The Rundown - GameStop Shares Soar After Nearly $1B Stock Sale, T-Mobile to Acquire Most of U.S. Cellular for $4.4B

Episode Date: May 28, 2024

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Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Tuesday, May 28. In today's episode, we get you ready for a short week on Wall Street. We still got some pretty notable companies that are reporting earnings this week. Also, GameStop is rallying again, and then stick around to the end of the show to find out how much money Elon Musk's new AI company just raised. All right, let's go. Summer is unofficially here, everybody. and it's hot outside, okay?

It was like 98 degrees over the weekend in Houston, but that still might not be hotter than the stock market right now. The S&P 500 and NASDAG both finished last week in the green, making that the fifth consecutive week in a row. I mean, to be fair, the S&P barely pulled it off, needing a rally on Friday to get over the hump by just one point, but it's still a win. And I think even Wall Street was ready for the long weekend

because Friday was the lowest trading volume day of the year for the New York Stock Exchange. This stock market bull run continues to push higher. side of the 5% correction that we had in April, the stock market has been up and to the right since last October, which is right around the time we started this show. Probably just a coincidence. The S&P 500 is up 11% for the year, and the NASDAQ is up more than 12% thanks to strong showings from tech companies like InVideo. Now, this week we wrap up earnings season. 96% of S&P 500 companies have already reported earnings, but we have some big names reporting this week. Like Best Buy, Dell, Salesforce, Costco, and many people's favorite, Kava are all reporting.

first quarter earnings this week. We're going to be recapping all the major ones on the rundown, so make sure you guys tune in. Let's run through some headlines, starting with Apple. Apple finally has some good news in China. iPhone shipments grew by 52% year over year in China last month, given the company a back-to-back month of smartphone growth in the world's second largest economy. Now, the increase might have been due to Apple's price cuts of iPhones in China, with the company doubling its discounts in April compared to its February. offering. We've talked a lot about Apple's struggles in China recently. Apple's business in China kicked off the year poorly with iPhone shipments falling 30% in January, and then they fell by

33% in February. And the Chinese competitor Huawei recently became the number two smartphone in China, taking the title from Apple in the first quarter. And Huawei is not slowing down either. They recently released their new smartphone in April called the Pura 70. And it has AI capabilities via its own large language model called Pangu LLM. Now, Apple hasn't yet brought any generative AI tools to the iPhone, but they're expected to make an announcement at its worldwide developer conference starting June 10th. Now, I think this might be the most anticipated WWDC we've had in a long time because everyone wants to know what is Apple's AI strategy. But one thing's for sure, Apple's strategy of cutting prices of iPhones in China has paid off

and iPhone sales are starting to bounce back. Now, I just wish they would do that in the US. Sticking with the cell phone theme, T-Mobile was making some news this morning. They are acquiring a majority of U.S. Cellular's wireless operations and a deal worth $4.4 billion. This acquisition will give T-Mobile more than 4 million new customers in addition to U.S. Cellular's retail stores and 30% of its spectrum assets. Now, T-Mobile is the third largest wireless carrier in the U.S., and this deal would give it more access to rural areas that it typically doesn't cover. I personally have T-Mobile and any time I drive out anywhere outside the city, I struggle

against signal. So maybe this will help. Now, this acquisition still needs to be cleared by regulators, which, which, you know, which isn't a guarantee these days, but if there's no issues with regulators, this deal is expected to close in mid-2020. Now, just zooming out a bit, the wireless carrier industry

continues to consolidate as the big three. You have AT&T, Verizon, and T-Mobile, and they continue to absorb competitors. And I feel like T-Mobile has been the one making the most moves. They recently finalized a $1.35 billion deal to buy MintMobile, which is a carrier that was partially owned by Ryan Reynolds. And then remember, T-Mobile merged with Sprint back in 2020

in a $26 billion deal. So T-Mobile continues to make moves, and we just continue to have consolidation in the wireless carriers in the U.S. Let's talk about some stocks making moves today, starting with GameStop. Yes, we're doing the GameStop thing again. It's up big in the pre-market after they announced that they made around $933 million from selling $45 million of their own stock. Now, remember, GameStop would disclose they planned on selling their stock on May 17th,

and that stock still has now been completed. GameStop says they plan to use the money for general corporate purposes, which may include acquisitions and investments. And as a result, GameStop stock is up more than 25% in the pre-market on this news. But, you know, I don't really understand this because typically when companies sell their stock, the stock goes down because existing shareholders get diluted. But I guess investors are excited that GameStop will use this new money to help grow their business, even though I don't think that $933 million is going to get people to start shopping

at GameStop again. But this is a meme stock we're talking about. Not everything has to make sense. On a somewhat related note, AMC stock is up more than 3% this morning as well. On the flip side, stock not doing so good this morning is Draft Kings. Draft King shares are down this morning after the Illinois State Senate approved a 2025 budget that triples the tax rate on sports betting to 40% of adjusted gross revenue, which would be the second highest in the U.S. after New York.

Obviously, Draft Kings having to pay a higher tax rate isn't great for their bottom line, and as a result, the stock is down more than 7% in the pre-market. And I think a concern for investors is that other states might follow suit in raising taxes on sports betting, which might continue to eat into Draft King's business. Something to keep an eye on for sure. Let's wrap the show with the fun fact. Today's fun fact is about Elon Musk. He just raised $6 billion for his AI company, XAI, which values the company at $18 billion.

Now, Elon founded XAI last summer to compete with Open AI. And yesterday the company raised $6 billion from multiple sources like Andrews, and Horowitz, Sequoia Capital. I think there was some Saudi money in there as well. The company plans to use this money to bring its first AI product to market. Now, XAI already does have an AI product called GROC, which is like an edgier version of ChatGPT. I guess that's probably the best way to put it. But Elon wants to build it out further. And now he has $6 billion to do that. But you know who the big winner in all this is? Invidia. Because XAI is going to have to buy a ton of Nvidia AI chips to build out this AI product. I guess it's not surprising that an Nvidia stock is up around 30. in the pre-market of the backs of this news. Shovels in a gold rush, man. Also, can you imagine what Elon's calendar or inbox looks like? The dude is running like six companies.

He has Tesla, Twitter, SpaceX, Neurlink, and now XAI? I mean, I get stressed out when I have like six unread emails. I can't imagine what his inbox looks like. Well, all right, guys, that's the rundown for today. Short week on Wall Street, but still a lot to talk about. Make sure you guys are tuning in every day this week as we recap some of the last remaining companies to report earnings this week. Also, if you guys enjoy this show, please consider giving us a five-star rating on Apple and Spotify.

And tap the notification bell on Spotify if you guys want to be notified as soon as an episode goes up. And finally, don't forget to vote in today's Spotify poll. We put up a poll every day on Spotify. And the results for those polls is always pretty interesting. So go check that out if you're listening to this show on Spotify. Thank you guys so much for listening. Hope you guys enjoyed your long weekend. Excited for another action-packed week.

Shout out to Connor and Mike for all the hard work behind the scenes. 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 this 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 or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals.

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