Morning Brew Daily - OpenAI is the World's Most Valuable Private Company & Tesla Sales Are… Up?

Episode Date: October 3, 2025

Episode 684: Neal and Toby wrap up the week taking a look at the astronomical rise of OpenAI and how they have reached a $500B valuation. And Tesla reports thats sales are up thanks to an EV tax credit. Next up, the guys share their stock of the week (Fico) and dog of the week (Reddit). Then, Taylor Swift releases The Life of a Show Girl. Finally the headlines you need to know heading into this weekend.  Spend $250 on your first campaign on LinkedIn Ads and get a free $250 credit for the next one. Check out https://www.linkedIn.com/mbd for more. Get your MBD live show tickets here! https://www.tinyurl.com/MBD-HOLIDAY  Vote for MBD in the Signal Awards!  Best Daily Podcast: http://bit.ly/3W4e5ik  Best Commute Podcast: https://bit.ly/4pxZidv Best Business Podcast: https://bit.ly/3IE7lEP  Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠ Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewerdaily. That's aflack.com slash morning brewdaily.

Good morning, Brut Daily's show. I'm Neil Fryman. And I'm Toby Howell. Today, Tesla had its best sales quarter ever, so why did the stock drop? Then Open AI is now officially the most valuable private company in the world. It's Friday, October 3rd. Let's ride. Good morning and happy Friday.

We made it not to add some stress to your plate this weekend. But have you picked out a Halloween costume yet? Time is ticking down to the Spook Fest, which is now less than a month. away. And if you need some inspiration, Spirit Halloween revealed its most popular costumes of 2025 so far. And number one, see if you can guess it, is K-pop Demon Hunters, which makes sense because that's become the most viewed movie in Netflix history. Other popular costumes are related to wicked, animated shows like South Park and SpongeBob and classic superheroes like Mr. Fantastic. Toby, what are you expecting to see out there among the trick-or-treaters this year? Well, first of all,

Spirit, those are not very good. I have a lot. of better ideas. Gather two friends and be the Thruple from the Coldplay concert Kiss Cam, or you and a hundred of your closest friends could dress up as the 100 men versus one guerrilla debate. I'm also parceled to a little Katie Perry in space, get up, just a blue jumpsuit with some blue origin patches on it. And finally, you can always go as hair and makeup. Just don't show up to work to really sell it. Those are my ideas. That's what I think we're going to be seeing out there this year. All right. Now, a quick word. from our sponsor LinkedIn ads. Toby, what do you search for? Deeper meeting in my inner personal

relationships, a sense of belongingness I haven't experienced since childhood in a really good pretzel bun. Well, that's very deep, Toby. What I was going to say was what do you search for in professionals when doing B2B advertising? Because with LinkedIn ads, you can target your buyers by job title, industry, company role, seniority, skills, company revenue, so you can stop wasting budget on the wrong audience. Ah, I see. Well, in that case, it's worth mentioning LinkedIn. ads has a network of over one billion professionals and 130 million decision makers. Plus, LinkedIn ads generates the highest B2B that's business to business, Roas of all online ad networks.

Spend $250 on your first campaign on LinkedIn ads and get a free $250 credit for the next one. Just go to LinkedIn.com slash MBD. That's LinkedIn.com slash MBD. Terms and conditions may apply. On your left, Elon, OpenAI is now the most viable private company in the world after completing a secondary share sale for employees at a $500 billion valuation leapfrogging Elon's SpaceX in the process. Open AI gave employees who'd been at the company for more than two years a chance to cash out of $10.2 billion worth of their stock, but in the end, only about two-thirds of

that was actually sold. Inside the company, that's being read as a show of confidence. Many workers decided to hold on to their shares, even at that sky high, half a trillion dollar valuation. On the other side of the equation, there were plenty of investors still eager to buy whatever stock was available. And no wonder, Open AI is starting to ramp up its money making, hitting $4.3 billion in revenue in the first half of this year, which was 16% above what it made in all of 2024, according to the information. It's still going through a lot of cash, though, projecting $8.5 billion in burn for 2025. So it's got explosive revenue growth that you want to see, but cash burn driven by R&D and server companies. are still higher. Neal, this company just keeps seeing its valuation swell. It would now be the 20th largest publicly traded company in the world if it ever wanted to go that route. And I know

it's got to be satisfying for Sam Altman to pass his rival Elon SpaceX in the process. Investors see just a huge growth trajectory for this company because compare this $500 billion valuation with other companies that are on the public market. So $500 billion is around what Exxon Mobile is worth. Exxon Mobile has reported annual revenue of almost $350 billion last year and a profit of more than $30 billion. OpenAI, as you mentioned, did $4.3 billion in the first half of the year. It's expecting $13 billion of revenue and it is losing billions of dollars. And now those two companies are valued the same. It's a show that investors think that OpenAI, this $500 billion valuation is going to jump a lot in the next few years.

How is it going to live up to this valuation? Right now, it is torching cash, but every launch is kind of expressing how it does see a path towards profitability and a path towards revenue going forward. I mean, they just launched instant checkout, which allows users to buy products directly in chat, GPT. So that's potential, Leah, a revenue stream. And then also, they have a hardware play in the works. They have Johnny Ive, who worked at Apple, creating something that. they think can replace potentially mobile phones going forward. And then also they just recently hired an Instacart CEO to kind of figure out its advertising

network ads are likely coming to Chat CPT at some point in the future. Because right now, only 4% of ChatTPT's nearly 700 million weekly users are on a subscription plan. So a lot of those are unmonetized users right now. What's the way that the internet has traditionally monetized users? it is through ads. So it's giving some hints as to how it's going to finally move from this cash burning enterprise into one that actually makes a lot of money. Maybe it's not Exxon mobile levels yet, but this is kind of the hints in the strands that they're pulling to finally

make some money. And even if this, you know, fundraise, share sale happened on, they're not fundraise, share sale happened on the private markets. It did have a big impact on the public markets. Yesterday, NASDAQ hit its second consecutive record high. and the NASDAQ is composed of a lot of tech companies. The AI trade had kind of been wobbling for the past few weeks. Investors were wondering whether these companies had all this money to fund the trillions of dollars that are needed to build out these data centers that fuel the AI race. But after Open AI got this, you know, vote of confidence from other investors that sent a bunch of other tech shares up. Sam Altman is also in Asia right now, inking deals with South Korean chip companies. And he's in Japan today. And those companies saw a huge boost. So the public market,

got a strong reaction from this because it was a sign that the AI trade is alive and well. I remember when a trillion-dollar company was just a really big deal. Now we have startups. I mean, that's not quite the word to use for Open AI, but these private companies that are halfway there in the private markets right now. So truly just staggering levels. And it is passing Elon's kind of business empire as well, which had to feel pretty dang good. Tesla finally reported the blowout delivery numbers investors have been pining for selling nearly 500,000 vehicles global. in Q3, good for a 7.4% increase year over year. So why the heck did the stock fall 5% yesterday? It all comes down to that pesky $7,500 federal EV tax credit, which pulled demand forward,

juicing short-term numbers as buyers rest to take advantage of the cheaper prices. Still, Tesla beat analyst's expectations by a hefty amount. Wall Street only forecasted about 450,000 deliveries, which would have implied a decline in sales. But even with the beat, the market is still down on EV makers navigating a creditless future. GM in Ford also reported around 8% Q3 sales growth, but both traded in the red yesterday. Rivian saw its shares retreat despite delivering 32% more vehicles year over year, and Elon himself has warned Tesla is likely to face several, quote, rough quarters going forward as the incentives disappear and before it ramps up robo taxis at scale. Despite his foreboding tone, Musk's pocketbook is doing just fine. He became the first person in history to cross

a $500 billion net worth on Wednesday per Forbes's billionaire index. His wealth briefly touched $500.1 billion before slipping slightly, leaving Larry Ellison in the dust after the Oracle co-founder briefly overtook the mantle of richest person in the world earlier this year. Neil, such dissonance here. Elon being worth half a trillion dollars, Tesla reporting sales growth, and yet the vibes are still pretty bleak right now. And that's because this was expected.

Every single electric vehicle seller, whether it's a legacy automaker or Tesla, had a huge quarter because of that pull forward in demand because the tax credit was ending electric vehicle sales in the United States jumped 22% in the third quarter from a year earlier to set a new record of 410,000 vehicles. EVs accounted for 10% of the new car market. That's a record. But this week, you had a bunch of automaker CEOs come out and say, well, the times are good now, but they're about to get a lot leaner. Ford CEO Jim Farley said that demand for EVs is going to be cut in half because of tax credit, ending. And we're expecting the same thing for Tesla, which has not really done a very good job of putting new EVs out there.

And so when this tax credit ends, the buyers are going to look at Tesla's light up and say, well, there's nothing that's super attracted now that I can't get this tax credit. And that's what investors are responding to. And in Elon's mind, they're not even really a car company anymore. Remember, Tesla's master plan for is that they want to move away from just being an EVV maker. AI, robotics, and energy systems are its big plays in the future. They want to redefine labor mobility and energy at scale. That's kind of the new manifesto at Tesla right now.

So even with this credit expiring, Elon has come out and just said, like, yes, it's going to be rough for us. But in his mind, the EVs are going to be a smaller and smaller portion of this business as this autonomous vehicle division ramps up as the optimist robot division ramps up, as even this battery storage division ramps up because it had a pretty good quarter in that as well. So, yes, there is going to be this hit from it. But in Elon's mind, it is $500 billion mine right now. He's probably saying it's all right. At least we have these backup plans. Yeah, if you're looking at the calendar for Tesla, they have two big things that are

circled on it. The first one is the rollout of this Robotaxie program. They're going in Austin right now. They have tests going in the Bay Area. And Elon says that by next year, they're going to have hundreds of thousands of self-driving Teslas out in the United States. So that is a huge push that they're really banking the company on. And the next thing is this big annual meeting happening next a month where shareholders are going to vote on this trillion dollar pay package. We know Elon Musk is worth $500 billion, but he could be worth a trillion if this new pay package gets voted into the company bylaws. And that's worth a trillion dollars should Elon Musk hit these particular targets as CEOs. And you mentioned that the car aspect is going to be a smaller portion of the

company. And if you look at the incentives that are set out for Elon Musk, that really exemplifies the sort of trajectory that Tesla is on. The targets for car sales really aren't that aggressive at all compared to profit, deployment of robots, self-driving taxis, and the stock price. So for Elon must to get this full trillion dollar pay baggage, Tesla needs to hit an $8.5 trillion market cap in the next decade right now. It stands at about $1.4 trillion. So there's a lot of growth that needs to happen and we'll be here to walk you through it. Okay, welcome to Stock of the Week, Dog of the Week, the segment where Toby and I pick one stock with a strong sweater game

and another that should be taking notes from Harry and Sally. I won the pre-show game of a rock paper scissors, so I get to go first. And my winner is Fair Isaac, the company that created the FICO credit score. Isaac was looking extra fare yesterday, shooting up 18% after giving the middlemen in its industry the old middle finger. Fair Isaac announced that mortgage lenders could access FICO

scores directly from the company, whereas previously they had to buy them from the three credit reporting giants, Experian, Equifax, and Trans Union. It's one of the biggest changes to the home lending market in decades and one that could diminish the role of those middlemen credit reporting companies. All three, Equifax, Experian, and Trans Union tumbled at least 4% yesterday. Fair Isaac didn't necessarily make this move on its own. It's faced heated pressure from the White House to lower the costs associated with getting a home loan. In late July, top housing regulator Bill Pulte blasted Fair Isaac as a monopoly that contributed to higher credit score prices for consumers.

Yesterday, Pulte seemed partially appeased with the move to go direct, calling it a first step in ensuring a competitive and safe and sound market. So it looks like First Isaac killed two birds with one stone here, got some regulatory heat off its back while potentially snagging market share from the big credit reporting bureaus. And Toby, there's nothing at Wall Street and Main Street like more than cutting out the middleman. Who are the winners and who are the losers here? The winners are borrowers and home buyers because now these credit poles, which are a lot cheaper now, which regulators have been on FICO for years now, even if it's just a few bucks

a score, there are millions and millions of loans out there. So multiply that. It is some meaningful cost savings. And then FICO is obviously a short term or a winner here. They get much higher volume. They get much more control over their distribution of these all-important magic numbers that determine if you can get a loan and you see that with the stock pop. And then the regulators and politicians also, they were thrown a bone as well because, yeah,

Bill Pulte has been after this monopoly that he calls it within the credit score industry. He's been trying to get another entity in this space Vantage score to be another player to reduce the reliance on FICO. Now they can claim this win on affordability without actually having to legislate it. So it really was, FICO did kill two birds with one zone because they damage their rivals while also appeasing regulators at the same time. All right, we're going to move on to our dog of the week after this quick break. My dog of the week is Reddit because chat GPT is sending a lot less traffic its way these days.

Earlier this week, the data aggregator prompt watch showed that Reddit appeared in just 2% of chat GPT responses down from nearly 10% in August in a peak of 14% in September. Reddit has long functioned as a search engine in its own right. People have gotten into the habit of adding Reddit to the end of their searches on Google in the hopes of getting an answer from the masses. But if AI replaces that behavior or stops citing it as frequently, Reddit's traffic flow is at risk. Reddit's long time advantage has been its user-generated authenticity. A trawl through a Mexico City subreddit will likely yield better places to eat than an SEO optimized article on Google. But it's a two-ed sword because Reddit threads are also messy,

or sometimes unreliable, so AI companies may decide they're not worth servicing going forward. Neil, this has shades of when Facebook nuked publisher traffic with a single algorithm tweak. Now it seems like OpenAI has similar leverage over Reddit, which is why its stock is down about 15% over the last week. Yeah, Reddit has really hitched its wagon to these big distribution platforms like Google, and now as traffic has shifted from Google to AI searches like Perplexity or ChatGBT, It's also moved over there to sign deals with them. And Reddit has become a pretty key data supplier to AI companies

because it has so much user-generated content that AI companies really want for their LLMs. It signed this deal with Google on the day that it IPOed last year for $60 million a year that gave Google access to real-time content on Reddit's platform. And then a few months later, it struck a similar deal with OpenAI that is estimated to be worth around $70 million a year to allow, chat GBT to access Reddit's data. And now that traffic is dipping a little bit, going from chat GBT to Reddit. It is spooking a little investors. But if you look at, if you look at Reddit's stock price, it mostly has gone up from its IPO. But every time

there is any sort of algorithm change on Google or chat GPT, then you see a lot of volatility and Reddit stock prices because it's what investors are paying attention to. It's all this referral traffic that goes from these big distribution platforms back to Reddit. Yeah, there's so much platform risk here because it is. You just live and die on this smallest of tweak that other companies are making, which is just not necessarily what you want to see. For all this talk about AI, though, Reddit's core business is still advertising. It feels like every single conversation starts with AI, but comes back to advertising. 93% of Reddit's revenue still comes from ads, and it's doing well. It's revenue growth in Q2 was up 84% year over year. That's the fastest growth

it's seen in three years. So it's still a pretty healthy advertising business. But again, if that traffic starts to dry up, then you can't sell ads anymore because you have less eyeballs. So definitely a vulnerable position it finds itself in, even though it's done pretty well as a public company so far. And what do you think of the fact that when you're querying chat GPT or an AI for anything? It's mostly probably coming from Reddit, the analytics platform profound, showed that

between August, 2024, June 2025. Reddit was the best. Sited domain by Google AI overviews and perplexity, the second most cited by chat GPT. So when you ask a chat bot something, it's kind of going straight to Reddit and bringing together whatever people were saying on Reddit, which, you know, makes you think a little bit. Yeah, it's scary to think about. All right. The commercial supernova that is Taylor Swift is back on the airwaves, releasing her 12th studio

album, The Life of a Showgirl at midnight this morning. It's her first album since last year's The Tortured Poets Department, which set a Spotify record for the most streamed album in a single day and helped her. become the first artist to hold the top 14 spots on the Billboard Hot 100. The life of a showgirl could be as big or probably even bigger. Over 5 million people have it pre-saved on Spotify the most in history, while pre-orders for a special vinyl edition sold out in less than an hour. But when you listen to this album, as no doubt many of you Rabbit Swifties already have,

you might notice something different about the music, whereas the past couple of Swift albums have been more melancholy, sprawling, esoteric records. This one features choruses that are more singable. Swift said on her fiance's new Heights podcast that the life of a showgirl would be more a beat with, quote, melodies that were so infectious that you're almost angry at it. And that's because for this album, Swift team back up with Max Martin, the Swedish songwriter behind some of the most infectious popular songs of the past three decades. Max Martin and his collaborator, Shelfback, helped Swift make the transition from country to pop in

the 2010s, co-writing hits like Shake It Off, Blank Space, and Bad Blood, and now, these tagged them in to launch a new era of earworms. Toby, did you stay up till midnight to listen? Oh, absolutely. If that's why I'm sounded a little tired this morning, no, I did not do that. But this morning I did get through about two-thirds of the album while we were prepping for the show. And the expectation going in that she's reunited with Max Martin, that this was going to be an album full of bangers. And there are certainly some bangers on there. His pedigree, though, is just unmatched, unparallel in terms of the pop music canon. He has co-written 27 number one songs. That is second only to Paul McCartney. If you expand from the Taylor Swift discography, he's also worked on Britney Spears baby

one more time and since it's going to be me, the weekends of Blinding Lights and eight of Katie Perry's nine number one hit. So this dude just has his finger in every single popular song over the last few decades. So definitely a shift from her more exploratory genre albums of the few years now back to kind of the meat and potatoes pop hits in life of a showgirl. I mean, he wrote, Max Martin wrote, I want it that way. I mean, that even if he wrote that, it would have been enough. Another sort of business angle to look at with the release of Taylor Swift's new album is at the box office, interestingly enough. She is releasing a movie with AMC called the official release party of a showgirl. And that is tracking a debut of $35 to $40 million

of the weekend. It's expected to be the top. movie at the box office, and that would be her second consecutive number one box office debut. Remember, in 2023, she released Taylor Swift, the ERAs tour, which debuted with $93 million. So she's definitely going to conquer Spotify and all of the audio airwaves this weekend and probably beyond that. But she's also probably going to conquer the box office with box office with this movie release. It's a different movie. It's not a traditional concert film like the Ares Tour was it's behind the scenes footage, it's new music video, and she's selling tickets for $12, which everything has meaning in the Taylor Swift universe right now. That number is important

to her as well. But yeah, going to have to finish listening to this album. I listen to Wood, and I'm not going to spoil anything for anyone who hasn't listened to it yet. There's a song called Wood. There's a song called Wood. Don't listen to it around your parents. You might start blushing a little bit. That's where we're going to leave it for now, because this is a PG podcast. All right. Let's sprint to the finish this Friday with some final headlines. lines. Warren Buffett may have only three months left as Berkshire Hathaway CEO, but he's not coasting into the sunset like I did senior year of high school. Yesterday, Berkshire struck its biggest deal in three years, buying Occidental's chemicals business, OxyCem for $9.7 billion.

It could be Buffett's swan song. The 95-year-old investing icon is stepping down January 1st as the head of Berkshire before handing over the reins to Greg Abel, who was the real mastermind behind this deal. Toby, for years, Buffett has said, I can't find any attractive takeover targets. Everything on the market is too expensive. And all that waiting around led to antsy shareholders and a cash pile that's spelled to $344 billion. So why pounce now? This is just a classic Buffett business. I mean, there's nothing more boring and more money-making than petrochemicals. He's been circling Occidental for years now. He actually helped them expand its oil and gas business with a lot of loans. And so he's accrued this big stake in it. So he's

got a vested interest in this company. When OxyCAM became up for sale, he said, this is kind of a win-win because it helps you pay down some of that massive debt that you've accrued. This is my kind of business. It just spits off cash. So investors, though, have reacted a little bit skeptically to this. Occidental share price actually fell by more than 7% upon the news. Some analysts say that it's because the petrochemical sector has experienced a little bit of a downturn. There's also some that say, like, hey, why are you actually getting rid of this volatile? but also very lucrative business. Occidental says, hey, we just want to focus our time and energy on paying down this debt and on our oil and gas business.

So I don't know. It's probably in the canon of Warren Buffett's deal is not the sexiest one he's ever made, but it does seem like the perfect kind of end to his reign over Berkshire Hathaway, another boring business that probably is going to make billions of dollars. For our final headline, supplies of Japan's most famous super dry beer, Asahi, are drying. out after a cyber attack has halted operations at most of its 30 domestic breweries. Asahi pumps out nearly 7 million bottles of the delicious beer a day in Japan, but with production pause, retailers are predicting empty shells within the next two or three days. And even though

rivals like Kieran can fill the gaps, Asahi Super Dry has a fiercely loyal customer base that doesn't switch easily. Saahi is throwing everything it has at the problem, even testing out a paper-based system to process orders. But right now, it's low. loyal Japanese customers have dwindling options to slate their thirst with some super dry. Neil, these cyber attacks are growing around the world. We just talked about Jaguar Land Rover having to pause all of its operation, while Japan's national police agency said reports of ransomware attacks are up 12% this year. But when you go after Asahi Superdry, that is crossing the line.

They better fix this fast because the Dodgers are playing the Phillies tomorrow. And, you know, a lot of people over there want to be drinking beer while they watch Joe Aetani, you know, strike out a bunch of times versus the Phillies. So that could be a national crisis because they love baseball over there. Interesting. I was looking at the stats of how much beer Japan drinks. They do love beer over there in terms of total consumption. They are 10th in the world, Japan.

But if you're talking about per capita beer consumption, Japan is way down the list. The top countries are, number one, the Czech Republic, followed by Austria, Poland, and Ireland. Japan per capita beer consumption is actually one fifth of the per capita beer consumption. is actually one fifth of the per capita beer consumption of the Czech Republic. So they are beer-loving, but in the scope of the globe, you know, they're just a little bit down the list compared to those European countries. But, hey, Asahi, get your act together. These people need to be drinking beer this weekend.

All right, that is all the time we have. Thanks for starting your morning with us. Have a wonderful Friday and an even better weekend. Toby, don't we have a live show coming up? Oh, I'm just daydreaming over here about our morning, Brew, Daily, Live holiday show. We got an email from a family who is coming in from Cali, California to watch the show. That is some dedication. So if you live closer than that, definitely consider buying a ticket. It's going to be fun end of year celebration. Early December

with some live interviews, some games, and some meet and greet opportunities. You can snag a ticket now by heading to the link in the show description. We will see you all there. And if you have any feedback on today's episode, send a note to Morning Brew Daily at Morningbrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lou is our producer, our associate producers, are Olivia Graham and Olivia Lake. Hair and makeup called out sick, but we all know they're at a Taylor Swift listening party. Devin Emery is our president

and our show is a production of Morning Brew. Great show today, Neil. I wish you all well.