Morning Brew Daily: Episode Summary

Title: Tesla Sinks After Musk-Trump Beef & Can the Switch 2 Save Nintendo?
Release Date: June 6, 2025
Hosts: Neal Freyman and Toby Howell

1. Elon Musk and Donald Trump's Fallout: Impact on Tesla and SpaceX

The episode opens with Neal Freyman and Toby Howell delving into the explosive fallout between Elon Musk and former President Donald Trump. This public breakup has had significant repercussions for both Tesla and SpaceX, leading to a dramatic decline in Tesla's stock.

• Stock Market Impact:
  Elon Musk and Donald Trump's public feud culminated in Tesla's stock plummeting by 15%, marking the company's largest single-day loss ever and stripping over $150 billion from its market cap.
  Neal Freyman notes, "[...] the decoupling of Musk and Trump was perhaps even more explosive than expected, with billions of dollars of market cap and government credits caught in the crossfire." [04:02]

• Government Contracts and Subsidies:
  The tension stems from Musk's criticism of Trump's proposed tax and spending bill, which Musk labeled a "disgusting abomination" for ballooning the deficit and cutting EV incentives. Trump retaliated by threatening to revoke federal subsidies and contracts essential to Tesla and SpaceX.
  Toby Howell adds, "SpaceX has benefited from $22 billion in federal spending, while Tesla has received around $11 billion in regulatory credits." [05:07]

• Potential Ramifications:
  The duo's clash underscores the intertwined nature of their businesses with federal policies. Musk's threat to halt the Dragon spacecraft's development—a crucial asset for NASA—highlights the leverage each wields. However, there are signs of potential reconciliation, as Musk's Tesla stock recovered by 5% the following morning, suggesting the situation remains fluid.
  Neal Freyman observes, "Bill Ackman, who is his head fund manager, tweeted, 'hey guys, please calm down. Like you need to buddy up again because there's so much at stake.'" [05:57]

2. Nintendo Switch 2: Hype and Market Performance

Shifting gears, the hosts discuss the highly anticipated release of the Nintendo Switch 2, which has already seen impressive sales despite challenges.

• Sales Success:
  The Switch 2 launched to record-breaking sales, with retailers worldwide struggling to keep up with demand, particularly in Japan. This launch echoes the massive enthusiasm seen during previous console releases.
  Toby Howell remarks, "The Switch 2 is looking like it's off to a flying start." [08:13]

• Product Enhancements:
  Building on the original Switch's success, the Switch 2 boasts enhanced hardware, a larger screen, and updated controllers. However, it comes with a higher price tag of $450, a 50% increase from its predecessor. Despite the price hike, consumer demand remains strong.
  Neal Freyman explains, "The Switch 2 is more powerful, has a bigger screen, and arrives with more modern controllers than its predecessor." [09:39]

• Game Releases and Market Strategy:
  Accompanying the console is "Mario Kart World," an $80 game that signifies rising prices in the gaming industry. Nintendo leverages its strong portfolio of exclusive titles to drive sales, ensuring continued consumer interest despite the higher costs.
  Toby Howell adds, "Nintendo has just this great archive of games that constantly updated and attract new fans, even to this day." [10:31]

• Historical Context and Future Prospects:
  Unlike previous Nintendo consoles, which faced challenges with follow-up models, the Switch 2's conservative yet effective design strategy avoids the "second console jinx." Analysts remain optimistic about its potential to surpass legacy expectations.
  Toby Howell notes, "Analysts are bullish because they're just making it a little bit better, which will probably not lead to that second console jinx." [09:39]

3. Stock of the Week: Circle's Remarkable IPO Performance

Neal introduces the "Stock of the Week" segment, highlighting Circle's impressive public offering.

• IPO Success:
  Circle, a stablecoin issuer, saw its stock surge by 168% on its IPO day, marking the best performance for a large IPO since 2021. This surge reflects investor optimism about stablecoins revolutionizing financial transactions.
  Neal Freyman states, "A stablecoin is a cryptocurrency that's supposed to be well stabilized by being pegged to another asset, typically the US dollar or Treasuries." [12:55]

• Market Potential:
  With a market cap of around $62 billion, Circle's USDC is the second-largest stablecoin behind Tether. The growing use of stablecoins in remittances, B2B payments, and e-commerce signifies their expanding role beyond niche crypto circles.
  Toby Howell comments, "If Congress does pass legislation that regulates these things, then it could be a new era for the financial system." [14:02]

• Regulatory Landscape and Future Outlook:
  Advancements in stablecoin legislation and the integration of stablecoins into mainstream financial systems bolster Circle's prospects. The positive IPO performance is indicative of broader market confidence in the stablecoin economy.
  Neal Freyman concludes, "Shares of companies that went public in the US this year are up 15% on average from their IPO prices." [14:37]

4. Dog of the Week: Fast Fashion Giants TikTok's Struggles Amid Tariffs

In the "Dog of the Week" segment, the hosts examine the decline of TikTok-driven fast fashion apps like SHEIN and TikTok's impact on these businesses.

• Declining User Engagement:
  TikTok-based fashion apps have faced significant user drops, with SHEIN's daily active users falling by 52% and TikTok's own platform experiencing a 25% decline since March.
  Neal Freyman highlights, "Both apps have plummeted down the app store rankings." [16:30]

• Impact of Tariffs:
  The introduction of a 50% tariff under Trump's global trade policies has rendered these apps less competitive in the US market, forcing them to withdraw due to unsustainable costs.
  Neal Freyman explains, "The effective tariff rate is 54%, making it uncompetitive for these companies to operate in the US." [17:35]

• Attempted Market Shifts:
  With the US market becoming untenable, companies like SHEIN are redirecting their efforts towards Europe, albeit facing their own set of regulations and lower de minimis thresholds.
  Toby Howell notes, "Europe is a difficult market to enter as well because they have a lot of legislation and regulation." [18:18]

• Challenges in International Expansion:
  Businesses struggle with the complexities of international markets, including VAT registrations, diverse plug standards, and multilingual requirements, often describing the process as "hell mode."
  Neal Freyman shares, "A business owner had to translate his instruction manuals into at least five different languages." [19:01]

5. Broadway's Resurgence: Record Grosses and Gen Z Engagement

The discussion transitions to the booming Broadway scene, which has seen unprecedented success in the latest season.

• Historical Revenue Milestone:
  Broadway grossed a record $1.89 billion from May 2020 to May 2025, surpassing the previous record of $1.83 billion set in 2019.
  Neal Freyman states, "This season, Broadway shows grossed more money than any other in history." [19:01]

• Attracting Top Talent and Younger Audiences:
  High-profile actors like George Clooney, Denzel Washington, and Jake Gyllenhaal have starred in successful productions, drawing in diverse audiences. Additionally, Broadway has effectively engaged Gen Z with contemporary themes and pop music-infused productions.
  Toby Howell explains, "They're incorporating more pop music into plays and attracting younger audiences with relatable storytelling." [20:51]

• Record Young Audience Demographics:
  Productions like "Romeo and Juliet" have recorded unprecedented engagement from younger demographics, with 14% of ticket purchasers aged 18 to 24, compared to the industry average of 3%.
  Neal Freyman highlights, "This is the youngest ticket-buying audience ever recorded on Broadway." [21:43]

• Strategic Marketing Initiatives:
  To sustain this growth, Broadway is implementing strategies such as offering discounted student tickets, ensuring accessibility for younger patrons while maintaining its affluent audience base.
  Toby Howell notes, "They gave out cheaper tickets to students to bring them in, contributing to the record young crowd." [22:15]

• Upcoming Productions:
  Excitement builds for the return of Tom Felton as Draco Malfoy in "Harry Potter and the Cursed Child," set to premiere in November, further boosting Broadway's appeal.
  Neal Freyman adds, "If you are a Malfoy fan, you can see him in November." [22:15]

6. Additional Headlines

a. Amazon's Exploration of Humanoid Delivery Robots

Amazon is testing human-like robots designed to handle last-mile deliveries. These robots, developed in a secret park in San Francisco, aim to navigate suburban environments efficiently. While innovative, the integration of such robots could disrupt traditional delivery jobs and cause confusion among residents and pets alike.

• Toby Howell: "If these humanoids ever get deployed, it could lead to a lot of delivery workers losing their jobs and a lot of dogs being very, very confused." [23:45]

b. Hermes Birkin Bag Auction in Paris

The original Hermes Birkin bag, a historic piece inspired by actress Jane Birkin, is up for auction in Paris. Valued as a unique memorabilia item, the bag symbolizes luxury and timeless fashion, reflecting its creators' collaboration on a design that has become iconic in the fashion world.

• Neal Freyman: "The sketch ended up as a one-of-a-kind prototype that is as tall as it is deep and wide with the crossbody strap and, of course, the initials JB on the front." [25:40]

• Toby Howell: "Birkin bags are appreciating assets, outperforming the S&P 500 over this era of time." [26:37]

7. Closing Remarks

Neal and Toby wrap up the episode by encouraging listeners to engage with Morning Brew Daily and share their thoughts via email. They also briefly mention upcoming segments and thank the production team.

Notable Quotes

• Neal Freyman:
  "The big question is where do we possibly go from here after the dust has settled? It's anybody's guess." [00:58]

• Toby Howell:
  "The Switch 2 represents a bridge between the past and future of gaming." [07:00]

• Neal Freyman:
  "Shares of companies that went public in the US this year are up 15% on average from their IPO prices." [14:37]

• Toby Howell:
  "If you are a Malfoy fan, you can see him in November." [22:15]

This episode of Morning Brew Daily provided a comprehensive overview of significant events impacting major industries, from high-stakes corporate disputes and groundbreaking product launches to record-breaking performances in entertainment and innovative advancements in technology. Neal Freyman and Toby Howell delivered insightful analysis, enriched with pertinent quotes and detailed discussions, making it an informative listen for those looking to stay updated on current business and economic trends.