The Rundown - Biden Blocks $14B Buyout of U.S. Steel, Short-Seller Calls Out Carvana for "Accounting Grift"

Episode Date: January 3, 2025

Stock market update for January 3, 2025. Follow our new Instagram account ⁠⁠@TheRundownDaily

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Friday, January 3rd. In today's episode, we take a look back at the Santa Claus rally as it comes to a disappointing end. We also tell you about President Biden's decision to block the U.S. steel acquisition and Tesla's big year in China. Then stick around to the end of the show to find out why Rivian stock is up, Carvana stock is down, and how much money movies made at the box office in 2024. All right, let's go.

Well, the stock market, not off to a great start in 2025. Both the S&P and NASDAQ were down 0.2% on Thursday, making that five straight losing days in a row. This has to be one of the most disappointing Santa Claus rally ever. Remember, the Santa Claus rally period consists of the last five trading days of December and the first two trading days of January. and typically stocks go up 1.3% during the Santa Claus rally period. Well, that's not the case this year because stocks have pretty much gone down every single

day since the rally started, with the S&P so far dropping 1.8%, making this the worst stand-in-rally since 2015. Another interesting stat about stocks in January, according to the Dow Jones market data, if stocks finish January in the green, the rest of the year sees gains 79% of the time with a median increase of 11.5%. Put it another way, if the stock market gets off to a good start in January, there's a good chance the markets will finish the year in the green. So we'll have to see if the markets can turn things around.

We're a couple weeks away from earnings season getting underway, which could set the tone for the year. As always, we are going to be covering it all, so make sure you guys are subscribed to the podcast to stay in the loop and maybe share this podcast with someone that wants to become a more informed investor in 2025 or just wants to stay in the loop of what's happening in the markets to chop it up with the boys, Or the girls.

You know, I'm pretty sure my wife and mom listen to this show. Let's run through some headlines. President Biden is blocking the $14 billion acquisition of U.S. Steel by the Japanese company Nippon Steel. Now, this has been dragging for months now. In fact, Nippon Steel originally announced her acquisition of U.S. Steel back in December of 2023. And this deal faced a lot of opposition. President Biden had indicated that he opposed this acquisition, saying that U.S.

should remain American-owned and operated. And after months of review, this deal is being blocked on the grounds that it would pose a national security risk by leading to a decline in American steel production. And, you know, this decision has attracted bipartisan support. Members from both sides of the aisle, including Donald Trump, and also labor unions, oppose this buyout. You know, this decision is a pivot away from the U.S.'s typical openness to foreign investment, especially from an ally like Japan.

So some experts now worry that this could dissuade. foreign companies to invest in the U.S. The story's not over, though. Nippon and U.S. Steel are expected to contest this decision in court. So this might drag on for a few more months. Investors weren't loving at those shares of U.S. Steel are down around 8% this morning in reaction to this news. Let's shift gears and talk about Tesla.

We talked about them yesterday on how they reported disappointing Q4 delivery numbers. Well, the company had some good news to report this morning coming out of China. Tesla sales in China hit a record high in 2024, up nearly 9% from. from 2023. The company said they delivered 657,000 cars in China, which is pretty nice to hear, especially after the company just reported their first annual sales decline in over a decade. China is an incredibly important market for Tesla, accounting for nearly 37% of its total sales. That always blows my mind when I hear how big China is to Tesla's business. Now, the China report wasn't all good, all right? Tesla's exports of his China-made vehicles

dropped 24% as demand from Europe and the U.S. got weighed down by factors including reduced subsidies and also preference for hybrid vehicles over just electric vehicles. There's also the rising popularity of Chinese brands like BYD, which is cutting into Tesla's market share. I think the big takeaway here and something to watch out for is how important the Chinese market is to America's largest companies, including Apple, which we talked about yesterday, they're having their own challenges there. It was reported this morning that shipments to China of foreign-made smartphones, including Apple fell 47% year over year in November, down for the fourth straight month. There seems to be a real shift in Chinese consumers preferring Chinese brands over American brands. So that could have an

impact on businesses like Apple and maybe Tesla long term. And it could also play a role between trade relations between U.S. and China, especially with President-elect Donald Trump returning to the White House in a couple weeks. So something to watch out for as we enter 2025. Let's talk about some stocks making moves today. Well, we just talked about Tesla. Let's talk about their rival Rivian, because their shares are rising after the EV company reported 2024 production and delivery numbers that were in line with estimates. Rivian produced nearly 50,000 EVs in 2024 and had more than 51,000 deliveries.

The company had previously lowered its production guidance in October due to a part shortage, but that didn't seem to get in the way as Rivian surpassed the updated guidance. I think they pulled the classic under-promise of. over deliver, you know? But hey, it worked because they beat expectations and their shares are booming up more than 15% this morning in reaction to this news. On top of that, the company said the shortage issue they had a few months ago is no longer a problem. So maybe 2025 is going to be the year of Rivian. Great way to kick off the year, especially after their stock fell more than 40% in 2024. So speaking of cars, Carvana shares are down this morning after short-seller Hindenburg called the

company an accounting grift for the ages. The Carvana story is. so interesting. They're an online used car retailer known for its car vending machines that you might have seen around cities in the U.S. And they were on the brink of bankruptcy in 2022 and 2023. But then the stock spiked 284% in 2024, bringing their market cap to over $44 billion. But Hindenburg isn't buying the turnaround. They're calling it a mirage, and they're claiming that Carvana is propping up its financials with risky loan sales and sham deals between between Carvana and businesses tied to his CEO's father, who is the company's largest shareholder.

Oh, man. So some pretty heavy allegations here. Carvana has already responded to this report saying the allegations are intentionally misleading and inaccurate, but shareholders are kind of nervous. Carvana stock is down around 4% this morning in reaction to this report. Let's wrap the show with a fun fact. Movies made $8.7 billion at the U.S. box office in 2024,

which was actually 3% less than the $9 billion made in 2023. But Hollywood is celebrating this news because it's much higher than the $8 billion that was initially expected. Disney was by far the best performing studio making over $2 billion at the domestic box office. Thanks to some of its big hits like Inside Out 2, which was the highest grossing animated movie of all time. And Deadpool and Wolverine, which I still think is mid, becoming the highest grossing R-rated movie of all time. And they also had Moana 2, which came out during the holiday season. and it was a huge hit, even though I don't think it was nearly as good as the first one. So I guess it was a decent year for movies in 2024.

Bonus fun fact, the record amount made at the box office was $11.8 billion back in 2018. So we're still like $3 billion away from that. And I don't think that we're ever going to get back to those numbers. Because, you know, people just don't go to the movies as much as we used to, thanks to all the streaming options and other entertainment options we have these days. Well, all right, guys, that's the rundown for today. That's the rundown for this week. I hope you guys have been having a great start to the year.

Now, I'm personally looking forward to getting back to a routine starting next week. Every day is felt like a Saturday for the last two weeks, and I just want to get back into a routine. We are actually going to have another short week next week because the stock market is closed on Thursday in honor of President Jimmy Carter passing away. So four shows again next week, but I think we'll have a lot to talk about. By the way, if you guys have like 15 extra seconds and want to help us out, give us a five-star rating on Apple, on Spotify, vote in today's Spotify poll. a comment on Spotify, follow our Instagram account for clips of this podcast. All that engagement helps us out, and it helps

other people find the show. Thank you guys again for listening. Shout out to Mike and Connor for all the help behind the scenes, and we'll see you guys back here on Monday. 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. Run-down guests are not financial advisors and are not affiliated with public holdings or subsidiaries. You should make your own financial and investment decisions or consult, respective professionals, learn more at public.com disclosures. In partnership with Zayidamani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.