Elon Promises Kids SpaceX Stock, AI Stocks Face a Reality Check

Zaid Admani (0:00)

Public.com presents The Rundown. Your daily market update in 10 minutes. My name is Zaid Admani, and today is Monday, October 19th. In today's episode, we'll break down why the NASDAQ just had its worst week since June, and why I think the AI sell-off might be a good thing. We'll also get into the charity fight between Elon Musk and Anthropic, and how every kid in America might end up owning a piece of SpaceX. Then stick around to the end of the show to find out how Harvard has been cashing in on SpaceX. We got a great show for you today.

Let's go.

Last week was a brutal one for the market. Stocks had their worst week since June, with the S&P 500 dropping nearly 2%, and the NASDAQ tanked by 4.5%. And I guess I have to show the Dow some respect here because it actually finished up 0.7%.

Now, I still don't care about the Dow, but the Dow finishing in the green shows you that the sell-off last week was concentrated in the tech sector. The AI trade was hot, but it's starting to show some signs of cracking. I think investors are starting to wonder how much the AI boom depends on companies being able to keep borrowing money. The poster child for this right now is CoreWeave. Their stock dropped 25% last week and is now down more than 50% from its highs from earlier this year. Dell was also a loser. It fell by 22% last week, which was the worst week for the company ever. And overall, the SOX semiconductor index fell by 10% last week as well. Personally though, I think this kind of shakeout is healthy for the markets. I think it's great that investors are asking questions instead of treating every AI stock like a guaranteed winner. Plus the broader market has been holding up fine. Sure, the tech sector has been the worst performing in October, but energy and defensive sectors like consumer staples and utilities are rallying this month. What we're seeing right now is a market rotation into other sectors and not money leaving the market all together. Plus, it looks like investors are already buying the tech dip. As I record this in the pre-market, stocks are already bouncing back, including tech and chip stocks. Last week might have just been one of those short-term shakeouts where investors were anxious about AI. We've seen that happen a few times this year. But every time that's happened, we seem to bounce back pretty fast. So we'll see if that happens again this time. Now, we are entering a pretty critical period for the markets. Q3 earnings season is about to really kick into gear. This week is a big one. Netflix reports earnings on Tuesday after the close. They're dealing with a lot of drama over there themselves. No pun intended. So I'm looking forward to seeing what they have to say. We're also hearing from Tesla and Meadow on Wednesday after the close. Plus a lot more. So if you're new here, you picked a great time to start listening to the podcast. We're gonna be breaking everything down. So definitely get subscribed to the podcast if you haven't already. And tune in every day to stay in the loop.

Let's run through some headlines. And we're starting with Anthropic and Elon Musk. Anthropic and Elon are getting into a charity fight. And I mean that in a good way. Over the weekend, Anthropic announced plans to commit 5% of its shares to a new public benefit fund. You know, Anthropic is targeting a $2 trillion valuation for their IPO. So a 5% stake would be worth about $100 billion. The fund is being created to make donations to nonprofits and distribute money directly to specific groups and help address the disruption that AI could cause in the labor market. So I imagine a big reason that Anthropic is doing this is PR related because there's a growing backlash around AI and people losing jobs because of it. So essentially the idea of this fund is to distribute some of the wealth created by AI to help people affected by AI. Now Anthropic said the details on how this fund will be run is going to come out in the next coming months. And this is where Elon Musk decided to chime in on X. He replied to Anthropic saying that he recommends just giving shares directly away to the public. And then this morning, he made his announcement about his SpaceX giveaway. On Monday morning, Elon Musk posted on X that he plans to give one share of SpaceX to every single kid in America next year. Now for some context, there are about 72 million kids under the age of 18 in the US. And Elon owns around 4.8 billion SpaceX shares. So this is him giving away roughly 1.5% of his stake. That might not sound like a lot, but this is still one of the biggest gifts ever given. SpaceX stock closed last week at $146, so giving away 72 million shares is about $10 billion worth of stock. Not to mention, Elon also said there would be more to come. Now, Elon also gave zero details on how his SpaceX giveaway will actually work. We all know that he has a history of tweeting out wild ideas without following through. So I wonder how he's going to go through with it. It's possible that he does it via the Trump accounts. Remember, the Trump accounts launched back in July, where the US government seeded $1,000 for every kid born between 2025 and 2028? This has been a pretty popular program so far. The White House says that nearly 70 million accounts have already been created. And beyond just the $1,000 seed from the federal government, companies can also donate into these accounts. In fact, Michael Dell and his wife pledged $6.25 billion last year, giving $250 for 25 million kids. Not to mention SpaceX's president, Gwen Shotwell donated SpaceX shares to more than 2 million kids via the Trump accounts. So it's possible that's the same mechanism that Elon uses. Overall though, I'm loving this trend of billionaires funding investment accounts for kids. You know, I like the idea of kids growing up having a direct stake in the success of the US stock market and taking part of the upside of US companies. For one, this should result in a decent pool of money for kids when they turn 18 But more importantly, I hope this gets kids more interested in investing at a young age. Let me know in the comments what you guys think about all this. Do you like the Anthropic approach of creating a public fund or the SpaceX approach of just giving away stocks to kids directly? Drop your thoughts on Spotify and YouTube.