The Rundown - Activist Takes $1B Stake in Pfizer, 'The Joker' Sequel Flops at the Box Office

Episode Date: October 7, 2024

Stock market update for October 7, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Monday, October 7th. In today's episode, we tell you what to look forward to this week, including Tesla's Robotaxi event and earnings season. Then we dive into why Pfizer is being targeted by activist investors and discuss one of the biggest box office flops of the year. Then stick around to the end of the show to find out why Amazon stock is down and Google losing their dominance in advertising. All right, let's go. Last week had a lot going on.

You know what the port strikes and everything, but stocks did squeeze out again thanks to a monster jobs report on Friday. Hiring looks to be pretty strong, according to the report. The U.S. economy added 254,000 jobs in September, nearly double what was expected. We talked more about the jobs report

on Friday's episode of the rundown, so if you missed that, go check that out. That strong jobs report really brought the good vibes out on Friday. Stocks rallied, and the S&P and NASDAQ finished the week in the green. Soft landing definitely in play. Now this week should be a good one because we kick off earnings season. PepsiCo, Delta, Dominoes, and banks like J.P. Morgan and Wells Fargo

are just some of the companies who set to report earnings this week. On top of that, Tesla's Robotaxy event is happening on Wednesday, so we'll finally get to see what Tesla has been cooking up. There's a lot of hype going into that event. Tesla has a lot of expectations to live up to, and their stock's probably going to get pretty crazy this week. But I am pumped, and as always, we got you guys covered here on the rundown. We'll be recapping all the earnings, the Tesla

Robotaxi event, and anything else that pops up this week. So hit that subscribe button if you haven't already. Kind of a random thought, but like October's the best month of the year, right? Like, there's no debate because we got earnings season, we got a bunch of sports happening, weather's getting really good, Halloween's coming up. There's no other month that's better. Let's run through some headlines. Activist investors have found their next target. This time, it's Pfizer. We've been talking a lot about activist investors over the past few months. These investors build up large stakes in companies, typically struggling companies, and then use their influence to push some changes at these struggling companies to turn the business around.

Recently, companies like Starbucks and Southwest Airlines have faced activist investor pressures. And the latest target seems to be Pfizer. The activist investor's Starboard value has built over a $1 billion stake in the company. And they're looking to shake things up, according to the Wall Street Journal. Starboard has discussed partnering with Pfizer's former CEO and CFO to assist in getting the company back on track. Now, Pfizer's stock hasn't been doing so hot lately. Their stock has been cut in half compared to its 2021 pandemic highs. COVID vaccine demand is way down and Pfizer, for some reason, was expecting demand to

continue post-pandemic. Not sure the logic there. COVID sales were down 87% in the most recent quarter. Now, Pfizer has taken some steps that, you know, turn things around. They announced a $4 billion cost cutting plan, which is set to finish at the end of this year. And a $1.5 billion saving initiative set to finish by 2020. These pharma giants are somewhat complicated businesses.

There's research and development of new drugs. There's drug trials to patent. So I guess it makes sense on why Starboard is thinking about partnering with the former CEO and CFO. So we'll see what happens. But usually when Starboard gets involved, things do turn around. Investors seem to be pretty happy that Starboard is getting involved. Pfizer's stock is up around 3% this morning. Speaking of companies that have been struggling, let's talk about Warner Brothers Discovery.

Things haven't been so great for the movie studio and they continue to get worse. The new Joker movie came out over the weekend, and it was a giant flop. The Joker sequel only made $40 million at the box office, which was below the already tempered expectations of $50 to $60 million. If you compare that to the original Joker movie, which came out back in 2019, it made over $100 million on its opening weekend going on to making a total of over a billion dollars worldwide. It was a massive hit, not so much for the sequel.

And to make matters worse for Warner Brothers, this is going to be a costly miss, because the sequel cost over $200 million to make three times more than the first film. And I don't think I've seen a movie get dragged so hard. Review after review were just brutal. So yeah, the normal strategy of studios releasing sequels and hoping to make money, that doesn't always work. But I highly doubt that strategy is going to stop anytime soon, especially churning out movies of existing IP. For example, this year, all top 10 films at the box office are existing IP. And next year, 50 to 70% of movies slated to be released by the six major studios will be existing IP. So new stuff just barely gets made these days.

But then again, it's hard to blame studios, right? Because Inside Out 2 and the Deadpool movie made over a billion dollars. So even though this new Joker movie flopped, I don't think we're going to see a change in strategy anytime soon. Let's talk about some stocks making moves today. Shares of Alibaba are up after Macquarie upgraded the stock to a buy rating with a price target of $145 per share. The upgrade comes off the heels of China's moves to boost their economy, which includes a rate cut and changes to the reserve requirement rules for banks.

Macquarie thinks that the e-commerce, travel, and local service divisions will benefit from China's new economic policy. Alibaba shares are up more than 2% on this news. And quietly, Alibaba has had a pretty solid year. It's up more than 50% in 2024. Now, while China's e-commerce giant might be up today, America's e-commerce giant Amazon is down this morning after Wells Fargo downgraded the stock, lowering their price target to $183 a share. Wells Fargo analysts expect slower growth for Amazon moving forward and increased competition from Walmart. Low-key, Walmart Plus, kind of nice.

Not going to lie. Amazon shares are down around 2% in reaction to this downgrade. On a related note, Amazon Prime Day starts tomorrow, and at this point, I'm not even sure if it's worth getting excited about anymore. But not to be outdone, Walmart and other retailers are now matching Prime Day by doing their own October deals special thing. So this week is also like the unofficial kickoff of holiday shopping season. I guess it's almost time to add Mariah to the playlist, huh?

Let's wrap the show with a fun fact. Google's dominance in search advertising is shrinking. Next year, Google's shares of the U.S. market is expected to slip below 50% for the first time in over 10 years. This is according to research firm e-marketer. That's down from Google's peak from 60% in 2018. Google's facing a lot more competition these days, especially from Amazon, which has essentially become a de facto search engine for shopping.

Like think about it, when you want to buy something, what do you go to? Most people go to Amazon and search for whatever they want to buy. And that's helping their ad business. Amazon's market share has doubled from 10% in 2018 to 22% this year. I actually mentioned this in a show last week, but don't be surprised if Amazon's ad business becomes a major player with the likes of Google and meta. There's also competition from younger players like TikTok and perplexity AI.

So yeah, Google's dominance in search advertising is definitely feeling some heat. And I wonder with more AI tools coming out, how much of that is going to impact them moving forward. Something to keep an eye on. Well, all right, guys, that's the rundown for today. We should have a pretty exciting week coming up, pretty exciting month coming up, honestly. There's a lot happening, and I am pumped for the next few weeks. If you guys enjoyed today's episode, don't forget to share it with somebody who might enjoy it as well. And if you have like 15 seconds, consider giving us a five-star rating on Apple and Spotify.

And if you're listening to the show on Spotify, don't forget to vote in today's Spotify poll. all that engagement really does help us out. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security.

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