Sonic the Hedgehog may be able to run faster than the speed of light, but his film franchise nearly came to a screaming halt in 2019.

A less-than-three-minute trailer released early that year to tease the film’s release, which was just six months away, was widely panned by fans who took to social media to rail against Paramount’s character design. Dubbed “Ugly Sonic,” the blue creature that appeared on film was a far cry from the iconic video game speedster.

Cinematic Sonic, version 1, had more realistic facial features, including human-like teeth, and his body proportions were deemed inconsistent with the character fans grew up with in the ’90s.

“The trailer goes out, and I think it became the most viewed trailer in the history of Paramount Pictures. Which is amazing,” said Toby Ascher, who acquired the rights to Sonic and produced the film franchise. “The only problem was that 90% of people hated the trailer because of the design of Sonic.”

“All of a sudden we went from trying really, really hard to make a really, really faithful video game adaptation to being next in line of the people who had ruined video games for everyone. It just was a disaster of epic proportions,” Ascher added.

The studio pivoted, opting to redesign the title character and push the film’s release back three months to February 2020. The fix cost Paramount around $5 million but resulted in a franchise that has generated nearly $1.2 billion at the global box office. The studio hopes to build on that momentum with a fourth installment in the film franchise, set to debut in 2027.

“The Sonic franchise owes its box office success and longevity to a monumental decision early in the development of the first films’ marketing campaign,” said Paul Dergarabedian, senior media analyst at Comscore. “A re-design of a main character is no small thing. … These decisions can make or break what is every studio’s dream of having a single film turn into a long-term revenue generating franchise. The return on investment by turning an ‘ugly’ Sonic into a beautiful revenue generating franchise is undeniable.”

Ascher first acquired the rights to Sonic the Hedgehog in 2013, a time in Hollywood when video game-inspired films had failed to resonate with audiences.

“When we first started working on Sonic, making a video game adaptation was, like, a really bad idea,” he told CNBC.

No film based on a video game property had, to that point, managed to earn a positive rating from review aggregator Rotten Tomatoes. It wasn’t until 2019 that a video game-based film generated a “fresh” rating on the site, indicating more than 60% positive reviews.

“I don’t think anyone in town really thought making a Sonic movie was a good idea,” Ascher said. “But, I think our strategy was that we had grown up with these games. We’ve grown up with these characters, and we wanted to treat them like any other character. We wanted to give them real emotional arcs, and real emotional stories where you could relate to them.”

Ascher noted that previous video game adaptations typically focused on worldbuilding rather than character development.

“What we’ve been able to do is inject into the franchise heart, and I think that that’s what’s made it different,” said Neal Moritz, Ascher’s producing partner and producer of franchises like “The Fast and the Furious” and “21 Jump Street.”

Both Ascher and Moritz noted that while the filmmaking team behind the first “Sonic the Hedgehog” film overhauled the main character’s design, the story remained pretty much the same.

The filmmaking team was blindsided by audiences’ reactions to the first trailer, but were resolute in trying to resolve the issue rather than shelve the film or release it in its current form.

Moritz said he made an “impassioned speech” to the heads of Paramount and Sega to allow the filmmakers to fix the mistake.

As Moritz recalls, he told executives: “We really screwed up here, but there’s an incredible amount of interest and what we need to do is fix it … We need some more money and we need some more time. If you give that to us, I think we could turn this thing around.”

“I give both Paramount and Sega a lot of credit,” Moritz said. “They said ‘OK.'”

In the redesign, the team brought back Sonic’s iconic white gloves and classic red shoes. They reinfused the character with some of his cartoon roots, and six months after the first trailer, Paramount released a new iteration.

“The fans saw that we were trying to be really genuine in our love for this franchise,” Ascher said, noting that in the wake of the first trailer the team began engaging more with fans and focus groups to drum up feedback and inspiration.

The new trailer was well-received by fans, and three months later “Sonic the Hedgehog” opened to $58 million at the box office. The feature went on to collect $146 million domestically before the pandemic shuttered theaters. Globally, it pulled in $302 million.

The Sonic franchise has continued to thrive in the following years, with each follow-up feature outperforming the last.

“Sonic the Hedgehog 2” snared $190 million domestically and $403 million globally, while “Sonic the Hedgehog 3” tallied $235 million stateside and $485 million worldwide.

“That’s a big jump,” said Marc Weinstock, Paramount’s president of worldwide marketing and distribution. “I get excited that every new movie does better than the last one, which is rare.”

Following the success of the second “Sonic” film, the studio’s then-president and CEO of Paramount Pictures, Brian Robbins, greenlit a “Knuckles” series based on the franchise for the company’s streaming service, Paramount+, as well as a third Sonic film.

Sonic was becoming multi-platform, much like Robbins and Paramount had done for franchises like “Teenage Mutant Ninja Turtles,” “A Quiet Place,” “Spongebob Squarepants” and “Paw Patrol.”

The “Knuckles” show generated more than 11 million global viewing hours in its first 28 days on Parmount+.

The theatrical success also rocketed Sonic from a $70 million licensing business to one that generates more than $1 billion in retail revenue annually, according to Ivo Gerscovich, Sega’s senior vice president and chief business and brand officer of Sonic the Hedgehog.

“The great thing about Sonic — and the success of Sonic from the very beginning — is that we basically have listened to the fans from day one,” Robbins, now co-CEO of Paramount, said. “The fans are fanatical about this franchise and love this franchise and know this franchise. Because of that, they’ve become really key in shaping the franchise … They evangelize it.”

Fans inspired the casting of Keanu Reeves as Shadow, an archrival of Sonic, in the third Sonic film. And the filmmaking team says it continues to look to fans to inspire which characters it will add to the films and series next.

Ascher and Moritz both teased that the fourth Sonic film with again feature a new fan-favorite character, but said the team will continue to expand the franchise’s universe at a slow pace.

“If all of a sudden we bring every character, they are not going to get the time that the audience needs to understand them and relate to them and really fall in love with them,” Ascher said. “So, as we bring characters in, whether it’s film or it’s TV, the most important thing is that they have a good story that really showcases the character in an incredible way.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns Rotten Tomatoes and is the distributor of “The Fast and the Furious” films.

Teladoc Health shares fell in extended trading on Wednesday after the company reported a wider loss than analysts expected and issued disappointing quarterly guidance.

Here’s how the company did, compared to analysts’ consensus estimates from LSEG:

• Loss per share: 28 cents vs. 24 cents expected
• Revenue: $640.5 million vs. $639.6 million expected

Revenue at the telehealth company decreased 3% in the fourth quarter from $660.5 million during the same period last year, according to a release. Teladoc’s net loss widened to $48.4 million, or 28 cents per share, from a loss of $28.9 million, or 17 cents per share, a year ago.

Teladoc is in the middle of a deep slump, with its stock price dropping in each of the past four years due to hefty competition in remote health, challenges at mental health division BetterHelp and high operating costs.

When Teladoc acquired digital health company Livongo in 2020, the companies had a combined enterprise value of $37 billion. Teladoc’s market cap was around $1.9 billion as of market close on Wednesday.

“As we look forward in 2025, execution will continue to be a top priority as we advance efforts to unlock growth opportunities and position the company for long term success,” Teladoc CEO Chuck Divita said in the statement. “We will also remain focused on our cost structure, building on the significant improvements achieved in 2024 over the prior year.”  

Teladoc reported adjusted earnings of $74.8 million in its fourth quarter, a 35% decrease from a year ago. Adjusted earnings for the company’s Integrated Care segment declined 5% to $53.2 million, and BetterHelp saw adjusted earnings drop 63% to $21.7 million.

For the first quarter, Teladoc said it expects revenue of between $608 million and $629 million, while analysts were expecting $632.9 million. The company said adjusted earnings will be between $47 million and $59 million for the period.

Earlier this month, Teladoc announced it will acquire preventative care company Catapult Health in an all-cash deal for $65 million. Teladoc said its outlook includes the anticipated contribution from the deal but not the effect of potential impairments or purchase accounting. Teladoc said the acquisition should close at the end of the month.

Teladoc will host its quarterly call with investors at 4:30 p.m. ET.

— CNBC’s Bertha Coombs contributed to this report.

WATCH: Cramer weighs in on Teladoc

Citigroup mistakenly credit a customer’s account with $81 trillion last year when it meant to send just $280.

The payment, which took place last April, was missed by two employees but caught 90 minutes after it was posted, the Financial Times first reported Friday. It was reversed several hours later and reported to the Federal Reserve and Office of the Comptroller of the Currency as a “near miss.”

The event is the latest mistake disclosed by the Wall Street bank, which is struggling to overcome a series of operational errors in recent years.

“Despite the fact that a payment of this size could not actually have been executed, our detective controls promptly identified the inputting error between two Citi ledger accounts, and we reversed the entry,” Citi said in a statement to NBC News. “Our preventative controls would have also stopped any funds leaving the bank. While there was no impact to the bank or our client, the episode underscores our continued efforts to continue eliminating manual processes and automating controls through our Transformation.”

Citi neither confirmed nor provided comment on the number of near misses it has experienced.

Near misses occur when a bank processes the wrong amount but is able to recover the funds. The bank suffered 10 near misses of $1 billion or more last year and 13 in the year prior, the according to the report.

The bank has been working to repair its reputation since it sent $900 million in error to creditors engaged in a contentious battle over the debt of cosmetics group Revlon five years ago — which led to the ousting of former CEO Michael Corbat, as well as big fines and regulatory consent orders requiring Citi to fix the issues.

Corbat’s successor, Jane Fraser, has said improving risk and controls is a top priority. The bank was still fined $136 million by regulators last year for not making enough progress on the improvements.

Business: Aspen Technology provides industrial software that focuses on helping customers in asset-intensive industries worldwide. Its software is used in performance engineering, modeling and design, supply chain management, predictive and prescriptive maintenance, digital grid management and industrial data management. The company serves a range of asset-intensive industries, including oil and gas exploration and production; oil and gas processing and distribution; as well as oil and gas refining and marketing.

Stock Market Value: $16.8B ($265.25 per share)

Ownership: ~9.0%

Average Cost: n/a

Activist Commentary: Elliott is a very successful and astute activist investor. The firm’s team includes analysts from leading tech private equity firms, engineers, operating partners – former technology CEOs and COOs. When evaluating an investment, the firm also hires specialty and general management consultants, expert cost analysts and industry specialists. Elliott often watches companies for many years before investing and have an extensive stable of impressive board candidates. The firm has historically focused on strategic activism in the technology sector and has been very successful with that strategy. However, over the past several years its activism group has grown, and Elliott has been doing a lot more governance-oriented activism and creating value from a board level at a much larger breadth of companies.

On Feb. 7, Elliott announced that it’s taken a $1.5 billion position in Aspen Technology. The firm expressed its disagreement with Aspen’s decision to support a $265 per share tender offer by Emerson Electric, noting that it substantially undervalues the company.

Aspen Technology (AZPN) is a global provider of process optimization software solutions designed to manage and optimize plant and process design, operational performance, and supply chain planning. On Nov. 5, 2024, Emerson Electric (EMR), which currently owns approximately 57.4% of Aspen’s outstanding shares, issued a tender offer to acquire all outstanding shares of Aspen not already owned by Emerson at $265 per share. To evaluate this offer, Aspen’s board formed a special committee of three independent and disinterested directors. Ultimately, on Jan. 27, 2025, it was announced that the committee voted unanimously to recommend the transaction for approval. On Feb. 7, Elliott announced that it opposes the tender offer as the firm does not believe it fairly values the company.

Emerson acquired a 55% position in Aspen in 2022 and until May 2024 had a standstill agreement preventing it from acquiring additional stock (it got to 57% through share repurchases by the company). As an insider for 2.5 years, Emerson knows Aspen well and could have made this offer at any time since May. As a controlling shareholder, Emerson has an informational advantage over the public and pursuing a buyout now suggests that it’s strategically timing its move. Notably, it comes after a good quarter where the integration of Emerson’s contributed assets from its 2022 majority investment is starting to take hold, an improvement of margins seems to be on the horizon, particularly with the recent suspension of Aspen’s Russia business, and the seating of the Trump administration (Emerson actually announced its bid on Election Day) bringing with it a more lenient regulatory environment for oil- and chemical-related products.

When Emerson publicly announced its tender offer, Aspen stock was trading at approximately $240 per share, making this a 10% takeover premium that does not come close to accounting for the significant synergies Emerson could get from this transaction. While there are operational and sales synergies of at least $100 per share, what is most valuable to Emerson is access to Aspen’s software and code, which Emerson can only get by acquiring the entire company. There is a clear precedent for this. In January 2023, Schneider Electric closed out its acquisition of Aveva, buying out the remaining 40% of the company – which happens to be Aspen’s smaller peer player. It offered a 41% premium to Aveva’s undisturbed share price before Schneider’s interest was disclosed in August 2022. This is more of a standard premium for these types of transactions and is consistent with the $100 per share of synergies Emerson would get here. This suggests a substantially higher fair price than $265 per share. When looking at all the synergies and integration advantages Emerson has in this transaction, a more reasonable takeout price looks to be north of $350 per share.

As a majority shareholder, Emerson has a lot of control in this situation. Absent an activist investor, this deal likely gets done at $265. Not only does the price seem glaringly low, but the process suggests a sweetheart deal. For example, Aspen’s “independent special committee” that approved this deal was comprised of three directors, two of whom were Emerson’s designated directors on the board. So, Emerson effectively controlled the special committee that was tasked with reviewing the tender offer. Fortunately, in Delaware, where the company is incorporated, a tender offer requires at least 50% of disinterested outstanding shareholders to approve the transaction. This means 21.4% of the remaining shareholders (other than Emerson) need to vote for the deal for it to pass. Elliott has 9%, and if every other shareholder votes (an improbable likelihood), Elliott would just need another 12.4% to block the transaction. If 5% of shareholders do not vote, Elliott would only need an additional 7.4% of votes. Kayne Anderson is the next largest shareholder with 6.5%, so its vote will be important. It should be noted that it is not clear if Elliott’s position is in common stock or swaps (a common practice for the firm) as its actions here would not require the firm to file a 13D. However, in this situation it is not that relevant. If the company were required to get the vote of 50% of disinterested shareholders, Elliott would need to have its position in common stock to vote. However, since in this case the requirement is a tender of 50% of disinterested shares, even if Elliott owns swaps (and assuming the counterparty does not take equity risk), the shares underlying the swaps will not be tendered.

One final note – this is not just a “bumpitrage” situation for Elliott. While the firm would sell to Emerson at a fair price, it owns the stock because it likes Aspen and thinks it is a good investment as a standalone company owned 57% by Emerson. If Emerson does not increase its bid, that does not mean Elliott will tender at the $265 price or any other price it finds insufficient. The firm would likely be happy to own the stock and benefit from the same operational and macro tailwinds that Emerson sees. Moreover, the company just had a strong earnings call, but the stock did not rise past the $265 on the news as the offer price is establishing somewhat of an artificial ceiling. So, this is a situation where if Emerson ups its offer, the stock will go up. If the offer goes away, the artificial ceiling does too, and the stock price could also go up in that situation.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

With a population of about 2,100, Neodesha, Kansas, is roughly 100 miles from Wichita and Topeka in Kansas and Tulsa, Oklahoma. Its claim to fame is the 65-foot-tall tower that supported the drilling framework for the first commercial oil well west of the Mississippi River, locals say. 

But as an old oil town, Neodesha has struggled with a decreasing population and an aging housing supply for years.

When the refinery formerly owned by Standard Oil Co. closed in 1971, “the population was cut in half over night,” according to Neodesha’s mayor, Devin Johnson.

“We have seen that decline as every small community has over the last 50 years,” Johnson said. “The thing with small communities is, if you are not growing, you are dying.”

Last year, Neodesha partnered with MakeMyMove, an online relocation marketplace that connects workers with communities trying to attract new residents.

The town is now offering qualifying new residents incentives — such as waiving state income tax through 2026 along with property tax rebates and help with day care for working parents — as well as access to existing perks, including student loan repayment assistance up to $15,000 and free college tuition through the Neodesha Promise scholarship program.

MakeMyMove, which has worked with 88 communities across the U.S., screens applicants and connects them with local resources.

Since the program launched in 2024, more than 30 people are in the process of moving to Neodesha, according to Evan Hock, MakeMyMove’s co-founder and chief operating officer.

“We’ve awarded over $1 million in scholarships, and I feel like we are helping the community and making some real progress,” said Ben Cutler, who grew up in Neodesha and now funds the scholarship program, which started in 2020 and is available to any graduate of Neodesha High School in good standing. (Neodesha’s promise program will cover tuition at participating colleges or associate degree programs and vocational schools nationwide.) 

“One of my key focuses was helping build the community, to help in any way I could to make Neodesha a more attractive community for young families, and I think we’re making some real progress in that regard — I certainly hope so anyway,” Cutler said.

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Meanwhile, efforts are also underway to construct hundreds of new homes, apartments and duplexes in the region, along with the development of retail and commercial spaces and the renovation of several historic buildings on Main Street.

“We’ve got to cherish what we’ve got but make sure we make Neodesha an attractive place for people to come,” Johnson said.

Other communities across the country have also been upping the ante with cash incentives or voucher programs for people willing to move.

For example, workers relocating to Topeka can receive up to $10,000 for rent for the first year or up to $15,000 to put toward buying a home.

Another program affiliated with the West Virginia Department of Tourism is offering a cash incentive of $12,000 along with access to free coworking spaces and outdoor recreation packages for those who move to the state for at least two years.  

The Shoals Economic Development Authority offers $10,000 in cash to full-time remote employees who are willing to relocate to the Shoals community in northwest Alabama.

“This is a cost-effective way of doing economic development,” said MakeMyMove’s Hock. The communities “usually get a return within the first year.”

However, “incentives are not the reason people actually move,” he said. Affordability is key, he said, but community also plays an important role.

“They are looking for quality of place, they want a community connection, that’s what is motivating the move,” Hock said.

Incentive programs in Neodesha and other regions are gaining steam as residents from major cities across the country increasingly migrate to Southern and Midwestern spots where housing costs are less severe, and where construction is keeping up with the demand, reports show.

United Van Lines’ annual 2024 study found a growing shift away from the cities and suburbs of New York, Los Angeles and Chicago toward more “livable” locations with lower day-to-day living expenses.

Kaitlyn Sundberg never expected that she would move to Kansas. Sundberg and her husband, Jack, lived in Southern California but struggled to save enough for the down payment on a home of their own.

“We were living with my in-laws, and we were not able to afford anything,” said Sundberg, 27.

Sundberg’s husband, who worked as an estimator for a telecom company, expanded his job search — significantly — and found an opportunity as the program manager for Southeast Kansas Inc.

When they visited Neodesha, “it just seemed like a family-friendly place to live,” Sundberg said.

“We spent a Saturday looking for a house — there were kids riding bikes,” she said, “I just cried.”

The couple moved to Neodesha with their two dogs 18 months ago, even before the incentive program launched. Sundberg now works as the executive director of the new early learning center in town after a neighbor brought over the job posting and suggested she apply for the position.

“Being away from family is the hardest part,” she said, “but I would never want to move back.”

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High mortgage rates and elevated home prices combined to crush home sales in January.

Pending sales, which are based on signed contracts for existing homes, dropped 4.6% from December to the lowest level since the National Association of Realtors began tracking this metric in 2001. Sales were down 5.2% from January 2024. These sales are an indicator of future closings.

“It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” said Lawrence Yun, NAR’s chief economist. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”

While weather may have been a factor, sales rose month to month in the Northeast and fell in the West, which would have seen the smallest impact of cold temperatures. Sales fell hardest in the South, which has been the most active region for home sales in recent years.

Mortgage rates were also higher in January. The average rate on the popular 30-year fixed loan spent the first half of December below 7% but then began rising. It was solidly above 7% for all of January, according to Mortgage News Daily.

Home prices have been easing over the last few months in certain areas, with more sellers cutting prices, but nationally they are still higher than they were a year ago.

This drop in sales also came despite the fact that the inventory of homes for sales in January, including houses that were under contract but not yet sold, increased by 17% compared with last year, growing on an annual basis for the 14th month in a row, according to Realtor.com.

“More for-sale inventory has the potential to generate more contract signings, but climbing home supply is not evenly distributed across the U.S.,” noted Hannah Jones, an economist with Realtor.com. “Moreover, many areas with high demand see relatively low for-sale inventory, which limits progress towards more home sales.”

Nvidia reported fiscal fourth-quarter earnings after the bell on Wednesday that beat Wall Street expectations. The company also provided strong guidance for the current quarter.

The company’s report and guidance signals that the chipmaker is confident it will be able to continue its historic run of growth driven by artificial intelligence well into 2025. Shares were flat in extended trading.

Here’s how the company did, compared with estimates from analysts polled by LSEG:

• Revenue: $39.33 billion vs. $38.05 billion estimated
• Earnings per share: 89 cents adjusted vs. 84 cents estimated

Nvidia said it expected about $43 billion in first-quarter revenue, plus or minus 2%, versus $41.78 billion expected per LSEG estimates. The first-quarter forecast implies year-to-year growth of about 65% from a year earlier, a slowdown from 262% annual growth in the same period a year prior.

Chief Financial Officer Colette Kress said the company expects “a significant ramp” of sales of Blackwell, its next-generation AI chip, in the first quarter.

Net income during the quarter rose to $22.09 billion, or 89 cents per diluted share, versus $12.29 billion, or 49 cents per share, in the year-ago period.

Nvidia reported a 73% gross margin in the quarter, which was down three points on an annual basis. The company said the decline in gross margin was due to newer data center products that were more complicated and expensive.

Revenue continues to surge at Nvidia as the company rides the AI boom with its data center graphics processing units, or GPUs, which comprise the vast majority of the market for AI accelerators. Nvidia’s revenue in the quarter rose 78% from $35.1 billion, and full fiscal-year revenue for Nvidia rose 114% to $130.5 billion.

However, Nvidia’s growth is slowing as the company becomes larger. During the fourth-quarter of fiscal 2024, Nvidia sales more than tripled.

Much of the focus this calendar year is on how quickly the company can ship its next-generation AI processors, called Blackwell.

Nvidia said it had $11 billion in Blackwell revenue during the fourth quarter. Nvidia CEO Jensen Huang said demand for Blackwell is “amazing” in a statement, and Kress called it “the fastest product ramp in our company’s history.”

“Blackwell sales were led by large cloud service providers which represented approximately 50% of our Data Center revenue,” Kress said in a statement.

Blackwell sales, as well as sales of the previous generation Hopper AI chips, are reported in the company’s data center business. That unit now represents 91% of the company’s total sales, up from 83% a year ago and 60% in the same period of 2023. In total, data center revenue has increased about tenfold over the past two years.

Nvidia said it had $35.6 billion in data center revenue in the fourth quarter, which was up 93% on an annual basis. That also surpassed StreetAccount expectations of $33.65 billion.

Nvidia officials told investors that while its chips were previously used to develop, or train, artificial intelligence, its new chips such as Blackwell would be used to deliver AI software, a process often called inference.

Kress also addressed investor concerns that efficient models such as DeepSeek’s R1 may limit the need for additional Nvidia chips. New ways of running AI models that ask the AI to generate additional information to “think” through responses could require as much as 100 times the amount of Nvidia chips, she said.

“Long-thinking, reasoning AI can require 100 times more compute per task compared to one shot inferences,” Kress said.

“The vast majority of our compute today is actually inference,” Huang told investors. He said next-generation AI algorithms could even need millions of times the current amount of computing capacity.

Huang also addressed questions about whether Nvidia’s business could be threatened by custom chips being developed by technology companies such as Amazon, Microsoft and Google.

“Just because the chip is designed doesn’t mean it gets deployed,” Huang said.

The company’s data center business this quarter also included $3 billion in sales for the company’s networking parts, which are used to connect hundreds of thousands of GPUs together. However, while Nvidia had signaled that networking was a growth opportunity for the company, networking sales were down 9% from a year ago.

The company’s gaming business, which includes graphics processors for playing 3D games, reported $2.5 billion in sales versus StreetAccount expectations of $3.04 billion. Nvidia’s graphics sales actually declined 11% on an annual basis. The company announced new graphics cards for consumers during the quarter that share the same Blackwell architecture as the company’s AI chips.

One of the company’s growth categories is its business selling chips for cars and robots. Nvidia said on Wednesday that it had $570 million in automotive sales during the quarter, which is a small fraction of the company’s AI business, but which represents a 103% rise on a year-over-year basis.

Nvidia said it spent $33.7 billion on share repurchases in its fiscal 2025.

As the IRS faces cutbacks, some taxpayers are weighing whether to file returns this season.

But skipping your federal filing can be costly, experts say.

Josh Youngblood, an enrolled agent and owner of The Youngblood Group, a Dallas-based tax firm, said he’s had a few clients ask whether they need to file this year.

“I’m concerned we’re going to see more of this” amid IRS layoffs and calls to eliminate the agency, he said.

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Last week, the IRS faced mass layoffs as Elon Musk’s Department of Government Efficiency, or DOGE, continued to seek federal spending cuts. Meanwhile, Commerce Secretary Howard Lutnick told Fox News that President Donald Trump wants to “abolish” the agency and replace it with tariffs.     

The uncertainty could contribute to taxpayers’ filing delays.

As of Feb. 14, the IRS received about 5% fewer individual returns compared to about the same point last season, according to the agency’s latest filing statistics.   

There are various reasons why some taxpayers don’t file returns, according to Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic.

In some cases, they may think “[the IRS is] never going to find me” or “they’re frightened and overwhelmed by the prospect of owing money,” he said.

Another category of non-filers or filers who deliberately underpay, known as “tax protestors,” argue federal taxes are unconstitutional or don’t apply to them, said certified public accountant Mark Kohler.

“There’s this whole laundry list of weird arguments that never work,” he said.

Tax protestors issues can lead to tax court and penalties can be hefty, experts say.

If you file a return without enough information to calculate the correct tax liability, you could be subject to a $5,000 civil penalty for filing a “frivolous tax return,” according to the Internal Revenue Code.  

“Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement’s illusory claim that there is no legal requirement to pay federal income tax. And, like moths, these people sometimes get burned,” a circuit judge wrote in United States v. Sloan.

Whether you’re protesting the government or avoiding taxes owed, non-filers can expect IRS penalties, experts say.

The “failure to file” penalty is 5% of your taxes owed per month or partial month the filing is late, capped at 25%, according to the IRS.

That’s “ten times worse” than the “failure to pay” penalty, which is levied at 0.5% of your tax balance per month or partial month, also limited to 25%, Nassau explained.  

If you owe taxes, it’s cheaper to file your return on time, or file an extension, and work out a payment plan with the IRS, he said.

The egg aisle is anything but cheaper by the dozen these days — and that’s becoming a big problem ahead of the Easter holiday.

The makers of Easter egg dye kits are bracing for the potential fallout if the egg shortage doesn’t begin to clear up before the April 20 holiday. For many companies that specialize in these activity sets, egg dye kits and related products make up a significant share of annual revenue. Diminished sales could have a major impact on their bottom lines.

“I think sales will be down,” said Ashley Phelps, founder and CEO of Color Kitchen, a plant-based baking decoration company. “That remains to be seen, but I think it probably will be.”

Wholesale egg prices have eclipsed record levels, reaching a high of $8.58 per dozen amid a domestic bird flu outbreak, according to global commodity data firm Expana. More than 52 million egg-laying birds have died, leaving the national flock at just 280 million, a critically low level, said Ryan Hojnowski, a market reporter at Expana.

He noted that rising prices have slowed consumer demand as retail egg prices average around $6 per dozen or higher. Additionally, many stores have implemented purchasing limits, restricting the number of cartons that customers can buy at one time.

The combination of inflated price and limited availability could curtail sales of eggs for the Easter holiday, ultimately affecting the demand for egg dye kits.

Natural Earth Paint, a company that manufactures natural art supplies and craft kits for kids, typically sells between 40,000 and 50,000 egg dye kits around the Easter holiday, according to founder Leah Fanning. So far this year, the company’s retail partners have ordered only 7,000 kits.

“It’s definitely a huge drop,” Fanning said, noting that most buyers have cited the egg shortage for the smaller orders.

Fanning told CNBC that the egg dye kits have been Natural Earth Paint’s bestselling product for 13 years and kept the company in business for its first eight years. Of the company’s more than 40 products, the egg dye kit remains its “absolute bestseller.”

She noted that while the majority of Natural Earth Paint’s sales come from retail locations, online sales typically pick up around three weeks before Easter. That leaves the chance that direct-to-consumer sales could get a boost in mid-March.

Color Kitchen said its Easter items represent 20% of the company’s total stock of items and outpace sales of all other items, including its Christmas icing kits.

Phelps noted that most retailers order these egg kits months ahead of the holiday to ensure they are in stock immediately after Valentine’s Day. She said retailers “took a little less product this year” given sensitivity to the inflationary environment.

“The other concern is that, some of the grocery stories, if they don’t sell through, then we get charged back for product that goes discounted to try and move it out of the store,” Phelps said. “So, that’s where we’ll get hit if the stuff that’s already been shipped out to grocery stores does not sell. That could potentially be very bad.”

Phelps said 75% of Color Kitchen sales are from the shelf. The remaining 25% is from direct-to-consumer sales on its website and on sites such as Amazon.

There are some companies that still expect to see solid business this Easter. The holiday takes place in late April, giving companies three more weeks of sales compared with last year.

Hey Buddy Hey Pal, a company that makes the Eggmazing Egg Decorator, a crafting tool that spins eggs so kids can use markers to color them, generates between 85% and 90% of its annual revenue from its Easter product. Last year, the company generated $14 million in sales, a 22% bump from the year prior.

Curtis McGill, co-founder of Hey Buddy Hey Pal, said retailers have ordered fewer of its products this year. Still, the company said it expects another jump of 18% in annual revenue as it’s set to sell between 600,000 and 700,000 egg decorators this year.

Even as egg prices boil over, some dye kit makers see egg decorating as an essential tradition that few families will opt to skip, even if they reduce the number of eggs they use.

Paas, the leader in the egg dye kit space, expects that some families will decorate fewer eggs this year, but said many will still participate in the tradition.

“It’s just such a sticky tradition,” said Joe Ens, CEO of Signature Brands, which owns the 140-year-old iconic Paas brand.

The company recently completed a survey of 120 consumers and found that 94% of them still plan on decorating eggs this holiday.

“And the reason for that, other than the tradition being so important to consumers, is if you really break down the cost of the tradition, it is arguably the most affordable family tradition during any holiday,” he said.

Paas expects to sell more than 10 million kits this year, one of the company’s strongest sell-ins ever, he said.

Arts and crafts store chain Michaels said it’s already seeing shoppers opt for egg-inspired products. The company told CNBC that 43% of its planned Easter sales this year are for plaster, plastic and craft eggs.

Michaels said a particular craft egg kit designed to “mimic the traditional egg-decorating experience” is selling nearly three times faster than the company had anticipated.

Similarly, Hey Buddy Hey Pal expects some families may opt to purchase wooden eggs instead of real ones. Though the alternatives are typically more expensive than real eggs, they’re an opportunity to keep the creations around long after the holiday is over.

“A lot could happen between now and then, we can continue to see an outbreak of avian flu and some different egg farms that hadn’t been affected,” said McGill. “It could get worse before it gets better. That’s not the projections, but at this point … I’m just gonna hold my breath until we get to April the 20th.”

Correction: This story has been updated to correct, based on updated information from Michaels, that 43% of its planned Easter sales this year are for plaster, plastic and craft eggs. An earlier version mischaracterized the metric.