1%) and Sherwin-Williams (SHW, +3.5%) led Dow Jones stocks to the upside. Nvidia (NVDA, -3.0%) was No. 30 but is still trending toward a $4 trillion market capitalization.

Meta Platforms (META, -2.6%) and Netflix (NFLX, -3.4%) also posted big declines to open the third quarter.

Mr. Powell goes to Sintra

"Wherever you go, there you are" is Ralph Waldo Emerson's famous reduction of the concept of travel. And so it is for Fed Chair Jerome Powell, who stuck to his lines about tariffs and inflation in Portugal Tuesday.

Speaking at a European Central Bank forum, Chair Powell said the Fed will continue to monitor the impact of tariffs on prices and growth.

"We're simply taking some time," Powell said. "As long as the U.S. economy is in solid shape, we think the prudent thing to do is wait and learn more and see what those effects might be."

Recent incoming data broadly suggest inflation is cooling, though the Fed's preferred gauge – the Personal Consumption Expenditures Price Index (PCE) – came in a little hotter than expected in May.

"I think that's right," Powell said when asked during a panel discussion whether the Fed would have cut interest rates by now but for Trump's tariffs.

"In effect," he explained, "we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs."

Still, price action in the federal funds futures market indicates investors, traders and speculators expect the Fed to cut two times for a total of 50 basis points between now and December.

The ISM Manufacturing PMI edged up in June, though it remains in contraction territory, and construction spending fell in May for a seventh consecutive month.

At the same time, job openings were stronger than expected in May and have held steady since mid-2024.

We now look to Jobs Thursday this holiday-shortened week for fresh insight into the other half of the Fed's dual mandate and a labor market that's showing signs of both weakness and resilience.

The bottom line, according to BMO Capital Markets Senior Economist Jennifer Lee, is we "need some clarity on tariffs... certainty on what the tariff rates will be and what they will cover."

Uncertainty, Lee writes, is "putting the brakes on business planning." The economist expects the Fed "to stay on hold this summer (certainly in July)," but to make its next cut after Labor Day.

Note that the U.S. stock market will close at 1 pm and the bond market will close at 2 pm Thursday. Both the stock market and the bond market are closed Friday in the U.S. in observance of Independence Day.

What Warren Buffett is buying

The yield on the 10-year U.S. Treasury note dipped ticked up from 4.226% Monday to 4.248% Tuesday, though the key benchmark continues to trend lower.

Indeed, yields across the Treasury maturity spectrum are coming down ahead of expected Fed rate cuts.

And one of the world's most famous investors has been buying shorter-term U.S. Treasury bills, doubling his holdings, according to data compiled by JPMorgan Chase (JPM).

In fact, Warren Buffett and Berkshire Hathaway (BRK.B) now hold nearly $350 billion in T-bills – more than the Fed has on its balance sheet.

Invest with the Oracle of Omaha? It's probably easier than you think. Here's how to buy Treasury bills.

By the closing bell, the Dow Jones Industrial Average had gained 0.9% to 44,494, though the S&P 500 had lost 0.1% to 6,198 and the NasdaqComposite was off 0.8% at 20,202.

Trump vs Musk

Trump continues to take shots at Powell, whom he nominated for Fed chair during his first administration. The president is also pursuing a fresh feud with another he once held close, Tesla (TSLA, -5.3%) CEO Elon Musk.

The erstwhile DOGE administrator opposes Trump's Big Beautiful Bill as a waste of taxpayer money. And he's triggered a response from the president, with potential impact on TSLA's share price incoming.

"Elon may get more subsidy than any human being in history, by far," Trump posted on Truth Social, "and without subsidies, Elon would probably have to close up shop and head back home to South Africa."

What Dan Ives describes as a "best friends forever" situation "has now turned into a soap opera that remains an overhang on Tesla's stock, with investors fearing that the Trump administration will be more hawkish and show scrutiny around Musk-related U.S. government spending."

The Wedbush analyst and longtime TSLA bull notes specifically potential drags for Tesla and SpaceX, "and most importantly the autonomous future with the regulatory environment key to the future of robotaxis and cybercabs."

Still, Ives concludes, "At the end of the day Musk needs Trump and Trump needs Musk given the AI arms race going on between the U.S. and China."

The analyst reiterated his Outperform (Buy) rating and his $500 12-month target price for TSLA stock.

Related content

• AI vs the Stock Market: How Did Alphabet, Nike and Industrial Stocks Perform in June?
• 5 Best Commodity ETFs to Buy Now
• The Best Vanguard ETFs to Buy

For many investors, the word that most appropriately describes 2026 is "uncertain." Variables include war in the Middle East and Ukraine, government trade policies, inflation and interest rates, stock market sentiment, and just about everything else.

In such an environment, many investors look for low-risk, low-volatility stocks. There is no one-size-fits-all approach to measuring a company's risk factors, but one helpful metric is "beta" – a calculation of historic volatility compared to the broad market.

Beta is expressed as a decimalized figure, and a reading of 1.0 means the stock or exchange-traded fund moves perfectly in line with the market.

Your favorite S&P 500 index fund has a beta of 1.0, considering it literally invests in the benchmark itself.

A beta that is lower than 1.0 means the stock moves less than the broader market. Sleepy consumer staples stocks such as General Mills (GIS) and The Campbell's Company (CPB) tend to have the lowest betas among S&P 500 stocks.

If the stock's beta is greater than 1.0, it is typically more volatile than the broad market – meaning it's capable of tremendous gains on the good days, but epic crashes when things go south.

With that in mind, we put together a list of the most volatile S&P 500 stocks as measured by their three-year annualized beta. This doesn't mean they are doomed to fail, as some have put up nice gains lately. But it does mean they rank as the riskiest S&P stocks to buy now and investors should proceed with caution.

Data is as of May 26.

Coinbase Global

• Sector: Financials
• Market value: $47.4 billion
• Beta: 3.4

Coinbase Global (COIN) is a publicly traded crypto exchange listed on the Nasdaq and in good standing with major U.S. regulators. That makes it one of the most established and legitimate crypto platforms out there.

It has relationships with mainstream brokers and payment platforms, including Visa (V), which offers credit cards that pay rewards in crypto. So Coinbase is cozy with old-school banking and finance firms despite its innovative connections to digital assets.

At the same time, the financial stock typifies the volatility that, along with uncertainty, has defined the second Trump administration. COIN surged in the immediate aftermath of the November 2024 presidential election but plummeted alongside the broader market amid a chaotic rollout of new tariffs.

COIN rallied once again after the Senate passed the GENIUS Act – a law that aims to provide a regulatory framework for stablecoins. Shares have retreated once more in the second half of the year during a steep sell-off for the broader crypto industry.

Still, crypto's "time on the fringe" is likely ending and will be replaced "by an era of consistent regulation and expanding use-cases with the ultimate potential to supplant the traditional global financial system," says William Blair analyst Andrew Jeffrey.

Jeffrey adds that Coinbase will see an outsized impact from this shift, given its "leadership creates an inherent advantage."

Volatility and uncertainty will keep COIN on this list of riskiest S&P 500 stocks for the time being.

Palantir Technologies

• Sector: Technology
• Market value: $327.5 billion
• Beta: 1.5

Palantir Technologies (PLTR) is down more than 23% year to date. But it was one of the best-performing S&P 500 stocks in 2025.

There's good reason for that, too, given that the intelligence community and the U.S. Department of Defense are long-term partners of the data analytics and artificial intelligence (AI) platform.

And there are many reasons to expect PLTR to be much more than a flash in the pan based on an AI fad. Indeed, Wall Street is calling for 73% annual revenue growth this year and 45% growth next year. Earnings per share are expected to surge, too.

However, history shows that some growth stocks can crash as hard as they climb. So investors should be aware of the high beta and volatility risk we see in PLTR before presuming this tech stock has nowhere to go but up.

Carnival

• Sector: Consumer discretionary
• Market value: $38.8 billion
• Beta: 2.3

Cruise ship operator Carnival (CCL) developed a reputation as a stand-in for the struggling travel industry writ large during the pandemic.

That made the consumer discretionary stock a prime target for day trading as speculators looked to turn quick profits on big moves related to macro trends involving tariffs, global trade and consumer spending.

But a longer-term look at CCL stock shows that it has a history of making big moves in either direction.

Looking at the price charts across the past 10 years or so indicates that Carnival shares have traded in a wide range of roughly $7 to $70 per share.

These days, CCL trades closer to $28, though many on Wall Street are betting CCL is poised for its next leg up. Indeed, the average price target among the 21 analysts following the stock who are tracked by S&P Global Market Intelligence is $34.01 – more than 20% above current levels.

But investors should be aware that this is definitely one of the riskiest S&P 500 stocks and there's no way of knowing for sure which way the wind will blow.

Tesla

• Sector: Consumer discretionary
• Market value: $1.67 trillion
• Beta: 1.8

Most investors are familiar with the relationship between Tesla (TSLA) CEO Elon Musk and President Donald Trump.

And electric vehicles (EVs) are seen as a technology with a long-term runway, though Musk's work in Washington, D.C., disenchanted a large number of left-leaning consumers and public feuds with Trump risk alienating the other side of the aisle, too.

Tesla's share price was cut in half between December 2024 and March 2025 amid backlash to Musk's political ambitions. But TSLA rallied after Elon stepped down from his role at the Department of Government Efficiency (DOGE).

Excitement over the company's soft robotaxi launch in late June created additional tailwinds. And a late-November Tweet from the CEO about Tesla's AI chip ambitions sent the stock even higher.

Still, TSLA shares are generating interest now because the company is widely rumored to be destined for a merger with Musk's SpaceX. And the SpaceX IPO is on track to be the biggest initial public offering ever.

But buyers beware: Big price swings in either direction are why Tesla is on this list of the riskiest stocks in the S&P 500 right now.

Caesars Entertainment

• Sector: Consumer discretionary
• Market value: $5.9 billion
• Beta: 1.8

Casino icon Caesars Entertainment (CZR) operates brick-and-mortar gambling facilities, as well as online sports books, in 32 jurisdictions across North America.

Despite its domestic focus, the company has long been dependent on the gambling-friendly cultures across Asia to send along customers from abroad.

And amid rising tensions between the U.S. and its trade partners, which has negatively impacted travel from key markets such as China, CZR stock was down more than 30% in 2025.

It's been a different story so far in 2026, with the stock up more than 20% on solid digital growth and a rebound in Las Vegas.

And the company is now engaged in exclusive talks to be acquired by Fertitta Entertainment for $18 billion, or $32 per share.

Stifel analyst Steven M. Wieczynski maintains a Buy rating on the stock, though he recently lowered his 12-month target price from $36 to $35 due to uncertainty about CZR's future. "All investors care about at this point is will CZR still be a public company moving forward," Wieczynski writes, "and unfortunately, nobody still knows that answer."

Investors should remain on high alert given that CZR is one of the riskiest S&P 500 stocks right now. "Looking past the chatter that is circulating around CZR," the analyst concludes, "we continue to see real value in this name regardless of if they are taken private or remain a public entity."

Related content

• Best Long-Term Investment Stocks to Buy
• The Best Vanguard Bond Funds to Buy
• How to Decide to Sell a Stock: A Master Guide

Equity futures and U.S. Treasury yields surged on incoming data showing the labor market remains "resilient" even amid down-trending sentiment survey results.

Meanwhile, reports of de-escalation in the burgeoning feud between President Donald Trump and erstwhile adviser Elon Musk provided an additional boost for the bulls on Jobs Friday.

They continue to turn May's rally into June's with fresh inflation data looming on Wednesday, early consumer survey results deadlining next Friday, and the Federal Reserve in a quiet period ahead of its upcoming policy meeting.

Tensions between the president and the Tesla CEO may or may not have eased – the White House would like to move on. But Trump, unbound by any "quiet period," continues to attack Fed Chair Jerome "Too Late" Powell.

"If 'Too Late' at the Fed would CUT, we would greatly reduce interest rates, long and short, on debt that is coming due," posted the president about 20 minutes after Friday's opening bell.

U.S. Treasury yields were higher across maturities, the 2-year up to 4.041% from 3.924% Thursday, the 10-year up to 4.506% from 4.395% and the 30-year up to 4.966% from 4.884%.

By the closing bell, the blue-chip Dow Jones Industrial Average was up 1.1% at 42,762, the broad-based S&P 500 had added 1.0% to 6,000, and the tech-heavy Nasdaq Composite was up 1.2% at 19,529.

Donnie vs Lonnie: who wins?

Tesla (TSLA) rebounded 3.7% Friday after its 14.3% crash Thursday and recovered about $50 billion of the $152 billion in market capitalization it lost.

Indeed, stocks to buy for a Trump presidency were up across the board.

And Trump Media & Technology Group (DJT) was up 3.9%.

"The most colorful story is the rift between President Trump and Elon Musk," muses Louis Navellier of Navellier & Associates, who recounts the Tesla CEO's journey from fanboy to critic as the president's "big beautiful bill" made its way through the House and to the Senate.

And "the rhetoric between the two got really heated" as TSLA stock fell from an intraday high of $355 Tuesday to an intraday low of $273 Thursday.

Other names in the Trump Industrial Complex, such as AI stock Palantir Technologies (PLTR, +6.5%), rose amid peace-for-now between Trump and Musk.

Beyond the battle between social media heavyweights with market-moving implications, according to Navellier, "What people are looking for is to see if the S&P can close above 6,000."

The index climbed as high as 6,016.87 within 15 minutes of Thursday's opening bell. "Clearly," Navellier concludes, "the trend remains positive."

Take these jobs

The Bureau of Labor Statistics said nonfarm payrolls increased by 139,000 in May, ahead of a consensus estimate of 130,000. As expected, the unemployment rate remained at 4.2%.

The BLS reported a net downward revision of 95,000 jobs for the previous two months, the March count down from 185,000 to 120,000, and April's count trimmed from 177,000 to 147,000.

Average weekly hours were unchanged at 34.3, while average hourly earnings increased from $36.09 in April to $36.24 in May. Average weekly earnings increased from $1,237.89 in April to $1,243.03 in May.

"It's clear that the economy remains resilient, with the job market holding up well," says Northlight Asset Management Chief Investment Officer Chris Zaccarelli.

Zaccarelli adds that the Fed "should be reluctant to cut rates because the full effects of tariffs haven't impacted inflation numbers yet and the job market isn't deteriorating enough to force their hand."

Raymond James Chief Economist Eugenio J. Alemán suggests the report "will appease market concerns about the U.S. labor market" and that "even after those large downward revisions, job growth remains healthy for now."

Echoing Zaccarelli, Morgan Stanley Wealth Management Chief Economic Strategist Ellen Zentner concludes that "continued labor market resilience could help the economy sidestep recession."

Related content

• Earnings Calendar and Analysis for This Week (June 9-13)
• Kiplinger's Economic Calendar for This Week (June 9-13)
• When Is the Next Fed Meeting?

Stocks struggled for direction Thursday as market participants awaited more details on tariff negotiations between the U.S. and its trading partners.

On Wednesday, President Donald Trump and Chinese President Xi Jinping held a roughly 90-minute phone call to discuss trade between the two countries.

In a post on Truth Social, Trump said it was "a very good talk," and the two "straightened out" some complexities centered on "rare earths" and "other things."

High-level representatives from the U.S. and China will meet again "shortly, according to Trump, to resume trade negotiations.

Signs of rising tensions between the two countries, following news of a short-term trade truce in mid-May, have sparked volatility in the markets.

And while today's price action was up and down, moves were much more modest than we've experienced in recent months.

At the close, the blue chip Dow Jones Industrial Average was down 0.3% at 42,319, the broader S&P 500 was off 0.5% at 5,939, and the tech-heavy Nasdaq Composite was 0.8% lower at 19,298.

Tesla sinks as Musk-Trump rift widens

Tesla (TSLA) was one of the biggest decliners on Thursday, spiraling 14.3% as the split between Trump and Elon Musk grew.

The Tesla CEO recently ended his cost-cutting efforts in Washington, D.C., in order to turn his attention back to his companies.

While Musk seemingly left on good terms with Trump, his recent criticism of the president's "big, beautiful" tax bill has shined light on a widening rift between the two.

For his part, Musk posted on X that the spending bill is a "disgusting abomination" that will bankrupt America.

Trump replied with his own post on Truth Social today, writing that he took away an "EV Mandate that forced everyone to buy Electric Cars," and Elon "just went CRAZY!"

Circle stock soars after IPO

Circle Internet Group (CRCL) had a strong first day of trading, opening at $69 on Thursday.

The stablecoin issuer priced its initial public offering (IPO) late Wednesday at $31 per share – above its prior range of $27 to $28 – and the crypto stock reached an intraday high of $103.75 before settling at $83.23.

Cryptocurrency is in an upswing right thanks to supportive measures from the Trump administration.

And CRCL could get an additional boost if Congress passes the GENIUS Act – a bill aimed at creating a regulatory framework for stablecoins.

The successful offering also bodes well for mobile banking platform Chime, which will price its upcoming IPO this Wednesday, June 11, according to Fortune, and begin trading on the Nasdaq under the ticker symbol "CHYM" on Thursday, June 12.

Jobless claims come in hot

Data from the Labor Department showed that initial jobless claims rose by 8,000 last week to 247,000, more than the 236,000 economists expected.

This is just the latest sign of a cooling labor market and comes ahead of tomorrow morning's release of the May jobs report.

The data are expected to show the U.S. added 125,000 nonfarm payrolls in April.

Job growth has been a tailwind for the U.S. economy, says Scott Helfstein, head of investment at Global X, and this makes Friday's report "particularly important in the battle of hard fundamental data versus high frequency survey data."

Related content

• Actively Managed Vanguard Funds to Buy and Hold
• Chime IPO: Should You Buy CHYM Stock?
• Best Cheap Stocks (Under $10) to Buy Now

The 2025 tax season has wrapped up, and the IRS is set to experience another gutting of its workforce this week — or is it?

As many as 5,000 IRS employees reportedly accepted the Trump administration’s “fork-in-the-road” deferred resignation offer, initially provided earlier this year. Most of those workers were told to work until May 15, because the agency characterized their work as “essential” to the 2025 tax season.

Now, some Treasury Department and IRS employees are reportedly being told they must work through June 30, and can go on administrative leave starting July 1. This could include call representatives and employees who are still processing tax returns.

The timeline for the layoffs, orchestrated by the Trump administration’s efforts to downsize the federal government, caused problems for taxpayers across the country. Multiple tax preparers told Kiplinger that their communication with revenue officers was becoming a black hole.

“We suspect that this means that those revenue officers are no longer with the IRS, and we have to wait for a new one — from the already reduced pool of revenue officers to be assigned,” said Logan Allec, CPA and founder of Choice Tax Relief.

Here’s a snapshot of what the IRS layoffs looked like this tax season, and what it could mean for you going forward.

Nearly 5,000 IRS employees resigned

The disruptions at the IRS began nearly as soon as President Donald Trump began his second term in January, when federal employees were surprised with a controversial “fork-in-the-road” deferred resignation offer.

The offer would grant federal employees full pay and benefits through September 30 in exchange for their resignation. As reported by Kiplinger, IRS employees deemed critical to the tax season could accept the offer but were told to work through May 15, one month after the April 15 tax deadline.

An analysis by the Treasury Inspector General for Tax Administration (TIGTA) revealed that:

• A total of 4,128 employees accepted and were approved for the deferred resignation program (DRP).
• As of March, an additional 552 applications were eligible and pending approval.
• Nearly half (47%) of approved applicants were older than 55.

Overall, more than half of the employees who accepted the DRP were placed on administrative leave.

IRS layoffs 2025: Probationary employees targeted

As more experienced IRS employees accepted Trump’s deferred resignation offer, newer federal workers were placed on the chopping block.

The Office of Personnel Management (OPM) sent a memorandum asking federal agencies to identify probationary employees in January. These workers were defined as those who had served “less than one year in a competitive service appointment, or less than two years in an excepted service appointment.”

Specifically, the memo said that probationary employees could be terminated “without triggering Merit Systems Protection Board appeal rights.”

In response to executive orders, the IRS Human Capital Office created an initial list of probationary employees to be let go. Employees deemed essential to the tax filing season from the Taxpayer Services, Taxpayer Advocate, and Information Technology departments were exempt from this list.

As many as 7,315 probationary employees received termination notices on February 20, according to the analysis. These workers were temporarily reinstated in March as part of ongoing court challenges, only to be fired again. The legal battle continues.

According to TIGTA, most of the 7,315 probationary employees who received termination notices had less than one year of experience with the IRS.

• 6,669 employees had been at the IRS for 1 year or less.
• 615 employees had between 1 and 5 years of service at the agency.
• 31 employees had worked at the IRS for more than 5 years.

Notably, probationary employees who received termination notices were under the age of 40. A total of 549 of those let go were under 25 years old, while 3,466 were between 25 to 39 years old.

Thousands forced to leave the IRS

As of February, the IRS had a headcount of 103,000 federal employees. The Trump-orchestrated reductions to the workforce shrank this figure by 11%, according to TIGTA.

Overall, 11,433 of the tax agency's employees were terminated because of their probationary status or were approved to accept the deferred resignation.

A deeper dive into job titles showed which employees were most affected by IRS layoffs, for instance:

• As many as 3,623 (or 31%) of revenue agents either received termination notices or accepted the DRP.
• Some 2,599 IRS contact representatives, who help taxpayers with tax-related issues, also left the agency.
• A total of 1,614 (or 10%) of tax examiners separated from the IRS.

More layoffs are on the horizon

The IRS is offering three voluntary separation programs, including the Treasury Deferred Resignation Program (TDRP), which “will mirror the benefits of the first DRP offering.”

The agency extended the Trump-instructed TDRP to all employees in April. According to the IRS, over 23,000 employees applied for the program, and 13,124 were approved as of April 22, 2025.

TIGTA also noted that the IRS announced in April that it had begun implementing a reduction-in-force (RIF) that would result in “staffing cuts across multiple offices and job categories.” These reductions would target the Office of Civil Rights and Compliance, which was formerly known as the Office of Equity, Diversity & Inclusion.

An internal IRS memo said that 5% of this office had left through the deferred resignation program and attrition, and that an additional 75% of the office would be “reduced through a RIF.” That same month, the IRS announced that it had initiated a RIF for the Taxpayer Experience Office and the Office of Equity, Diversity & Inclusion in Taxpayer Services.

TIGTA noted that it would periodically update its report on IRS reductions to the workforce and operational areas that are impacted by the cuts.

What’s next for the IRS

Before the disruptions in the IRS workforce began, the agency had over 100,000 employees — a staffing milestone not seen in 30 years.

Nearly half of the IRS workforce belongs to Taxpayer Services, which is tasked with processing tax returns and handling the high volume of calls during tax season, among other duties.

The IRS is known for having an “all hands on deck” approach to tax season, often siphoning employees from departments to Taxpayer Services to meet tax filing deadlines. The recent wave of layoffs sparked concerns over the future of the agency and whether taxpayers will be given a fair experience.

Trump has suggested abolishing the IRS and replacing the agency with a tariff-led revenue system administered by a so-called External Revenue Service. To date, the Senate has yet to confirm President Trump’s choice for commissioner, and it remains unclear when the hearing will be scheduled. Additionally, the IRS has lost several members of its leadership.

Stay tuned for more updates on how the IRS layoffs can impact you next tax season.

Related Content

• IRS Layoffs Spark Delays, Doubt This Tax Season
• Trump Wants You Out of the IRS, But You’ll Have to Wait Until May
• House GOP Bill Aims to Abolish the IRS and Rewrite the Tax Code

The U.S.'s taxing agency is in chaos. Changes at the top, DOGE layoffs and much more are creating havoc at the IRS.

Taxpayers haven't yet felt the full effects from all the turmoil at the agency. The 2025 filing season has progressed smoothly, and tax refunds haven't been delayed.

But just wait, experts tell us. It will take time for all the agency cuts to be felt by people outside the IRS, including taxpayers and the tax preparer community. Yes, more complex audits will decline. But that means the IRS will focus on the low-hanging fruit, exams that agents conduct solely through correspondence. But good luck in getting a reply to correspondence that you send to the IRS, even if your letter is in reply to an IRS notice. Taxpayer assistance will also suffer, including the phone lines.

Let's delve into some of the reasons for all the chaos.

1. Who's in charge?

The IRS is on its fifth commissioner since January 1. Danny Werfel, the former official IRS commissioner, resigned soon after President Trump's inauguration. Doug O'Donnell served as acting head for a month. Melanie Krause took over, but then opted to resign after the IRS entered into a controversial agreement with Immigration and Customs Enforcement (ICE) to purportedly share information on suspected illegals. Gary Shapley, a former IRS criminal investigator who alleged that the IRS wrongly handled its probe of Hunter Biden, was chosen by Elon Musk to lead the IRS. But Shapley was replaced after two days, when Treasury Secretary Scott Bessent complained to Trump that Musk installed Shapley as head of the agency without Bessent's knowledge. The new acting head of the IRS is now Michael Faulkender, who will help lead the agency while also handling his principal job duties as deputy secretary of the Treasury.

In addition to the people serving as acting IRS commissioner, there have been other high-level IRS officials who have also left the agency or have announced their departures. They include the chief information officer, the chief taxpayer compliance officer, the chief privacy officer, the chief transformation and strategy officer, the chief implementation officer and many more.

Meanwhile, former Republican congressman Billy Long, Trump's official pick for IRS commissioner, is on the sidelines. Long is now an advisor with the Office of Personnel Management while he awaits his Senate confirmation hearing.

Unlike previous commissioners, Long isn’t a lawyer or an experienced tax pro, nor has he run a large company or government agency. And he’s not a management and budget expert. Long was a congressman from Missouri. He was also an auctioneer, real estate agent and lobbyist. And he recently worked in the tax field promoting the employee retention credit (ERC), the COVID-19-related payroll tax break that the IRS claims is rife with fraud. Long could possibly face stiff opposition in his Senate confirmation hearing because of his ties to companies touting ERC refunds.

2. Staff layoffs and departures

The IRS is bleeding staff through deferred resignation programs and layoffs. On January 1, the IRS had about 100,000 employees. 11,000 people were either terminated or took the government's first deferred resignation offer in February and March. Another 22,000 or so accepted the government's second deferred resignation offer in April, and many of these workers have already left the agency or will be gone by May or June at the latest. And even more widespread layoffs or reductions in force are expected to take place.

All aspects of the IRS will be impacted, including enforcement, chief counsel, appeals, forms, taxpayer service, criminal investigation, and computer and database modernization. Many of the IRS workers who took the deferred resignation offers are near or at retirement age. The loss of experience and know-how will be hard to replenish with those who remain.

3. Data sharing agreement with ICE

The IRS's decision to share data with ICE doesn't sit well with many people at the IRS. We said previously that this is what eventually led to acting commissioner Melanie Krause's departure from the IRS. Under the pact, ICE would give the IRS the names and addresses of individuals suspected of being in the country illegally, and the IRS would use its locations database to confirm that information or provide updated addresses.

Critics say that this agreement violates the federal statute that generally prevents the IRS from disclosing taxpayer information. An IRS attorney, who was the agency's subject matter expert on the federal statute banning disclosure of taxpayer data, left the IRS shortly after the ICE agreement was finalized. Tax experts also say that this agreement will lead to fewer tax return filings by immigrants, who are afraid that their identities will be disclosed to ICE. In the past, the IRS encouraged tax return filing by immigrants by promising not to share their information.

4. IRS modernization efforts halted

The 2022 Inflation Reduction Act gave the IRS a lot of money over a 10-year time span to be used for bolstering enforcement and taxpayer service and for modernizing the IRS's antiquated databases and other IT systems. The IRS used a portion of that money to develop the Direct File program, create online taxpayer accounts, provide new computers to employees, and modernize its case management systems, among other things. Congress has clawed back much of the IRS's Inflation Reduction Act money.

Since then, Congress has allocated zero dollars to the agency for modernization, and DOGE has come into the IRS and generally paused the agency's modernization efforts. (We were told that DOGE did a one-week "hackathon" on the IRS's databases.)

Some tax experts view DOGE as wanting to trade people for time- and cost-saving technology. But, with no money at the IRS to improve technology, and the IRS's employees leaving in droves, how does this actually work in the short run and the long run?

5. A crackdown on regulations

President Trump's regulatory crackdown is shaking up the IRS. One of Trump's executive orders imposed a temporary halt on new regulations to give his administration time to vet them and decide which ones to keep or toss. Trump ordered that 10 existing regulations be wiped away for each one added. And he has reintroduced a rule from his first term that any proposed tax regulations undergo an extra layer of review by the Office of Information and Regulatory Affairs, a department that is within the White House Office of Management and Budget. Not all regulations will be affected. For example, routine IRS guidance should be protected. But many rules will be impacted.

The IRS is now reviewing old regulations to comply with Trump's executive order to reduce the volume of agency guidance. And the agency is asking the tax community for suggestions on regulations that should be scaled back.

6. IRS's Direct File program

The Trump administration is talking about ending the IRS's Direct File program. This free, voluntary program, which the IRS first piloted last year and expanded this year, allows eligible individuals who live in one of 25 states to opt in and, with the IRS's help, to prepare and electronically file their Form 1040s at no cost using a smartphone, laptop or other device.

Republican lawmakers and conservative-leaning organizations generally oppose Direct File, but the Trump administration chose to let it remain in place for the 2025 return filing season. Advocates for keeping Direct File say it's a free, simple, time-saving tax preparation tool. Naysayers say it is a failed program that wastes resources, and that the IRS can use it to hound taxpayers.

One thing is for certain: Putting an end to Direct File would certainly benefit tax software companies, which see Direct File as competition and have lobbied hard to get rid of this free efiling program.

Is IRS playing politics?

Trump's demand for the IRS to revoke Harvard's tax exemption is causing angst among taxpayers, long-time IRS observers, and left-leaning exempt organizations that might also see their exemption under threat.

Similar to most private colleges and universities, Harvard has 501(c)(3) tax exemption, which means donors can get tax write-offs on their tax returns for donating to the school. There are also other tax advantages to having a 501(c)(3) exemption.

The Trump administration is singling out Harvard, alleging the university is not doing enough to combat anti-Semitism on its campus, among other things. After Harvard rejected a wide slate of White House demands, Trump apparently asked the IRS to look into terminating the university's federal tax exemption. He also said on social media that "We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!" Revoking a university's tax exemption is rare. It's happened only once or twice before.

And it's not just Harvard. Other groups could be on the hot seat. Princeton, Columbia, and Citizens for Responsibility and Ethics in Washington have been noted by Trump as groups that IRS exempt-organization lawyers should keep a close eye on.

Opponents argue that the IRS would be playing politics if it starts down this path of attempting to revoke tax exemption from organizations that Trump doesn't like. They say that what Trump and other Republicans now want to do is not so different from, and may even be worse than, when the IRS last got caught playing politics. In 2013, the IRS got into trouble with Republican lawmakers for improperly targeting mainly conservative groups that were seeking 501(c)(4) tax-exempt status as social welfare organizations.

Related Articles

• How Many IRS Commissioners Have We Gone Through This Year?
• How the Trump Harvard IRS Tax Threat Could Impact You
• Trump Plans to Terminate IRS Direct File program

To help you understand what's going on in politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

At the 100-day mark of his presidency, Donald Trump is back in a familiar place. His popularity is waning, as it was in his first term. And his policy agenda faces major obstacles, including legal challenges and legislative inaction.

Trump’s approval rating is currently 45%, on average, with a 52% disapproval rating. On the one hand, the president’s numbers are better than at this point in his first term. On the other, he is under water on every major issue, including the economy, where 42% of voters approve of his job performance and roughly 55% disapprove. Even immigration, once Trump’s lone bright spot, has become a political minefield for the president.

And he’s lost ground with key demographics, most notably Hispanics, who were crucial to his win in the 2024 election. The president’s approval rating with them is falling faster than with voters overall.

Economy and trade
There’s still time for Trump to right the ship. His resolve on issues like tariffs has started to weaken in response to both corporate and popular backlash, although he has resisted calls to abandon them.

The key difference now is that the economy has become a political headwind, instead of the tailwind that it was in his first term. That’s bad news for a president whose party was already at risk of losing control of the House in next year’s midterms, and it ups the pressure on congressional Republicans to get something done ASAP.

Trade is the president’s one priority where he has far-reaching authority — but it is also his greatest potential vulnerability. The most painful effects of the tariffs that Trump enacted are not expected to set in until later this year. Plus, the administration is struggling to strike deals with major trading partners.

Immigration and government efficiency
Two of the president’s other big priorities continue to be mired in lawsuits: Immigration, where attempts to dramatically increase executive power on deportations have been rebuffed by the judiciary, including the Supreme Court. And shrinking the federal government.

Leading Trump adviser Elon Musk is stepping back from his role as the head of the Department of Government Efficiency (DOGE), which so far claims to have saved $160 billion, though many of these savings have been called into question. The administration has shed 121,000 workers via firings and layoffs, and encouraged others to leave through voluntary buyouts, though reduction-in-force plans at federal agencies keep hitting legal roadblocks.

Tax and spending cuts
As always, the path to lasting achievements likely runs through Congress, where Republicans are struggling to reach an agreement on both the extension of Trump’s first-term tax cuts and the spending cuts to pay for them. Their deadline has already slipped, from Memorial Day to July 4. Trump needs them to get moving.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• How Do Tariffs Impact the Stock Market?
• Is the Economy at Risk of a Recession Because of Tariffs? What the Experts Are Saying
• Donald Trump Tests His Limits

"The thing that’s really important to recognize," Nvidia (NVDA) CEO Jensen Huang recently said, "is that this is the largest infrastructure buildout in human history." His remark about artificial intelligence (AI) is not hyperbole.

The rapid adoption of generative AI and large language models (LLMs) has ignited a surge in spending on data centers, networking equipment and specialized semiconductors, chips and processors needed to train and run AI systems.

Generative AI will boost global GDP by 7%, add close to $7 trillion in value and drive increased productivity in the next decade. Venture funding, a key catalyst for growth so far, surged 85% year over year to $211 billion in 2025.

Hyperscale technology companies Alphabet (GOOGL), Amazon.com (AMZN), Meta Platforms (META) and Microsoft (MSFT) are expected to spend about $650 billion on AI-related infrastructure in 2026.

Yet the investment frenzy isn't just about building data centers. Whether you see an AI boom or an AI bubble, the broader promise lies in AI's potential to transform the global economy.

Companies across sectors and industries are deploying AI tools to automate tasks, analyze information faster and improve decision-making processes.

These capabilities can translate into higher productivity, lower operating costs and more efficient workflows.

One of the most promising developments is the rise of AI agents, which autonomously perform complex tasks such as customer service, research, software development and business operations.

Unlike earlier forms of automation that handled narrow tasks, AI agents can coordinate multiple steps in a workflow, interact with other systems and adapt to changing conditions.

As these technologies mature, businesses expect them to unlock new levels of efficiency and innovation.

Who are the big names in this AI revolution? Here's an overview of 10 major players you should know.

Amazon.com

AI applications are often built on cloud platforms. Some of the reasons include scalability, low costs, centralization of data, monitoring, analytics and customization. All that is good news for Amazon, as Amazon Web Services (AWS) is the world leader in cloud technologies.

AWS has been retooled as a comprehensive platform for AI development. Amazon management said AWS generated $35.6 billion in fourth-quarter sales, a 24% year-over-year increase.

AWS offers several systems, such as SageMaker and Bedrock, which make it easier to use, manage and deploy AI models and agents. Bedrock allows companies to access leading generative AI models from multiple providers through a managed service.

Amazon has strengthened its AI ecosystem through major strategic investments and partnerships. The company has invested about $8 billion in Anthropic, whose Claude models are tightly integrated with the Bedrock platform and run primarily on AWS infrastructure.

In early 2026, Amazon struck a major partnership with OpenAI and invested $50 billion as part of a $110 billion funding round. The transaction has expanded a long-term cloud computing contract.

Amazon has also built several AI applications on its AWS infrastructure, such as the Amazon Q assistant, which the company used to save $250 million in a Java migration project. Without this tool, the project would have taken 4,500 developer years. Amazon Q is designed to help developers and enterprise workers generate code, analyze data and automate tasks across AWS systems.

But AWS is more than software. Amazon has invested heavily in creating its own silicon chips for processing AI workloads. The latest offering is Trainium2, which has shown strong performance at relatively low costs.

Amazon has also developed Inferentia chips for AI inference workloads, part of a broader strategy to lower the cost of running large AI models and reduce reliance on third-party processors.

OpenAI

In late 2015, investors including Elon Musk, Reid Hoffman, Peter Thiel and Sam Altman co-founded OpenAI to "ensure that artificial general intelligence — AI systems that are generally smarter than humans — benefits all of humanity."

The first few years were far from encouraging, but in 2019, the company realized that the best strategy was to pursue generative AI, which led to the building of a series of generative pre-training transformer (GPT) models.

This became the foundation for the launch of ChatGPT in late 2022, when generative AI quickly became mainstream. Within two months, it would attract more than 100 million users, making it history's fastest-growing app.

While the AI market has become intensely competitive, OpenAI's models remain highly popular. The company sells access to its models to developers and also generates revenues from different versions of ChatGPT.

Revenue has surged in recent years, hitting about $13 billion in 2025 and reportedly surpassing $25 billion in annualized revenue by early 2026.

OpenAI's models are also widely used by enterprises through cloud platforms and developer APIs. This makes it a foundational layer for many generative AI applications.

A major driver of this growth has been OpenAI's close partnership with Microsoft, which has invested billions of dollars in the company and integrated OpenAI's models into products such as Azure, Microsoft 365 Copilot and GitHub Copilot.

Databricks

In 2009, a group of computer science students at University of California, Berkeley created an open-source project called Apache Spark. They wanted to make it easier to manage data processing for AI models.

The timing was spot-on, as deep learning was becoming more practical and powerful. As Apache Spark grew more popular, the students would go on to found Databricks, a platform for data management, providing analytics, security and governance.

Databricks has since expanded into a broader "data and AI platform," helping organizations store, analyze and prepare massive datasets used to train and run AI models.

More than 20,000 organizations worldwide — including Comcast (CMCSA), Shell (SHEL) and Rivian Automotive (RIVN) — rely on Databricks to take control of their data and put it to work with AI.

Databricks CEO Ali Ghodsi has been aggressive with acquisitions. In 2023 the company acquired MosaicML for about $1.3 billion. This gave Databricks the technology to help customers build and train their own LLMs. Then in 2024, the company acquired Tabular for a reported $2 billion. The deal strengthened Databricks’ capabilities around data lakehouse architecture and open table formats, which are increasingly important for managing the large datasets used in AI applications.

In late December of 2025, Databricks announced its latest funding round of $4 billion at a $134 billion valuation. Investors included Insight Partners, Fidelity, J.P. Morgan Asset Management, Andreessen Horowitz, BlackRock and Blackstone.

Meta Platforms

Unlike many other megacap tech firms, Meta's AI strategy has focused on building open models that developers can freely use and adapt. The company launched Llama in early 2023, and the models quickly became popular with researchers and startups.

Meta has continued to expand the lineup. In 2025 the company released new multimodal versions of Llama capable of processing text, images and other types of data.

A key advantage for Meta in the AI race is its enormous scale. More than 3.5 billion people (PDF) use at least one of the company's apps every day. This gives Meta a powerful distribution channel for AI services.

Meta is also using AI extensively in its core advertising business. The company has been deploying systems to automate ad targeting, creative generation and campaign optimization for advertisers. These efforts have already shown results, with improved revenue and lower costs.

Ultimately, the mission for AI is to build a platform for "personal intelligence." CEO Mark Zuckerberg (PDF) explains it: "We're starting to see the promise of AI that understands our personal context — including our history, our interests, our content and our relationships."

According to Zuckerberg, "A lot of what makes agents valuable is the unique context that they can see, and we believe that Meta will be able to provide a uniquely personal experience."

Alphabet

In 2017, researchers at Alphabet's Google published a paper on machine learning, "Attention Is All You Need." The paper introduced the transformer model (PDF), which is what powers generative AI.

While Google continued the research, it wasn't focused on commercialization until the launch of ChatGPT. Worried that its core search business was in jeopardy, it scrambled to create its own products, such as Bard. But they were disappointing.

Since then, Google has made significant strides. The company's Gemini 3 model has demonstrated strong results against rival LLMs, including those from OpenAI and Anthropic. The chat app has about 750 million monthly users.

"As an ex-Googler, I’m very impressed by the amount of progress and efficiency to become a force in not only building models but also training data," says Shanea Leven, CEO at Empromptu AI.

Google has "such a large corpus of data," Leven adds. "They should be the leaders without much of the backlash OpenAI and Anthropic have been getting."

Google has also aggressively integrated AI across various segments. For example, search has an "AI mode."

Its AI investments are starting to make a major impact on the company’s growth: Alphabet reported an 18% increase in revenue to $114 billion (PDF) for the fourth quarter, driven by increased monetization of the ad business and the cloud division.

Nvidia

Founded in 1993, Nvidia was one of the pioneers of graphics processing units (GPUs) and was initially focused on the fast-growing gaming market.

But in 2012, Alex Krizhevsky, Ilya Sutskever and Geoffrey Hinton showed that Nvidia GPUs could be effective in training sophisticated AI models for tasks such as image recognition. The chips were able to handle huge amounts of data in parallel. Another key advantage was Nvidia’s Cuda software system, which allowed for customization.

At the time, the company had a market cap in the $7 billion-to-$8 billion neighborhood. Elevated by the AI revolution, NVDA is now a $4 trillion stock and is the world's most valuable publicly traded company.

Nvidia earnings continue to grow at a blistering rate. Management reported fiscal 2025 fourth-quarter revenue growth of 73% to $68.1 billion. More than 91% of the top-line came from data center hardware, with a focus on training AI models.

The market is expected to transition toward inference, which is how AI systems respond to queries and actions. Management has been preparing by bolstering its CPU segment, its efforts paying off in February with Nvidia's announcement that Meta will buy "tens of billions of dollars' worth" of Nvidia's Grace and Vera CPUs.

"The part that matters most for the AI trade is not simply that NVIDIA is selling more GPUs," Futurum Chief Market Strategist Shay Boloor observes, "but that the revenue mix is proving the stack is moving from training-only narratives into full AI factories where compute and networking are one integrated purchase decision."

As Boloor sees it, "Jensen Huang has basically framed the company as an AI infrastructure provider rather than a chip vendor."

Microsoft

In 2019, Microsoft CEO Satya Nadella agreed to invest $1 billion in OpenAI. At the time, it was a risky proposition. OpenAI was still a fledgling startup, and the launch of ChatGPT wouldn't happen for another three years.

But Nadella knew AI was strategic to the success of Microsoft, and OpenAI had a standout team of data scientists. He would eventually invest another $13 billion in OpenAI.

The investment has turned into a home run. Microsoft got exclusive access to OpenAI models while becoming its sole cloud provider. This was critical in giving Microsoft a head-start in the AI race.

The OpenAI relationship has been critical for the growth in Microsoft's cloud business, where revenue was up 39% during its fiscal second quarter.

At the same time, Microsoft has struggled with building its own applications, such as Copilot. This system has lagged, such as against rivals like Gemini, Anthropic’s Claude, and ChatGPT.

To bolster its efforts, Microsoft introduced Copilot Cowork, an agentic AI automation system that according to Nadella "turns your request into a plan and executes it across your apps and files, grounded in your work data."

Anduril

Palmer Luckey started building virtual reality (VR) headsets when he was 16 years old. Relentless with his innovation, such as adding stereoscopic 3D, wireless capabilities and wider fields of views, his efforts were the foundation of a startup called Oculus VR, which he launched when he was 19.

To fund the development, Luckey pulled off a successful Kickstarter campaign, raising $2.4 million. In just a couple years, he'd sell the company to Meta for $2 billion.

While working at Meta, Luckey became intrigued with another startup opportunity. The pace of innovation in the defense industry was too slow, he concluded, and he saw an opportunity to build a company that would leverage software, AI and inexpensive hardware.

In 2017, he left Meta to pursue this startup, called Anduril. "The company shows what happens when AI is applied to a specific high-stakes domain," Empromptu.ai co-founder and CEO Shanea Leven said.

At the core of Anduril is its Lattice AI platform, an autonomous command-and-control layer that processes huge amounts of data from sensors. Lattice AI also powers the company's drones, as well as U.S. Air Force jets and undersea vehicles.

Like many companies developing cutting-edge military technology, Anduril has faced setbacks. Some of its autonomous systems and drones have experienced failures during military tests and exercises, including drone crashes and mechanical issues in prototype systems.

Regardless, there remains strong interest from investors. According to The Wall Street Journal, Thrive Capital and Andreessen Horowitz are leading a massive investment in Anduril at an estimated valuation of $60 billion.

Anthropic

Former OpenAI executives Dario Amodei and Daniela Amodei founded "safety-first" AI company Anthropic in 2021 following disagreements with their previous employer about general strategic direction and AI safety in particular.

Anthropic's latest model is Claude Opus 4.6, widely regarded as one of the top frontier AI models for reasoning, coding and complex multistep tasks.

As for the growth of the business, it's been rapid. The annual run-rate is near $20 billion, up from $9 billion in 2025, according to Bloomberg. To fund its future ambitions, Anthropic announced a $30 billion venture round in February at a $380 billion valuation.

A dispute with the Department of War (formerly, the Department of Defense) about the developer's refusal to disable safety features in its models led the Pentagon to label Anthropic a "supply-chain risk," essentially banning its tech or federal use.

Anthropic has filed a lawsuit against the Pentagon, claiming that it had been targeted. The dispute represents a threat to billions of dollars of revenue from government contracts.

xAI

In 2023, Elon Musk founded xAI to build powerful generative AI models and applications. Musk assembled a veteran team of researchers and AI experts from companies such as OpenAI and Google.

The AI application of xAI is Grok, a conversational AI assistant (launched in late 2023). To accelerate distribution, Musk integrated the system into X.

Grok has been controversial, though. Then again, Musk wanted a system that had fewer filters for content moderation. The result is that the responses from Grok have sometimes been offensive or misleading.

For example, critics have alleged that the company's image-generation system creates sexualized deepfakes of unconsenting women and minors. This has led to various investigations and lawsuits.

In the meantime, Musk has made deals to accelerate the growth. Last year, xAI acquired X in an all-stock swap for $33 billion.

In January, xAI announced a $20 billion funding round led by Valor Equity Partners, Stepstone Group, Fidelity, Qatar Investment Authority, Abu Dhabi's MGX and Baron Capital Group. Then SpaceX agreed to purchase xAI, establishing a valuation for the combined entity of $1.25 trillion. The company plans to launch its IPO in July.

According to Musk, SpaceX is "the most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet."

Learn more about AI

• How AI Can Be Used in Investing
• If You'd Put $1,000 Into Nvidia Stock 20 Years Ago, Here's What You'd Have Today
• How to Protect Your Privacy While Using AI
• How AI Will Impact Your Workplace Retirement Plan
• What Is AI Investing?

To help you understand the trends surrounding new technologies and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts. (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

With falling prices, shrinking hardware, reusable rockets and new tech, the space industry is expanding like never before. There’s rising demand from businesses, governments and consumers. “I think the space age is starting now,” said Tom Mueller, CEO and founder of space start-up Impulse and founding employee of SpaceX, at a recent space conference. Here’s an outlook for an industry teeming with activity.

SpaceX leads the way
Everyone is chasing SpaceX and its huge lead and near-monopoly status. It won’t be easy, but there’s a concerted effort to create viable alternatives to SpaceX’s reusable rockets and Starlink internet constellation. More consolidation is inevitable as satellite operators and manufacturers try to mimic SpaceX’s strategy of vertical integration. SpaceX rarely needs outside suppliers, making its own rockets, engines, satellites, antennas and more.

Other major companies used M&A in recent years to keep pace, such as Eutelsat-OneWeb, SES-Intelsat and Viasat-Inmarsat. “We ain’t SpaceX in terms of being fully integrated,” Dan Goldberg, CEO of Telesat, recently remarked. He noted that the company has started building a lot of tech in-house as it races to catch up. Big players are absorbing suppliers, buying space start-ups and trying to acquire customers.

Heated competition will push the global space market to nearly $1 trillion in 2033, up from $600 billion in 2024, according to a report by market research firm Novaspace. The adoption of cloud computing and artificial intelligence, along with other innovations, are “creating new opportunities for commercial adoption,” says the report.

The rise of megaconstellations
Megaconstellations will lead to more disruption. Starlink’s lead is building with nearly 7,000 small satellites in low-earth orbit, beaming fast broadband service to more than 5 million customers. That includes businesses, ranging from United Airlines to Carnival Cruise Line, and consumers around the globe, especially in remote spots. Speeds are as quick as home internet, service is reliable and data delays are small. Starlink provides web service on trains in Miami, the Scottish Highlands and beyond. It connects more than 75,000 ocean vessels. Consumers are choosing it for remote lake houses, RVs or as an alternative to traditional wired broadband.

Competition spells falling data prices that entice new customers. Amazon’s Kuiper will make waves with a constellation that rivals SpaceX’s Starlink. Kuiper plans for 3,200 satellites, with service starting in 2027. Eutelsat OneWeb already has 630 satellites in orbit, focusing on business and government customers. Telesat’s Lightspeed starts service in 2027. Rivada Space Networks, Logos Space and others aim to have constellations. Globally, 70,000 new satellites are planned through 2030, according to a Goldman Sachs forecast, and China is planning to launch three-quarters of them. Though not all of these global missions will pan out.

Demand is growing for better rockets and fully revamped manufacturing. SpaceX launches 80% of all spacecraft and did 134 orbital launches last year, according to BryceTech. Next on the list was China’s space program (48) and Russia’s space program (17), followed by California-based Rocket Lab (14). Europe has Arianespace and Japan has Mitsubishi Heavy Industries. Top start-ups include Relativity Space, Firefly and Blue Origin. SpaceX aims for 170 launches this year, a bit lower than initially planned. China is ramping up, too.

In coming years, tens of millions of flat-panel antennas will need to be built. SpaceX is expanding its Bastrop, Texas facility to churn out millions of antennas per year. Amazon will have to ramp up antenna production as Kuiper service gets off the ground. Florida is also a hot spot for space manufacturing. SpaceX has shown how mass production lowers costs and shrinks the hardware. One Starlink antenna, the mini, is 12-inches by 10-inches and just 2.5 pounds. It fits in a backpack and can run on a large portable battery pack, providing speeds over 100 megabits per second.

Explosion of applications
Fast broadband from space is sparking new and fast-growing satellite applications. Wi-Fi on planes and trains can handle video calls, streaming movies and gaming. Soldiers can stay connected in war zones. Ditto, victims after natural disasters.

New antennas from Kymeta, ThinKom and others connect to satellites in multiple orbits plus land-based cell networks for resilient and secure service, which is useful for border security, intelligence agencies, emergency services and more. Agriculture is a fertile market, with John Deere using Starlink for remote diagnostics and communications on tractors, and CNH using Intelsat service on its farm equipment.

Other uses for satellites include tracking drones, fleets of trucks, ships, goods and cars. Many smartphones can tap satellite service for emergency SOS messages or to just send texts, no extra hardware needed. And don’t forget Earth observation. Capella Space, Planet Labs, BlackSky and others sell imagery for mining, insurance, agriculture, oil and gas, retail, defense, finance and other sectors.

Sovereignty in space
A growing mantra among countries across the globe: Sovereignty in space. With geopolitical tensions high, countries want more control over satellites, rather than rely on SpaceX rockets and internet service. Even the U.S. military, which has a SpaceX constellation in the works, wants more choice. Amazon’s Kuiper is a sure bet to win big Pentagon contracts, plus contracts from other countries.

It’s a big tailwind for the industry, both SpaceX and others. More nations want to adopt commercial space service and off-the-shelf hardware and software, plus launch their own large stationary satellites and small satellite constellations. The Department of Defense plans to integrate commercial space with its current tech for faster speeds and improved reliability. NATO recently started a similar project. The European Union is spending $11 billion to build its own internet constellation, using European rockets and satellites, with the aim of boosting its space autonomy. Of course, China sees its planned constellations as a way to avoid outside space tech.

Global government spending on space is set for double-digit yearly growth in coming years. $135 billion was spent by governments in 2024, a 10% increase versus 2023, according to Novaspace. The U.S. leads in government spending, with 59% of the total. More than half of the global tally is defense spending. “With the rising importance of space assets, more nations are establishing dedicated space forces” as a way to bolster defense capabilities, notes the report.

Look for more nations to try to cut red tape for the industry. In the U.S., the Federal Communications Commission is planning to streamline satellite approvals, free up spectrum and OK services, such as direct-to-device tech, at a faster clip.

Investing in space
Emerging space tech and improved services continue to excite investors. Promising start-ups keep landing funding from venture capital firms. Exciting tech includes Impulse, which is building vehicles to ferry satellites in an efficient way from low-earth orbit to higher orbits, or the moon and beyond. HiSky is building low-cost, small antennas for tractors, cars, wind turbines and more. Elve aims to make vastly cheaper millimeter-wave amplifiers, a key space component. Orbit Fab is building gas depots in space to refuel satellites and extend their lives. There are start-ups in manufacturing, ground systems, Earth imagery, software and other areas.

Despite big opportunity, many start-ups won’t pan out. Some will combine with bigger firms. Tech could fail, cash could run out or revenue not materialize. Meanwhile, there is a long list of publicly traded companies in the sector, from traditional firms such as Boeing to newly public companies such as Rocket Lab. Other public firms include Iridium, Planet Labs, Intuitive Machines and MDA Space. Kuiper is sure to intrigue space investors in Amazon. Though SpaceX has no plans to go public soon, there’s already huge interest. It has a sky-high private valuation.

We think space investments can be risky and require ample due diligence. The capital-intensive industry is notably prone to disruption, delays or failures.

Future challenges loom
Don’t overlook the headwinds for space. Start with the threat of tariffs from the U.S. and other countries, which could cause costs to rise, reduce innovation and fragment the global supply chain. Other types of protectionism include countries blocking foreign space services via regulations. There’s the inherent risk of space, shown in the recent explosion of SpaceX’s next-generation Starship rocket, which is sure to spark delays.

There are growing fears about satellite collisions, service disruptions or cyberattacks. Funding could dry up or defense spending on space could be lower than predicted. “The old axiom that ‘space is hard’ endures,” noted Iridium CEO Matt Desch in an annual report from recent years.

But those challenges hardly dim the immense promise for customers. And there are emerging solutions from advanced artificial intelligence, set to help with collision avoidance, imagery detection, bandwidth allocation, predictive maintenance and more. Amazon Cloud Services already has an AI chatbot for deciphering satellite interference.

Related Content

• Starlink's Internet Beamed From Space Is Taking Off
• SpaceX in Good Shape Despite Test Flight
• Space Stocks: How Russia Is Changing the Game
• NASA’s Moon Mission is Delayed

This tax season has been rife with disruptions and layoffs set off by the Trump administration, now the president reportedly plans to eliminate the IRS’ Direct File program. The program is available to over 30 million taxpayers this year.

The tax prep software, which is under scrutiny, was successfully piloted last year under the Biden administration and allows taxpayers to prepare and file their federal taxes for free with the IRS. However, Republican lawmakers and commercial tax preparation companies like H&R Block and Intuit’s TurboTax say the program is “wasteful” because there are already reputable third-party free filing options available.

It should be noted that the Federal Trade Commission (FTC) has previously flagged companies like H&R Block for pressuring people to overpay for tax prep services and making it harder to downgrade to cheaper filing options. Intuit’s TurboTax has also been cited for engaging in deceptive advertising practices, which have fooled consumers into believing they were eligible for “free” tax products and services.

GOP lawmakers allege that Direct File can create confusion for state taxpayers. Meanwhile, Elon Musk declared that he had “deleted” 18F, the digital services agency responsible for developing the IRS Direct File system in early February. More planned layoffs at the IRS could impact the program further.

The comments come despite favorable feedback from taxpayers who used Direct File. A study found that 90% of users rated their experience as positive and said the software was easy to use and trustworthy during the pilot.

Even though the federal deadline to file and pay 2024 taxes was April 15, taxpayers in 25 participating states have until Oct. 15, 2025, to file through IRS Direct File.

But the permanence of the Direct File remains largely uncertain under the Trump administration, sources say. Here’s what taxpayers had to say about the program.

Taxpayers are interested in Direct File

According to the Tax Policy Center, more taxpayers would like to use Direct File if the free tax-filing program is available in their state. Among those who filed a tax return last year:

• 73% of respondents across all age groups, education, and race said they would be interested in using Direct File if they were eligible for the program.
• 69% of those who paid to file taxes said they were interested in Direct File.
• 85% of people who filed for free last year said they would like to file directly with the IRS via Direct File.

Still, there was some hesitancy among respondents. Two-thirds of tax filers, or 68%, said they didn’t know enough about Direct File to feel comfortable using it. The study found that 88% said that their most recent filing method met their needs.

How many people used Direct File during its pilot?

For fiscal year 2023, over 140,000 tax filers with simple tax situations used Direct File across 12 states during its pilot, which ran from February 1 to April 20, 2024. According to an analysis by the Treasury Inspector General, more than 35,000 tax returns were rejected due to various reasons.

The rejections were mainly due to two reasons:

• Mismatches between prior year adjusted gross income (AGI)
• Inability to reconcile advance payments of the Premium Tax Credit (PTC). This was because the IRS did not include Form 8962 for the PTC in its Direct File pilot.

Why choose Direct File

Last year, the IRS announced that Direct File would be a permanent option for filing federal tax returns as of the 2025 tax season.

“The clear message is that many taxpayers across the nation want the IRS to provide more than one no-cost option for filing electronically,” former IRS Commissioner Danny Werfel said in a statement.

As reported by Kiplinger, the program was expanded to residents of 25 states this year and could be used by as many as 30 million eligible taxpayers. The move to make Direct File permanent came after multiple lawmakers and organizations urged IRS leaders to renew the program.

Today, Direct File offers live support from IRS staff Monday through Friday from 7 a.m. to 10 p.m. ET. You can also file from your smartphone, tablet, or computer if your state is eligible. Assistance is offered in Spanish and English.

Separately, the IRS Free File also offers taxpayers the option to file their federal income tax returns directly with the agency. There’s one caveat: Your adjusted gross income (AGI) must be 84,000 or less to qualify.

IRS online Free File also offers eight private-sector partners you can choose to file with.

GOP lawmakers target Direct File

A report from the Economic Security Project found that Direct File could save taxpayers $8 billion in filing fees and an additional $3 billion in time costs each tax season. That’s $11 billion in savings.

Additionally, the analysis found that the program could spare more than 400,000 filers a year from enduring the stress of IRS correction proceedings and audits. Finally, Direct File could close long-standing credit gaps for people who unknowingly miss out on tax benefits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

Still, 29 GOP lawmakers urged President Trump to immediately end Direct File.

Mainly, some Republicans claim the program would cause taxpayers to miss their refunds or suffer penalties if they were unaware that they must file their state taxes separately from their federal taxes.

As reported by Kiplinger, tax preparation companies H&R Block and Intuit’s TurboTax have opposed the IRS launching a free tax preparation program.

Ending Direct File would be a gift for big corporations, said supporters of the free filing program.

The Institute on Taxation and Economic Policy (ITEP) characterized Trump’s plans to end Direct File as a move to ramp up private profits for big corporations that have lobbied to prevent the IRS from providing free filing options to taxpayers for years.

“Ending Direct File is another gift from this administration to large corporations, this time to the multibillion-dollar tax prep industry that wants to make money off of you filing your taxes,” said ITEP Executive Director Amy Hanauer. “This is yet another piece to the ongoing attack on the IRS at the benefit of the wealthy and exploitative tax preparers.”

What’s next for Direct File?

Elon Musk declared on his social media platform X that he had “deleted” 18F, the digital services agency responsible for developing the IRS Direct File system. The CEO of Tesla echoed sentiments from GOP lawmakers who alleged that the program would create confusion for state taxpayers and was a waste of government spending.

Direct File is expected to remain operational for the 2025 tax season, per Treasury Secretary Scott Bessent. As mentioned, taxpayers in 25 participating states have until Oct. 15, 2025, to file their 2024 federal tax return with IRS Direct File.

However, with layoffs threatening the IRS workforce, there is no telling if the program will be impacted. Internal sources have also told the Associated Press that the Trump administration plans to eliminate the program.

Stay tuned to our latest coverage on the matter on our live tax blog.

Related Content:

• Why Some States Won’t Participate in IRS Direct File for 2025
• IRS Direct File Will Be Permanent, Competing With TurboTax, H&R Block
• IRS Free File Is Now Open for 2025: Are Your Taxes Eligible?

This year, many are receiving Social Security checks with a modest 2.5% cost-of-living adjustment. However, some individuals are experiencing significantly increased benefits due to the Social Security Fairness Act. At the same time, Elon Musk and Trump's Department of Government Efficiency (DOGE) are leading efforts to make substantial cuts to the Social Security Administration.

Despite these challenges, an interesting trend persists: many people seem willing to pay more to ensure Social Security’s long-term stability.

A survey by the National Academy of Social Insurance (NASI), AARP, the National Institute on Retirement Security, and the U.S. Chamber of Commerce finds that 85% of respondents favor maintaining or increasing Social Security benefits — even if it means raising taxes.

Notably, that sentiment crossed political lines. About 3 in 4 Republicans, 9 in 10 Democrats, and 8 in 10 independents support the approach.

This willingness to contribute more through taxes may be related to concerns about the future of Social Security.

• A 2024 Gallup poll revealed that 87% of U.S. adults are worried about the program, with 43% expressing "a great deal" of concern.
• Additionally, a Bankrate survey found that 73% of Americans fear that promised Social Security benefits won't be available to them upon reaching retirement age.

The worry is understandable. The latest projections from the Social Security Board of Trustees show that the combined Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds are expected to be depleted by 2035.

At that point, the program could only pay 83% of scheduled benefits, relying solely on incoming payroll taxes.

Additionally, under the Trump administration, the Social Security Administration faces significant workforce and resource cuts, which many say will harm the agency’s ability to serve more than 60 million people who receive benefits.

So, will you have to pay more taxes to save Social Security? Or are there other options on the table? Here’s what you need to know.

Social Security reform 2025?

The debate over Social Security continues. For example, since President Trump returned to the White House for his second term, there has been considerable discussion about possibly eliminating taxes on Social Security benefits.

However, that idea isn’t new; Republican and Democratic proposals to end or reduce these taxes for retirees have existed for some time. And while no federal taxes on Social Security income may seem appealing to many, as reported by Kiplinger, some experts caution that eliminating the taxes could ultimately harm the program's solvency.

So, what should Congress do to ensure that Social Security is around for future generations?

One idea involves raising the payroll tax rate.

Payroll tax rate increase

Currently, employees and employers each pay 6.2% toward Social Security. A suggested increase would bring that rate to 7.2%, according to a NASI report. That change and other adjustments could close Social Security's funding gap and result in a small surplus.

A related approach proposed by the Brookings Institution would ensure long-term solvency through revenue enhancements and benefit adjustments. Key elements include:

• Gradually raising the payroll tax rate from 12.4% to 12.6%
• Increasing the taxable wage base to cover 90% of total wages by 2039
• Modifying rules for pass-through businesses to prevent tax avoidance

Proponents argue this approach is fairer than cutting benefits, while some critics say it could burden workers and small businesses.

The Social Security tax limit debate

Another idea for addressing a Social Security shortfall involves the tax limit (also called the "wage base" or "wage cap."

Social Security tax is withheld from each paycheck, but stops once income reaches a certain amount. That’s due to the Social Security tax limit, which is the maximum amount of earnings subject to Social Security tax.

For 2025, the Social Security wage base is $176,100. So, earnings above that amount aren’t taxed for the program.

• Some propose eliminating or raising the tax limit to address funding shortfalls.
• Removing the limit could generate trillions over a decade by taxing high earners on all income.
• Partial adjustments (e.g., taxing wages over $250,000) could offer a compromise.

Advocates argue this would make the system fairer because top earners currently pay a smaller percentage of their income.

An often-cited example is how quickly wealthy individuals, including billionaires, finish paying their Social Security taxes.

For instance, if you consider just gross annual wage, CNBC explains that Elon Musk would meet the $176,100 tax limit within minutes of the start of 2025. (Reporting indicates that many millionaires earning wages would meet the cap by early March.)

Still, critics of wage cap changes counter that unlimited taxes without corresponding benefit increases weaken the program’s contributory principle and could reduce work incentives.

Do rich people get Social Security?

Meanwhile, some think it doesn't make sense for wealthy individuals to receive Social Security benefits. The argument is that limiting benefits for the rich could help ensure that those who need it get more support.

Others believe that if only some people receive Social Security benefits, everyone might lose interest in supporting the program.

Recently, economist and NYU Stern professor Scott Galloway suggested that wealthy individuals like himself should not receive Social Security benefits.

Data show that the average person receiving Social Security in 2025 receives about $1,976 monthly from the program. The Motley Fool finds that a billionaire who earns wages could conceivably receive the maximum monthly benefit: $51,08 this year, if that billionaire were to retire at 70.

The Street reports that Galloway sees the current system as unfair because high earners don't pay taxes on all their income, yet still get benefits. Galloway argues that the system would be fairer and more effective if those benefits were redirected to those who truly need them. That belief reflects growing concern about ensuring that Social Security works for everyone, including future generations.

Other Social Security reform proposals coming out of the Republican-led Congress:

• Some lawmakers have proposed gradually raising the retirement age for claiming full benefits to 69. Such a change would reduce lifetime payouts by thousands of dollars annually. But it’s unpopular with retirees and faces strong opposition from those who argue it would force many people to work longer for less money.
• Meanwhile, other lawmakers oppose payroll tax rate increases or expanded wage base limits, preferring to focus on cutting program costs. Critics argue that those moves won’t effectively address insolvency concerns.

On that note, DOGE, led by Elon Musk of Tesla and SpaceX, has already implemented workforce reductions (the plan is to cut 50% of staff) and closed Social Security offices, raising concerns about the quality of service and accessibility for beneficiaries.

Social Security changes: Impact on retirees

According to projections from the Urban Institute, if the Social Security trust fund were depleted, the number of beneficiaries who would subsequently fall into poverty could rise by over 50%.

That estimate highlights the critical role that Social Security plays in providing financial security for millions of retirees who rely on these benefits for their basic needs.

The NASI report indicates that more than 8 in 10 respondents who had not received benefits still described Social Security as "important" or "very important."

Meanwhile, billionaire Musk has referred to Social Security as "the biggest Ponzi scheme of all time" during a February interview on The Joe Rogan Experience podcast. He made that remark during a discussion about government obligations and financial sustainability.

Speaking of Musk and DOGE, a recent report from Sen. Bernie Sanders (I-Vt.) warns that Musk's proposed staffing cuts at the Social Security Administration could double disability benefit wait times to over 400 days and lead to tens of thousands more applicant deaths each year. The report also disputes Musk and DOGE's claims of widespread Social Security fraud.

“President Trump and Elon Musk have suggested that ‘millions and millions’ of dead people receive Social Security checks. That is an outrageous lie designed to undermine Americans’ faith in Social Security,” Sanders stated in a release regarding the report findings.

While poll respondents' willingness to pay more taxes is notable, it’s important to remember that any significant legislative changes to the Social Security program will likely require bipartisan support. As a result, Congress will need to balance ensuring long-term solvency with financial concerns and the needs of current and future retirees.

So, as Social Security debates continue on Capitol Hill and in the White House this year and beyond, stay informed and carefully consider how potential policy and tax changes could affect your retirement.

Related

• Will Retirees Stop Paying Taxes on Social Security Next Year?
• What's Wrong With Trump’s Plan to Eliminate Taxes on Social Security Benefits
• Social Security and Your Taxes: Five Things to Know for 2025

To help you understand what is going on in politics and the economy, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Prepare for slower growth and higher inflation as the president seeks to revise the global trade system through sweeping tariffs on virtually all U.S. imports. He is promising short-term pain for long-term gain. We agree on the short term. The long term is murkier. Given the highest U.S. tariffs in a century:

Prices of many goods will turn higher. Sellers of imported goods will absorb some of the new duties and pass along the rest to their overseas suppliers and to U.S. consumers. The exact breakdown will vary by product and industry, but the trend is inflationary.

Overall inflation could hit 5% by year-end, up from 2.8% in February, but not as bad as the 9% peak that the economy endured in 2022. Still, for businesses and consumers alike, steeper price hikes will hurt.

Spending will suffer, at the retail level because shoppers’ dollars won’t stretch as far now, and among businesses because of the uncertainty about how long the tariffs will last. The White House wants companies to invest in new manufacturing here. Some will — indeed, some already are — but other firms are likely to hold off. Building new factories is costly and can take years, a major risk if tariffs then get reversed by Trump or his successor.

Recession doesn’t appear imminent. But there is a real threat of stagflation — the dreaded combo of slow growth and stubbornly high inflation, last seen in the 70s. Of course, the exact impact of the new tariffs depends on reactions to them.

Trade partners must decide whether to negotiate, stand pat or push back. We expect a mix of reactions there.

• China will almost certainly retaliate. It faces the highest combined duties, well over 50%. And while the U.S. is a key market that China can ill afford to lose, Beijing also can’t afford to appear cowed by Trump. Look for it to respond by targeting sensitive U.S. products, especially foodstuffs.
• The European Union may well also push back as it faces 20% U.S. duties.
• For now, Australia, India and possibly the U.K. appear unlikely to retaliate.
• Smaller countries facing steep tariffs may have no choice but to negotiate by dropping their own duties on U.S. goods. Vietnam, for instance, depends heavily on exports to the U.S., and now faces a punishing 46% rate. That may be unbearable.
• Mexico and Canada, spared new duties, may also look to make deals. USMCA, the free-trade pact Trump made with them in his first term, is up for renewal in 2026. He appears open to extending it if he gets concessions on migration and other issues.

The big question: Will Trump succeed and bring back U.S. manufacturing?
He is determined to try. But there are limits to what any president can do. Consumers are also voters, and even voters who support him may blanch at the cost tariffs will add to what they buy. Some foreign leaders will bet we can’t take the pain.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related content

• What’s Happening With Trump Tariffs? Full Updates and Analysis
• How Tariffs Could Impact Affluent Retirees
• Trump's Tariffs on Canada and Mexico to Spike Food, Gas Prices

If you feel less than enthusiastic about filing your federal income taxes this year, you're not alone. IRS filing data and a recent survey shed light on a growing trend: Many are hesitant to file taxes in 2025.

Ths tax season, the IRS has reported a notable downturn in tax return submissions compared to previous years.

Why? Possible reasons range from concerns about IRS workforce reductions to general economic uncertainty.

A March survey of 1,003 respondents conducted by Qualtrics on behalf of Intuit Credit Karma also revealed some interesting data points. Nearly a quarter of respondents felt less concerned about making errors on their tax returns this year, while almost half worried about receiving a timely refund.

Meanwhile, according to the survey, 17% of millennials have contemplated not filing at all. They reported a belief that audit risk has decreased due to recent downsizing at the IRS.

So, what does all of this mean for you? Here’s more to know.

Filing taxes 2025: Slowdown at the IRS

Since the start of the 2025 tax filing season on January 27, the number of returns processed by the IRS has fallen by 1.7% ( just over 1.2 million returns) compared to the same period in 2024.

That decline comes despite an average increase in refund amounts and suggests that significantly fewer taxpayers are filing early this year — or at all.

According to Bloomberg (paywall), former IRS Commissioner Charles Retitig relayed the following: “I know thousands of accountants, tax professionals, tax return preparers — and they’re all getting the question, ‘Why should I file my taxes? Why should I pay my taxes? My understanding is the IRS is going to be abolished.”

The impact? The IRS reportedly anticipates a $500 billion decrease in tax revenue this year. (That’s a more than 10% decline compared to last year.) That projected revenue loss is particularly striking compared to the $5.1 trillion collected by the IRS in 2024.

Some attribute the estimated shortfall to widespread disruptions caused by staff reductions and operational changes initiated by the Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk of Tesla and SpaceX.

Here’s what’s been happening that could be contributing to the tax-filing hesitancy this tax season.

DOGE IRS workforce cuts

As Kiplinger has reported, Trump’s DOGE has implemented substantial budget cuts at the IRS, resulting in significant staff reductions. Some say the cuts have impacted the tax agency's ability to process returns efficiently and enforce compliance.

For more information, see IRS Layoffs Cause Doubt, Fear This Tax Season.

As mentioned, reports also suggest the IRS could face a potential revenue drop of as much as half a billion dollars due to some taxpayers betting on the tax agency's diminished audit capabilities.

Some experts caution that, going forward, these cuts could severely hamper the IRS's functionality, weaken the government's ability to collect taxes effectively, and lead to processing delays.

Other things to keep in mind:

• Republican lawmakers have proposed abolishing the tax agency. Trump has floated the idea of replacing the IRS with an ERS (External Revenue Service) and eliminating income taxes in favor of tariffs.
• Trump’s pick for IRS Commissioner, former congressman and auctioneer Billy Long, still hasn’t been Senate-confirmed.

Egg prices and economic uncertainty: Recession ahead?

Beyond IRS-specific issues, many people in the U.S. are grappling with significant economic challenges, including inflation, low or stagnating wages, and rising costs.

For instance, egg prices have soared to $10 or more per dozen in some areas, and consumer confidence is down. Additionally, economic uncertainty in 2025 has intensified partly due to President Donald Trump's tariff policies.

Many experts warn that tariffs (i.e., taxes on imports that often impact consumer prices) could slow economic growth and increase recession risks. Some point to tariffs as a major factor behind reduced spending and consumer pessimism.

Though it’s worth noting that some U.S. economic forecasts remain optimistic.

Meanwhile, additional surveys find many taxpayers are simply overwhelmed when it comes to filing taxes. The tax code and tax filing process can be incredibly complicated.

Additionally, many who rely on tax refunds to pay bills or purchase essentials worry their refunds will be delayed. Data show that most people use their tax refunds for practical purposes. As of March 17, the average IRS tax refund is $3,271..

• Reportedly, 49% of taxpayers will use their refund to “make ends meet,” about 25% of taxpayers plan to deposit their refunds into a savings account, while 35% intend to use their refunds to pay down debt.
• Other common uses include replenishing emergency funds, boosting retirement savings, and investing in education or home improvements.

IRS audit risk?

Fewer IRS workers focusing on tax compliance is leading some taxpayers to consider taking risks with their returns that they might usually avoid.

According to the Credit Karma survey, millennials are at the forefront of this trend. A notable percentage indicated they might not file taxes this year due to a perceived lower chance of being audited. Nearly half of the surveyed taxpayers doubted the federal tax agency's capacity to double-check filings.

Those findings reflect a broader lack of confidence in the IRS' ability to enforce compliance effectively without a Senate-confirmed Commissioner and with much of its staff already let go or on its way out the door soon.

Can you not file taxes?

Despite these issues and real concerns, most experts caution against failing to file or pay taxes. There are several consequences of not filing or paying.

Financial Penalties: The IRS imposes significant penalties for failing to file or pay taxes. These can include a percentage of unpaid taxes for each month the return is late. There are also penalties for failing to pay, which can increase if the IRS issues a notice of intent to levy.

Even if you owe a relatively small amount, penalties can add up. Interest also accrues daily on unpaid balances annually, compounding the financial burden over time.

Legal Consequences: Tax evasion, which involves deliberately avoiding paying taxes, carries legal risks. It can also result in hefty fines for individuals and businesses, potential prison time, and additional penalties for negligence or underreporting income.

In extreme cases, as Kiplinger has reported, the IRS can revoke passports for individuals with significant unpaid tax debts exceeding a certain threshold.

Other Enforcement Actions: The IRS has various tools to recover unpaid taxes. These include wage garnishment, bank levies, and filing a Substitute for Return (SFR), where the IRS files a return on your behalf based on available data, often resulting in higher tax liabilities.

Filing taxes: Bottom line

For those struggling financially or feeling overwhelmed by their tax obligations, experts recommend exploring options for paying the IRS if you owe like repayment plans or filing extensions, rather than avoiding filing altogether.

And concerning common tax filing mistakes, some experts note that human beings aren’t necessarily the ones who will catch errors on “average taxpayer” returns.

The agency may rely more on automated software to uncover unpaid taxes or filing errors and focus on what some experts have described to Kiplingers as “low hanging fruit,” i.e., Individuals behind on their taxes, non-filers, or taxpayers on repayment plans.

For those daunted by this year's tax season, consult a trusted and qualified tax preparer or financial planner who can help you through the process and ensure compliance with current tax laws.

Related

• What's Wrong With Trump's Plan to Abolish the IRS
• Five Scary Things the IRS Can Do If You Owe Back Taxes
• Tax Season 2025: IRS Changes to Know Before You File

To help you understand what is going on in politics our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

Congress has undergone a historic change. In short, the executive and legislative branches have, in a sense, merged. President Trump is the true head of Congress, with Republican leaders taking their cues from the White House on most issues, big and small. This is not just unusual, it’s unprecedented.

With that backdrop, unpredictability reigns on Capitol Hill, with GOP leaders suffering from whiplash amid Trump’s frequent changes of mind, forcing them to switch gears at a moment’s notice. That said, lawmakers still have work to do.

Tax cuts and border security
First up is a tax cuts and border security bill that Republicans hope to pass this summer. The bill would extend the 2017 tax cuts that expire at year-end. A hike to the state and local tax (SALT) deduction cap likely will be included, though it’s uncertain how much. The border portion would lift spending for enforcement and deportations. Differences are being hammered out among House Republicans and their Senate colleagues, like possible cuts to Medicaid and other entitlements. Such cost-cutting measures will be politically fraught.

To pass its tax plan, the GOP will use the budget reconciliation process, which allows a few select bills annually to bypass the Senate’s legislative filibuster, meaning that they can pass with a simple majority, not the usual 60-vote threshold. But this tricky process comes with rules that limit the type of provisions allowed. The bill also can’t increase the deficit beyond 10 years. The GOP is considering the use of an unusual accounting maneuver to essentially make the bill deficit-neutral, but the nonpartisan Senate parliamentarian has the final say on what’s included. It’s probable the package will pass in some form in the coming months, though due to reconciliation rules, it likely won’t include everything the GOP wants.

Raising the debt limit
Lawmakers also must act on raising the congressionally mandated debt limit, which, at $36.6 trillion, was hit in January. The Treasury Department can shuffle money around for a few months to delay defaulting on its loans. But time will expire by late summer, and if lawmakers don’t act soon, an already jittery Wall Street will react negatively. Republican budget hawks loathe debt limit increases without spending cuts, but with the party already pushing cuts elsewhere, they’ll fall in line. GOP party leaders may try to add a debt limit hike to the tax bill, but that could hit procedural obstacles.

Finally, Republicans want to codify into law spending cuts made by DOGE, the Department of Government Efficiency, which is, in effect, run by Trump ally Elon Musk. Congressional Republicans applaud Musk’s efforts, but want the final say on any cuts. Still, GOP lawmakers will push back at a few of the administration’s wishes. There’s zero chance that Congress will agree to the president’s call to impeach judges who rule against him. They’ll also ignore Musk’s calls for deep cuts to Social Security.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Related content

• Hurdles for Trump's Tax Bill
• SALT Cap Repeal? What to Expect in 2025 Tax Reform
• What Trump Isn’t Telling You About His 2025 Tax Plans
• Social Security Is DOGE's New Target: What You Need to Know

The IRS is reportedly preparing to reduce its nearly 100,000 workforce by as much as half through layoffs, buyouts, and attrition — and experts say the disruption is already interfering with this tax season.

Close to 7,000 probationary employees were laid off on February 20, and now the agency is reinstating and placing those workers on paid administrative leave until further notice. That figure adds to about 5,000 IRS employees who have reportedly accepted the Trump administration’s fork-in-the-road deferred resignation offer to cut down federal spending.

As reported by Kiplinger, those deemed critical to the 2025 tax season have been barred from accepting the buyout until mid-May, after the tax filing deadline.

Now, more layoffs could be on the horizon, as Elon Musk’s Department of Government Efficiency (DOGE) plans to cut as much as 20% of the IRS by mid-May. The billionaire tasked by President Donald Trump to dismantle federal agencies and other spending expects to eliminate about 6,800 more federal workers, barely a month after tax season ends.

The dramatic downsizing could worsen as the IRS is drafting plans to eliminate up to 45,000 of its overall headcount, sources familiar with the matter told the Associated Press. With the 2025 tax season underway, tax experts have noticed signs of trouble at the IRS, from a lack of customer service and delays to audit errors.

Here’s what you need to know about how IRS layoffs can impact you as a taxpayer, based on Kiplinger’s conversations with CPAs and tax experts.

Contacting IRS: ‘Revenue officers becoming a black hole’

When tax season rolls around, the saying “all hands on deck” is not lost at the IRS. The agency has been operating with that approach for years to overcome staffing shortages and successfully process millions of tax returns.

In fact, the IRS has been known to siphon employees from other departments to meet tax filing deadlines in previous years. This year is no different. According to the National Taxpayer Advocate, the agency made the business call to temporarily direct staffers from the Identity Theft Victim Assistance (IDTVA) department to answer phones in Taxpayer Services to handle the high volume of calls during tax season.

As reported by Kiplinger, Taxpayer Services accounts for half of the IRS entire workforce. The agency’s overall headcount had surpassed 100,000 by January, a staffing milestone not seen in 30 years.

But that progress has fallen back in barely two months.

With the recent wave of layoffs shaking up the IRS, some impacted employees likely belonged to the IDTVA. Between fiscal years 2023 and 2024, the department hired 663 new employees. Musk’s firings on February 20 mostly impacted probationary workers who had fewer protections compared to long-term colleagues, which may have included some of those recent hires.

Industry experts across the country have already noticed that it’s getting harder to reach an IRS agent on the phone, putting their clients' tax returns and problems inevitably on hold.

“Typically, when we work a high-value collections case, we are working with a single point of contact for our clients’ case at the IRS known as a revenue officer,” Logan Allec, CPA and owner of tax relief company Choice Tax Relief, told Kiplinger. “All information is passed to, and negotiations done with, this particular individual.”

But what happens when IRS phone lines go unanswered? That’s a question many CPAs and taxpayers are asking themselves this year.

Harder to avoid tax penalties

With fewer employees at the IRS, taxpayers are likely to face more obstacles as they attempt to get their problems solved.

The National Taxpayer Advocate pointed to hiring as one of the IRS's most serious problems in its annual report to Congress this year. The government watchdog wrote that insufficient funding in the IRS and low staffing levels over the past decade have forced taxpayers to deal with:

• Delays in processing returns and refunds
• Reduced access to knowledgeable IRS employees
• Inconsistent application of tax laws and increasing errors

The sudden reduction in IRS staff has sounded alarm bells for one attorney in Michigan, particularly regarding its impact on taxpayers.

“Fewer IRS employees create a big problem for taxpayers when it comes to getting their tax issues resolved,” Stephen Weisberg, principal attorney and founder of The W Tax Group, told Kiplinger. “Tax debt resolutions, including payment plans, Offers in Compromise, levy and lien releases, will take longer, that is, assuming you can get in touch with someone to help you.”

As reported by Kiplinger, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers were able to speak with an employee during the full year. While that is an improvement from previous years, it still required reassigning employees from other departments to assist with phone calls.

“The IRS is already overwhelmed,” Weisberg added. “With even fewer employees, there’s going to be no one to help taxpayers resolve these issues. Penalties will still accrue, as will interest, despite the fact that taxpayers won’t be able to get in contact with anyone in order to resolve their tax debt.”

‘Slow processing and refunds’

Taxpayers, particularly those with more complicated tax returns, often worry about delays.

Those concerns are within reason. It took the IRS an average of 180 days to manually process tax returns last year. Processing paper returns took an average of 20 days, instead of 13. Additionally, 66% of taxpayer mail was delayed and considered late by the end of 2024, according to the NTA.

If you were a victim of identity theft, the average time to reach a resolution and process refunds was nearly two years. Not to mention, the agency still faced a backlog of 1.2 million Employee Retention Credit (ERC) claims as of last fall.

The Trump administration’s hiring freeze and efforts to downsize the IRS are expected to aggravate existing problems. Mainly, ones that will impact your tax experience.

Slow processing will not only hurt responsible taxpayers it would also increase the national deficit if the IRS no longer has the bandwidth to target complicated returns, such as large corporations and higher earners.

A separate study from Yale Budget Lab shows that if the IRS shrinks by 50% — equal to a workforce reduction of about 50,000 people — the agency won’t be able to collect revenues, resulting in as much as $395 billion ($350 billion net) forgone revenue over 10 years. If the staffing reduction leads to an increase in taxpayer noncompliance, revenue losses could rise as high as $2.4 trillion in a decade.

“These layoffs within the IRS could slow processing and refunds; especially more complicated returns,” Thomas J. Cryan, attorney and author of Disrupting Taxes told Kiplinger. “Of greater impact, one can estimate that the reduction in the IRS workforce will undermine and reduce tax revenue collections; which will have the knock-on effect of increasing the annual budget deficit, which in turn will increase the costs of interest on the debt to the citizens.”

‘A focus on low-hanging fruit’

The recent string of IRS layoffs spearheaded by Musk’s DOGE team reportedly impacted thousands of employees who worked in taxpayer compliance, call centers, and the agency’s technology modernization.

While those estimated 7,000 probationary agency workers were recently placed on paid leave until further notice, they are not allowed to work during this tax season. In a letter to Acting IRS Commissioner Melanie Krause, 130 House Democrats warned that the loss of thousands in compliance staff “could cripple progress” and “embolden tax evasion” which would deprive the U.S. of urgently needed resources.

“Unfortunately, to make up for the lost revenue from experienced auditors leaving the agency, we will likely see more of a focus on low-hanging fruit,” Allec told Kiplinger, explaining that these are “less sophisticated and often non-represented taxpayers whom the IRS can essentially railroad in an audit or collections case.”

Some examples of low-hanging fruit where the IRS may focus enforcement efforts on include:

• Individuals behind on their taxes, or non-filers
• Taxpayers on repayment plans

According to Allec, the IRS has a system called Automated Substitute for Return (ASFR), which can calculate a taxpayer's liability. With less staffing, the IRS would have to lean on this automated software to pull in revenue.

“If we see more layoffs at the IRS, I have to believe that more resources will be allocated to the ‘automated’ programs,” he added.

Karla Dennis, an enrolled tax agent and CEO of KDA, Inc. told Kiplinger that the loss of compliance workers could mean fewer audits across the business sector and the wealthy. That’s because more complicated casework often requires a manual review by the IRS and can’t be run through a software service.

“The IRS compliance sector is divided between processing returns and conducting audits,” Dennis said. “Since layoffs seem to be targeting auditors, we can expect a decrease in audits, especially those for small businesses.”

What’s next for the IRS

The IRS workforce could face more shakeups as the Trump administration pushes its goal to reduce federal spending.

To date, the agency has yet to confirm President Trump’s choice for commissioner — ex-congressman and auctioneer Billy Long (R-Missouri). The IRS also demoted the acting chief counsel, William Paul. His position was filled by another IRS attorney Andrew De Mello, who sources say supports DOGE.

Looking toward the future, Trump has suggested abolishing the IRS and replacing the agency with a tariff-led revenue system administered by a so-called External Revenue Service.

However, one fact is for certain: the recent layoffs at the IRS will cause some strain on taxpayers.

"In the short term, most likely it will cause some issues, but the goal is to shake things up and make things more efficient over time,” CFP and tax strategist Matt Chancey told Kiplinger. “No one thinks that agency is efficient today, so it makes sense.”

Chancey, founder of Tax Alpha Title, cited a potential positive: “Will it get worse before it gets better? Most likely. But with new technology and some AI integration and being forced to become more efficient it should get better over time. What is the old expression — you have to break a few eggs to make an omelette."

Related Content:

• IRS Shakeup: What Trump’s Commissioner Pick Could Mean for Your Taxes
• No New IRS Agents? What Trump’s Federal Hiring Freeze, Firings Means for Your Taxes
• Could ERC Delays Get Worse if Trump Downsizes the IRS?

To help you understand what's going on in politics and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You'll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…

There’s still lots of uncertainty about DOGE — the Department of Government Efficiency. The new office in the Trump White House has tried to “move fast and break things” to improve the federal government, in many cases using legally questionable methods. But a concerted agenda is slowly emerging.

So far, DOGE has dismantled federal agencies, most notably USAID — United States Agency for International Development — now in a state of limbo. It’s also laid off thousands of federal workers as a prelude to an even larger reduction-in-force effort that is now under way at various federal agencies.

Legal setbacks
Both efforts have encountered legal setbacks, including a ruling by the conservative Supreme Court requiring the Trump administration to disburse money for already completed foreign aid work. Another judge ordered DOGE to halt further actions against USAID, though the agency can’t resume its work. A lower court says the White House must reinstate 30,000 workers who were fired because of their probationary status.

An expansion of executive power is at stake. The Trump administration seems intent on testing its legal limits, hoping for favorable court rulings that will increase its ability to fire federal workers, impound congressionally appropriated funds and more.

Reduction-in-force initiative
In the meantime, expect DOGE to try doing more things by the book. This includes implementing an even bigger reduction-in-force initiative across several agencies. The Department of Education is in the process of cutting 50% of its staff (roughly 1,900 people) via both layoffs and voluntary retirement. The Department of Veterans Affairs aims to return to its 2019 employment levels (400,000 employees) by shedding around 80,000 jobs. The Department of Defense wants to lose at least 55,000 of its roughly 780,000-strong civilian workforce. The Social Security Administration will look to cut 7,000 of its 57,000 employees.

But note that the traditional RIF process can take months to complete and comes with numerous requirements that open the door to more legal challenges.

DOGE also wants to fast-track efforts to shrink Uncle Sam’s office footprint, terminating hundreds of leases, some of which will expire as soon as this summer. Even here, projected savings may prove short-lived. Some leases will be renegotiated at the urging of agencies that were generally not consulted about the changes.

Slow progress and confusion
The slow pace of progress has proved frustrating for President Trump, whose hunger for quick victories has been stymied by political and legal realities, including fears that the reduction in manpower will hamper government services. So far, DOGE’s actions have mostly sown confusion in Washington. That in itself could help if it discourages people from seeking federal jobs.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

Read more

• Social Security Is DOGE's New Target: What You Need to Know
• With DOGE Making Cuts at National Parks, Can You Still Use Your Senior Pass?
• DOGE Gains More Grip on IRS Amid Leadership Reshuffle
• Donald Trump Tests His Limits

The IRS could suffer more internal shakeups as Elon Musk’s Department of Government Efficiency (DOGE) embeds itself further into the agency.

IRS acting chief counsel, William Paul, was reportedly demoted from his role at the agency and is expected to return to his prior role as deputy chief counsel technical, according to TaxNotes. Paul has been replaced by another IRS attorney Andrew De Mello, who sources say is supportive of DOGE.

President Donald Trump had nominated De Mello for inspector general of the Education Department during his first term.

The chief counsel serves as the top legal advisor to the IRS Commissioner, the Treasury, and taxpayers. The position, along with the commissioner, is appointed by the President and confirmed by the U.S. Senate.

It’s unusual, however, for the role to be changed as the presidency changes hands. Paul had previously served as acting chief counsel under President Biden and during Trump’s first term.

Although the reason for the demotion is unclear, it comes as IRS leaders are at odds with DOGE employees gaining access to sensitive tax databases. It also follows a dramatic reshaping of the IRS workforce, as Musk has set off to fire thousands of federal workers and cut nearly 20% of all IRS employees by May 15.

“I had never heard of a president firing a career acting chief counsel while awaiting Senate confirmation of the duly appointed chief counsel,” former IRS Commissioner John Koskinen told CNN. “In this case, it’s especially troubling since Bill Paul is a wonderful lawyer and a dedicated and devoted public servant.”

Related: Check out Kiplinger's tax blog for the 2025 filing season. We're providing live updates, news, information, and commentary to help you navigate your taxes.

Trump IRS leadership up in the air

This latest restructuring of IRS leaders may come as little surprise to some.

Paul’s removal follows IRS Commissioner Danny Werfel’s resignation before the end of his term. Werfel departed from his role on January 20, paving the way for President Trump’s choice for commissioner — ex-congressman and auctioneer Billy Long (R-Missouri).

• As reported by Kiplinger, Long’s background lacks tax experience which is typical for IRS commissioner nominees.
• He would also be the first politician appointed to the role in more than 80 years.

Long is still pending a Senate confirmation date, casting further doubt on the agency's future as Trump has suggested abolishing the IRS and replacing it with a tariff-led revenue system administered by a so-called External Revenue Service.

Since Werfel’s departure, Douglas O’Donnell briefly stepped up as acting IRS Commissioner before announcing his retirement on February 25 after serving 38 years at the agency. It's unclear whether inner turmoil at the IRS and recent layoffs, spurred by the DOGE incident, influenced his decision to exit.

In his place is Melanie Krause, former IRS Chief Operating Officer, who joined the IRS in 2021. Before her career at the IRS, Krause spent 12 years in the federal oversight community, including the Government Accountability Office and the Department of Veterans Affairs Office as Inspector General.

IRS workers feel ‘paralyzed’ by DOGE

This year has not been easy for the IRS.

The disruptions at the agency began as soon the first DOGE staffer embedded in the agency’s Washington, D.C. headquarters last month, according to CNN.

Allegedly, Musk’s DOGE staffers began to demand access to the tax collection agency’s sensitive internal databases, according to sources familiar with the matter. Some information on those servers includes the Social Security numbers and bank account information of millions of private citizens like you.

Privacy experts and government officials cited concerns that DOGE’s access to tax records could lead to a breach of confidential taxpayer information.

“They just randomly drop by people’s offices, demanding access to systems; they’re bullying us and there’s no discipline in what they are doing, which really worries me,” an IRS employee told CNN anonymously.

Another source reported they were “paralyzed” as DOGE announced widespread layoffs of federal employees, including IRS workers handling the tax season. To summarize:

• Approximately, 6,700 IRS employees were fired in February, particularly new hires, in the middle of the 2025 tax filing season.
• The National Treasury Employees Union estimates that as many as 5,000 IRS workers accepted Musk’s DOGE-arranged buyout offer by the Feb. 12 deadline.
• IRS workers deemed essential to IRS tax filing season are required to work through May 15, even if they took the buyout.

Overall, the Trump administration and DOGE are aiming to slash the IRS workforce by nearly 20% by May 15. That means nearly 6,800 employees would be terminated, adding to the roughly 11,400 that have been laid off or accepted the buyout. That’s more than 18,000 IRS employees that would be out of work.

Before the overhaul of the IRS workforce, the agency had approximately 100,000 employees. Nearly half of those were appointed to critical areas to ensure tax filing, compliance, and taxpayer services.

That includes federal workers who answer your phone calls during tax season, flag taxpayer errors, and administer refunds, among some examples.

Trump’s dramatic downsizing of IRS personnel has since raised concerns about the agency’s ability to assist taxpayers, run compliance checks, and process tax returns without further delays.

Despite the challenges, the IRS expects to receive more than 140 million individual tax returns by the April 15 deadline — also known as "Tax Day."

What’s next for the IRS under Trump?

The future of the IRS is facing a myriad of challenges under the Trump administration.

Congress has paralyzed $20 billion in critical funding allocated for key enforcement programs, which Treasury officials warned could lead to an increase in the national deficit of $140 billion, as many as 6,000 fewer audits to the wealthy, and 2,000 fewer audits to large corporations.

This month, a Treasury official said that the IRS is pausing modernization efforts due to the budgetary pause.

The leadership of the IRS still hangs in a state of limbo as Trump’s nominee for IRS Commissioner, Mr. Long, has yet to have a Senate confirmation.

Additionally, Musk-led DOGE efforts to downsize the IRS workforce have raised doubts about the agency's future efficiency, which already struggles to address ERC delays and taxpayer fraud due to a lack of staff — among other challenges.

Lastly, the Trump administration has suggested tariffs may abolish income tax for certain taxpayers. Some GOP lawmakers have even suggested eliminating the IRS and substituting revenue with a national sales tax.

All of these dramatic changes can have an impact on your finances and your experience as a taxpayer, so stay tuned to our coverage.

Related Content:

• Trump’s Latest Pitch: No Taxes If You Earn Less Than $150K?
• House GOP Bill Aims to Abolish the IRS and Rewrite the Tax Code
• Could ERC Delays Get Worse if Trump Downsizes the IRS?

When the Trump administration pressured IRS employees to take buyouts before Feb. 6 they missed one crucial detail: it’s tax season.

What followed was an abrupt letter directed to the IRS workforce on the eve of the buyout deadline.

Those in “critical filing season positions” in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service were told they are exempt from the buyout plan until May 15, 2025. Anyone who already resigned must work through the extended period.

The IRS headcount as of Nov. 2024 amounted to 100,791 full-time employees, with over half of the workforce belonging to IT and taxpayer services, the National Taxpayer Advocate (NTA) reported.

The news comes after President Donald Trump imposed a government-wide hiring freeze, and offered about 2.3 million full-time federal employees a so-called buyout through a “deferred resignation program” to hollow out the government workforce. Workers who voluntarily step down by the deadline would still collect paychecks and benefits until Sept. 30.

Note: That program is on hold due to a judge's ruling halting the program temporarily right before the Feb. 6 deadline. For more information, see Trump Buyout Program Paused: What It Means for You.

The IRS expects more than 140 million tax returns to be filed by the April 15 deadline, there’s no telling how gravely gutting its workforce would have impacted taxpayers. Jan. 27 marked the official start of the 2025 tax season.

Here’s what we know so far about Trump’s plan to reduce the federal workforce.

Trump buyout offer accepted by thousands of federal employees

Trump’s nationwide purge of the government workforce failed to yield his expected results and nearly backfired if enough IRS workers resigned amid tax season.

At least 40,000 government employees accepted an offer to quit their jobs in exchange for Trump’s so-called buyout before the Feb. 6 deadline, the White House said on Feb. 5.

That figure represents about 2% of more than 2 million federal employees who were given a deferred resignation offer on Jan. 28. No clarity has been given regarding how many were tied to the tax agency.

• Statistically, about 60,000 individuals retire each year across federal jobs — begging the question, were they leaving anyway?
• Key fact: 63% of IRS employees will soon reach retirement age.

Elon Musk’s hand in buyouts: The U.S. Office of Personnel Management (OPM) shocked federal employees with an exit offer titled “Fork in the Road” via an email blast. A subject line familiar to laid-off Twitter employees following Elon Musk’s acquisition of the company, now known as X.

Musk, who has been deemed a “special government employee” tasked by Trump with cutting spending and reshaping the government workforce via the Department of Government Efficiency (DOGE) hoped at least 5% to 10% of the federal workforce would quit.

“Can take the vacation you always wanted, or just watch movies and chill, while receiving your full government pay and benefits,” the DOGE posted on X, trying to entice fed workers to call it quits.

No reassurance for federal employees who stay

Employees who refuse to voluntarily separate from their posts were told via the same email that they must return to in-person work, adhere to high-performance standards, and that the workforce would be comprised of “reliable, loyal, trustworthy” individuals.

Lastly, the memo warned that except for branches of the military, the majority of federal agencies would likely be “downsized through restructurings, realignments, and reductions in force.”

Measures would include furloughs and reclassifications for a “substantial” amount of at-will employees.

Top officials warn: “Don’t be fooled… he’ll stiff you”

As millions of federal employees consider their next steps, federal union leaders and top government officials are warning workers to not take Trump’s buyout.

The American Federation of Government Employees (AFGE), the largest federal employee union representing 800,000 federal and D.C. government workers across 900 local unions cautioned members to not be tricked into resigning, citing concerns of not getting paid.

“There is not yet any evidence the administration can or will uphold its end of the bargain, that Congress will go along with this unilateral massive restructuring, or that appropriated funds can be used this way, among other issues that have been raised,” AFGE said in an email to its members.

“We are encouraging AFGE members NOT to resign or respond to this email until you have received further information and clarification,” top union officials added.

Government officials also criticized the validity of the buyout program.

“There’s no budget line item to pay people who are not showing up for work,” Sen. Tim Kaine (D-VA) said on the Senate floor. “Don’t be fooled. He’s tricked hundreds of people with that offer. If you accept that offer and resign, he’ll stiff you just like he stiffed the contractors.”

• A USA Today analysis found Trump had been involved in more than 3,500 lawsuits over the past three decades, involving normal Americans who claim they were never paid by Trump or his companies.
• Some stiffed individuals included Trump’s lawyers.

Noteworthy: Any fed worker that accepts the Trump administration’s buyout deal would waive the right to legal action, according to a circulated OPM memo.

That’s a risk many workers aren’t willing to take.

Bottom line: Troubling road for IRS

The IRS has a tough road ahead under the Trump administration, from losing billions in funding to a shrinking workforce.

Elon Musk’s apparent hyperfixation with “deleting” the tax agency has already sparked confusion and panic among taxpayers.

This week, the tech billionaire suggested on his social media platform X he had fired 18F, a digital services agency responsible for developing the IRS Direct File system. The IRS clarified that the free tax filing program is still functional across 25 states for the 2025 tax season.

Musk also gained unprecedented access to the U.S. Treasury payment system, which includes sensitive information like your name, Social Security Number, address, and government payments like your tax refund or Social Security payments.

At the same time, Republican lawmakers are pushing a bill to abolish the IRS. All of these changes can impact taxpayers like you, so stay tuned.

Related Content:

• Will Elon Musk’s Treasury Access Derail Your 2025 Tax Refund?
• No New IRS Agents? What Trump’s Federal Hiring Freeze Means for Your Tax Return
• The Fine Print: What Trump Isn’t Telling You About His 2025 Tax Plans
• Trump Buyout Offer Plan Paused by Judge Before Deadline

Elon Must isn't just the world's richest person. He's also a man who recently gained access to every single taxpayer's personal financial data. That ability to view data from the U.S. Treasury is the subject of a legal tug-of-war. As of February 11, a judge has upheld a ban on such access until Friday, according to the AP.

On Jan. 31, Treasury Secretary Scott Bessent granted members of the Department of Government Efficiency (DOGE), including Musk, access to the U.S. Treasury’s federal payment system. This system disburses trillions of dollars each year for programs that include Social Security and Medicare.

With this move, Musk effectively gained access to the federal government’s checkbook, attaining a level of control that many find unsettling.

The decision to grant Musk access to the Treasury’s payment system was not without controversy. David Lebryk, a top Treasury official who worked there for decades, was ousted after aiming to block Musk’s access.

Democrats push back

Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) questioned the decision to grant Musk access to the federal payment system. In a Jan. 31 letter, he stated, "I can think of no good reason why political operators who have demonstrated a blatant disregard for the law would need access to these sensitive, mission-critical systems."

Wyden also expressed concern that the mismanagement of the federal payment system could threaten the full faith and credit of the U.S., a concern echoed in a February 2 letter from Senator Elizabeth Warren (D. -Mass) to the new Treasury secretary. Wyden noted that Musk was not only denied high-level security clearance but that his business dealings overseas could put the U.S. at greater risk of a cybersecurity attack.

When asked about Musk's control of the U.S. Treasury payment system, President Donald Trump said, "We’ll give him the approval when appropriate; where not appropriate, we won’t."

In a Feb. 4 letter to Congress, Treasury officials stated that Musk's team had been given "read-only" access to its federal payment system. However, court filings show that a 25-year-old DOGE staffer, Marko Elez, was mistakenly given full access to payment systems on February 5. Mr. Elez resigned the next day, in part due to racist social media posts.

On February 7, the attorneys general of 19 states filed a suit. On Feb. 8, a federal judge, citing a risk of “irreparable harm,” temporarily restricted Elon Musk’s team from accessing a critical Treasury Department payment system. A Feb. 14 hearing is set for the matter.

Americans have questions

In late January, the White House was blocked from freezing federal grants and loans, and on February 6, a judge paused a buyout offer to federal employees just as the deadline was about to expire. Now, the concern shifts to other government programs Musk may or may not have the power to control. Here are a couple of the more pressing questions consumers will likely have.

Will you get your Social Security check on time?

Millions of Americans depend on Social Security's regular payments, which are processed through the Treasury payment system. There's no reason to believe that Social Security checks will be late due to DOGE's involvement. However, President Trump's offer to buy out federal workers may cause staffing shortages and disruptions that strain the system in unknown ways. The buyout was paused on February 6 and the pause was extended on February 10.

Senator Kirsten Gillibrand (D-NY) and other senators wrote to the U.S. Office of Personnel Management that the Social Security Administration is already facing staff shortages, and reducing staff even further could increase wait times. "In 2024, the average wait time for service via phone was 45 minutes; in 2023 the average wait time for disability determinations was 230 days, and SSA staffing was at a 25-year low."

There's also no indication that Musk's team wants to stop your Social Security check. According to The New York Times, Musk intends to focus cost-cutting efforts on blocking improper payments across government agencies rather than stopping individual checks.

Democrats vowed to protect Social Security and other payments with a bill. “We must protect people’s Social Security payments, their Medicare payments, tax refunds, from any possible tampering by DOGE or any other unauthorized entities,” Senate Minority Leader Chuck Schumer (D-NY.) said at a February 3 press conference.

Of course, the most significant risk to Social Security is its funding shortfall, as older Americans retire in droves and the program’s trust funds dwindle. There are no easy fixes. Potential solutions — including benefit cuts, raising the retirement age and tax increases — are politically difficult to enact. However, President Trump has stated that he will not touch Social Security.

That said, the Social Security Administration’s Office of the Inspector General found that between fiscal years 2015 and 2022, the agency lost almost $72 billion to improper payments, most of which were overpayments. Getting overpayments returned to Social Security fits within Musk's stated goal of blocking improper payments, though it would have only a marginal effect on the Social Security funding shortfall.

Why does Musk want access to Social Security data?

Musk and DOGE have been tasked with reducing wasteful government spending. Granting him access to Social Security data could, in theory, help his team identify fraud and put a stop to illegitimate payments.

On Feb. 11, Musk posted on X, "At this point, I am 100% certain that the magnitude of the fraud in federal entitlements (Social Security, Medicare, Medicaid, Welfare, Disability, etc) exceeds the combined sum of every private scam you’ve ever heard by FAR."

Only a few days earlier, he had posted on X that fraudulent payments could be costing taxpayers more than $100 billion per year.

Although Musk’s involvement in Social Security has been criticized broadly, the reality is that there is official data on record pointing to the mismanagement of funds. The Social Security Administration’s Office of the Inspector General found that between fiscal years 2015 and 2022, the agency lost almost $72 billion to improper payments, most of which were overpayments. Getting overpayments returned to Social Security fits within Musk's stated goal of blocking improper payments, though it would have only a marginal effect on the Social Security funding shortfall. And past attempts to claw back those overpayments have resulted in hardship for some Social Security beneficiaries.

On Feb. 10, Democrats rallied against Musk's newly granted access outside the Social Security Administration’s headquarters in Baltimore. “We have one simple message, which is: Elon Musk, keep your hands off of our Social Security,” Sen. Chris Van Hollen (D-Md.) said during the event's press conference.

Is your personal data safe?

In theory, Musk and his team now have access to every American’s Social Security number and, in many cases, their banking information. However, the team is still bound by the law, which means any attempt to use that information for commercial or other purposes would likely result in legal challenges from Congress.

What's less clear is that this new, unidentified team will protect Americans' data security.

Unfortunately, identity theft is rampant, and Americans need assurances that government data is secure. Musk has been criticized for poor privacy and security decisions at some of his companies. For example, Tesla has a spotty record when protecting user data.

Musk has floated the idea of using blockchain technology to track government payments and, ideally, to improve efficiency. Blockchain helps make payments more transparent and immutable, offering real benefits for tracking transactions. Some municipalities within the U.S. have piloted blockchain initiatives. However, this technology is still relatively young, and it's hard to know what kind of privacy issues might arise from its use in tracking the largest payment system in the world.

And speaking of privacy issues, DOGE is accessing Medicare and Medicaid systems.

According to the Wall Street Journal, DOGE personnel have been at the Centers for Medicare and Medicaid Services (CMS), with access to personal data systems. They are searching Medicare data for fraud and waste and reviewing CMS's staffing. The article quoted people familiar with this effort as saying that, to the best of their knowledge, DOGE has access to the contracting system but not personal medical data.

Whether you're a fan or a detractor of Elon Musk, ultimately, he is a private citizen who’s been handed the key to an unfathomably large vault. We are in uncharted territory.

Read More

• Eight Ways Trump Could Change Your Retirement
• Your Retirement Savings and Spending Should Change Under Trump
• Will Elon Musk's Access to Treasury Derail Your 2025 Tax Refund?
• What is the Average Social Security Check by Age?

Donald Trump has once again stirred the debate on tax policy, recently advocating for eliminating income tax and returning to a tariff-based revenue system.

"We're going back to the old days. No income tax, just tariffs. It worked before, and it'll work again," Trump said earlier this year in Las Vegas, Nevada. He emphasized his point by adding, "The IRS is a disaster. We don't need it. Tariffs will fund everything we need and more."

The remarks, which came not long after a Republican lawmaker separately proposed abolishling the IRS and rewriting the tax code, reignited discussions about fundamental changes to the U.S. tax system. (It's worth noting that critics argue that heavy reliance on tariffs could lead to trade wars, increased consumer prices, and potential economic instability.)

The idea of abolishing income tax isn't new, but Trump has thrust it into the spotlight, just as the U.S. faces the expiration of the Tax Cuts and Jobs Act (TCJA, aka “Trump tax cuts”) at the end of this year. (His sweeping tariffs on almost all goods from more than 100 countries went into effect April 9.)

This also comes as the Trump administration has unleashed a flurry of executive orders that significantly impact the functioning of federal agencies, including the IRS. And Trump's Department of Government Efficiency, led by Elon Musk of Tesla and SpaceX, has made sweeping workforce cuts across the federal government.

So, what does all of this mean for you? Here’s more to know.

Tariffs over income tax?

The concept of relying primarily on tariffs for federal revenue dates back to the early days of the United States (more than 150 years ago), when customs duties were the government's primary source of income. (The U.S. income tax was implemented in 1913.)

Trump argues that eliminating income tax would simplify the tax code, reduce taxpayers' burdens, and stimulate economic growth. He contends that a tariff-based system would protect American industries and create a more level playing field in international trade.

To that end, Trump has, as of April 9, levied sweeping tariffs on almost all countries, which his former Vice President Mike Pence has called "the largest peacetime tax hike in U.S. history."

However, the feasibility of a tariff-only revenue system in today's economy is questionable. Some economists warn that transitioning to such a system would be incredibly disruptive.

• The federal government relies heavily on income tax revenue, and replacing it entirely with tariffs would require a massive overhaul of the U.S. fiscal structure.
• Massive tariff hikes could potentially violate international trade agreements and spark retaliatory measures from trading partners.
• And let’s not forget: U.S. consumers will bear the brunt of tariffs through increased costs on numerous products.

Note: As of April 9, Trump levied sweeping baseline and some higher tariffs against almost all countries and a 104% tariff on China.

For more information, see Kiplinger's report: What's Happening With Trump Tariffs?

Interestingly, Trump's comments align with recent legislative proposals, like the Fair Tax Act reintroduced by Rep. Buddy Carter (R-GA).

As Kiplinger has reported, that bill proposes replacing the current tax code with a national consumption tax and eliminating the IRS.

What about abolishing the IRS tax agency?

Regarding getting rid of the IRS, Rep. Carter has stated, "The Fair Tax is exactly that – fair. It is the only tax proposal out there that is pro-growth, simple, and allows Americans to keep every cent of their hard-earned money while eliminating the need for the IRS altogether."

While not identical to Trump's tariff-focused plan, the Fair Tax Act also proposes eliminating income tax. Some Republican representatives support the Fair Tax Act, arguing it would simplify tax administration and allow U.S. taxpayers to keep more of their earnings.

• Critics of the Fair Tax Act and similar proposals warn that a consumption-based tax system could disproportionately burden lower-income households and potentially widen wealth inequality.
• They argue that such a system might be regressive since families with lower incomes typically spend more on consumable goods.

Meanwhile, Trump has floated the idea of a second tax agency, the so-called "ERS or External Revenue Service," that he says would handle tariff revenue.

The debate over these radical tax proposals is set against impending tax changes. With key provisions of the TCJA set to expire at the end of 2025, lawmakers face increasing pressure to address the future of U.S. tax policy.

And if that weren’t enough, a flurry of Trump executive orders are throwing a wrench into the mix.

Trump, DOGE cut IRS workforce amid hiring freeze

For example, in January, the White House Office of Management and Budget (OMB) issued a memo requiring all federal grants and loans that would have been effective January 28, 2025, to be frozen. While not directly targeting taxes, that unexpected and sweeping move would have significantly affected the tax landscape and many programs and activities that rely on federal aid.

However, just before the freeze on government grants and loans was to take effect, a federal judge paused its implementation until February 3. And, not long after, the Trump administration rescinded the OMB memo.

Still, the memo came in addition to executive orders already issued freezing federal hiring for 90 days (indefinitely for the IRS), requiring many federal workers to return to the office, and changing processes for reclassifying federal workers.

Key points of the now rescinded memo:

• Would halt distribution of federal financial assistance
• Would exclude Social Security, Medicare, and Medicaid benefits
• Federal agencies would have to report on affected programs by February 10, 2025

Note: This is a developing situation, so the key aspects of the memo are now impacted by legal orders.

Potential tax impacts of such a freeze:

• IRS Operations: A hiring freeze at the IRS could slow tax return processing and impact customer service.
• Tax Credits: Uncertainty around grant-supported tax credit programs, especially in clean energy and electric vehicles.
• Tax Guidance: Possible delays in issuing guidance on recent tax law changes.
• Program Changes: Tax-related federal programs could be affected, potentially altering available incentives and credits.

Notably, the memo didn't specify an end date for this "temporary" pause, which added another layer of uncertainty.

Trump income tax bottom line

While Trump's vision of a tariff-based system and similar ideas like the Fair Tax Act proposal may seem attractive to some, implementing such drastic changes (which require congressional approval) would be complex and challenging, to say the least.

But stay informed and engaged as tax discussions unfold. The decisions Congress and the White House make in the coming days, and months will have far-reaching implications for individual taxpayers, businesses, and the economy.

More on Trump's Tax Plan

• The Fine Print: What Trump Isn’t Telling You About His 2025 Tax Plans
• These States Would Be Hardest Hit By Trump Tariffs
• GOP Bill Proposes to Abolish the IRS and Rewrite the Tax Code

Undoubtedly one of the most enigmatic business figures of our era, Elon Musk’s net worth comes down to his ground-breaking ventures and repeated success in scaling-up innovative businesses. He is the mind behind some of the most revolutionary companies currently operating, including SpaceX, Tesla, SolarCity, and The Boring Company. 

According to Forbes, Elon Musk has a net worth of over $187bn, making him one of the richest people on the planet. But his headline-grabbing business practices often see his overall monetary value fluctuate. Nevertheless, he is one of the most prominent billionaires and consistently amongst the wealthiest in the world.

So, how did Elon Musk make his money?

How Elon Musk built his fortune

Born in South Africa in 1971, Musk moved to the US at the age of 17 to attend college, gaining degrees in physics and economics. He soon founded his first company, Zip2 — an online business directory service. This venture quickly made Musk very wealthy and he sold the business to Compaq for around $300m in 1999.

This cash was then used to kickstart his next venture, X.com, which later became PayPal (PYPL). In 2002, eBay (EBAY) acquired the online payment firm for $1.5bn, and the same year, Musk founded SpaceX.

A year later, he co-founded one of his most well-known companies — electric car manufacturer Tesla (TSLA). It is this business, in particular, that’s behind Musk’s stratospheric rise up the global rich lists, with shares reaching around $400 at their peak in November 2021.

Beyond Tesla and SpaceX, Musk has involvement in several other companies, including solar panel installation firm SolarCity and underground transportation firm The Boring Company.

The Rise of Tesla 

Tesla is now a household name down to Musk’s determination for it to be the world’s leading manufacturer of electric vehicles (EVs). In part due to innovation, cutting-edge technology, and advanced manufacturing processes, Tesla quickly gained traction within the nascent EV market in the mid-2010s and has since gone on to become a market leader.

By positioning the company as a leader in sustainable transportation, Musk has steered Tesla towards success, delivering him huge wealth in the process.

He used this wealth to make what many see as his most controversial business decision — the acquisition of Twitter in 2022 for around $44bn.

Market reaction to the deal was mixed, but many saw Musk’s move as rash. As such, Tesla's stock market value sank by over $100 billion the day following the deal, causing Musk to lose around $30 billion of his net worth.

Is Elon Musk the world’s richest person?

Elon Musk’s entrepreneurial spirit, ability to innovate, and willingness to take risks have seen him rapidly rise up the ranks of the world’s richest people. So much so, that despite his Twitter woes he is second in Forbes’ index of billionaires, behind only French fashion magnate Bernard Arnault.

Arnault and his family have a fortune of $220.7bn, according to Forbes — more than $30bn greater than Musk’s fortune.

Musk is wealthier than Jeff Bezos ($137.8bn), Larry Ellison ($129.5bn), and Bill Gates ($114.0bn) 

Despite the controversies surrounding Musk's management style, he has remained near the top of global rich lists while maintaining his relevance as a global business disruptor. So while he may not be the world’s richest person today, he is always a contender for the top spot and has earned his place amongst the world’s leading billionaires. 

Read more

• Are You Rich? U.S. Wealth Percentiles Might Provide Answers
• The Richest Person in the World Revealed
• Being Rich vs. Being Wealthy: What’s the Difference?
• 10 Things You Must Know About Becoming a Millionaire

Green energy stocks got a lift thanks to the clean energy incentives in the Inflation Reduction Act of 2022 (IRA), along with the dual catalysts of rising demand and lower costs.

Rising demand driven by leading AI data center operators is now the No. 1 factor supporting green energy stocks, despite President Donald Trump's effort to eliminate renewable and electric vehicle (EV) tax credits.

As Deloitte explained in its 2024 renewable energy industry outlook, the IRA extended wind and solar tax credits for projects that started construction before 2025 through at least 2032.

But state-level clean-energy legislation has also provided a boost, with 22 states and Washington, D.C., targeting 100% renewable energy or 100% carbon-free electricity by 2040 to 2050.

In addition, 43 of the 45 largest U.S. investor-owned utilities have committed to reducing their carbon emissions by raising the use of renewables.

"We expect little impact to U.S. utility-scale solar demand from corporate sustainability goals with or without tax credits," writes UBS analyst Jon Windham in a recent note on energy intensity and electricity costs for leading AI data centers and the impact on electric utility stocks.

According to Windham's analysis, the loss of renewable tax credits would have minimal impact on operating margins across tech stocks. "A detailed review of their sustainability reports reveals continued deep commitment to carbon free energy sourcing," Windham concludes.

Reuters reported less than 10 days after the election that Trump's transition team planned to kill the $7,500 consumer tax credit for electric-vehicle purchases as part of broader tax-reform legislation that we now know as the "big, beautiful" bill.

Such a law would have a deep but disparate impact on the EV market. Most EV stocks continue to trade on simple supply and demand in an increasingly global market.

Meanwhile, the main driver is elsewhere: U.S. corporations' demand for clean power has surged 100-fold in the past decade, according to a recent report from the trade group American Clean Power, as solar and wind power costs have fallen substantially due to increased competition and efficiencies.

As S&P Global reported in a June 2024 note, "As of this year, corporate renewable procurement capacity continues to show momentum, with 15.8 GW (gigawatt) contracted in the first quarter, growing 36% year on year. Europe led in capacity, while the Asia-Pacific region led in the number of deals. In terms of countries, corporates have been particularly active in the U.S., Australia and India."

With that in mind, here are nine of the best green energy stocks for investors looking to profit on the still-growing trend toward sustainability.

Data is as of June 11. Price target data is provided by S&P Global Market Intelligence.

• Sector: Industrials
• Industry: Specialty industrial machinery
• Market value: $132.0 billion
• Median price target: $451.24 (6.7% implied downside)

The name "General Electric" does not exactly evoke the image of renewable energy. But the April 2024 division of the venerable industrial conglomerate's remains into two separate businesses has changed all that.

GE Vernova (GEV, $483.47) incorporates the old General Electric's operations in renewables, power, digital and energy financial services under the leadership of CEO Scott Strazik.

The spinoff accomplished GE's goal of dividing itself into three companies focused on energy, aviation and health care.

The other entity created a little more than a year ago, GE Aerospace (GE), includes the aviation assets. The spinoff of GE HealthCare Technologies (GEHC) was completed in early 2023.

Vernova's focus, Strazik says, is on addressing climate change and fostering sustainable development.

Its businesses include onshore wind turbines with rated capacities of two to six megawatts (MW) for different environments, offshore wind with six- to fourteen- MW capacities for tougher conditions, hydropower generation, hybrid renewable energy and storage, grid solutions and related solutions.

The Inflation Reduction Act provided a lift for Vernova, as it did for other green energy stocks, despite questions about its long-term viability in a second Trump administration.

As Morningstar analyst Joshua Aguilar noted at the time of the spinoff, "Favorable U.S. legislation provides a backdrop of more certainty around timing of wind-related projects, and a combination of better project selectivity, a focus on the North American market, and rightsizing should help drive the profits GE investors have long been clamoring for."

Since its spring 2024 debut on the New York Stock Exchange, GEV stock is up more than 255%.

Noting GE Vernova is "well positioned to capitalize on growing electricity demand" in a note on the stock's recent performance, Morningstar's Brett Castelli observes, "Shares are up nearly 50% year to date, handily outperforming the broad market, as outer-year financial expectations continue to increase."

Explaining that its current valuation "adequately reflects future revenue growth and margin expansion," Castelli concludes GEV shares are "overvalued following the rally in recent weeks."

• Sector: Utilities
• Industry: Utilities – renewable
• Market value: $7.37 billion
• Median price target: $28.46 (9.9% implied upside)

Brookfield Renewable Partners (BEP, $25.92) is a renewable energy company that operates hydroelectric, wind, utility-scale solar and storage facilities in North and South America, Europe and Asia.

Brookfield Renewable has a track record of investing in and operating high-quality renewable energy assets. It's part of Brookfield Asset Management, which manages more than $1 trillion in assets.

"The fundamentals for energy remain very strong, with digitalization and re-industrialization driving accelerating demand that far outpaces supply," management notes in its first-quarter interim report.

"This imbalance persists despite weaker market sentiment due to uncertainty of the impacts of tariffs globally. Despite this, renewables represent the most viable solution to meet the insatiable demand for energy given their low-cost position, mature supply chain and ability to be deployed quickly in almost any region"

Brookfield has also positioned itself to benefit from a renaissance in the nuclear power industry promised by Trump.

Brookfield and its institutional partners formed a strategic partnership with Cameco (CCJ) to acquire Westinghouse, one of the world's largest nuclear services businesses, for $7.9 billion in 2023.

According to Brookfield, nuclear power and hydroelectricity are "the only forms of clean, dispatchable, baseload power generation and will be a key enabler of the rapid growth of intermittent solar and wind."

Westinghouse services about half the global nuclear power generation sector and is the original equipment manufacturer to more than half of the global nuclear reactor fleet. Brookfield and its partners own 51% of Westinghouse, while Cameco holds 49%.

"Westinghouse is well positioned to capture the increasing global tailwinds for nuclear," according to Brookfield.

• Sector: Consumer discretionary
• Industry: Auto manufacturers
• Market value: $1.1 trillion
• Median price target: $299.14 (8.4% implied downside)

The share price of Tesla (TSLA, $326.43) surged in the aftermath of Donald Trump's victory in the 2024 U.S. presidential election, with CEO Elon Musk playing a prominent role in both the campaign and the transition period ahead of the January 20, 2025, inauguration.

TSLA suffered some as Musk acquired Twitter, turned it into X and extended his reach into social media and politics. His bet on Trump — "a poker move for the ages," according to Dan Ives of Wedbush Securities — appears to another volatile venture.

The Trump administration plan to eliminate tax credits for EV purchases would likely benefit Musk's company, as Kiplinger's Kelley Taylor writes. "Tesla representatives have expressed support for ending the subsidy to Trump's transition committee. This may seem counterintuitive but seems to align with CEO Elon Musk's previous statements."

Still, TSLA has traded as high as $429.80 (January 15) and as low as $214.25 (April 7) so far in 2025.

Some of that price action is about Tesla's operational progress, including the anticipated release of its robotaxi. A lot of TSLA volatility is simply about CEO Elon Musk and his up-and-down relationship with Trump.

One of the largest battery electric vehicle automakers in the world, Tesla is well positioned to grow its solar panel and storage businesses in similar fashion.

But Tesla stock has other drivers now.

"We believe Trump in the White House changes the landscape for Elon Musk and Tesla," Ives said during a post-election appearance on CNBC.

Ives said then Musk's "major strategic bet" could prove "very bullish for Tesla’s AI/autonomous story."

Reflecting his bullish view on Trump's victory and its potential impact on Musk's company, Ives raised his price target for TSLA from $300 to $400.

Ives has raised that target as high as $550 in 2025. He's also cut it as low as $315 amid a "massive feud over social media" between the CEO and the president.

"The vast majority of valuation upside for Tesla depends on the success of its autonomous vision," Ives emphasized in a June 6 note. "Therefore, a cooperative relationship with Trump will be essential for securing the federal framework needed to support that vision."

Ives believes Tesla has a path toward a $2 trillion valuation driven by full self-driving, widespread adoption of autonomy, and the U.S. rollout of its Cybercab service.

• Sector: Utilities
• Industry: Utilities – regulated electric
• Market value: $150.7 billion
• Median price target: $80.71 (10.6% implied upside)

NextEra Energy (NEE, $73) is typically found on lists of the best green energy stocks to buy.

The world's largest producer of wind and solar energy, NextEra also owns Florida Power & Light, the biggest electric utility in the U.S., providing clean electricity to more than 12 million people.

It's a corporate leader in sustainability, having been awarded the S&P 500 Global Platts 2020 Energy Transition Award for ESG leadership.

The utility stock was a primary beneficiary of the IRA, which CEO John Ketchum described as "transformational for our industry and our business" when it was passed.

Ketchum and NextEra Energy expected tax credits for wind, solar and storage to remain in place. But management continues to find ways to grow its business.

NextEra Energy Resources continues to add new renewable and storage projects to its backlog.

Management also completed agreements with two Fortune 50 customers for the potential development of renewables and storage projects totaling up to 10.5 gigawatts between now and 2030.

NextEra Energy Transmission has also secured contracts to build transmission projects in the PJM Interconnection, California Independent System Operator and Southwest Power Pool footprints that will roughly double the size of its transmission investments. Management expects rapid growth in electricity demand from data centers supporting generative AI.

Highlighting the opportunity that increased power demand is bringing to the utility sector, management said NextEra "will be disappointed if we are not able to deliver financial results at or near the top of our adjusted earnings per share expectations ranges each year through 2027, while maintaining our strong balance sheet and credit ratings."

NEE has enjoyed a solid 2025 despite the political uncertainty of the IRA, rising 3.5% amid surging data-center demand for power and outperforming the S&P 500 year to date.

NextEra is also one of the best dividend stocks, with Ketchum saying the company expects to raise its dividend by 10% a year through "at least" 2026.

• Sector: Technology
• Industry: Solar
• Market value: $734.7 million
• Median price target: $12.97 (18.1% implied upside)

Canadian Solar (CSIQ, $10.98) has had a rough couple of years but remains one of Wall Street's best green energy stocks for the long term.

CSIQ is a solar power company that provides integrated solutions that include solar-power products, services and systems. It's one of the world's largest makers of solar photovoltaic products, as well as one of the largest solar-power plant developers. Canadian Solar sells to utilities, businesses and consumers.

Canadian Solar says it's delivered more than 125 GW of solar modules to thousands of customers in more than 160 countries with another 26 GW of solar projects and 56 gigawatt hours (GWh) of storage projects in the pipeline.

A combination of high interest rates making new projects prohibitively expensive plus policy changes at the state level has limited growth in residential solar demand.

Changes to California's Net Energy Metering program and similar moves by other states reduced financial incentives for going solar. With those impacts now priced in, the Solar Energy Industries Association forecast annual growth for the residential solar market will average 9% from 2025 through 2030.

CSIQ's revenue has doubled since 2019, from $3.2 billion to $6.5 billion for fiscal 2024.

The share price reached a multiyear low in April amid the broader post-"Liberation Day" stock market sell-off and the aftermath of another less-than-stellar earnings report.

CEO Shawn Qu remains optimistic. Noting operational and financial headwinds created by "intense" competition and ongoing policy and trade-related uncertainty, Qu said in the company's fiscal 2024 fourth-quarter earnings announcement that Canadian Solar's modules business helped it "maintain relatively stronger profitability compared to the broader market."

Qu added that the green energy stock remains "fully committed to the U.S. market" and continues to expand solar module, solar cell and energy storage manufacturing capacity at three facilities.

• Sector: Technology
• Industry: Solar
• Market value: $1.2 billion
• Median price target: $15.40 (26.1% implied downside)

SolarEdge Technologies (SEDG, $20.83) is featured among the best green energy stocks because it's the largest maker of solar inverters. Solar inverters convert direct current from solar panels into alternating currents used in homes and electrical grids.

According to Morningstar analyst Brett Castelli, SolarEdge's DC optimizer is the leader in solar residential rooftop installations; the company has expanded its sales to include business and utility clients.

Because a majority of the company's revenue comes from Europe, SolarEdge was well-positioned to navigate a slowdown in U.S. residential solar demand "as California NEM 3.0 takes effect," Castelli said in a research note.

California's Net Energy Metering (NEM) policy calls for homeowners to get credit when their solar panels push excess electricity onto the grid when the sun is shining. This credit offsets the cost of electricity they use at nightfall.

Under NEM 3.0, the rates homeowners receive are 75% lower than before. This means less savings for the homeowner and a drag on solar panel sales.

Beyond inverters, SEDG has expanded into e-mobility and uninterrupted power supply markets. The analyst notes that e-mobility might be a big and growing market, but it requires more capital, carries execution risk and takes a long time to generate meaningful revenue.

It was a difficult 2024 for SolarEdge stock, which shed nearly 75% of its value before CEO Zvi Lando announced his resignation in August.

SolarEdge named a new CEO, Shuki Nir, in December. Nir had been the company's chief marketing officer since June 2024.

The appointment followed a November 28 announcement that SolarEdge closed its utility-scale battery storage division to focus on solar photovoltaics (PV) and cut its employee headcount by about 12%.

The green energy stock has responded, rising more than 50% in 2025.

Castelli says SolarEdge will suffer less harm than other solar companies from legislation that would eliminate rooftop solar incentives and accelerate the phaseout of other renewables incentives.

• Sector: Consumer discretionary
• Industry: Auto manufacturers
• Market value: $47.9 billion
• Median price target: $54.15 (8.6% implied upside)

Why is General Motors (GM, $49.87) on this list of the best green energy stocks to buy? Because the carmaker is going all in on an electric future.

The company said that it plans to invest $35 billion in electric vehicle and autonomous vehicle (AV) production through 2025. By mid-decade, GM plans to sell a million EVs a year in North America.

GM also deepened its investment in AV company Cruise, buying SoftBank's stake for $2.1 billion and pouring in another $1.4 billion. Cruise develops self-driving cars for ridesharing and delivery.

In December, GM announced a plan to scrap the Origin robotaxi project and combine Cruise with its existing technical teams for a focused effort on autonomous and assisted driving

GM, which sells vehicles under the Chevrolet, Buick, Cadillac, Baojun and Wuling brands, also jointly developed its Ultium battery platform with South Korea's LG Energy Solution to mass produce battery cells.

GM is projecting that its next-gen Ultium packs will cost 60% less than existing batteries in use today with double the energy density. GM is reusing or recycling these batteries.

GM continues to transition to a fully electric future and still plans to phase out gas and diesel engines and offer only EVs by 2035.

Its strategy involves significant investment in EV technology, infrastructure and manufacturing.

• Sector: Consumer discretionary
• Industry: Internet retail
• Market value: $2.3 trillion
• Median price target: $239.22 (12.2% implied upside)

E-commerce giant Amazon.com (AMZN, $213.20) joins the list of green energy stocks to consider because it is far and away the largest buyer of clean energy in the U.S., according to trade group American Clean Power.

"Corporate buyers are a critical part of the energy transition" in America from fossil fuels to clean energy, the trade group's report said.

"Their accelerated buying of clean energy provides an important source of demand, while their efforts to decarbonize their products and services puts pressure on their supply chain to do the same."

In 2023, Amazon invested in more than 100 new wind and solar projects. Its renewable power purchase agreement capacity in 2024 was 34 GW.

Once its more than 500 wind and solar projects are operational, Amazon expects to produce 77,000 GWh of clean energy on an annual basis, enough to power 7.2 million homes.

Moreover, Amazon said it is on track to meet its 100% clean energy goal five years earlier than the 2030 it previously projected.

What's more, Amazon co-founded The Climate Pledge in 2019, which commits companies to achieving net-zero carbon emissions by 2040 or a decade earlier than the Paris Agreement.

• Sector: Utilities
• Industry: Utilities – renewable
• Market value: $18.1 billion
• Median price target: $13.17 (8.5% implied downside)

Ørsted (DNNGY, $14.40) is the largest multinational power company in Denmark. After selling its oil and gas fields in 2017, the company is now focused on renewables.

The company develops, constructs and operates wind farms, solar farms, energy storage facilities, renewable hydrogen and green fuels facilities and bioenergy plants.

Ørsted operates 9.9 GW of offshore wind farms, with the biggest concentration of operations in the U.K.

It has the largest portfolio of offshore wind farm projects in Europe and continues to ramp up its American presence.

Ørsted owns and operates the first U.S. offshore wind project, the Block Island Wind Farm, which replaced five diesel generators and now powers 17,000 homes in Rhode Island.

It's developing 5 GW of offshore wind capacity in Connecticut, Maryland, New Jersey and New York, as well as 4 GW of onshore wind, solar and storage projects in Texas, the Midwest and the Southeast.

In addition to being one of Wall Street's best green energy stocks, DNNGY was also named the world's most sustainable company in 2022 by Corporate Knight's 2022 Global 100 Index.

Related content

• The Best Utility Stocks to Buy
• Best Dividend Kings for Decades of Dividend Growth
• The Best Covered-Call ETFs to Buy

Market volatility, inflation and the pandemic have all amplified the need for investors to mitigate portfolio risks. Amid these factors, it’s vital to evaluate whether a disproportionately large portion of your portfolio is invested in any single stock — also known as a concentrated stock position.

While this investing approach isn’t always a negative, it can leave investors open to significant risk and potentially significant losses. Here are some key questions to ask your financial adviser when it comes to concentrated stock positions:

What are the general pros and cons of concentrated stock positions?

While highly concentrated stock positions have created significant wealth for many investors, including some of the world’s wealthiest people (think Elon Musk, Jeff Bezos, Bill Gates, Warren Buffett and Larry Ellison), they can also produce the opposite effect.

It’s natural to be fascinated by the possibility that meteoric growth in a single holding could drastically increase your net worth, but also important to remember that concentrated positions can dramatically decrease your wealth. This is why diversification and “de-risking” techniques are critical components of most investing strategies.

Are there any legal restrictions related to the sale of concentrated stock ownership?

The SEC has rules to regulate stock sales by corporate insiders — generally officers and directors, as well as employees who have earned the stock as part of their compensation package. Typically, the “insider” can still sell some or all of the concentrated positions but needs to be aware of the applicable rules and transaction windows.

For example, 10b5-1 plans allow directors and officers to sell company stock during predetermined “open windows” that normally occur outside quarterly earnings announcements or the dissemination of other new information to the public that could cause the underlying stock price to change significantly.

What reasons might investors have to maintain concentrated stock positions?

Whether investors understand the risks of concentrated positions or not, there is often a strong tendency to hold on to them. This could be caused by fear of missing out on potential future gains, emotional attachment to the investment, overconfidence in the stock’s outlook, corporate pressure or even tax implications.

Another potential motivator is recency bias, where recent outperformance leads an investor to believe such results will indefinitely continue.

What steps can investors take to reduce the risk caused by concentrated positions?

There are many techniques investors who would like to stay somewhat invested in the stock can participate in, depending on their unique circumstances and goals.

• The most common technique is to reduce or eliminate exposure to the same sector in other facets of the portfolio.
• One of the most straightforward of these strategies is structured sales that span across multiple tax years. With this, investors can sell a fixed-dollar amount or percentage of the position over multiple tax years, allowing them to achieve concentrated risk reduction and spread out tax implications over many years.
• Tax-loss-harvesting equity strategies are also another popular risk-reduction tactic, as they provide investors with direct ownership of individual stocks in an indexlike solution and use a harvesting technique designed to reduce taxes and improve after-tax returns (aka tax alpha).
• Charitable gifting is another, less obvious strategy that investors can use to de-risk, as there’s the flexibility to contribute shares of appreciated stock directly to a charity, with the potential to deduct charitable contributions.
• To potentially see some instant diversification, investors might consider exchange funds, which allow qualified purchasers to exchange shares of their concentrated stock for an interest in a diversified fund that will hold shares of other companies.
• For those who do not want to sell their shares and instead are in a situation where they would like to hedge their position, option strategies could be a highly customizable choice to achieve virtually any hedge an investor desires.

Throughout my career, I’ve found that effective risk minimization can be achieved through a customized combination of the strategies listed above, but again it depends on the client’s circumstances and financial objectives. While it’s possible for a concentrated position to greatly enhance an investor’s net worth, de-risking the position can actually be more critical to long-term investing success.

Apollon Wealth Management, LLC (“Apollon Wealth”) provides advice and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, Apollon Wealth has discretionary authority over investment decisions. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph, or marketing price to make decisions. The information contained herein is intended for information purposes only, is not a recommendation to buy or sell any security and should not be considered investment advice. Please contact your financial advisor with questions about your specific needs and circumstances.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The first half of Thursday looked a lot like Wednesday for investors. The Dow Jones Industrial Average outperformed its peers, this time on a solid earnings reaction for Salesforce (CRM). Meanwhile, the S&P 500 and Nasdaq Composite lagged as Treasury yields remained elevated and Tesla (TSLA) shares sold off after the company's Investor Day. However, all three benchmarks moved higher in late-afternoon trading thanks to some dovish Fed talk. 

Salesforce was the best of the Dow stocks today, adding 11.5% after the software-as-a-service (SaaS) firm reported earnings. In its fourth quarter, revenue jumped 14% year-over-year to $8.4 billion, and earnings per share doubled to $1.68. Both figures came in above estimates. CRM also gave higher-than-expected current-quarter and full-year guidance.

On the other hand, Tesla stock fell 5.9% after the electric vehicle maker unveiled its "Master Plan 3" at last night's Investor Day. The company discussed a host of initiatives, including eliminating reliance on fossil fuels in part by "improving the energy density of batteries" and seeing "all transportation go fully electric," said CEO Elon Musk. Tesla is also focused on "rethinking manufacturing again," which it believes could result in a 30% improvement to efficiency. 

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Additionally, TSLA said that its goal to sell 20 million vehicles annually by 2030 – up from roughly 1.3 million in 2022 – will require a $175 billion investment. The carmaker confirmed it is building a factory in Mexico and said it is bringing its Cybertruck to the market this year, but failed to give details on any new models of vehicles it is adding to its lineup. 

"Investors were underwhelmed, hoping to hear more than just a review of past achievements or the longer-term vision," says Greg Bassuk, CEO at AXS Investments. "Rather, they were listening intently for more meat on the bones regarding Tesla's concrete 2023 plans to remain competitive in an increasingly crowded and price-sensitive EV market."

While the major indexes spent most of the day mixed, mid-afternoon comments from Atlanta Fed President Raphael Bostic, who said that he is "firmly in the quarter point [interest rate] move" for the next Fed meeting, had them all closing higher today. The Nasdaq finished up 0.7% at 11,462, the S&P 500 rose 0.8% to 3,981, and the Dow added 1.1% to 33,003. 

Prepare for more stock market volatility

It wasn't only single-stock and central bank news making headlines today. On the economic front, weekly jobless claims unexpectedly declined last week (-2,000 to 190,000). The Labor Department also upwardly revised fourth-quarter unit labor cost growth – a measure of inflation – to 3.2% from 1.1% as was initially reported in early February. 

"Economic data remains the investor narrative for March," Bassuk says. "Just as the February selloff was sparked by the strong January jobs report and a multitude of robust growth and inflation readings, Wall Street and Main Street eagerly await upcoming economic data to decipher the trajectory of the job market and inflation to gauge the likely actions of the Fed in March and throughout 2023." And unless we see economic data weaken, "stocks look increasingly susceptible to a potentially intense pullback in March." 

Thankfully, low-volatility strategies offer investors a way to hedge their portfolios against a market downturn. Whether it be through the best low-volatility stocks or the best low-volatility ETFs, these picks can help balance out a portfolio during periods of instability. 

Stocks ran higher for a second straight day, building on Monday's gains which saw the three major indexes each rally more than 2%.

There were two different catalysts behind Tuesday's surge. Both raised hopes that the streak of aggressive Fed rate hikes could end sooner rather than later. One came from the Reserve Bank of Australia, which overnight issued a lower-than-expected rate hike. The other was this morning's Job Openings and Labor Turnover Survey (JOLTS) that showed job openings in the U.S. declined by 10% in August while layoffs edged higher.

"A hot labor market continues to be a challenge to the Fed's goal," says Matt Dyer, investment analyst at institutional asset management firm Penn Mutual Asset Management. But while "this morning's JOLTS data release shows some signs of cooling, the labor market is still running extremely hot with job openings outweighing the number of job seekers," Dyer adds.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

The day's headlines weren't all about global central banks and economic data, though. In single-stock news, Twitter (TWTR, +22.2%) rallied after Bloomberg reported that Tesla (TSLA, +2.9%) CEO Elon Musk will reverse course and go through with his original $44 billion bid to buy the social media company. The two parties were scheduled to go to court later this month after Musk in August accused Twitter of fraud and said he wanted to walk away from the deal.

"It's the latest twist in the dramatic takeover saga, and comes just two days before he was set to be deposed by Twitter's lawyers, raising speculation that 'Team Musk' believe the chances of the court ruling in his favor were slim," says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. "If Elon Musk loses, it could mean he'd be forced to complete the deal or be made to pay billions or more for breach of contract."

At the close, the Dow Jones Industrial Average was up 2.8% at 30,316. The S&P 500 Index (+3.1% at 3,790) and the Nasdaq Composite (+3.3% at 11,176) also finished with solid gains.

Other news in the stock market today:

• The small-cap Russell 2000 rocketed 3.9% to 1,775.
• U.S. crude futures jumped 3.5% to finish at $86.52 per barrel ahead of tomorrow's highly anticipated OPEC+ meeting.
• Gold futures gained 1.7% to end at $1,730.50 per ounce.
• Bitcoin rose 3.4% to $20,220.13. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Poshmark (POSH) popped 13.1% after the online second-hand apparel marketplace said it will be acquired by South Korean internet firm Naver for $1.2 billion, or $17.90 per POSH share. Today, the stock closed just below here at $17.61. "E-commerce has been one of the toughest sub-groups in our coverage over the past 12-18 months, with the average of our six e-commerce names trading ~80% below their 52-week highs," says Wedbush analyst Tom Nikic (Neutral). "This deal, however, may have created a 'floor' for this beaten-down group. Admittedly, POSH does have some key advantages that make them relatively more attractive to potential acquirers (healthy cash balance, asset-light business model, large user base, 'social network' characteristics, etc.), but some of the other e-commerce names in our coverage look particularly cheap in light of the proposed takeout."
• Rivian Automotive (RIVN) soared 13.9% after the electric vehicle (EV) maker said production in the third quarter was up 67% from Q2. The company also confirmed that it is on pace to reach its 2022 goal of building 25,000 vehicles. 

Midterm Elections and Stocks

Another potentially positive driver for the stock market is right around the corner: the midterms. Congressional midterm elections will occur on Tuesday, Nov. 8, and determine which political party controls the House of Representatives and the Senate for the next two years. 

A lot can happen between now and the midterm election races, but odds seem increasingly likely for a split Congress – which tends to be the most bullish outcome for the stock market. "Historically, split governments have been the best for equities," says Savita Subramanian, head of equity and quantitative strategy at BofA Securities. "Q4 has seasonally been the strongest quarter (+4.5% on average and positive 81% of the time), particularly in midterm years (+7.7% on average and 86% positive hit rate)." 

But returns aren't the only impact elections can have on the stock market. Here, we explore what else the midterms could mean for investors.

Stocks closed lower on Monday following weekend reports that China initiated a new round of restrictions to combat rising cases of COVID-19.

The directives included a week-long shutdown of non-essential businesses in the Chinese gambling hub of Macau, which sent casino stocks tumbling. Wynn Resorts (WYNN, -6.5%) and Las Vegas Sands (LVS, -6.3%) were among the notable decliners.

The news out of China also weighed on oil prices, with U.S. crude futures shedding 0.7% to end at $104.90 per barrel.

"Oil prices are weakening as crude demand outlook is hit by a one-two punch from China's rising COVID cases and Wall Street jitters that inflation is hitting the U.S. economy much harder than analysts were expecting," says Edward Moya, senior market strategist at currency data provider OANDA. "Oil will struggle to hold the $100 level if China's COVID situation deteriorates much further."

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

In terms of the sector logging the worst performance to kick off the trading week, that distinction easily went to communication services, which fell 3.0% amid an 11.3% drop in Twitter (TWTR) stock. Shares in the social media platform were hit by reports that Tesla (TSLA, -6.6%) CEO Elon Musk will terminate his $44 billion purchase of Twitter.

TWTR's decline bled into other sectors, with Alphabet (GOOGL, -3.1%), Amazon.com (AMZN, -3.3%) and Meta Platforms (META, -4.7%) all chalking up big losses.

The widespread selling snapped the Nasdaq Composite's five-day win streak, as the tech-heavy index finished off 2.3% at 11,372. The S&P 500 Index declined 1.2% to 3,854 and the Dow Jones Industrial Average retreated 0.5% to end at 31,173.

Other news in the stock market today:

• The small-cap Russell 2000 slumped 2.1% to 1,732.
• Gold futures declined 0.6% to finish at $1,731.70 an ounce.
• Bitcoin shed 6% to $20,497.90. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Lululemon Athletica (LULU) fell 4% after Jefferies analyst Randal Konik downgraded the yoga apparel maker to Underperform (Sell) from Hold. The analyst cited concerns over LULU's "sky high" sales per square feet, as well as rising competition in an increasingly crowded space. "We believe there is limited upside ahead, especially as recession risks rise, and there is uncertainty as it relates to the performance of footwear and MIRROR [LULU's home gym], limiting visibility," Konik says.

Another Inflation Update on Deck

So, what's in store for this week? A lot, that's for sure. In addition to the start of second-quarter earnings season, inflation data will remain front and center. The Labor Department will release its consumer price index (CPI) for June on Wednesday morning, with last month's red-hot reading (CPI rose 8.6% year-over-year, the fastest annual pace since December 1981) still fresh on investors' minds.

Regardless of what happens, Tony DeSpirito, CIO of BlackRock's U.S. Fundamental Active Equities, believes that it's best to take a more defensive positioning. "This includes owning energy and financials," DeSpirito says, while also adding "healthcare for a dose of resilience."

Indeed, healthcare stocks are especially helpful as an inflation hedge becaue they can pass higher prices along to consumers. Read on as we explore a dozen healthcare names that are poised to do well in almost any market condition.

The S&P 500 made its closest brush with a new bear market yet, falling more than 20% from its all-time highs during Friday's intraday action before reversing course and actually finishing with a marginal advance.

Specifically, the 500-company index dropped as low as 3,810 – well below the 3,837 level that would mark a 20% drawdown from its Monday, Jan. 3, record highs and put it in an official bear market – but rebounded late in the session to eke out a gain of less than a point, to 3,901.

Among the stocks weighing on the market Friday was Tesla (TSLA, -6.4%), which sank to its lowest level since August 2021 following a Business Insider report claiming that CEO Elon Musk's privately held SpaceX "paid a flight attendant $250,000 to settle a sexual misconduct claim against Musk in 2018." Musk decried the article as "political," but it nonetheless acted as the cap on a difficult week for Tesla, which was just kicked out of the S&P 500's ESG index and is facing COVID lockdown headaches at its operations in China.

Meanwhile, Deere (DE, -14.1%) was clobbered despite topping both sales and earnings forecasts and raising its full-year profit outlook. The major criticism of its report? The farm-equipment manufacturer's sales outlook relies on having a strong second half of 2022, which isn't a certainty.

The Dow, like the S&P 500, closed with a marginal gain to 31,261. The Nasdaq declined 0.3% to 11,354 but finished well off its intraday lows.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Dan Wantrobski – the technical strategist and associate director of research at Janney Montgomery Scott who said earlier this week that he was "encouraged" by Wednesday's washout – notes that while this drawdown might have lower to go, longer-term investors can begin sharpening their knives.

"At 3,800, we do believe that the S&P 500 resides in a price range (3,600-4,000) that can lead to some attractive returns over the coming years," he says." He's not calling a bottom for short-term traders, but "investors who hold a long-term view can start to deploy sideline cash in small increments and build long positions for the intermediate- to longer-term timeframe."

Other news in the stock market today:

• The small-cap Russell 2000 declined 0.2% to 1,773.
• U.S. crude oil futures gained 0.4% to settle at $110.28 per barrel.
• Gold futures ended the day unchanged at $1,842.10 an ounce.
• Bitcoin put together a small afternoon relief rally but still finished down $29,265.24. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Deckers Outdoor (DECK) jumped 12.6% after the maker of Ugg boots reported earnings. For its fiscal fourth quarter, DECK reported earnings of $2.51 per share on $736.0 million, up 113% and 31.2%, respectively, year-over-year. Both figures easily surpassed analysts' expectations, as well. "The company was able to offset supply chain disruptions by leveraging SG&A [selling, general and administrative expenses] in the quarter," says CFRA Research analyst Zachary Warring, who upgraded the retail stock to Buy from Hold. "The company continues to repurchase shares aggressively while maintaining a debt free balance sheet. We see this as an attractive entry point for shares as the company continues to execute and grow its HOKA brand well over 25% annually."
• Ross Stores (ROST) followed in the footsteps of fellow retailers Walmart (WMT) and Target (TGT), plunging in the wake of its quarterly results. Shares spiraled 22.5% after the off-price apparel and home fashions retailer reported lower-than-expected earnings and revenue in its first quarter (97 cents per share actual vs. $1.00 per share est.; $4.3 billion actual vs. $4.5 billion est.), while same-store sales slumped 7% over the three-month period. However, the "big news from ROST's first-quarter earnings report was the company lowered its fiscal 2022 earnings per share guidance to $4.34-4.58 vs. $4.71-$5.12 prior and the Street's $5.01 view," says UBS Global Research analyst Jay Sole (Neutral). "The midpoint of the new range is 8% below ROST's full-year 2021 earnings per share and 3% below its full-year 2019 result." Sole adds that he does not believe today's pullback represents a buying opportunity, and that more guidedowns could be in store as inflation negatively impacts lower-income consumer demand. Quarterly results from retailers will continue to be in focus next week, with Best Buy (BBY) and Dollar General (DG) among the many names on the earnings calendar.

Make Your Portfolio Pay You Every Month

Regular readers of Closing Bell will note that this week, we've been pounding the table about the role dividends can play in helping investors absorb volatile downturns like the one we've suffered in 2022.

We're not alone. Several strategists suggest loading up on dividend stocks in the current environment, including Gargi Chaudhuri, head of iShares investment strategy. "We see dividend stocks as an alternative source of quality, offering outperformance over the broad market, attractive yield for income, and diversified exposure to sectors benefiting from the current macro regime of high inflation and slowing growth," she says.

Most of our recommendations across the week have focused on dividend growth – namely, the S&P 500 Dividend Aristocrats, as well as their counterparts in Canada and Europe. That said, investors more interested in high current yield might find that the Aristocrats are a bit stingy. The ProShares S&P 500 Dividend Aristocrats (NOBL) exchange-traded fund, for instance, yields just 2% at current prices.

Those looking to load their cart with juicier yields might be better off eyeballing a different cohort: monthly dividend payers. Most U.S. dividend stocks tend to pay on a quarterly basis, but there are a select group of equities and funds that conveniently pay you just as frequently as you receive your bills – that is, once each month. Many of these monthly payers also tend to come from special classes, such as real estate investment trusts (REITs) and business development companies (BDCs) that pay much higher dividends than your average blue-chip stock.

Read on as we review a dozen of these generous monthly dividend names.

Anyone who expected turbulence amid Elon Musk's quest to acquire Twitter (TWTR) got precisely what they anticipated Friday morning, when the Tesla (TSLA) CEO tweeted that the Twitter deal was "temporarily on hold."

TWTR shares plunged roughly 10% early Friday following Musk's tweet, which linked to a May 2 Reuters story about Twitter's recent statement that "the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our [monetizable daily active users] during the quarter."

Musk later tweeted that he is "still committed to acquisition," which helped cut into the losses somewhat, though another seed of doubt was already sown.

"[Musk] is clearly intent in querying the company's estimate that spam accounts make up less than 5% of active daily users – a key metric given that establishing an accurate number of real tweeters is considered to be key to future revenue streams via advertising or paid for subscriptions on the site," says Susannah Streeter, senior investment and markets analyst for U.K. firm Hargreaves Lansdown.

But she also raises the possibility of an ulterior motive.

"There will also be questions raised over whether fake accounts are the real reason behind this delaying tactic, given that promoting free speech rather than focusing on wealth creation appeared to be his primary motivation for the takeover," Streeter says. "The $44 billion price tag [of the Twitter deal] is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform."

That price tag might seem like even more of a stretch now than when Musk first got involved with Twitter.

"I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter and a 38% premium over the day before my investment was publicly announced," Musk said in April when he declared his bid for the social media platform.

Since then, the S&P 500 and the communication services sector have both declined by double digits, with many high-priced technology and tech-esque shares plunging precipitously.

Twitter, to be fair, is roughly flat since then. But this latest hurdle puts his once seemingly imminent Twitter deal even further in doubt among investors and analysts alike.

The market has yet to price TWTR shares at the $54.20 level Musk offered in April. Not even after Musk revealed earlier this month that backers such as Andreessen Horowitz, Sequoia Capital and Oracle (ORCL) founder Larry Ellison were lined up to help provide more than $7 billion in financing.

As of Thursday's close, TWTR shares were trading 15% below Musk's bidding price. In Friday's premarket trade, that number was nearly 30%.

Wall Street's pros appear mildly skeptical the Twitter deal closing, too. According to S&P Global Market Intelligence, the 27 analysts who currently cover Twitter have an average price target of $51.50 and collectively consider the stock a Hold.

Social media stocks are in the limelight following news that one of their own will soon be taken private.

Specifically, Twitter (TWTR) put out a press release late in the day on April 25 confirming that its board of directors had agreed to Elon Musk's offer to buy the social media platform and take it private for $44 billion, or $54.20 a share.

The agreed-upon price is a 38% premium to Twitter's closing share price on April 1, 2022, the day before the Tesla (TSLA) CEO announced a 9.1% stake in the company.

By purchasing Twitter and taking it private, Musk has narrowed the list of social stocks for investors to choose from.

Here, we take a closer look at three top-rated social media stocks to watch post-Twitter. Each name featured here sports a consensus Buy recommendation from analysts and has solid growth prospects for the remainder of 2022.

Data is as of April 25. Analysts' ratings courtesy of S&P Global Market Intelligence. Stocks are listed by analysts' consensus recommendation, from highest score (worst) to lowest (best).

• Market value: $13.2 billion
• Analysts' consensus recommendation: 2.44 (Buy)

According to S&P Global Market Intelligence, Pinterest (PINS, $20.00) has a whopping 22 Hold ratings and one Sell recommendation. This compares to 11 analysts who rate it a Strong Buy or Buy. So while the social media stock's consensus rating is a Buy, it's only by the thinnest of margins.

Still, PINS currently trades at a reasonable 5.3 times sales. And while the online product and idea discovery company is considered more of a long shot over the next 12 months, Pinterest is not deterred.

The company continues to grow its user base by entering into partnerships with some of e-commerce's biggest platforms. For example, on April 13, it announced a partnership with WooCommerce – an open-source e-commerce platform with more than 3 million sellers – connecting its merchants with Pinterest's more than 400 million monthly active users (MAUs).

"WooCommerce merchants can create or connect a Pinterest for Business account and automatically sync their product catalog, turning their products into browsable product Pins," the company stated in its press release. "By installing the Pinterest tag, users can measure conversions on their Pinterest ads and optimize these ads for shopping campaigns or retargeting."

According to Pinterest, when its users make purchases, they usually spend 2x more than buyers on other platforms. That's a number that should keep merchants engaged with the company's shopping tools.

One of the 22 analysts giving PINS a Hold rating is Argus Research's John Staszak. The analyst points to decline in monthly active users in both the third and fourth quarters of 2021 and concerns over the company's weaker revenue guidance. Still, Staszak's long-term rating is a Buy due to Pinterest's strong brand recognition in the U.S. and internationally.

Staszak has an earnings estimate of $1.34 a share for 2022 and $1.62 per share in 2023, though both are improvements over the $1.13 per share PINS reported in 2021. While it's cheap from an earnings perspective, PINS is the lowest-rated of the social stocks featured here.

• Market value: $507.6 billion
• Analysts' consensus recommendation: 1.72 (Buy)

From a value perspective, it's hard not to like Meta Platforms (FB, $186.99). The parent company of Facebook trades at just 4.5 times sales, almost half Twitter's valuation, and its operating income in 2021 was a healthy $46.8 billion. Comparatively, Twitter's operating income in fiscal 2021 was just $270 million.

Elon Musk will have to perform miracles for Twitter's operating income to get anywhere near Meta Platforms.

UBS Global Research published a research report for the U.S. internet industry on April 20. It was quite positive about FB's business in the second half of 2022.

"We are increasingly upbeat on the second-half bull case on Meta shares, and while Street estimates look high to us, we think this is largely priced into shares already and the risk/reward skew looks positive," UBS analysts – who have a Buy rating on FB – wrote in the report.

Susquehanna Financial Group analyst Shyam Patil is also bullish on FB, rating the social stock at Positive, which is the equivalent of Buy. Patil also has a $217.31 price target, representing implied upside of 16.2% from current levels.

Over at Credit Suisse, analyst Stephen Ju lowered his FB target price on April 21 by 19%, from $336 to $272, though that still provides for significant upside over the next 12 months.

Ju maintained an Outperform (Buy) rating on FB stock due to "potential for better than-expected ad revenue growth on product innovation (Facebook Shops, Search in Marketplaces, etc.)."

The analyst also points to conservative Street models that "underestimate the long-term monetization potential of other billion-user properties like Messenger and WhatsApp," as well as the ability for "faster free-cash-flow growth on greater efficiency on content screening/security costs."

Despite FB shares being hit with broad-market headwinds in 2022, most analysts agree that it is one of the best social media stocks out there. Of the 54 following the stock that are tracked by S&P Global Market Intelligence, 32 have it at Strong Buy, eight say Buy, 12 call it a Hold and just two rate it at Sell or Strong Sell.

All in all, Meta Platforms is one of the strongest Buys among social stocks. The company generates so much cash it's hard to ignore.

• Market value: $48.8 billion
• Analysts' consensus recommendation: 1.59 (Buy)

Snap (SNAP, $29.91) reported its Q1 2022 results on April 21. It lost 22 cents per share in the quarter, which was 5 cents worse than analysts expected. However, revenues were in-line with the consensus at $1.06 billion, while the company's daily active users (DAUs) came in at 332 million, up 18% year-over-year.

Despite SNAP stock falling on the news, CEO Evan Spiegel feels the solid growth in DAUs reflects the company's momentum – even with the operational challenges faced by social media stocks so far 2022. In the second quarter, it expects to grow sales by at least 20% over Q2 2021.

Analysts, meanwhile, are targeting 24% year-over-year revenue growth for Snap in the second quarter. This reflects Wall Street's bullish bias toward the social stock. Of the 41 analysts covering SNAP tracked by S&P Global Market Intelligence, 25 have it as a Strong Buy, eight as a Buy and eight say it's a Hold. There are no Sell recommendations at the moment.

"Snap in our view has been able to adapt to changes in Apple's ad-tracking policy; rivals such as Meta Platforms have struggled with those changes," says Argus Research analyst Jim Kelleher (Buy). Kelleher adds that while the process of addressing these issues is ongoing, "underlying fundamentals at the selfie company appear to be strengthening, not weakening."

BofA Securities analyst Justin Post (Buy) admitted it was a "tougher environment" in Q1 and that Snap and other social media stocks could see "future disruptions. Still, SNAP "is well positioned to accelerate in the second half of 2022," the analyst adds.

Post specifically points to solid two-year revenue trends, strong user growth and multiple product catalysts that could boost average revenue per user (ARPU) metrics as reasons he likes Snap, as well as the social stocks valuation. Snap is currently trading at 10.7 times sales.

So it is also a Buy, but perhaps for more aggressive investors.

Elon Musk is buying Twitter (TWTR, $51.70) for $44 billion and taking the social media platform private.

Twitter's board of directors accepted the Tesla (TSLA) CEO's offer of $54.20 a share late Monday. Thus marks the likely end to a three-week drama that at times appeared to veer between comedy and even farce.

After all, with Musk, it can sometimes be difficult to tell the difference. But once the world's richest person lined up more than $46 billion in financing over the past few days, it became clear that his buyout bid was no joke.

And make no mistake, it's a seriously good deal for TWTR shareholders.

Elon Musk's Buyout Deal for Twitter: The Basics

At $44 billion, Musk is paying a premium of 21% to Twitter's enterprise value, or its theoretical takeout price that accounts for both debt and cash.

The deal looks even better when you consider what the market thought about Twitter prior to Musk's interest – which is to say, not much.

Musk is paying a 38% premium to where TWTR stock traded before the mercurial billionaire disclosed his original 9.1% ownership stake in early April. Even more impressively, Musk's Twitter buyout equals a whopping 54% premium to what he paid when he first began building the position in late January.

The fact is that the market has been very down on Twitter stock for a very long time. Analysts' consensus recommendation has been stuck at Hold for six years, according to S&P Global Market Intelligence.

And with good reason.

Twitter Is Great, But TWTR … Not So Much

Twitter is a classic example of a company with a great product and a fantastic brand – but a bad business. The advertising model that works so well for passive, lean-back screen experiences like television doesn't translate to the active, lean-in engagement process of scrolling and tweeting.

"Twitter does $3.5 billion a year in revenue, a business roughly the size of the Olive Garden," tweeted Josh Brown, CEO of Ritholtz Wealth Management. "You have to admit today is hilarious."

That disconnect between product and business explains why Twitter stock has been such a disappointment for much of its relatively short life in the public market.

TWTR's initial public offering (IPO) priced at $26 a share on Nov. 7, 2013. Musk's takeout price means anyone still hanging around on the IPO cost basis is sitting on a gain of 108%. That's pretty weak, considering the S&P 500 booked a price gain of 141% over the same period.

Musk's Twitter buyout price is also of little solace to anyone who bought the stock when it was hitting all-time highs in early 2021. TWTR once topped out above $77 a pop. Selling to Musk at $54-and-change means taking a loss of 30%.

If nothing else, Musk's involvement in TWTR stock gave it a catalyst analysts had been praying for – and were grateful to receive.

Plenty of them were rooting for Musk to prevail. Some even viewed a potential loss for him as an eventual win for shareholders. As CFRA Research analyst Angelo Zino (Hold) told clients last week:

"We do believe Musk's recent endeavors ultimately ends up being a positive for long-term shareholders even if a deal is thwarted, as it likely lights a fire under the management team (something will need to fundamentally change)."

The ink isn't dry; the deal is far from closed. But the way things look right now, Twitter shareholders won't have to worry about Twitter stock for much longer.

Twitter – all of it – will be Elon Musk's problem, and his alone.

First-quarter earnings season starts to heat up this week. Among the notable names on the earnings calendar are electric carmaker Tesla (TSLA, $986.01), pharmaceutical giant Johnson & Johnson (JNJ, $180.05) and streaming name Netflix (NFLX, $343.38).

Results from JPMorgan Chase (JPM) last week underscored how macro factors are impacting publicly traded corporations. "The firm cited higher probabilities of downside risks driven by the war between Russia and Ukraine as well as elevated inflation," says Dan Eye, chief investment officer at asset manager Fort Pitt Capital Group.

"It feels like there is more uncertainty heading into this quarter's earnings season than there has been in some time," says Michael Reinking, senior market strategist at the New York Stock Exchange.

While Reinking expects first-quarter earnings to remain strong, guidance will likely fall on the conservative side.

"Investors will be looking to conference calls for a better understanding of how the environment is shaping up," Reinking adds. "The margin story will remain a focal point with the main questions centered around whether price increases have been tolerated, are they impacting demand and has that changed in the back half of the quarter as the consumer is now getting hit on multiple fronts."

Tesla Earnings to Show Strong YoY Growth

Oppenheimer analyst Colin Rusch (Outperform) thinks Tesla's ability to pass on higher supply-chain costs to consumers will help drive margins for the automaker. The company has "substantial pricing power," Rusch says, "as demonstrated on recent price increases across models and commentary that the company is sold out through the end of the year in certain geographies."

It's already been a busy news cycle for Tesla. In addition to headlines signaling a potential second TSLA stock split in just two years, CEO Elon Musk followed up reports that he took a sizable stake in Twitter (TWTR) with an offer to buy out the microblogging site.

But this week, attention will be back on Tesla's fundamentals, with the company scheduled to report its first-quarter results after Wednesday's close.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

Earlier this month, the company said it delivered more than 310,000 in the first three months of the year. "TSLA's growth stands in stark contrast to other automakers who posted steep declines in U.S. sales in Q1," says CFRA Research analyst Garrett Nelson. He adds that the startup of the company's new factories in German and Texas will accelerate deliveries going forward.

The analyst also believes that "supply agreements signed with mining companies position the company to navigate battery raw materials shortages more successfully than competitors." Nelson has a Buy rating on TSLA stock, saying the company's "first-mover and cost of capital advantages, as well as future demand from the rental car and commercial truck markets, remain underappreciated by investors."

For TSLA's first quarter, analysts, on average, are targeting earnings of $2.26 per share – a marked improvement over the 93 cents per share it reported in Q1 2021. On the top line, the consensus estimate is for $17.8 billion, up 71.2% year-over-year (YoY).

Johnson & Johnson Earnings Could Get Hit By Forex Headwinds

Inflation will certainly be in focus when Johnson & Johnson reports its first-quarter earnings report ahead of Tuesday's open.

In JNJ's fourth-quarter earnings call, Chief Financial Officer Joe Wolk acknowledged that the company was "experiencing the impact of inflationary pressures, including higher input costs across our business and more significantly with respect to consumer health." According to Wolk, this included the "availability and cost of certain commodities, labor and transportation."

To counter these cost pressures, the executive said JNJ was initiating price increases across its consumer health portfolio in 2022.

Meanwhile, "The 'macro' has engulfed the med tech narrative and added to the near-term uncertainty," writes Raymond James analyst Jayson Bedford. However, he still sees plenty of demand for the industry.

Bedford has an Outperform (Buy) rating on the Dow Jones stock. He believes the company's "growth profile" is supported by gains in both its pharmaceutical and medical technology segments, as well as the spinoff of its consumer health business.

But he recently lowered his first-quarter revenue and adjusted earnings per share (EPS) estimates (to $23.7 billion and $2.50 per share, respectively) due to forex-related headwinds. Consensus estimates are for Johnson & Johnson to report revenue of $23.7 billion (+7.7% YoY) and earnings of $2.61 per share (+0.8% YoY).

Netflix Price Hikes Could Offset Slowing Subscriber Growth

It's been a rough year for communication services stocks and Netflix is no exception. Shares are off around 43% so far in 2022 to erase all of their pandemic-related gains.

In addition to broad-market headwinds, Netflix has been hampered by slowing subscriber growth. In late January, NFLX stock plunged almost 22% the day after reporting lower year-over-year subscriber additions in the fourth quarter and guiding for even slower growth in the first quarter.

And this metric was likely pressured even more so after Netflix joined the growing list of companies pulling out of Russia by suspending service in the country.

Still, Netflix's "first-mover advantage and large subscriber base provides the company with a nearly insurmountable competitive advantage over its streaming peers," says Wedbush analyst Michael Pachter (Neutral). He adds that the firm's mid-January price hikes on U.S. plans will offset slowing user growth.

NFLX will unveil its first-quarter earnings report after April 19 close. Analysts, on average, are looking for earnings of $2.90 per share (-22.3% YoY) and revenue of $7.9 billion (+10.7% YoY).

If it wasn't obvious before, Elon Musk was never going to be a "passive" shareholder in Twitter (TWTR, $45.85).

The Tesla (TSLA) CEO and world's richest person offered to buy the social media platform for $54.20 per share in cash, according to filings with the Securities and Exchange Commission late Wednesday. Musk's Twitter buyout offer translates into about $43 billion.

The bid represents a premium of 18.2% to TWTR's Wednesday closing price, and a 38% premium to where it traded before Musk disclosed his original 9.1% ownership stake in early April.

Most powerfully, Musk notes that his buyout price for Twitter represents a whopping 54% premium to what he paid when he first began building his position in late January.

Musk intends to take Twitter private, saying the company has "extraordinary potential. I will unlock it."

Musk's Twitter Buyout Offer: As Good as It Gets?

The mercurial billionaire made clear this is a take-it-or-leave it buyout offer, saying in the filing that "I am not playing the back-and-forth game. I have moved straight to the end. It's a high price and your shareholders will love it."

More worrisome: Musk essentially threatened to dump his TWTR holdings should Twitter reject his bid.

"If the deal doesn't work, given that I don't have confidence in management nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder," Musk said.

As Twitter's single largest shareholder, Musk's threat needs to be taken seriously, especially given his history of, shall we say, unpredictable behavior.

Sign up for Kiplinger's FREE Closing Bell e-letter: Our daily look at the stock market's most important headlines, and what moves investors should make.

After all, Twitter thought it had reached a sort of detente with Musk only days ago. The Tesla CEO was offered a seat on the board of directors in exchange for a commitment to purchase no more than 14.9% of Twitter's shares outstanding.

But Musk almost immediately changed his mind and declined board membership. The fact that directors are fiduciaries, and therefore are restricted in what they can publicly say (and tweet) about the corporations they serve, presumably factored into his thinking.

The latest chapter in this drama leaves Twitter investors – to say nothing of Twitter management and its board – in a bind.

Musk's interest in TWTR provided a much-needed catalyst. Shares lost 20% in 2021, a year in which the S&P 500 gained 27%. They were big-time market laggards in 2022 too – until Musk disclosed his interest.

The Twitter buyout offer has some analysts advising clients to get out while the getting is good. CFRA Research analyst Angelo Zino downgraded TWTR to Hold from Buy Thursday, saying most of the upside he forecast has been achieved.

"The offer price should be viewed as enticing to shareholders and will be difficult to reject," Zino writes. "If rejected, we fear Musk could walk away rather than raise his offer (we take him for his word), which would likely drive shares considerably lower. At current levels, we downgrade as our thesis has largely played out."

That's putting it diplomatically. If some market participants disliked TWTR stock before Musk got involved, they really can't stand it at current levels.

Then there's Wedbush analyst Daniel Ives, who believes Musk will prevail.

"Ultimately we believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," says Ives, who rates TWTR at Outperform (equivalent of Buy). "It would be hard for any other bidders/consortium to emerge and the Twitter board will likely be forced to accept this bid and/or run an active process to sell Twitter."

The market, for its part, is taking a more skeptical view. Twitter's price action suggests this is far from a done deal. Note that TWTR shares were trading around $46.50 early in Thursday's session – well below Musk's buyout offer of $54.20.

Bottom Line

Musk already has Tesla, SpaceX and the Boring Company in his considerable portfolio of responsibilities. As such, a successful Twitter coup d'etat has all the makings of a "be careful what you wish for" outcome.

As Bloomberg's Matt Levine once wrote, Musk owning 9% of Twitter makes him Twitter's problem. "If Elon Musk buys Twitter, Twitter is his problem."

And Musk certainly has plenty of problems as it is. Indeed, we shouldn't forget yet another constituency that's less-than-enamored of Musk's latest jape: Tesla shareholders.

The electric vehicle manufacturer's stock slumped after Musk disclosed his Twitter bid, and it's not hard to guess why.

"As the CEO of a trillion-dollar company, Elon Musk should focus on Tesla and not waste time attempting to acquire and manage a $43 billion company," says David Trainer, CEO of New Constructs, a Nashville-based investment research firm.

Twitter stock is up more than 50% from its 52-week low, but every investor's cost basis is different. Just remember: There's no shame in plotting an exit from what has been a very frustrating stock for a very long time.

A widespread rally in technology and tech-esque stocks started Wall Street's week off on the right foot.

Monday opened with a splash, with Twitter (TWTR, +27.1%) shares booming on news that Tesla (TSLA, +5.6%) CEO Elon Musk was taking a massive 9.2% stake in the stock.

While the move swirled up conversation about what Musk might do next – he has previously criticized both the social media platform and its current chief, Parag Agrawal – it was nonetheless also seen as a clear catalyst for the communication services firm's long-underperforming shares.

Also booming were numerous large-cap tech companies such as semiconductor stock Qualcomm (QCOM, +4.6%) and software names Salesforce (CRM, +3.1%) and Intuit (INTU, +4.5%).

The surge in tech and communications names boosted the Nasdaq 1.9% higher to 14,532, while the S&P 500 (+0.8% to 4,582) and Dow Jones Industrial Average (+0.3% to 34,921) were more modestly in the green.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

While Monday's advance was otherwise short on catalysts, Lindsey Bell, chief markets and money strategist for Ally Invest, points to a potential driver of additional second-quarter gains.

"What many people aren't talking about is the underappreciated opportunity the consumer presents," she says. "The job market is strong and excess cash has allowed consumers to absorb higher pricing. Companies and corporate profits have benefitted. I'm expecting earnings season will surprise the consensus, which expects guidance to fall significantly."

Other news in the stock market today:

• The small-cap Russell 2000 improved 0.2% to 2,095.
• Fresh calls from Europe for harsher sanctions on Russia sent U.S. crude futures (+4.0% to $103.28 per barrel) back above the $100 mark.
• Gold futures climbed 0.5% to $1,934.00 per ounce.
• Bitcoin slid 1.0% to $45,923.33. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Starbucks (SBUX, -3.7%) declined against the grain after interim CEO Howard Schultz announced the company would suspend share buybacks. “This decision will allow us to invest more profit into our people and our stores — the only way to create long-term value for all stakeholders,” said Schultz, who enters the company at a time where several locations have begun to unionize. Investors should note that SBUX did not repurchase any shares last year but had previously pledged $20 million toward both its dividend program (which will remain intact) and buybacks through 2024.

Rising Rates? These Stocks Don't Sweat 'Em

In a couple of days we'll get more clarity on the Federal Reserve's upcoming tightening measures.

"The big catalyst for this week is the Fed minutes on Wednesday afternoon, which is expected to shed some light on the balance sheet reduction process," says Michael Reinking, senior market strategist for the New York Stock Exchange. "There is still some uncertainty as to how aggressively Fed officials want to kick off this process.

"As I've laid out previously I'm looking for an initial announcement to start in the $60 billion to $85 billion range, which is less than some of the more aggressive projections out there."

From there, the market is likely to revert its focus back to the Fed's benchmark interest rate, which the central bank is expected to hike several more times this year. The exact number of increases (and their velocity) is still up in the air, but investors continue to tweak their portfolios to absorb more interest-rate pain – and in many cases, profit off it.

For instance, these seven exchange-traded funds (ETFs) hold either assets that are largely immune to rising rates or actually feed off it. But investors looking to make a more aggressive, concentrated bet to benefit from the Federal Reserve's expected hawkishness might do better in individual stocks.

Here, we look at 10 of the best stocks amid tighter monetary policy in 2022.

Kyle Woodley was long CRM as of this writing.

One of Twitter's (TWTR, $39.31) bigger headaches developed into a full-blown migraine Monday after Tesla (TSLA) founder and world's richest person Elon Musk disclosed a 9.2% stake in Twitter stock.

The mercurial billionaire is now the single largest shareholder in the social media platform. What he's up to, only Elon knows. But it's safe to assume Twitter management can't be thrilled with the move – not after Musk has tweeted so much criticism of the company's policies and priorities.

Twitter's C-suite is also well aware that Musk, with an estimated net worth of $298.1 billion, has the financial firepower to buy plenty more TWTR stock – perhaps even all of it – should he find it amusing to do so.

Musk's Stake in Twitter Stock

Musk revealed in a regulatory filing Monday that he purchased a total of 73.5 million TWTR shares worth $2.9 billion as of Friday's closing price. The market, reacting with a combination of shock and elation, sent Twitter stock up 25% at the opening bell.

If nothing else, the Musk news was the jolt shares needed.

The communication services stock lost 35% of its value over the six months ended April 1, versus a gain of 5.5% for the broader market. Wall Street, for its part, hasn't been particularly bullish on Twitter’s shares for some time. Indeed, analysts' consensus recommendation stands at Hold, per S&P Global Market Intelligence – a rating that has been in place for more than a year-and-a-half.

Perhaps Twitter stock will finally catch some upgrades now that Musk is involved. The devoted Twitter user with more than 30 million followers recently hinted about shaking up social media. And he's never been shy about singling out Twitter for a hard time.

Last month, Musk polled his followers on whether they thought Twitter adhered to the principles of free speech. In late 2021, he tweeted a meme that was apparently critical of incoming CEO Parag Agrawal, who replaced Jack Dorsey after his surprise November resignation.

Adding to the drama is that Musk has tweeted himself into trouble plenty of times – both with the Securities and Exchange Commission as the CEO of Tesla, and as a private citizen.

What Does Musk Have Planned?

Musk's stake has been described as a “passive” one, meaning he has no intent to run or take control of the company. But it's not clear what would stop him if he were to change his mind.

Unlike Alphabet parent Google (GOOGL) or Facebook parent Meta Platforms (FB), Twitter has only one share class. As such, the company's largest stockholder is well positioned to exert influence, analysts say.

"It looks like Elon has his eyes laser set on Twitter," writes Wedbush analyst Daniel Ives, who rates Twitter stock at Hold. Ives notes that Musk's move could lead to a "more aggressive ownership role."

And that could be putting it mildly, some analysts say. After all, Musk was able to buy more than 9% of TWTR for less than $3 billion. Although the company's market capitalization swelled to more than $40 billion following Monday's pop in the stock price, Twitter's enterprise value – or theoretical takeout price that accounts for both cash and debt – was less than $30 billion.

"While a passive stake by Musk won't change TWTR's fundamentals, we do think his investment will drive greater interest from consumers," writes CFRA Research analyst Angelo Zino (Buy). "Musk's actual investment is a very small percentage of his wealth, and an all-out buyout should not be ruled out."

The good news for Twitter stock holders is that they've been gifted a much needed catalyst. The bad news? The value of their shares is now to some extent linked to the whims and wishes of Elon Musk.

Sure enough, Tesla (TSLA) CEO Elon Musk has sold about $5.8 billion worth of stock in the world's largest automaker by market value so far this week – just days after asking in a Twitter poll whether he should do so.

But it looks like investors can finally stop worrying. After a couple days of deep price declines – likely fueled in part by the mercurial billionaire's sale threats – TSLA stock at least appears to have found its footing.

Given that the electric vehicle stock carries significant weight in scads of basic market-index funds held by most investors, that's an encouraging development.

Musk's Stock Sales Confirmed

Over the weekend, Musk conducted a Twitter poll asking followers whether he should sell 10% of his stake in TSLA stock, and promised to abide by the results of the poll.

The majority – some 3.5 million followers, or 58% – voted "yes."

But it seems likelier than not that the Twitter poll was just a stunt heralding something Musk already had planned.

"Today Musk owns roughly 21% of Tesla and it was viewed by many on the Street that he would sell up to ~5%/6% of his ownership stake before the Twitter poll fiasco began," says Wedbush analyst Daniel Ives.

Either way, Musk made good on his promise. Regulatory filings made public late Wednesday revealed that Musk exercised options Monday and then sold about 2.1 million of the TSLA stock he received to raise $1.1 billion in cash to pay taxes stemming from the transaction.

Interestingly, the option exercise and sales were pursuant to a Rule 10b5-1 trading plan. Insiders are required to adopt such plans so as to not run afoul of the Securities and Exchange Commission. The trading plan was filed with the SEC on Sept. 14, or well before Musk's infamous Twitter poll of Nov. 6.

It's also worth noting that the options were not set to expire until August 2022. Exercising options early is actually a bullish move on Musk's part, notes Barron's Al Root:

"It's important to remember that Musk had no looming bill from the options exercise. The tax is due only when the transaction happens. And Musk exercised the options before he had to, making it a bullish trade in theory.

Exercising options early and holding the stock bought is better, for tax purposes, when an options holder believes a stock is going up. That's because the tax rate on options exercise is the tax rate on ordinary income – and the tax rate on long-term capital gains is lower than the rate on ordinary income."

But let's not digress, because Musk's sale saga hardly ends here.

After exercising options on Monday, Musk undertook a series of sales on Tuesday and Wednesday, per regulatory filings. In those trades, the chief unloaded 3.5 million TSLA shares worth nearly $3.9 billion. Then on Friday, following our original story, new filings showed that Musk unloaded another $687.3 million worth of shares.

These transactions, however, were not made under a Rule 10b5-1 trading plan. That is, they were not scheduled sales.

Shares in Tesla tumbled more than 19% from the close on Friday, Nov. 5 through its intraday low on Wednesday, Nov. 10. Pressure from Musk dumping nearly $5 billion worth of Tesla stock into the market – and the uncertainty created by his Twitter poll asking if he should sell 10% of his total holdings – likely didn't help.

The pain caused by this selloff wasn't limited to holders of TSLA stock. With a market capitalization of more than $1 trillion, Tesla has a great deal of sway in cap-weighted indexes – the S&P 500 and Nasdaq Composite, for example – and scores of exchange-traded funds, such as the Invesco QQQ Trust (QQQ). Tesla has an outsized effect on consumer discretionary funds, as well. For instance, it accounts for more than 19% of the Consumer Discretionary Select Sector SPDR Fund's (XLY) $23 billion-plus in assets.

In other words, even investors who don't hold TSLA stock directly have skin in Musk's game.

Encouragingly, shares in Tesla began to stabilize Wednesday and continued to do so Thursday and Friday.

What Now for TSLA Stock?

For those worrying about Musk bailing out on his baby, the world's richest man still holds more than 167 million shares of Tesla stock, or roughly 16% of the electric vehicle maker's shares outstanding. Vanguard is the distant No. 2 shareholder, holding 5.9% of the company's outstanding stock.

Make of that what you will. And to reiterate: Musk's options exercise and sales were planned well in advance of his Twitter stunt – the point of which remains elusive to anyone but the Tesla chief.

To be fair, Musk's quick but precipitous sale of TSLA stock might have been the best course of action for Tesla's CEO.

"With 10% being a higher amount that surprised some investors, ultimately it's a digestible number we are not overly concerned about, although it has given fuel to the bears pressuring the name this week," Ives says. "In a nutshell, we would rather Musk rip the band-aid off now and sell this portion of stock quickly rather than it lingering over the next year and feeding into any non-fundamental bear thesis on the story."

Will Musk make good on selling even more of his stake? That's anyone's guess, but the bullishness he showed by exercising options early suggests it's probably one of his goofs.

The bottom line is there is no bottom line. We can only hope the billionaire feels sated by his latest jape, and whatever whim that follows causes less consternation for both TSLA stock and the broader market.

We're about to enter the busiest week of this earnings season so far, and Tesla (TSLA, $645.33) will help lead the charge after the market closes on Monday, July 26, when it reports second-quarter results.

The electric vehicle (EV) maker last took its turn in the earnings confessional in April, when it reported better-than-expected profit and revenues thanks in part to gains from its bitcoin investment.

But a lot has happened since then.

For starters, Tesla CEO Elon Musk announced in May that the company will not sell any of its Bitcoin and will no longer accept the cryptocurrency as a payment for its cars until a more environmentally friendly alternative can be found for mining the coins.

Plus, the price of Bitcoin plunged roughly 40% in Q2.

While Bitcoin's impact on TSLA's bottom line will certainly draw interest from Wall Street, Credit Suisse analyst Dan Levy (Hold) is homing in on three additional key themes in the final print.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

First is the company's capacity build-out, particularly as TSLA looks to get new factories in Texas and Berlin online. Second is the status of the firm's full self-driving (FSD) capabilities, as "some have cited concern over Tesla's release of features that aren't fully validated." And lastly, Levy is looking for upside on gross margin.

"We assume volume strength, price increases and favorable mix should more than offset higher raw material costs and production inefficiencies," he says. Levy expects gross margin, excluding regulatory credits, will arrive at 25% – up 300 basis points (a basis point is one-one hundredth of a percentage point) from Q1 – while earnings per share (EPS) will land at $1.34.

Overall, the consensus estimate for Tesla's second-quarter report is for earnings of 96 cents per share, up 118% year-over-year (YoY), with revenues expected to rise 85.8% from the year prior to $11.2 billion.

A Boisterous Bounce-Back for Alphabet Earnings?

The pros are upbeat ahead of Alphabet's (GOOGL, $2,665.95) announcement due out after the July 27 close, expecting the Google parent to report EPS of $19.21 in its second quarter, which would mark an 89.6% improvement from the year prior, on $56.0 billion in revenues (+46.3% YoY).

"We remain positive on GOOGL and highlight [it] among our favorite large-cap picks as we believe it should benefit from ad spend recovery, pent-up demand for Google Cloud and call options on Waymo and other non-advertising initiatives," says Jefferies analyst Brent Thill, who rates the stock at Buy.

BofA Big on Apple Ahead of Q3 Report

Analysts are optimistic ahead of Apple's (AAPL, $148.59) fiscal third-quarter earnings report, too, with consensus estimates for the iPhone maker's EPS docked squarely at $1.00 (+56.3% YoY). Meanwhile, revenues are projected to arrive at $72.9 billion, which is 22.2% higher than what AAPL brought in this time last year.

However, BofA Global Research is guiding for even better numbers from Apple (EPS of $1.05 on $77 billion in revenue). "We expect AAPL to report a strong June quarter on broad-based hardware strength," the firm says.

BofA Global Research has a Neutral (Hold) rating on the tech stock, with a $160 price target, representing expected upside of 8% over the next 12 months or so.

Apple will report Tuesday after the closing bell.

Cloud Expected to Lift Microsoft Results

Microsoft (MSFT, $289.38), which also reports Tuesday evening, is expected to report earnings of $1.90 per share in its fiscal fourth quarter – up 30.1% from the year prior. Revenues are forecast to arrive at $44.1 billion (+16% YoY).

"We expect MSFT to broadly outperform Street expectations on the heels of sustained strength within the company's commercial business lines, particularly Office 365 and Azure," says Stifel analyst Brad Reback, who has a Buy rating on the stock.

"We continue to believe that the pandemic is forcing organizations of all sizes to accelerate the pace of their respective cloud migrations and that MSFT should continue to be a key beneficiary as its broad stack enables it to capture Tier 1 workloads previously out of reach."

Analysts Have High Q2 Expectations for Facebook

After a slow start to the year, Facebook (FB, $371.94) has been trending higher since late March, and is now more than 36% higher for the year to date. Part of this upside came in the wake of the social media giant's first-quarter earnings results in April.

Specifically, FB shares jumped 7.3% the day after the company reported stronger-than-anticipated earnings and revenue thanks to a 30% year-over-year pop in the average price per ad and a 12% rise in the number of ads shown.

Canaccord Genuity analysts Maria Ripps and Michael Graham think ad revenue continued to accelerate in the second quarter. "Digital advertising spend remains robust as ongoing momentum from COVID beneficiary verticals like e-commerce and technology is now accompanied by a recovery from travel, traditional retail, and movie studios," the analysts say. And for FB's second quarter, they are targeting year-over-year ad revenue growth of 47.4%.

The pros are generally positive for Facebook's top- and bottom-line growth, as well. For its second quarter, the average analyst estimate is for revenues of $27.8 billion, up 59.9% from one year ago, while EPS are expected to come in at $3.02 (+67.2%). FB will unveil its Q2 report after the July 28 close.

Initial public offerings (IPOs) are the process companies use to tap the public stock markets for capital. These offerings usually involve early-stage businesses that are looking for fresh fuel for growth; many are small opportunities, but the biggest IPOs can create mammoth returns for investors.

Consider if you invested $10,000 in the IPO of Amazon.com (AMZN) back in 1997. The e-commerce company's per-share offering price was $18. There have been multiple stock splits through the years, so if you held onto your original investment, you would now own 133,200 AMZN shares. What's more, the value of your investment would be roughly $32.5 million. That's more than enough for most folks to retire on.

But IPOs aren't guaranteed tickets to riches, as notable dot-com implosions Pets.com and Webvan proved. Indeed, whenever there is a chance to snag high returns — even with the hottest upcoming IPOs — there are always lots of risks lurking.

Public offerings aren't only relegated to startup companies. Some of the biggest IPOs come from multibillion dollar organizations that have been around for decades. These will often lead to huge deals.

But what are the biggest IPOs in U.S. history? Here, we take a look at the largest 25 public offerings ever to grace U.S. markets. (Data is courtesy of Renaissance Capital, unless otherwise noted.)

• IPO date: October 22, 1998
• Amount raised in IPO: $4.4 billion
• Offer price: $23.00

In 1875, Isaac Elder Blake founded Continental Oil and Transportation Company, which was focused on oil, kerosene and other chemical products. He sold Continental to Standard Oil in 1884, but it was spun off in 1911 as part of a monopoly breakup.

Through the years, the company bulked up via acquisitions and eventually changed its name to Conoco. DuPont acquired the company during the go-go 1980s takeover era, taking advantage of a depressed share price due to plunging oil prices. But the companies weren't a good fit, and Conoco was once again spun off via an IPO.

The 1998 offering raised $4.4 billion — a record at the time that still keeps Conoco on this list of the biggest U.S. IPOs ever. When Conoco went public, it was the sixth-largest oil company in the U.S., boasting a network of 7,900 gas stations.

Conoco eventually merged with Phillips Petroleum in 2002 to form ConocoPhilips (COP). The company today has operations in 14 countries and has about 10,000 employees. Its total assets as of December 2025 were $122 billion.

• IPO date: June 29, 2021
• Amount raised in IPO: $4.4 billion
• Offer price: $14.00

The IPO roadshow for Didi Global, the top ride-hailing app company in China, took only three days.

The CEO boasted about the company's growth potential, underscoring the fact that a sizable amount of the populations in the Chinese cities DiDi covered did not have cars. The company was also making substantial investments in artificial intelligence (AI) and electric vehicles (EVs).

Unfortunately, the investment would turn into a disaster — and quickly. Within 11 months of its debut as one of the biggest U.S. IPOs ever, Didi delisted its shares from the NYSE due to the Chinese government's crackdown on the company. Regulators had concerns about Didi's data security, ordering it to stop taking new customers and terminating some of its apps. The result was a nearly 13% decline in the company's top line.

By the time of the delisting, the company's market capitalization had plunged to around $11 billion from above $75 billion in July 2021.

• IPO date: July 24, 2024
• Amount raised in IPO: $4.4 billion
• Offer price: $78.00

Lineage (LINE), which calls itself the world's largest global temperature-controlled warehouse REIT, debuted with the largest IPO since Arm Holdings (ARM) in 2023 when it listed on the Nasdaq on July 24, 2024.

LINE's final initial offering price of $78 was at the high end of the company’s target range of $70 to $82, and management also boosted the number of shares on offer from 47 million to 56.9 million.

Shares opened at $82 on July 25 and traded as high as $89.85 on July 31, putting a market cap north of $20 billion on the stock.

Just the second REIT to go public since 2022, according to Renaissance Capital Management, LINE has had a tough go of it since. Demand for cold-storage services surged during the pandemic and figured prominently in Lineage's IPO decision but has since cooled.

Uncertainty around tariffs and geopolitical developments also create headwinds for Lineage.

LINE has lost nearly 50% since its IPO and now carries a market cap of $9 billion.

• IPO date: March 11, 2021
• Amount raised in IPO: $4.6 billion
• Offer price: $35.00

When Bom Kim dropped out of the Harvard MBA program in 2010, he started Coupang (CPNG). He saw a huge opportunity to build an e-commerce platform in South Korea, Asia's fourth-largest economy by gross domestic product (GDP).

The focus was to create a marketplace such as China's Alibaba Holdings (BABA) that would allow for an extensive product selection. But Kim also built a distribution network with warehouses and logistics systems, similar to Amazon.com.

The strategy worked. From 2018 to 2021, revenue soared to $12 billion from $900 billion. A major catalyst for the company's top line was the COVID-19 pandemic as consumers in lockdown had little choice but to use Coupang's service.

Unfortunately, in a story similar to many pandemic darlings, growth cooled as the world returned to normal, and CPNG shares came under pressure. By May 2026, the stock had lost nearly two-thirds of its initial value.

• IPO date: July 2, 2002
• Amount raised in IPO: $4.6 billion
• Offer price: $23.00

Conglomerate Tyco bought top business lender CIT in 2001, then tried unsuccessfully to sell it back off in early 2002. Management then switched gears to spin it off with an IPO instead.

Wall Street wasn't very enthusiastic about the CIT Group deal, in part because Tyco CEO Dennis Kozlowski had abruptly resigned a month earlier due to reports he was being investigated about dodging taxes.

The IPO priced below its original range, and the financial stock fell by 4% on its first day of trading. Still, the offering raised a hefty $4.6 billion — still one of the biggest U.S. IPOs ever — most of which was used to pay down Tyco's massive debt load, which it accumulated because of an aggressive merger and acquisition (M&A) spree.

The company eventually had to file for bankruptcy in late 2009 amid the financial crisis, and shareholders were wiped out. But CIT Group remained, albeit with a massive restructuring.

In January 2022, CIT Group merged with First Citizens BancShares in an all-stock deal worth roughly $2.2 billion.

• IPO date: September 13, 2023
• Amount raised in IPO: $4.6 billion
• Offer price: $51.00

The origins of Arm Holdings (ARM) go back to 1990. The company was a joint venture of Apple (AAPL), VLSI Technology and Acorn Computer, and its focus was to build cutting-edge semiconductors for computers with batteries. With the growth in mobile devices, Arm's strategy was spot on.

In 1998, the company would go public on the London Stock Exchange. Then, in 2016, Japanese conglomerate SoftBank agreed to shell out $32 billion for Arm. A few years later, Nvidia (NVDA) attempted to acquire the company for $40 billion, but regulators blocked the deal.

Arm's valuation would continue to rise. By the summer of 2023, SoftBank took the semiconductor stock public at a market capitalization of roughly $55 billion — making the Arm IPO one of the biggest on record.

Currently, the company's chips are inside nearly all smartphones. However, amid a maturing market, Arm is looking to expand into other categories such as data centers and AI. In its most recently completed fiscal year, the company reported revenue of $4.9 billion.

• IPO date: June 21, 2000
• Amount raised in IPO: $4.9 billion
• Offer price: $19.99

By summer 2000, American markets were under intense pressure from the dot-com bubble burst, but that didn't deter Chinese telecom company China Unicom. The firm pulled off a $4.9 billion deal — at the time, the biggest U.S. IPO ever by a Chinese company — to list on the New York Stock Exchange, and managed to gain 12% on its first day. Shares also were offered in Hong Kong.

China Unicom, the second largest telecom company in China at the time, was a division of state-run China United Telecommunications. CHU held about 14% market share, including strong footprints in Beijing, Shanghai and Tianjin. Half its revenue came from paging.

Currently, the company has more than 1.1 billion subscribers and has found growth in such categories as cybersecurity, the internet of things (IoT) and big data.

China Unicom delisted from the NYSE in 2021.

• IPO date: March 13, 2000
• Amount raised in IPO: $5.2 billion
• Offer price: $33.92

In 2000, German chipmaker Infineon Technologies (IFNNY) wanted to get a piece of the dot-com action in the U.S. — and it worked. The deal was the second-biggest for a German company — second only to Deutsche Telekom (DTEGY) — and shares more than doubled, to $70 per share from a $33.92 offering price.

Infineon was a division of old-line industrial operator Siemens (SIEGY) and was ranked No. 10 in the world among chipmakers, in terms of total sales. Siemens, by the way, had enjoyed deal-making success a year earlier with an IPO of its Epcos division.

Infineon Technologies delisted from the New York Stock Exchange in 2007, but still trades on the Frankfurt Exchange, as well as over-the-counter in the U.S.

It has a strong footprint in key markets such as self-driving vehicles and IoT. Its power and smart card ICs are No. 1 in market share. In fiscal 2024, revenue came to nearly 15 billion euros and there were 57,000 employees worldwide.

• IPO date: November 10, 1999
• Amount raised in IPO: $5.5 billion
• Offer price: $50.00

In 1907, James Casey created the American Messenger Company, which offered parcel and special-mail service primarily by foot and bicycle. However, it upgraded its "fleet" with its first Ford Model T in 1913, and six years later, it took on the name we know it by now: United Parcel Service (UPS).

UPS built a massive business without much need for outside capital. UPS didn't go public until 1999 — compare that with rival FedEx (FDX), which was founded in 1971 and went public in 1978.

Demand for the UPS IPO was so robust that the deal had to be delayed by 45 minutes. Shares ended their first day of trading up 36%. Unlike many offerings, employees collected a nice windfall; they collectively owned about a third of the company's shares.

Since its massive IPO, UPS has continued to thrive. In fiscal year 2025, the company posted $88.7 billion in revenue and delivered 20.8 million packages per day across more than 200 countries and territories.

• IPO date: May 12, 2026
• Amount raised in IPO: $5.55 billion
• Offer price: $185.00

The post-pandemic IPO market has been shaky due to several temporary hurdles. In 2026, these have included private-equity concerns, worries about an artificial intelligence (AI) bubble and geopolitical uncertainty.

But things appear to be looking up, thanks, in part, to a blowout offering in mid-May from Cerebras (CBRS), a company that builds high-powered chips for complex AI applications.

Cerebras bills itself as "the fastest AI infrastructure" firm. "For many workloads, Cerebras is up to 15 times faster than leading GPU-based solutions as benchmarked on leading open-source models," the company explains in its S-1 filing. "In some more exotic workloads, we have been more than 1,000 times faster."

In 2025, Cerebras had $510 million in total revenue, up 76% from 2024, and $237.8 million in net income vs a net loss of $481.6 million from the year prior.

So far in 2026, Cerebras has already inked multiyear deals with artificial intelligence giants OpenAI and Amazon Web Services. Its backers also include OpenAI's Sam Altman, Greg Brockman and Ilya Sutskever.

On May 13, the company priced its offering at $185 per share, above the high end of its upwardly revised range. Based on the 30 million shares of common CBRS stock it offered, the AI company raised $5.55 billion in its offering, making it not only one of the biggest IPOs of the year but one of the largest U.S. IPOs ever.

• IPO date: October 5, 1998
• Amount raised in IPO: $5.6 billion
• Offer price: $25.00

In 1851, Switzerland's government created a telegraph network to run through the country. This would later become the system for telephones across Switzerland. The organization would later come to be known as Swisscom (SCMWY), and it continues to adapt quickly to emerging technologies such as the mobile networks.

In the 1990s, the Swiss government felt that the best strategy for growth and innovation was to privatize Swisscom. To do this, it held a public offering that raised $5.6 billion in the U.S. and a total of $7.1 billion on a global basis — securing its place on this list of the biggest IPOs ever.

The party didn't last, though, and in 2007, Swisscom delisted its shares from the NYSE. The main reason was that the costs and regulations were too onerous, given the low trading volume. The stock is still traded over the counter.

Today, Swisscom has half of market share in mobile communications in Switzerland and 46% of the broadband category.

• IPO date: November 17, 1997
• Amount raised in IPO: $5.6 billion
• Offer price: $25.00

Similar to Swisscom's history, Telstra (TLGPY) originated from Australia's telecom system, which came under the Postmaster-General Department's watch in 1901. In 1993, the system was renamed to Telstra, whose name is a mashup of "telecommunications" and "Australia."

As competition became more intense, Australia's government set up a program for privatization of Telstra in 1997. The first step was a partial IPO of Telstra. The offering resulted in a $5.6 billion haul from investors.

As of now, Telstra remains Australia's top telecom operator. The company has 22.5 million retail mobile customers.

Telstra delisted from the NYSE in 2006, but still trades over the counter in the U.S.

• IPO date: December 16, 2025
• Amount raised in IPO: $6.26 billion
• Offer price: $29.00

Medline (MDLN) debuted in December 2025 in what was the biggest IPO since Lineage's offering in July 2024. The medical supplies company previously traded on the public markets in the mid-1970s, but was taken private by Jim and Jon Mills, who founded the company in 1966.

In 2021, a group of private equity firms — Blackstone, Carlyle and Hellman & Friedman — acquired a majority stake in Medline for roughly $30 billion, in what was then the largest leveraged buyout since 2008.

Medline currently operates 22 manufacturing facilities and 69 distribution centers across more than 100 countries. It employs 43,000 folks worldwide.

Its growth is impressive too. The company has enjoyed more than 50 straight years of annual net sales growth. In 2025, Medline generated net sales of $28.4 billion, up 11.5% from the year prior. In the first three months, net sales rose 9.8% to $13.5 billion.

Its share price, meanwhile, has been choppy since its IPO. The healthcare stock is down more than 7% so far in 2026 (through May 14) to trade near $39, just below its December 17 close of $41.

• IPO date: October 17, 1997
• Amount raised in IPO: $7.3 billion
• Offer price: $32.00

In 1878, the French government created the Ministry of Posts and Telegraphs. This would be the country's exclusive telecommunications organization that would eventually become France Telecom.

By the mid-1990s, the French government began the privatization of various state-owned businesses. One of its most prized assets was France Telecom. The timing of the public offering was also favorable, as it came during the dot-com bubble. Investors were optimistic that the platform could be leveraged as valuable internet infrastructure.

In 2007, France Telecom changed its name to Orange (ORANY). It was a recognition that the company had expanded its platform into different business segments. Orange was also a more memorable brand for consumers.

Currently, Orange has more than 340 million customers.

• IPO date: May 10, 2019
• Amount raised in IPO: $8.1 billion
• Offer price: $45.00

Garrett Camp and Travis Kalanick founded Uber Technologies (UBER) in 2009. They would create one of the killer apps for the smartphone era.

The founders were aggressive in their growth strategies. They raised huge amounts of capital and quickly built an extensive network.

But some of the moves were controversial. For one, Uber built software to circumvent the efforts of regulators. Then there were various sexual harassment and discrimination claims. There were also problems with the company's self-driving car efforts, namely in 2018, when a pedestrian was struck and killed. In 2017, Kalanick resigned as CEO.

When Uber went public, the company raised a hefty $8.1 billion — making it one of the biggest IPOs ever. The deal turned out to be a dud, though, with shares falling nearly 8% on their first day of trading. Within a year, they would lose more than half their value.

However, the stock has put in a solid performance on the price charts in recent years and is now up more than 60% from its offer price.

• IPO date: June 13, 2001
• Amount raised in IPO: $8.7 billion
• Offer price: $31.00

Philip Morris International (PM), which had purchased Nabisco in 2000, spun off Kraft Foods in 2001, using much of the offering's proceeds to pay down debt from the acquisition.

Kraft Foods at the time had a nice portfolio of brands, including Kraft Macaroni & Cheese, Maxwell House, Philadelphia Cream Cheese, Oreo and Oscar Mayer. It also had an interesting leadership structure that included co-CEOs, and Philip Morris' CEO was the chairman.

Nonetheless, even one of the biggest IPOs in U.S. history spurred little investor interest, with shares rising just 1% on their first day of trading.

In 2012, Kraft announced it would split off its North American grocery business as Kraft Foods Group, with the remaining snack-foods company to be renamed Mondelez International (MDLZ). Three years later, Kraft Foods Group merged with Heinz to become Kraft Heinz (KHC) in a deal facilitated by Warren Buffett's Berkshire Hathaway (BRK.B) and global investment firm 3G Capital.

• IPO date: April 27, 2000
• Amount raised in IPO: $10.6 billion
• Offer price: $29.50

The AT&T Wireless IPO came at the peak of the dot-com boom, as parent company AT&T wanted to capitalize on the frenzy. The deal was done by issuing "tracking stock." This tracking stock essentially trades based on the performance of a company's division but doesn't require the company to yield control of the unit or spin off the division's actual operations.

AT&T Wireless was growing at a fast pace, as were other mobile companies including Sprint and Nextel. Revenue spiked by 41% year-over-year to $7.6 billion in 1999, and the firm boasted 12 million subscribers. No one was surprised when AT&T raised a then-record $10.6 billion in one of the biggest U.S. IPOs ever, a year after UPS' $5.5 billion raise.

AT&T Wireless eventually sold out to Cingular Wireless — itself a joint venture between SBC Communications and BellSouth, which were broken off from the original AT&T — in 2004 for $41 billion. SBC eventually took on the AT&T brand as AT&T Inc. (T).

• IPO date: November 10, 2021
• Amount raised in IPO: $11.9 billion
• Offer price: $78.00

From an early age, RJ Scaringe would restore cars in his neighbor's garage. But over time, he saw that there needed to be alternatives to fossil-fuel vehicles.

This led him to focus on getting an education in advanced mechanical engineering. He would eventually receive a doctorate from the Massachusetts Institute of Technology's (MIT) Sloan Automotive Lab. After this, he started his own company to build cars in 2009. It would become Rivian Automotive (RIVN) and the vision was to create electric-powered trucks and SUVs.

Pulling this off required more than innovation. Scaringe had to raise billions of dollars to build the infrastructure. Some of his backers were Amazon and Ford Motor (F).

When Scaringe took the company public in late 2021, he was able to raise a hefty $11.9 billion. This was even As the company generated minimal revenue and had lost about $2 billion since 2020.

The IPO got a strong reception from Wall Street. On Rivian's first day of trading, shares shot up by nearly 30%, and the market value of the company was above $100 billion.

But Rivian was not able to keep up the momentum. The stock is now down more than 80% from its IPO price.

• IPO date: November 17, 1997
• Amount raised in IPO: $13 billion
• Offer price: $17.00

The West German government created Deutsche Telekom (DTEGY) a few years after World War II. The organization has undergone several restructurings since, and the privatization process began in early 1995.

In late 1997, the government launched a massive IPO for Deutsche Telekom, raising roughly $13 billion in fresh capital.

The deal was challenging, though. For the most part, the growth started to slow, and competitive pressures took a toll. A key advantage for Deutsche Telekom, though, was that it had a monopoly in Germany for internet services.

Today, the company is one of the world's largest telecom operators, with 245 million mobile customers and 21 million broadband lines. It has operations in more than 50 countries.

While the communication services stock delisted from the NYSE in 2010, it's still traded over the counter.

• IPO date: November 18, 2010
• Amount raised in IPO: $15.8 billion
• Offer price: $33.00

General Motors (GM) has a rich history dating to 1908, spanning iconic brands (current and defunct) such as Chevrolet, Cadillac, GMC, Pontiac, Hummer, Saturn and Opel.

However, it wasn't immune to the financial crisis, and it in fact succumbed in June 2009, when it filed for bankruptcy. This included a $50 billion bailout from the federal government that sparked the nickname "Government Motors."

But GM was able to get its house in order. The company worked aggressively to cut costs, streamline operations, revamp the lineup and invest more in the Chinese market.

The result? General Motors was able to launch a successful IPO a couple of years later. It reduced its obligations to the U.S. government by $22 billion (and fully paid off the government by 2015), and it made a $4.7 billion profit in 2011 — its first positive annual earnings since 2004.

The stock, on a price basis, has done well for investors, returning nearly 140% from its IPO price.

• IPO date: May 18, 2012
• Amount raised in IPO: $16.0 billion
• Offer price: $38.00

There was plenty of drama in the lead-up to the Facebook IPO. Facebook's prospectus noted that user-base growth likely would slow. The mobile side of the business was lagging. CEO Mark Zuckerberg didn't win any friends when he wore a hoodie to his investor presentation, leading many to believe he had a lackadaisical attitude toward the process.

The day of the IPO was no better. Facebook's deal pricing was delayed because of a Nasdaq glitch that resulted in roughly $500 million in losses across numerous Facebook investors.

The situation got worse in the next few months, as Facebook plunged below $20 per share.

But Zuckerberg didn't flinch. He swiftly focused on investing in mobile, including upgrading the original Facebook app and also making deals for image-based social media company Instagram and messaging service WhatsApp. Facebook more than recovered. By August 2021, the shares fetched more than $380.

Later that year, Zuckerberg took a big bet on the metaverse and changed the name of the company to Meta Platforms (META). However, the results were mostly disappointing and expensive. Zuckerberg has since cut back on costs and invested heavily in AI, and the Magnificent 7 stock staged a nice comeback.

• IPO date: November 2, 1999
• Amount raised in IPO: $16.5 billion
• Offer price: $45.23

Italian utility company Enel SpA (ENLAY) had a few things weigh on its IPO — namely, it was a utility (which doesn't tend to create excitement), and it was a foreign operation, which also tends to hurt interest.

Wall Street's reception was an unsurprising yawn. Enel became the largest publicly traded utility in the world, but the utility stock barely budged on the first day of trading, crawling ahead by just 0.33%.

Another interesting wrinkle: Enel was state-owned. The Italian government actually used the deal to bolster its treasury, as part of a wide-scale policy of privatization and attempting to adopt the euro.

But while the Enel IPO was the second-largest deal raise in U.S. market history, the stock never got much traction. By 2007, management chose to delist from the NYSE because of low trading volumes.

• IPO date: March 18, 2008
• Amount raised in IPO: $17.9 billion
• Offer price: $44.00

On March 16, 2008, JPMorgan Chase (JPM) agreed to buy Bear Stearns for a mere $2 per share — a 93% discount to the prior close (and a price that eventually would be moved up to $10 per share) — in a deal that involved a $30 billion loan from the Federal Reserve. It sent shockwaves across Wall Street, as investors started to worry about America's largest financial institutions.

This was the environment Visa (V) had to contend with when, a couple of days later, it pulled off one of the biggest IPOs in U.S. history.

This was a gutsy move by management, who wanted to make a statement that Visa was in solid financial condition. Visa operated the world's largest payments system and was owned by about 13,000 financial institutions. At the time, it had about 1.5 billion cards in use, compared with 916 million for rival Mastercard (MA). Wall Street cheered the offering, driving V shares up 28% on their opening day.

Anyone willing to invest in Visa during this time is doing cartwheels. A $1,000 investment on V's first day of trading would be worth nearly $23,000 today.

• IPO date: September 19, 2014
• Amount raised in IPO: $21.8 billion
• Offer price: $68.00

Chinese e-commerce giant Alibaba Group Holding (BABA) launched in April 1999 by its 18 founders, including its charismatic leader Jack Ma.

Ma, a former English teacher, had little business or technology experience, but he did have a compelling vision: to create a massive marketplace where Chinese businesses could sell their wares in China as well as global markets.

Alibaba's early days were challenging. Funding was difficult to come by, as tech companies were folding left and right in the dot-com bubble bust . Still, the company found traction and eventually built a powerful ecosystem. By the time it launched its 2014 IPO, the company was earning roughly $3.8 billion in annual net income from 279 million active buyers.

BABA's business has since spread to other areas such as cloud computing, digital media and even self-driving vehicles. However, the company has had to deal with challenges, including intense regulatory scrutiny. The result is that the shares have been under pressure during the past few years. In fact, since the IPO, the average annual return for investors has been only about 4%.

When Elon Musk took Tesla (TSLA) to market in June 2010, the electric vehicle maker raised more than $226 million in its IPO. However, that pales in comparison with General Motors, which raised roughly $20 billion in its November 2010 offering, when the automaker returned to the public markets after filing for Chapter 11 bankruptcy in 2009.

Sixteen years later, Musk had his redemption on the IPO stage, with the entrepreneur taking SpaceX (SPCX), his space exploration and satellite company, public in what is the biggest IPO ever.

Elon Musk founded SpaceX in 2002, intending to lower costs for space launches and eventually build a livable colony on Mars. The company had its first successful space launch in 2008 and has since had more than 650 total launches. It also wants to build data centers in space.

"A key to its success has been a relentless focus on innovation," explains Kiplinger contributor Tom Taulli. "The company's breakthroughs include reusable orbital rockets, which have greatly reduced the costs of space flights; vertical rocket landings; and onboard autonomous systems."

SpaceX also owns Starlink, a satellite internet project that today provides coverage to roughly 10 million customers across 160 countries and territories, and xAI, Musk's artificial intelligence company that owns X (formerly Twitter).

The SpaceX IPO was priced at $135 per share, and based on the 555.6 million shares it sold, it raised $75 billion in its offering. This easily knocked Alibaba out of the top spot for biggest U.S. IPOs. It also surpassed Saudi Aramco as the biggest global IPO ever.

Related content

• Best Stocks to Buy Now
• 5 Core Stocks Every Investor Should Own in 2026 and Beyond
• Best Long-Term Investment Stocks to Buy

Give credit where it’s due. Tesla Inc. (TSLA, $300.84) CEO Elon Musk, through sheer willpower and persistence, has mainstreamed the idea of electric vehicles. EVs were a fringe project taken on by only a handful of organizations a few years ago; now, every major automaker has entered the EV market. Tesla, meanwhile, has become synonymous with this kind of car, and TSLA stock has firmly grabbed Wall Street’s attention.

But Tesla’s journey hasn’t always been pretty. Sometimes, it has been downright ugly. Musk has led Tesla to the EV fore … but also into operational challenges and publicity headaches. He often overpromises and underdelivers. He’s distracted by leading his other companies, Boring and SpaceX.

Never even mind his penchant for getting Tesla ever deeper into debt, and his company’s extreme difficulties in turning a profit.

On the upside, Tesla’s earnings report on Wednesday, Aug. 1, hints that the company and Musk finally are moving in a healthier direction. In his quarterly comments to shareholders, Musk said that in the second half of this year, he expects Tesla “to become both sustainably profitable and cash flow positive.” Wall Street was encouraged, driving TSLA stock almost 10% higher before the next day’s trading commenced.

Here's a look at seven of Tesla’s potential pitfalls that deserve closer inspection. Just one of these issues could prove to be the company’s undoing. A more plausible outcome is that a combination of these impasses slowly chips away at Tesla’s current leadership of the electric vehicle market. If nothing else, even the most ardent bulls should be aware of these factors as potential risks.

Data is as of Aug. 1, 2018.

Overwhelming debt can be a company killer. Indeed, it may be the No. 1 concern of investors and corporate managers.

It’s a particularly potent threat to Tesla, however, as the company’s debt load and corresponding interest expense continue to rise, leading the company to ever rising losses. Last quarter, Tesla made $163.6 million worth of interest payments, pushing the company to a record-breaking GAAP loss of $717.6 million for the same quarter.

Debt in and of itself isn’t a death sentence. It takes money to make money, and early investors of Tesla’s bonds and equity knew it was a long-term project. But Tesla’s debt headache may be on the verge of becoming very ugly.

Of the $9.5 billion in long-term debt currently on the books (and $9.1 billion in current liabilities), $230 million of it matures in November, and $920 million expires in March of next year. Tesla has the funds it needs on the books, but that could leave it cash-strapped after last quarter’s cash burn; after paying interest on debt, TSLA had negative free cash flow of $889.9 million, according to S&P Global Market Intelligence. And with Moody’s recently lowering the company’s debt from B2 to B3, new debt becomes even more expensive for Tesla to handle.

If Tesla doesn’t start creating the cash flow that it hinted at in its Q2 report, illiquidity could turn into a debilitating problem.

Superficially speaking, the decision to build at least few Model 3 vehicles in a huge tent behind its production facility in Fremont, California, was more about meeting a specific pace of output before the end of June than an indication of logistical sloppiness. Even so, it’s a subtle sign that Musk – who has no other real automobile manufacturing experience – might be winging it as he goes instead of scaling up with a deliberate production plan.

Doug Kinsey, partner with Cincinnati-based money management firm Artifex Financial Group, says, “He’s had trouble executing on the Model 3, while companies like Volvo are moving forward on very competitive products, like the Polestar 1. Tesla will have an increasingly difficult time competing with established car brands who understand the nuances of manufacturing.”

The company’s track record affirms Kinsey’s view.

The Model S (the P85D version, in particular) garnered rave reviews back in 2015 when it was the organization’s focal point. Consumer Reports scored it at 103 … on a scale that tops out at 100! But that review didn’t measure reliability. Shortly after the initially glowing look, the Model S displayed too many quality problems to retain a positive recommendation from Consumer Reports.

That was when Tesla was cranking out just more than 4,000 vehicles per month. Now it’s making almost 7,000 cars per week, but the rush appears to have exacerbated quality problems – especially with the Model 3.

While Tesla may be the undisputed pace-setter among companies entering the electric vehicle fray, other players are catching up. And there are a lot of them – all taking aim at Tesla.

Artifex’s Kinsey says, “Volvo is going to be a real problem for Tesla.” John Engle, President of Illinois-based venture capital firm Almington Capital, argues that threats are zeroing in from all angles. He says, “(Tesla) did all the hard work of normalizing electric cars in the luxury and mainstream and now the legacy automakers are out to eat its lunch. At the premium level, Porsche and Jaguar are pushing hard. In entry level luxury, BMW is ramping up. And at the mass-market level, GM, Ford and Kia are all moving in for the kill.”

Those other players, individually or collectively, still have plenty of work to do.

Despite the Model 3’s woes, it still outsold the nearest competing EV (Toyota’s Prius Prime) through July by a ratio of more than 2-to-1 in the U.S. Securing the No. 3 and 4 best-selling EV spots year-to-date are the Model S and Model X, respectively. Tesla is no slouch overseas, either.

But the lack of competition thus far has mostly been the result of a lack of unwillingness from major manufacturers to give electric vehicles their due attention. That’s changing now; at the start of 2018, the industry had earmarked $90 billion in funding for the development of EVs.

The knee-jerk response to the unveiling of the Model 3 was nothing less than incredible. More than a quarter of a million people put down a refundable $1,000 deposit right out of the gate; by the end of that month, the number had grown to 373,000. A few months later, Musk claimed there were more than 500,000 deposits on future purchases of the vehicle.

Things have changed considerably in the meantime.

Pre-order tallies are starting to shrink, and not just because those buyers have been taking deliveries. Needham and Co. analyst Rajvindra Gill, discussing Tesla's stock, recently opined that refund requests were now rolling in faster than new reservations were being submitted. Gill believes one out of every four depositors are asking for their money back, citing “extended wait times, the expiration of the $7,500 credit, and unavailability of the $35k base model.”

Tesla disputes Needham’s presumptions. But even if the numbers aren’t perfectly accurate, the underlying logic is. Two years ago, Tesla generated lots of excitement and customers had few alternatives. Now there’s less of the former and more of the latter.

In addition to the risk of existing debt, TSLA might also be running out of options for future funding – which most everyone except Musk is convinced the company will need a great deal of sooner than later.

“A rumor that began in comment threads and backroom discussions among analysts is starting to be mentioned in reputable investing publications,” Almington Capital’s Engle says. “Namely, it is the specter of something blocking the capital raise everyone but Elon Musk acknowledges needs to happen. What that something is remains to be seen.”

Although Musk alluded to self-sufficiency during the conference call, not all investors are convinced that’s possible just yet. Prior to Tesla’s quarterly report, Goldman Sachs suggested the company may need as much as $10 billion in fresh funding by 2020. Even if Tesla manages to drive more fiscal success beginning in this year’s second half, that still leaves significant potential for a funding shortfall. And investors are increasingly uneasy about the prospect of throwing away good money after bad.

Before EVs became mainstream, most investors thought little of lithium and cared even less about neodymium. The former is salt, essentially, and the latter is a rare-earth metal that can be turned into a super-magnet. Cobalt is yet another element that meant practically nothing to investors until recently.

All three are not only necessary but critical for the functioning of an electric vehicle. Lithium is the basis for the powerful batteries required to power an EV’s motors. Cobalt is used in the electrodes of these batteries. Neodymium is Tesla’s rare-earth element of choice to make its super-powered motors.

None of these elements is proving cheap to source, and the mining industry still isn’t ready to meet the kind of demand the advent of electric vehicles has created for them. For perspective, cobalt now sells for $30.50 per pound, down from June’s peak above $40, but well above 2013’s average price near $15. The ask on neodymium oxide is $69 per kilogram, up 45% from two years earlier. Lithium prices have effectively tripled within the past three years. That’s largely a result of the ramp-up in EV production.

Some experts believe the price increases for all three commodities are overblown and ready to reverse. Jeffrey Christian, managing director of commodities market research firm CPM Group, told Financial Post, “I don’t even look at the current prices because I think both cobalt and lithium are basically overvalued. They’ve been bid up by the expectation of a more rapid move into electric vehicles than is going to occur.” The outlook, however, may not fully account for all the other carmakers turning up the heat on their EV ventures.

Given his history and increasingly antagonistic demeanor, one can’t help but wonder if Elon Musk eventually is going to cross a line that the market can ignore.

Case(s) in point: In July, after offering to send a mini-submarine to help find and rescue children trapped by rising water in Thailand cave, he went on to refer to one of the workers as a “pedo” (as in, pedophile). His April Fool’s Day tweets were equally eyebrow-raising. His refusal to even address a question about future capital needs during the Q1 conference call – he simply responded, “Excuse me. Next. Boring, bonehead questions are not cool. Next?” – is downright alarming.

Investing.com Senior Stock Analyst Clement Thibault says, “As some aspects of Tesla’s business look grim, namely it’s debt and production issues, the inevitable questions that Musk deems as ‘boring’ must be asked. And he must have the patience to answer them, such his is duty to Tesla’s many investors.”

Just because Musk may refuse to remain calm and act like a CEO, however, doesn’t mean Tesla can move on to another one. Thibault continues, “Tesla and its investors must put up with Musk’s shenanigans because they have a financial incentive to do so. Should Musk announce his departure from Tesla sometime in the future, we’ll see a selloff of Tesla like we’ve never seen before.”

There is a recent glimmer of hope here, however. On the Aug. 1 conference call, Musk showed contrition numerous times for his behavior, and a KeyBanc Capital Markets analyst called one particular apology “maybe the most valuable apology of all time.”

If it’s a lasting change of character, that could bode well for TSLA stock. But if he falls back to a lack of accountability and consequence for the things he says, investors again could be put in an uncomfortable position.