The Rundown - Elon Musk Offers to Buy OpenAI for $97B, Coca-Cola Beats Earnings Fueled by Price Hikes

Episode Date: February 11, 2025

Stock market update for February 11, 2025.Follow us on Instagram⁠@therundowndaily

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Tuesday, February 11. In today's episode, we tell you about some winners and losers from Trump's steel tariffs and how other countries are planning to retaliate. We also tell you about Elon Musk's plans to buy OpenAI and Sam Altman's response to all of it. These two are going at it again. Then stick around to the end of the show to find out how much it costs to make a penny.

Honestly, the numbers will shock you. All right, let's go. Well, the stock market got off to a nice start this week. The S&P 500 was up 0.7% and the NASDAQ was up 1% on Monday. It looks like the markets don't seem to be overly concerned about the steel tariffs that Trump signed on Monday. We're going to talk more about the winners and losers of the steel tariffs in a bit and the overall economic impact. I do want to give a shout out to meta because their stock has been on an incredible hot streak going up for 16 straight sessions in a row. You know, Meta has been by far the best performing magnificent seven stock this year,

up more than 22%. Also, Invidia quietly having a fantastic February. Now, one thing we're going to be paying close attention to today is Jerome Powell's testimony to Congress. The Fed chair goes in front of Congress every six months where lawmakers ask him questions about the economy, the Fed policy, and a lot of these questions are pretty bad and sometimes overly political, and Jerome Powell does his best Neo impression to dodge most of these questions, but it's still worth paying attention to because Jerome Powell's words have a heavy influence in the stock market. I'm sure Jerome Powell is going to get a ton of questions about tariffs and the impact it will have on inflation. So I'm really curious to see how we response to that. If anything noteworthy comes

from this testimony, we'll talk about it on tomorrow's show. So make sure you guys are following the podcast to stay in the loop. Let's run through some headlines. And we're going to start with tariffs. On Monday, President Trump officially signed an order imposing a 25% tariff on all imports of steel and aluminum to the U.S. with no exceptions. And that last part is pretty important because steel tariffs aren't new. Trump had them in his first term and the Biden administration also had steel tariffs, but these tariffs have always had exceptions carved out for certain countries like Canada, Mexico, and the EU.

But these exceptions have now been eliminated. So all imports of steel and aluminum from all countries will be slapped with a tariff. So what that will do is make overseas steel more expensive, therefore increasing the demand for U.S. made steel, which is why the stock price of domestic steel companies shot up on Monday. U.S. steel stock was up 5%. Cleveland Cliff was up 18%. So these tariffs are likely to be great for U.S.-based steel companies. But it's not going to be great for anyone that uses a ton of steel, since tariffs are likely to increase the overall price of steel and aluminum. Some of the most impacted companies from these tariffs are likely to be car manufacturers like GM and Ford,

because higher prices of steel and aluminum is going to increase the cost of production. But I think the bigger story here is how these countries that are going to be slapped with steel tariffs going to respond, especially Canada, Mexico, and the EU, which are the top three largest sources of steel and aluminum for the U.S. In fact, the EU has already come out, and so they plan to hit the U.S. with retaliatory tariffs as a response to these steel tariffs. So trade tensions are already heating up. Surprisingly, though, the stock market is kind of ignoring all of this for now. Maybe we're all kind of numb to the tariffs drama, or maybe the markets expect some sort of deal to get worked out. So we'll see how it all plays out the steel tariffs officially go into effect on March 4th.

So there's a few weeks for something to get worked out. Now, something that isn't likely to get worked out anytime soon is Elon Musk's relationship with Sam Altman. These two guys continue to exchange jabs on the internet. Especially after Elon Musk's latest move to buy OpenAI for $97.4 billion. Elon put on this unsolicited offer to buy the nonprofit that controls OpenAI. And people are seeing this as a 5D chess move by Elon Musk. Because remember, Open AI is working to transition from a nonprofit to a for-profit organization.

But in order for Open AI to become a for-profit company, they have to buy the assets from the nonprofit company. I hope I haven't lost you guys yet. It's kind of confusing. The nonprofit arm of Open AI controls Open AI in all of its assets. So in order for Open AI to spin that off, Open AI, the for-profit company, has to buy the assets from the nonprofit company. And Elon Musk was concerned that Open AI's offered to the nonprofit company for all these assets, including ChatGPT, and all the AI tech would come in lower than market value. So he's trying to set the market value by making his own offer of $97 billion. Now, just to be specific here, this bid for Open AI is coming from Elon's own AI company,

XAI. So maybe he's seeing it at some sort of merger between XAI and Open AI. And this deal has a lot of backers, like Palantir's co-founder Joe Longsdale is backing it. Ari Emanuel, the CEO of Endeavor is backing it. Now, Sam Altman is already firing back saying that Open AI is not for sale. also took shots at Elon calling him insecure and just listen to the clip. Do you think Musk's approach then is from a position of insecurity about X-A-I? Probably his whole life is from a position of insecurity.

I feel for the guy. Do you feel for him? I do, actually. I don't think he's like a happy person. I do feel for him. So yeah, these two guys continue to go at it. And who knows how this all ends. I guess it makes for good drama.

Let's talk about some stocks making moves today. Shares of Coca-Cola are rising after a report. reporting better than expected sales. Looks like consumers continue to fill their carts with products like Sprite, Minutemade, and Coke, despite a spike in prices. Not going to lie, I think I've developed a Coke Zero addiction over the last few months. Now, Coca-Cola said that it raised their price mix, which is the price it charges across all products, by 9% in the recent quarter.

You combine that with a 2% increase in volume. That boosted Coca-Cola sales to beating expectations. And Coca-Cola's product lineup is pretty diverse by these days. It's beyond just soda. They have vitamin water. they got PowerAid. They got the Fair Life milk brand, which has been going really fast. But so does still make of about 60% of the company's total sales.

Coca-Cola stock is up around 3% this morning in reaction to these earnings. You know, Warren Buffett's probably smiling right now drinking is cherry Coke. Now, on the flip side, Shopify's stock is down, despite the company delivering a stronger than expected financial performance in Q4. Shopify's revenues were up 31%, which marks the company's seventh straight quarter of sales growth above 25%. Now, the e-commerce platform did say that their Q4%. Q1 free cash flow margin will be in the low teens. That could be one reason why the stock is down around 2% this morning.

Let's wrap the show with a fun fact. It costs the U.S. government $3.7 to make a single penny in 2024. And because of these costs, the U.S. government lost $85.3 million in making pennies last year. President Trump has now instructed the U.S. Treasury to stop producing new pennies, calling it a waste of money. And this might be controversial, but honestly, I think I'm all full. for this. Like for one, how often are people using cash these days, especially using coins to pay for something? That's probably not happening very often anymore. Like, I can't remember the last time that I've even seen a penny. And other countries all over the world have moved on from

the penny. Canada stopped producing the penny back in 2012, and Australia stopped using them back in the 90s. So I think I am in favor of eliminating the penny. But maybe that's not a very popular opinion. I don't know. Let us know in the comments on what you think. If you do come across a penny, though, it might be worth saving it because in a few years, pennies might be collector's items. like how I wish I said to all my Pokemon cards. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like 15 extra seconds,

consider giving us a five-star rating on Apple or Spotify. Don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. Follow our Instagram account for bonus content and clips of the show. All that engagement really does help us out and it helps other people find the show. 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. Rundown guests are not financial advisors and are not affiliated with public holdings, board subsidiaries. You should make your own financial and investment decisions or consult. Respected professionals. Learn more at public.com disclosures. In partnership with Zayidmani, brokerage services for U.S. listed, registered securities are offered by open to the public investing incorporated, member FINRA and SIPC.