Tesla’s Roadster Takes Flight, Netflix Shakes Up Its Leadership

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 16th. In today's episode, we'll break down Wall Street's dramatic comeback yesterday, and whether the AI scare is actually over. We'll also talk about Tesla's new Roadster car, and why it might be a tease to a potential SpaceX merger. Then stick around to the end of the show to find out why KFC is ditching Pepsi for Coca-Cola after 40 years. We got a great show for you today.

Let's go.

We had a pretty dramatic comeback in the stock market yesterday. The S&P 500 gained 0.3%, while the NASDAQ squeezed out a gain of 0.1%. Now, on the surface, that might sound boring, but when trading started on Thursday, it looked like we were headed for another 1% sell-off. Then by midday, things started turning around, and then by the close, we ended up finishing in the green. Thursday ended up being the biggest intraday rebound for the NASDAQ since April. Now, one reason for the turnaround yesterday might be the big drop that we saw in treasury yields. The 10-year yield fell to about 5.09% yesterday. It was the biggest one-day decline in more than a year. And that decline happened despite another ugly inflation report. Now, we covered the PPI report on yesterday's show. It showed that wholesale prices jumped 1.3% month over month in September, which was more than double the 0.6% increase that economists had expected. And normally, a hot inflation report causes treasury yields to go up because it means that the Fed will have to raise interest rates, but investors were so spooked by the tech sell-off this week that they bought treasuries causing yields to drop. And that brings us to the other topic of conversation this week, which is borrowing costs. One reason that tech stocks were selling off this week is because investors are concerned about all the debt that AI companies are taking on to build data centers. Now, one of the big losers this week has been CoreWeave because investors are worried about the company's ability to repay all that debt. But yesterday, CoreWeave stock jumped about 6% because of some reassuring comments from NVIDIA CEO Jensen Huang. Jensen was at a conference in Stockholm yesterday where he said that CoreWeave's strength is improving every day and that he was optimistic about the company. Now, keep in mind, NVIDIA is a CoreWeave shareholder and their biggest chip supplier, so asking Jensen if CoreWeave is healthy is like asking your landlord if the neighborhood is nice. Of course he's going to be optimistic. The bond market wasn't convinced though. CoreWeave's debt was still showing signs of distress even as the stock rebounded. But like I said yesterday, the market goes through these brief periods where it freaks out about AI, and then a few days later, it ignores all the red flags and goes back to rallying. We've seen that a few times this year. We'll see if the same thing happens this time. One thing to note about yesterday's comeback though, semiconductor stocks still fell. The semiconductor ETF was down for the eighth straight day. The rally yesterday was carried by other sectors like healthcare, materials, financials, and consumer discretionary, which all gained more than 1%. We'll have to see how the next few weeks play out because we're starting to get into the thick of earning season. Next week we're hearing from Netflix, United Airlines, Tesla, Meta, IBM, Spotify. So it's going to be a pack week. The following week is going to be even crazier. We have all the big tech earnings coming out. So we're going to be breaking it all down. It's a great time to 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 Tesla. Tesla showed off their new Roadster last night, and this car was literally flying in the demo. When they showed off the car at the event last night, the car drove on a curve ramp and did like a flip mid air and then landed. You have to watch the clip if you haven't seen it yet. It was really cool. Now what's interesting is that this demo took place at a SpaceX testing facility in McGregor, Texas, because this Roadster is a collab between SpaceX and Tesla, which are still two separate companies, by the way. The car had some rocket tech from SpaceX that allows it to fly. Now, before you start imagining yourself flying over traffic, the flying rocket package is invitation only and it still isn't approved for public roads. As for the Roadster itself though, Tesla first teased this car back in 2017 and started taking pre-orders, which required a $50,000 deposit. The original plan for the car was to deliver it by 2020, but in classic Elon fashion, it kept getting delayed. Well, now it looks like the release should be around the corner. Now, we didn't get a release date at the event or a price tag. It's probably gonna cost more than $250,000 if I had to guess. And honestly, this car might be more an engineering flex by Tesla and not something that's gonna impact their bottom line. What Tesla really needs is a cheap car that they can sell in volume. But this event last night could have also teased a potential merger between SpaceX and Tesla. The companies developed the Roadster together, they held the demo at a SpaceX facility, and Elon Musk used the stage to emphasize their collaboration. SpaceX and Tesla are also working on other projects, including the proposed Terafab Semiconductor plant in Texas. So I think Elon might be planting the seeds of this merger is going to happen down the line. In fact, there's been some speculation that this merger could happen before the end of this year. Following the event last night, Tesla stock was up more than 5% this morning in the pre-market, but it has given some of those gains back. Now we are going to hear from Tesla next week. They report earnings on Wednesday. And I gotta imagine there's going to be a few merger related questions on the earnings call.