← The Rundown
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zeydad Mani and Today is Monday, September 8th. In today's episode, we'll preview this upcoming week and why the next few days will be pivotal for the market. We'll also dive into the latest financial figures coming out of OpenAI. Some pretty shocking stuff in there. Then stick around to the end of the show to find out how much money the Powerball winners will take home and why. It's a lot less than you might think. We got a great show for you today. Let's go. Stocks are coming off a winning week with the S&P 500 inching up 0.3% last week and the NASDAQ added more than 1%. Honestly, it wasn't a bad week considering that Friday's jobs report continued to show more cracks in the labor market. Jobs growth came in way below expectations and the unemployment rate ticked up to 4.3%. We broke down the jobs report in more detail on Friday show, so go check that out if you missed it. Now, this weakening labor market pretty much guarantees tease a rate cut at next week's Fed meeting. The markets are pricing in a hundred percent chance of an interest rate cut. In fact, there's currently a 10 chance of a 50 basis point jumbo cut. So we're going to officially find out at the next Fed meeting, which is on September 17th. Another thing that I'm keeping an eye on is gold prices. Gold prices continue to rally this year, hitting record highs last week. In fact, the price of Gold is up 36% year to date. Gold is seen as this safe haven asset and there's a lot of uncertainty right now, one of those things being inflation. And we're going to learn more about inflation this week because we are getting the PPI report on Wednesday which measures wholesale inflation, and then the CPI report on Thursday morning. If those numbers come in hot, it could put the Fed in a tough spot because a weak labor market mixed with high inflation is a recipe for stagflation. Now, beyond just macroeconomics, it's going to be a busy week of headlines. We got Apple's iPhone event tomorrow and we are also getting earnings from Oracle, Adobe and even GameStop later this week. So, so we're going to be covering all of that and whatever else pops up this week. So make sure you guys are tuning into the podcast to stay in the loop. Let's run through some headlines starting with OpenAI. We get a peek behind OpenAI's finances and they are crazy. According to a report from the information, OpenAI now says that they will burn through $115 billion by 2029. That is $80 billion more than what they projected just a few months ago. The cost for training models is getting more expensive, and the cost for talent is also going up. OpenAI is one of the largest renters of cloud servers on the planet, and training their AI models, it cost them billions. This year alone, OpenAI expects to spend $9 billion on training, and that's going to go up to $19 billion next year. And then, in order to keep their top AI engineers so Zuck doesn't poach them, OpenAI has set aside about $20 billion in stock compensation just to keep their talent from jumping ship. Zuck really started a talent war over the summer, and that's increasing the cost for OpenAI. Now, OpenAI does have some plans to reduce expenses over time. They're working with Broadcom to develop their own custom AI chips. We talked about that on Friday's show, so go check that out if you missed it. OpenAI wants to be less reliant on Nvidia's chips in the future, but developing custom AI chips is going to be expensive and it's going to take time. So in the near term, OpenAI expects costs to keep rising. But the thing is, OpenAI can just keep getting away with spending so much money and burning all this cash is because investors and venture capitalists are willing to give them as much money as they need, even at crazy valuations. OpenAI is reportedly selling stock at a $500 billion valuation, which is nearly double where it was six months ago. In fact, that's almost a fifth the size of Google. But as long as investors are willing to give them the money, they're going to take it. Now, the good news for OpenAI is that their revenues continue to have a hockey stick like growth as well. OpenAI raised its revenue forecast at 13 billion dol billion for this year, which is up 3.5x from last year. And 10 billion of that is coming from chat GPT, which is 25% more than initially expected. OpenAI also makes money from APIs and agent products, but the company actually lowered their revenue outlook for each of those products through 2030. What OpenAI is really trying to do is to figure out how to better monetize their free users, whether that means affiliate links in their AI responses or ads or something else. You know, they figure out how to monetize their massive free user base. That could be huge. I think it's only a matter of time before we start seeing ads and chatgpt. And I think that's why investors are willing to write a blank check to the company. Despite being a capital intensive startup, investors clearly think the upside is worth it. They're betting that Sam Altman can turn the billions of users into billions of dollars in profits someday. The company says they'll have about 2 billion users by 2030. Now let's shift gears and talk about Tesla. Tesla's grip on the US EV market is starting to slip. Tesla's market share for EVs in the US has fallen to 38% in August. That's the lowest since 2017. And the speed of the decline has been so Fast. Tesla had 49% market share just two months ago, but they're facing increased competition, especially from Asian carmakers. Hyundai, Honda, Kia and Toyota are seeing EV sales jump between 60 to 120% as they roll out aggressive discounts and incentives. Now, I've seen a lot of commercials for these EV cars while watching football this past weekend. The problem is that Tesla hasn't released a new car in a while. The last one was the Cybertruck in 2023 and that was kind of a flop, I think it's fair to say. Now, the Model Y refresh this year was nice, but it just didn't lead to a noticeable bump in sales. And to make matters worse for Tesla, the $7,500 federal tax credit for EVs is expiring at the end of this month. That's going to hurt all the carmakers because but especially Tesla because they only sell EVs. You know, I think Elon is still banking on self driving to get people to buy Teslas, but the tech isn't quite there yet. I guess that could explain why Elon Musk has been pivoting the company to focus more on Robo taxis and robotics. Let's talk about some stocks making moves today. App Lovin stock is booming this morning after the S P500 announced that the company's stock would be added to the index. Getting into the S and P is like the ultimate form of validation. It's the most exclusive club in the world, the top 500 companies in the US on top of that, it also boosts the demand for the company stock because every index tracking the s and P500 has to now buy Applovin stock. And that's why shares of Applovin are up more than 9% this morning. The stock will officially join the S&P 500 on September 22. By the way, AppLovin stock has been on an absolute tear recently. It's up more than 4,400% in the last 12 months. The company operates an ad exchange, which connects advertisers to mobile apps. So if you've ever been annoyed with intrusive ads while using an app, especially gaming apps, you could probably thank Applovin for that. But hey, it's a profitable and growing business, which is why they're now in the S and P. Sticking with the winners here, EchoStar stock is ripping this morning after striking a massive spectrum deal with SpaceX. The deal is worth about $17 billion in cash, and SpaceX stock plus SpaceX agreed to cover $2 billion in EchoStar's debt interest payments through 2027. Now, the reason this is a big deal is because these wireless spectrum rights are a hot commodity in the telecom world because it allows transfers of data to people's phone. And now that SpaceX has the spectrum rights, they could expand Starlink satellites into a direct to device mobile service. Up until now, SpaceX had leaned on partnerships with T Mobile to do this, but with these spectrum licenses, they can go at it on their own. So we might be getting a SpaceX mobile service pretty soon. For EchoStar, investors are loving that they are cashing in on their spectrum rights and they're getting cash, some debt relief and some SpaceX stock, which could be worth a lot of money someday. EchoStar shares are up more than 19 this morning at the time of this recording. And that brings me to the losers. With SpaceX potentially entering the mobile space in, it's sending shares of AT&T and Verizon lower, with both stocks down more than 4% this morning. You know, if SpaceX can deliver a reliable satellite service directly to phones, the traditional players could lose customers. That's especially true in rural areas where laying down physical infrastructure is costly and mobile service isn't great. So SpaceX might come in and just take that entire market, which is spooking investors and sending shares of AT&T and Verizon lower. Let's wrap the show with the fun fact. Over the weekend, two people hit the winning Powerball numbers for the second largest jackpot in history. The Powerball jackpot was up to $1.8 billion. And this money will now be split between the two winners, which comes out to around $893 million each. Now, I gotta say that $1.8 billion jackpot number is kind of misleading. You only get that amount if you accept the prize in annual payments for the next 30 years. The winners also have the choice to take the lump sum payment upfront which in this case would be $410 million each and that number is before federal and state taxes are taken out. So the actual take home prize might be closer to the $250 million range. Well all right guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you guys have been enjoying our show so far and you have like 8 extra seconds, consider giving us a 5 star rating on Apple Spotify wherever you listen to your podcasts. And if you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really helps us out and it helps other people find the show. Thank you guys again for listening and watching. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow.