SpaceX Takes Aim at Phone Carriers, Starbucks Explores Chipotle Takeover

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, October 9th. In today's episode, we'll tell you why one report about OpenAI's revenue sent AI and tech stocks tumbling. We'll also break down why SpaceX is making a play to be your next cell phone carrier, and why Starbucks is looking to buy Chipotle. Then stick around to the end of the show to find out about Spotify's latest deal with Joe Rogan. We got a great show for you today.

Let's go.

Stocks fell for the second straight day on Thursday. The S&P 500 dropped 0.5%, while the NASDAQ tanked by 1.3%. Thursday was the worst day for the NASDAQ since mid August. What's interesting is that non-tech stocks actually had a decent day. An S&P 500 ETF that excludes tech stocks is actually up 0.5%, and 6 of the 11 sectors actually finished in the green as well. But the reason that tech and AI stocks sold off so hard yesterday was because of a report that OpenAI isn't making as much money as everyone thought. The Financial Times reported yesterday that OpenAI told their investors that their annualized revenue was approaching $50 billion as of the end of September. The problem is, is the estimates on Wall Street was around $70 billion of annualized revenue. So that's a $20 billion gap. So that report caused AI and chip stocks to get smoked yesterday. NVIDIA fell nearly 3%. Oracle dropped more than 5%. And Neo Clouds like Coreweave and Nebius lost nearly 8%. You gotta remember, for a lot of these companies, OpenAI is their biggest customer. So if OpenAI's revenues aren't as high as everyone thought, well then OpenAI might have to pull back on spending, which could impact all these companies. But here's the thing, there's still so much confusion about how much revenue these AI labs are actually making. In fact, OpenAI and Anthropic don't even calculate annualized revenues the same way. Anthropic counts the sales it makes through Amazon and Google Cloud. OpenAI doesn't. And according to the FT article, investors tried to adjust OpenAI's numbers to make them comparable with Anthropic. And that's where the $70 billion number might have come from. So that's why I don't wanna focus on the annualized revenue numbers too much. On top of that, annualized revenue isn't a great metric to focus on anyways. It's basically one month of sales multiplied by 12 It doesn't mean that OpenAI actually collected $50 billion over the past 12 months. That's not to say there isn't any concern about a potential slowdown in revenue growth for OpenAI. Now CNBC did report that total revenue run rate did grow by 77% for OpenAI during the third quarter. A lot of that thanks to their enterprise business. And then Bloomberg came out with a report overnight that OpenAI expects to reach or exceed $70 billion in annualized revenue by the end of the year. You know, this is why I can't wait for these AI labs to go public because then we'll have some proper accounting to go off of and not just reporting. Anyways, it seems like the market is already bouncing back from yesterday's sell-off. As I record this, I'm seeing green in the pre-market across the board, especially for tech stocks. So yesterday's sell-off might have just been an overreaction. I think I might have to set up my AI agent on public to automatically buy the tech dip every time there's a report of OpenAI or Anthropix revenue, because I feel like the market usually bounces back. We'll continue to keep an eye on all the AI drama, along with everything else happening. 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 SpaceX. SpaceX might be making a play to be your next cell phone carrier. The company announced yesterday that they were buying a nationwide chunk of wireless spectrum from an investment firm called Grain Management. The Wall Street Journal reported that SpaceX is paying about $8 billion in cash. Now a quick explainer here. Spectrum is the radio frequencies that your phone uses to carry your calls and data. And by buying the spectrum licenses, that gives SpaceX the right to use those airwaves. And the spectrum that SpaceX bought is low band spectrum, which travels far and goes through walls. And the reason that's key is that SpaceX already has the capability of offering satellite phone coverage via Starlink. In fact, they currently have a partnership with T-Mobile. But the thing is, satellite is great for offering coverage in remote areas, but it's not great for cities where there are buildings and a ton of people in a concentrated area. So by buying this low band spectrum, SpaceX could fill in those gaps in the cities and eventually turn Starlink Mobile into a full fledged competitor to Verizon, T-Mobile and AT&T. And that's why the market kind of freaked out on this news. Shares of AT&T, Verizon and T-Mobile are all down more than 7% this morning at the time of this recording. But the thing is, buying spectrum doesn't mean that SpaceX will suddenly have a nationwide network ready to go in the next few months. They still need to build out the ground infrastructure, like installing cell phone towers for reliable indoor coverage. And that could take years and billions of dollars of investments. So I feel like the 7% drop for these phone carriers might be a bit of an overreaction. And personally, I don't really understand why SpaceX is getting into this business in the first place. You know, being a phone carrier isn't exactly a high growth business. It's super capital intensive. And you're going up against established players with nationwide networks. So I'm kind of surprised that SpaceX is doing this and not just doubling down on selling satellite coverage to the carriers for remote areas. Maybe there's a bigger play here that I'm not seeing. So let me know in the comments on what you guys think about SpaceX potentially getting into the phone carrier business.