← Morning Brew Daily
Morning Brew Daily
Meme Stocks Are Back & ‘South Park’ Lands $1.5B Deal with Paramount
00:28:59
To the moon redux & Paramount makes a financial decision
Loading summary
Transcript51 lines
- [00:00]
Pacaso Ad
Right now you can invest in vacation there's seemingly always demand for vacation. The thing is, not everyone can afford all of the vacation homes they want. That's where Pacaso saw the chance for a co ownership model where families can own fractions of move in ready vacation homes in 40 plus destinations worldwide. Pacaso seen over $110 million gross profits to date including 41% year over year growth last year alone. Join leading VC firms investing in this unlisted stock when you go to pacaso.com brew that's pacaso.com brew this is a paid advertisement for Pacaso's Regulation A offer. Please read the offering circular@picasso.com Brew.
- [00:37]
Neal Freyman
Good Morning Brew Daily Show. I'm Neal Freyman.
- [00:40]
Toby Howell
And I'm Toby Howell.
- [00:41]
Neal Freyman
Today Randy Marsh can quit his day job because south park just inked a $1.5 billion deal.
- [00:48]
Toby Howell
Then bust out your Kohl's cash because the door is opening again to meme stock madness. It's Wednesday, July 23rd. Let's ride.
- [01:01]
Neal Freyman
Must be a slow week at work because we've been craz crushed by your responses to the new MBD game Password we released this week. If you missed what this is, here's a rundown. Morning Brews Puzzle Master Jack has picked a secret word, a password that you need to guess each day of the week. We're giving you a clue to help you get closer to the answer. The earlier in the week you submit, the more likely your name will be selected for the prize. On Monday, the hint was the the password is an anagram to a major city. Yesterday, the hint was the password ends with a number that's spelled out. Toby, you've been poring through the responses. What has stood out to you?
- [01:43]
Toby Howell
We have gotten a lot of responses, some correct, some not so much. The most common incorrect answers were more and diagnosed anagrams of Rome in San Diego respectively. Very creative, but incorrect because neither end in a number. My favorite incorrect answer so far was either New York one, which good try, I guess, or xiphone spelled with an xi which is an anagram of Phoenix and does end with the number one on E1 but is unfortunately not a real world at all. So some of you are doing great. I love you thinking outside the box, but Neil, put them out of their misery and toss them another hint please.
- [02:23]
Neal Freyman
The hint for today is the password contains a silent t. The password contains a silent t so comb combined with the other two hints from Monday and Tuesday. Spend some time today thinking about what the password could be and then remember to submit. Just head to the Google form linked in the show description. We are awaiting your responses.
- [02:46]
Toby Howell
And now a word from our sponsor Amazon Ads When's the last time you saw a commercial for something you actually wanted?
- [02:53]
Neal Freyman
Oh man, I don't know. Most of the ads I get are for medications and stuff.
- [02:57]
Toby Howell
You seem like you're in great health though.
- [02:59]
Neal Freyman
I am. The problem is these brands aren't reaching the right customers. They should be Using Amazon ads. You can show up alongside the content your customers love with the help of trillions of buying, browsing and streaming signals.
- [03:12]
Toby Howell
They make it easier for advertisers to plan, activate and measure their streaming TV campaigns. You don't even need to sell on Amazon to be a part of it, but your ads are right there on your audience's favorite shows. It's a single easy to use tool that can do it all.
- [03:26]
Neal Freyman
Gain the edge with Amazon ads@advertising.Amazon.com start now that's advertising.Amazon.com/start now well holy moly.
- [03:37]
Toby Howell
We have a new Meme stock on our hands. Shares in the Left 4 Dead department store Kohl's more than doubled in premarket trading as meme stock mania crept into aisle 12. The mania peaked at $21 a share yesterday, up 105% from a day earlier, before settling up around 37% by the day's close. The recent rally isn't because affordable mom jeans are suddenly all the range again. The run up was likely driven by a short squeeze, a GameStop ask situation where a heavily shorted stock suddenly rises, forcing short sellers to quickly cover their positions. Nearly half of Kohl's outstanding shares are currently sold short, so the pressure was turned up to 11 for unlucky bearish traders. Kohl's ascent up Meme stock mountain mirrors a similar climb from Opendoor just a day earlier. Despite being on the verge of being delisted a few days ago, the struggling real estate tech company climbed as much as 121% to start the week due to similar frothiness from the social media crowd. Neal Kohl's is still the same old dreary department store chain, which shows some FOMO is definitely creeping back into markets as stocks continue to notch all time highs against a fragile economic backdrop, it looks like some riskier trading activity is creeping back into vogue.
- [04:53]
Neal Freyman
Wall street has a phrase for this and it's known as the Phoenix flight to Crap, chief strategist at Interactive Brokers. Put it another way, it is clear that the motivation behind many of These stocks activity is something other than disciplined considerations of discounted cash flows. This speculative frenzy has been going on for a few weeks Now. Of the 14 companies in the Russell 3000 index that have more than tripled since that market bottom on 4-8-10 don't generate any profits. There has been a groundswell of retail and retail individual investor support for companies that just aren't making money. It is a sign to some of frothiness in the market. Reminds you certainly of the days in 2021 when there was zero interest rates. Spacs were going crazy, GME and AMC were going crazy. And it is also reminding some of 1999 when right ahead of the dot com bubble bursting.
- [05:53]
Toby Howell
The difference between 1999 and now though is that WallStreetBets subreddit is a thing. They are a force to be reckoned with. Kohl's was the most commented ticker on the subreddit over the previous 12 hours, which is rare to see because usually Tesla supplants every stock on that forum. And then we have to talk about the volume again. We spoke a little bit about this, about open doors, insane amount of shares that were being traded. Same thing for Kohl's. 75 million shares were traded by 9:51am Eastern, which was already a daily record for the stock. The trading day had hardly even started. And again, when you have 50% of its float being shares that are sold short, that means the hands that are trading quickly are putting a ton of pressure on, you know, these bearish bets, which causes them to have to sell more shares to cover their position. So hence the idea of a short squeeze. So just the sheer amount of people getting involved in these meme stocks is very reminiscent of 2021.
- [06:50]
Neal Freyman
And it just goes to show or drives the point home that retail traders are an absolute force in the stock market. Right now, retail traders comprise 20.5% of total volume of the shares traded in the stock market. And many of them are going to companies that aren't so valuable. Trading activity in names priced below $5 makes up more than which is Kohl's, which is open, makes up more than 26% of the overall trading volume. We were wondering what the lasting impact of the meme stock mania back in 2021 is. I think we're still trying to figure that out four years later. But one of the main takeaways is that individual investors, retail investors, are hugely influential in certain stock moves in the stock market.
- [07:40]
Toby Howell
And we just saw finra, which is a governing body of kind of a Lot of these brokerages, they are trying to lower the their day trading rule. Usually you had to have at least $25,000 in a margin account in order to make more than four trades in a five day period. Four trades a day in a five day period. Now they're looking to bump that number down to just $2,000, hopefully, you know, opening the market up to more of these retail traders who do like to, you know, get their hands dirty on a daily basis. So that is another kind of implication of meme stock madness is more of us can be degenerate day traders.
- [08:13]
Neal Freyman
And maybe a big reason why this is happening now is there's not a lot of sports to bet on. True that o Coca Cola and General Motors are a combined 249 years old, but both iconic companies made major announcements yesterday that show they're just trying to keep up with the times like the rest of us. Let's start with Coke, where anticipation of its earnings call was especially high. Everyone was wondering whether it would confirm President Trump's social media post last week and announced a shift from using high fructose corn syrup to cane sugar in its signature drink for the American market. The answer is not really. The company did say it would launch a new Coke product for American consumers made with American sugar, but it won't replace the existing corn syrup mix it's been using for decades. CEO James Quincy said this is really an and strategy and not an or strategy. We are going to continue to to use a lot of the corn syrup that we do now and that is a relief for us corn producers, which warned of a spectacular jobs wipeout if a buyer as huge as Coca Cola would transition wholesale away from corn syrup. Analysts thought this outcome was unlikely heading into the earnings call because using high fructose corn syrup is much cheaper than using cane sugar. And besides, the US doesn't make enough sugar to supply Coca Cola's immense scale, so most of it would need to be imported anyway. Bottom line, Toby, is that come the fall, Americans will be able to choose from a corn syrup Coke and a sugar cane Coke like Mexican Coke, which will serve as a nice little natural experiment over which tastes better.
- [09:43]
Toby Howell
I know we already did this natur experiment in the office. You and me sat down, had a Mexican Coke, had a high fructose corn syrup Coke. Unfortunately, both said the high fructose corn syrup Coke did taste better. So we already did kind of carry that experiment out. Now it's going to be carried out across the nation. This new kind of Coke product, though, does show an interesting wrinkle of the Trump administration. They aren't necessarily trying to make companies change through laws or regulations. He kind of just puts pressure, immense media pressure on these companies and you end up with these new products. We're also seeing it kind of out of RFK junior. He's called out these companies for artificial dyes for high fructose corn syrup, but largely avoided actual regulations on those things. But even still, we are seeing big food companies like Nestle, Kraft, Heinz, General Mills, they've all pulled synthetic dyes from some of their products recently. So this playbook is something that you don't necessarily see. Usually you just have laws and regulations that make companies change. Not so in this administration.
- [10:44]
Neal Freyman
Yeah, one one guy is literally forcing product changes at companies. So Trump, if you are listening to this post on true social iPhone batteries must last 20 hours. Thank you for your attention to this matter. Okay, let's move on to gm, which during its earnings call said that tariffs would wipe out $1.1 billion in profits. About half of the vehicles the company sells in the US Are imported. And with tariffs now in Canada, Mexico and South Korea, where GM makes cars for the American market, the automaker is seeing its bottom line, bottom out. In a statement, GM CEO Mary Barra said she's busy, quote, positioning the business for a profitable long term future as we adapt to new trade and tax policies and a rapidly evolving tech landscape. That positioning includes cutting costs and rejiggering GM supply chain in an attempt to offset 30% of the tariff bill. But it won't be enough to stop the bleeding. At the moment, the GM predicted that tariffs would cost it 4 to 5 billion dollars throughout this year, about one third of its total pre tax profits in 2024. And its stock slid more than 8% yesterday. The good news for consumers is that GM seems to be okay with eating those extra costs for now and isn't planning broad based price increases.
- [11:56]
Toby Howell
Yeah, GM imports roughly half of the vehicles it sells in the US and that includes their entry level cars that are around that $30,000 price range. So it is a lot of, you know, pressure on these entry level sticker prices. They're not the first automaker to even talk about this. This week. Stellantis, which makes, you know, Dodge and Ram, also said that it lost $2.7 billion in the first half of the year partly because of tariffs. So GM is right there alongside it. They say that if you eat into our profits like this, it's harder to invest in new technologies in the future. That being said, though, it did still have a relatively good quarter overall. I mean, their profits were almost $2 billion, so it could have been a pretty blowout quarter, which does show that consumers are still, you know, buying their products. They are just unfortunately eating a lot of the tariff when it comes to their bottom line. Let's move on. If you want a gold medal at the International Math Olympiad, you're going to have to have a deep knowledge of combinatorics, geometry and number theory, face off against the most talented high school computational minds in the world, and also battle the most powerful AI systems in the world. Google announced this week its latest reasoning model achieved the highest honors at the IMO in Australia over the weekend, answering five of the six questions in the competition correctly. OpenAI previously said its model also performed similarly, though Google's was the only one officially entered in the competition. Both companies said their models followed the same rules as their flesh and blood competitors, completing the test in the allotted four and a half hour time period and showing their work along the way. It's that latter piece that has industry watchers so excited. Last year, Google designed two systems specifically to take on the IMO Alpha Geometry and Alpha Proof. They earned a silver medal, getting four out of six questions correct. But those systems needed to have humans involved, both to convert plain language questions into technical jargon the models could understand, then to interpret the model's answers as well. Deep Think this new model from Google, on the other hand, works entirely in natural language from start to finish, and it wasn't built specifically for solving math problems. Neil I haven't won a gold medal since I took down the St. Pete Meek and Mighty Triathlon under 12 division. Google just nabbed one in the most prestigious math competition in the world.
- [14:17]
Neal Freyman
So there were 630 students, high school students, participating in this competition in Australia. 11% achieved gold medal scores along with OpenAI and Google's large language models. Just five people there are six questions. Just five people got them all correctly. They were all stumped, including the AIs, by this one last problem. Going to read it out to you just in case you want to bring out a piece of paper. Consider a 20202025 by 2025 grid of unit squares. Matilda wishes to place on the grid some rectangular tiles such that each side of every tile lies on a grid line and every unit square is covered by at most one tile. Determine the minimum number of tiles Matilda needs to place so that each row in each column of the grid has exactly one unit square that is not covered by any tile. Some people might take a lot of time with this question. For me, it's a little easy. The answer is, obviously the limit does not exist, but there are. This is a big breakthrough, as you mentioned, for these AIs because it is not a single purpose. These are general natural language, language processing ones. They can do pretty much any task. When you talk about AIs that beat humans at Go Poker, other contests, those were, those were designed specifically to be a human Echo poker and other competition. This is a, this is a more general knowledge one. And what really stood out to me, I thought this was fascinating. There was a four and a half hour time limit to solve that Matilda question and a bunch of others. The AIs took all of the four and a half hours. They were literally reasoning and thinking through these questions as a human would.
- [15:52]
Toby Howell
Yeah, they don't go down one linear line of thought. They actually do run multiple reasoning processes just like you or me hypothetically would if we were confronted with these mathematic questions. That is almost actually why it got the final question wrong. Is it zeroed in on this idea that like 10 was the amount of rectangles and it couldn't get off that train of thinking. And again, a lot of the researchers were like, hey, listen, this was the hardest problem. A lot of the humans didn't get it right either. But it is fascinating to see how instead of just using reinforcement, learning to solve math problems by almost brute force, it is thinking, I mean, with quotations around it, reasoning through multiple lines of thought to get the correct answer. Pretty crazy though, that only five, five people got it right. We were looking at the questions this morning. It's all agreed.
- [16:40]
Neal Freyman
To me, it doesn't look like anything I can understand, but one reason that I don't think has come up that why AI and Google are entering these competitions is it's a very fertile recruiting ground. OpenAI said a lot of people who were participants as young kids in this Math Olympiad and you can imagine we've talked so much about the race for AI talent that to start the pipe, the talent pipeline, early in the Math Olympiad to show like, hey, hey guys, you're doing this math. Look, our AI models are super cool. When you graduate college, why don't you come work for us? I can see that's a big reason why they do it.
- [17:16]
Toby Howell
That is also why I think OpenAI published that they achieved a similar score two days before the official results came out. Even though they didn't enter the competition trying to win like the PR battle In that sense, even though technically they didn't participate in the competition itself. All right, let's take a quick break and talk about south park next.
- [17:38]
Neal Freyman
We talk a lot about emerging technology here, but with how rapidly technology evolves, it's easy to fall behind the curve.
- [17:45]
Toby Howell
If only there were a team of AI engineers, data scientists and architects who could help us understand and align this new technology with our goals.
- [17:53]
Neal Freyman
Well, wouldn't you know it, Toby, there is. Deloitte can simplify the seemingly impossible and help brands achieve real business outcomes.
- [18:00]
Toby Howell
Their engineers leverage AI powered platforms to design scalable, secure solutions from cloud computing to cybersecurity, tailored to your needs.
- [18:08]
Neal Freyman
And through R and D innovation labs, engineering studios and their strong relationships with other leading technology providers, they can push boundaries and help clients bring groundbreaking solutions to market.
- [18:19]
Toby Howell
Start building toward the future@deloitte.com US technology-innovation that's deloitte.com US/technology-innovation Toby, what if I.
- [18:31]
Neal Freyman
Told you there was one tool with the power of nine tools?
- [18:34]
Toby Howell
You mean like some sort of nuclear powered super hammer?
- [18:37]
Neal Freyman
No, Toby, not a super hammer Gem. With Jem, you can replace up to nine recruiting tools like ATS, CRM, sourcing, scheduling and analytics. Its unique AI first recruiting platform comes with over 650 million candidate profiles. So you can reduce reliance on a expensive talent sources and eliminate redundant tools.
- [18:56]
Toby Howell
Gems Customers love that they can consolidate completely or enhance their current setup. Most teams save 30 to 50% while boosting productivity up to five times.
- [19:06]
Neal Freyman
With Gems agents embedded into every workflow, recruiters can spend less time system switching, more time relationship building.
- [19:13]
Toby Howell
Plus you can use GEMS ROI calculator to estimate potential savings and productivity gains. To get started, check out gem.com/roi. That's gm.com/roi.
- [19:29]
Neal Freyman
After a wait of more than two years, the 27th season of south park begins tonight. But maybe it should be called Aspen. Instead, the satirical cartoon show inked a streaming deal with Paramount that's worth, wait for it, $1.5 billion over five years, or $300 million a year. The agreement will bring the Paramount own park back home to Paramount plus for the first time in the US and solidifies south park as one of the most valuable franchises in TV history. Because low key south park is a financial juggernaut and its creators, Trey Parker and Matt Stone are extraordinarily rich. Before this latest $1.5 billion deal with Paramount Plus, South park got paid $500 million to appear on HBO Max for five years. Separately, in 2021, Parker and Stone signed a $900 million deal with the company that's now Paramount to produce six more seasons of South park and 14 specials. Yesterday, in addition to that streaming deal, Parker and Stone agreed to make new episodes for five more years to the tune of $250 million annually. Still, even with all that cash weighing down their pockets, the two were pretty upset with how streaming negotiations were going, with Paramount calling out Skydance Media, the company that's set to buy Paramount for meddling in the discussions. Remember, this merger is the same one that's been at the center of the conversation around Stephen Colbert's cancellation and a number of high level departures. From CBS News in 60 Minutes, all properties under the Paramount umbrella. But bottom line, you'll be able to find south park on Paramount plus where it'll likely be making fun of Paramount Plus.
- [21:05]
Toby Howell
Now we are in the wrong line of business because. What do you mean? We're talking in the billions for this TV show and it is smart of Paramount to try to get this deal across the finish line because they already had to delay their season. Season 27 premiere, the official south park account said, issued a statement for Parkinson Stone saying this merger is a bleep show and it's bleeping us up. That is two guys that you don't necessarily want on your bad side because you know they will absolutely etherize you in their show itself. The figure behind this deal is not necessarily as big as it seems. There's this agreement going back to 2007 where Park county, which is Stone and Parker's joint venture, has a joint venture with Paramount called South Park Digital Studios. That revenue sharing agreement enables Paramount to recoup about half of its licensing fee. That being said, 50% is actually still a really good number if you're the creator of the show. That so one and a half billion dollars. It's not all going into their pocket pockets. But still, when you're talking billions, that's still a lot of zeros going into your pocket. Now let's sprint to the finish with some final headlines. Guy Fieri better head out to Hollywood because there's a new diner to review and apparently it's electric. Tesla opened up a retro future 24.7diner concept this week out in L A that doubles as a place for drivers to charge their electric vehicles. While there, you can sample from its classic diner menu that includes hamburgers and hot dogs made with locally sourced ingredients or popcorn served by Optimus Tesla robots. Tesla drivers will be able to order through an app in their cars for pickup or they can hook up to a charging station grub and catch a movie on the diner's drive in movie screens. Neil seems like an odd time to open a diner, especially for a company that is struggling with falling sales. But Elon thinks there's some Runway here posting on X that if our retro futuristic diner turns out well, Tesla will establish these in major cities around the world.
- [23:04]
Neal Freyman
This is the Elon Musk we knew from a decade ago where he would take these random side quests that proved to be very successful market stunts for his companies. I'm thinking about that boring company Flamethrower that sold out with within seconds and this diner which looks pretty cool. He says it's greet Greece meets the Jetsons with Supercharging is a brand building exercise at a time when the Tesla brand has been absolutely obliterated. There were very long lines for Tesla super fans which you forgot that they existed. But they were waiting until 420 when obviously this, this diner opened and it is a sign still has a lot of fans out there despite a lot of his political involvement over the past few months. So generally I think this opening created some unusually positive vibes around Tesla. It also shows what you can do with a charging station. I think a lot of retailers are probably looking at ways to create experiences around bringing people who have to charge their electric vehicles like Tesla is. There's 80 superchargers there, so maybe Elon is paving the way here for what a future retail, you know, supercharger mashup looks like. Toby, what's your diner order though?
- [24:20]
Toby Howell
I know I was looking through the menu here. They have a surprisingly affordable chicken and waffles that is kind of my guilty pleasure when it comes to diner food. Only 13 and a half dollars. That seems like in New York that's at least 20 plus dollars. So I'm going chicken and waffles here.
- [24:34]
Neal Freyman
I want to know your diner order though. If you're listening, drop it in the Spotify or YouTube comments. A very heated topic of conversation. Mine is obviously the tuna melt. Ozzy Osbourne went off the rails one last time. The metal pioneer turned reality TV star died at 76 on Tuesday, according to his family. Without specifying a cause, Ozzy's death comes just a little over two weeks after he played a final concert with his band Black Sabbath in their hometown of Birmingham, England. The concert, seen by millions around the world, raised $190 million for charity, making it the highest grossing charity concert of all time. As the New York Times pointed out, Ozzy was a pioneer in two Very different entertainment domains. Heavy metal and reality tv. Lars Ulrich of Metallica once said, when it comes to defining a genre within the world of heavy music, Sabbath stand alone. And then later in life, Ozzy and his family starred in the Osbournes, the most popular show MTV ever aired and one that paved the way for dozens of other shows about celebrity households. Toby. I'd venture to say Ozzy Osbourne was one of the most rec people on the planet. An absolutely giant personality. RIP to the Prince of Darkness.
- [25:47]
Toby Howell
Reading his obituary from multiple news outlets, the dude lived an insane life. One of my favorite pieces of lore about Black Sabbath is that their whole reason for their name and their vibe on stage is that they notice that if people paid money to feel scared at the movies, then maybe the same could be true of concerts. So they just applied that logic and created this entire vibe and esthetic that became so influential. From a music perspective, he was respected as well. A songwriter biographer who covered Osbourne said in an interview for his obituary that Ozzy's vocal tone is distinctive, but I think the main thing is his vocal lines just relentlessly shadow the chord progression with an insistence most singers would probably avoid so they can look more clever. So next time you listen to a Black Sabbath song or an Ozzy Osbourne song, listen to how he's just kind of of singing the chorus, the melody, and it is. It comes out amazing. And then my final anecdote I want to share about him is that he repeatedly failed his driver's test because he did have a lot of substance alcohol problems. So he started riding to his local pub on his lawnmower. And then he got tired of that, so he bought a horse. So I think that sums up just kind of the kind of person that Ozzy Osbourne, absolute legend.
- [26:59]
Neal Freyman
And whenever you learn good guitar, what is the first riff you learned? There's Deep Purple and there is Crazy Train. Okay, that is all the time we have. Thanks so much for starting your morning with us. Have a wonderful Wednesday. If you have any thoughts on today's episode, send an email with questions, comments or feedback to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Hair makeup is going down to South Park. Going to have themselves a time. Devin Emery is our president and our shows are production of Morning Brew.
- [27:31]
Toby Howell
Great show today, Neil. Let's run it back tomorrow.
- [27:42]
Neal Freyman
Reaching the right small businesses starts with the right data.
- [27:46]
Toby Howell
Intuit SMB Media Labs is a first of its kind small business ad network.
- [27:51]
Neal Freyman
With access to audiences and insights from the maker of QuickBooks. You can target key decision makers by industry size, maturity, location and more.
- [27:59]
Toby Howell
It's your gateway to B2SMB marketing success. Learn more at media labs.intuit.com that's media labs.into it.com.