Brew Markets – Podcast Summary

Episode Title: Inside Meta’s Mega Stock Drop & Is Chipotle Losing Its Spice?
Date: October 30, 2025
Host: Ann Berry (Morning Brew)
Co-host/Producer: John Couteau

Episode Overview

On this episode, Ann Berry and John Couteau break down the day’s top market stories, focusing on the dramatic moves in major company earnings (Meta, Chipotle, Microsoft, Alphabet, and Starbucks), the crisis at Chegg, and late-breaking news on US-China trade relations. The hosts discuss the key causes behind market reactions, highlight long-term industry shifts (especially with AI and cloud investments), and provide sharp, insightful commentary on strategic missteps and consumer trends.

Key Discussion Points & Insights

1. Meta’s Mega Stock Drop: Strong Numbers, Cautious Market

[00:04 – 04:11]

• Strong Revenue, Large Profits (On Paper): Meta posted Q3 revenue of ~$51 billion (up 25% YoY), driven by robust ad performance and high engagement across platforms. Reels alone reported a $50B annual run rate (Ann Berry, [00:30]).
• Profit Miss Explained: Headline profit was below expectations due to a $16 billion one-time tax charge, but underlying EPS beat estimates (Ann Berry, [00:51]).
• Massive CapEx Announcement Spooks Investors: Meta unveiled plans to increase 2025 CapEx to $70–72 billion (up 10%), with CFO Susan Lee promising even higher spending in 2026 for AI, infrastructure, custom chips, and data centers.
  • “CFO Susan Lee made clear that the investment wave isn't slowing anytime soon. She said that she expects capex to grow notably larger in 2026 as Meta accelerates spending on artificial intelligence and infrastructure…” – Ann Berry, [01:29]
• Market Reaction: Despite strong fundamentals, Meta shares dropped 12% ($230B in market cap) in 24 hours.
• Investor Concerns:
  • Heavy front-loaded investment will weigh on near-term margins.
  • Unclear details on how and when these CapEx investments will produce returns.
  • Regulatory risk remains, with multiple youth privacy lawsuits looming for 2026.
• Memorable Quote:

  “Is this the moment that shareholders finally demand that Meta starts telling it when that CapEx spend is going to pay off?” – Ann Berry, [00:10]

2. Chipotle: Losing Its Spice

[04:40 – 07:17]

• Poor Market Reaction: Chipotle shares down 15–20% post-earnings, now off 45% year-to-date.
• Revenue Explained:
  • Revenue up 7.5% to $3B, but mainly due to opening 84 new restaurants.
  • Crucial Metric – Same Store Sales: Flat, with lowered guidance for slight declines.

    “Same store sales … were essentially flat. But the key kicker here… is the company lowered guidance and said that it expects full year comparable restaurant sales declines in the low to single digit range.” – Ann Berry, [05:34]

• Consumer Weakness: CEO noted Chipotle is “overindex to a younger consumer who is particularly under pressure” (John Couteau, [06:08]).
• Drive-Thru Innovation: “Chipotlanes” showing potential by improving convenience and access, but fast casual overall is struggling—especially outside “urban centers by office blocks where folks… walking to go pick up their lunch.” – Ann Berry, [06:52]
• Memorable, Lighthearted Moment:

  “How do you think the through works? … isn’t part of it where you lean over the sneeze guard and you point at the protein you want? …I just, I don't know how that works.” – John Couteau, [07:09]

3. Starbucks: Turnaround Brewing?

[07:17 – 08:14]

• Earnings Recap: Profits missed forecasts, but first positive same-store sales quarter in nearly two years nudged shares up 1%.
• Geographic Nuance: US sales flat, small growth in China amid aggressive competition from Luckin Coffee.
• Strategic Alternatives: CEO Brian Niccol (former Chipotle CEO) exploring partnerships, possibly selling the China business.
• Quote:

  “Can Brian Niccol do at Starbucks what he had done before he left Chipotle, which was really get that business humming…” – Ann Berry, [08:14]

4. The “Mag 7 Plus”: Microsoft & Alphabet Earnings

[08:14 – 15:40]

Microsoft

• Big Beat: Revenue up 18% to $78B, “productivity and business processes” unit up 17% ($33B), showing some tangible AI benefit ([09:38]–[09:45]).
• Cloud Strength: Azure cloud revenue up 40% despite a notable outage ([10:23]–[11:08]).
• OpenAI Partnership:
  • $13B Microsoft investment for 27% OpenAI stake.
  • OpenAI to spend $250B on Azure cloud.

    “We continue to benefit mutually from each other's growth across multiple dimensions.” – Satya Nadella via John Couteau, [11:36]

• Cautious Sentiment: Despite strong performance, investors growing nervous due to high run-up (MSFT up 25% YTD).

Alphabet (Google)

• Blockbuster Revenue: Q3 revenue at $102B, shares up 5%. Market cap reached $3.4T.
• Double in Five Years:

  “Five years ago our quarterly revenue was at 50 billion. Our revenue number has doubled since then and we are firmly in the generative AI era.” – Sundar Pichai, quoted by John Couteau, [13:09]

• CapEx Surge: AI CapEx planned at $91–93B, nearly double last year.
• Cloud & YouTube: Google Cloud up 34% YoY, YouTube revenue up 15% to $10B.
• Search Resilience: Search revenue up 15%, but the OpenAI “Atlas Browser” launch looms.
• Waymo Expansion: Autonomous vehicles entering London, US markets (Dallas, Nashville, Denver, Seattle).

5. Chegg in Crisis: CEO of the Week

[17:29 – 21:51]

• Chegg’s Plunge: Share price down 98% in 5 years; market cap cratered from $15B to $110M.
• AI as a Disruptor: Company blamed staff cuts (22% then another 45%) on AI’s rapid adoption reducing demand for paid learning platforms.
• Leadership Carousel: Dan Rosensweig returns as CEO, bringing deep experience in old/new media and tech.
  • Seen as a “textbook example… of how technology can so quickly disrupt the disruptor.” – Ann Berry, [17:50]
  • Questions remain whether Chegg can remain public or attract a buyer:

    “I'm pretty willing to bet that no one turned up to buy it other than an absolute bargain basement price.” – Ann Berry, [20:20]

6. Market Close Recap

[21:51 – 22:44]

• Broader Down Day:
  • S&P 500: -1%
  • Dow: -0.25%
  • Nasdaq: -1.5%
• Media Shifts: YouTube TV’s standoff with Disney for carriage rights (could lose ABC, ESPN).
  • Comcast lost 104,000 broadband customers last quarter—media delivery changing fast.

7. US-China Trade News

[22:44 – 24:30]

• Key Outcomes from Trump–Xi Jinping Meeting:
  • Small US tariff reduction on Chinese imports (tariffs still high at 47%).
  • China to combat fentanyl precursors and increase US soybean purchases.
  • Limited easing of rare earth mineral export controls.
  • Competition in STEM:

    “China graduates every year more engineers than the entire west combined… that race for leadership in STEM… is intense.” – Ann Berry, [24:20]

  • Ukraine peace topic discussed between leaders.
• Ongoing Uncertainty: High-level details; underlying volatility likely to persist.

Notable Quotes & Memorable Moments

• On Meta’s Spending: “Is this the moment that shareholders finally demand that Meta starts telling it when that CapEx spend is going to pay off?” – Ann Berry, [00:10]
• On New Restaurant Growth vs. Same Store Sales: “Same store sales … were essentially flat. But the key kicker here… is the company lowered guidance and said that it expects full year comparable restaurant sales declines in the low to single digit range.” – Ann Berry, [05:34]
• On Microsoft’s OpenAI Deal: “We continue to benefit mutually from each other's growth across multiple dimensions.” – Satya Nadella via John Couteau, [11:36]
• On Google’s Growth: “Five years ago our quarterly revenue was at 50 billion… our revenue number has doubled since then and we are firmly in the generative AI era.” – Sundar Pichai via John Couteau, [13:09]
• Chegg as Tech Casualty: “It is a textbook example, yes, pun intended, of how technology can so quickly disrupt the disruptor.” – Ann Berry, [17:50]
• On China STEM Leadership: “China graduates every year more engineers than the entire west combined… that race for leadership in STEM… is intense.” – Ann Berry, [24:20]

Timestamps for Key Segments

• Meta’s Earnings & CapEx Fears: [00:04 – 04:11]
• Chipotle’s Disappointing Q3: [04:40 – 07:17]
• Starbucks Earnings & CEO Legacy: [07:17 – 08:14]
• Microsoft Earnings & OpenAI Partnership: [08:14 – 12:45]
• Alphabet/Google Earnings Analysis: [12:45 – 15:40]
• Chegg’s Crisis & CEO Deep Dive: [17:29 – 21:51]
• Market Wrap (Indices, Media Trends): [21:51 – 22:44]
• US–China Trade Updates: [22:44 – 24:30]

Tone & Style

• Engaging, slightly irreverent yet sharp and analytic.
• Frequent use of analogies, puns, and direct questions to the audience.
• Clear attribution of financial facts and direct CEO quotes.

Summary Takeaway

This episode of Brew Markets deftly dissects why impressive numbers don’t always yield positive stock reactions—especially when future profitability and strategic clarity (as with Meta and Chipotle) are questioned. Massive AI- and cloud-related investments are redrawing the competitive landscape for Big Tech, even as consumer and regulatory challenges multiply. Chegg’s rise and fall is a stark warning for “disruptors.” Meanwhile, the US-China relationship continues to simmer, influencing everything from tariffs to rare earths and STEM rivalry.

Listeners walk away with both the numbers and the nuanced stories behind the day’s most important market moves—plus a few laughs along the way.