The Rundown - Klarna Aims for $14B Valuation in IPO, Kraft Heinz to Split Business Into Two

Episode Date: September 2, 2025

Stock market update for September 2, 2025.

Public.com presents the rundown. Your daily market update in under 10 minutes. My name is Zad Admani, and today is Tuesday, September 2nd. In today's episode, we'll tell you why the courts ruled that Trump's tariffs are illegal and what this means for the markets. We'll also tell you why Kraft Heinz is splitting up and more about the upcoming Kalarna IPO. Then stick around to the end of the show to find out why Starbucks just had a record sales week. We have a great show for you today.

Let's go. The stock market is coming off a winning month with the S&P 500 adding 2% in August, while the NASDAQ was up 1.6%. I got to give a special shout out to the Russell 2000. The small cap index jumped more than 9% in August. So stocks had a pretty solid month in August, but now we head into September, which has a reputation for being the worst month for the markets. Historically, the S&P 500 has added.

Average a 0.7% drop in September over the past 30 years. So that's a pretty big sample size. And if you just look at this decade, the S&P has been in the red for four of the last five years. So we'll see what happens this year, but things are already off to a bumpy start. On Friday afternoon, a federal appeals court ruled in a 7-4 ruling that most of Trump's tariffs are illegal. The court said that President Trump overstepped by using a 1977 emergency powers law to slap tariffs on multiple countries. That law was meant for things like freezing assets of hostile nations not launching a full-on trade war. So these tariffs have been ruled illegal, but they're not going away just yet.

The courts will keep the tariffs in place until October 14th to give the Trump administration time to appeal this to the Supreme Court. So now the fate of tariffs are in the hands of the Supreme Court. If they strike them down, the government might have to refund billions of dollars in tariffs collected over the past few months. On top of that, this would throw a huge wrench into Trump's go-to economic tool in his second term. So we'll see what the Supreme Court ends up saying, but this definitely adds a lot of uncertainty over the next few weeks. So between the seasonal market weakness and the tariff uncertainty, September is already looking to be pretty interesting. On top of that, we have a jobs report coming out this week and a Fed meeting later this month. So we're going to be keeping an eye on all of that.

Make sure you guys are subscribed to the podcast to stay in the loop. Let's run through some headlines. Starting with Kraft Heinz. Craft Hines is officially breaking up with itself. The Packaged Food Giant announced plans to split into two separate publicly traded companies unwinding their mega merger from about a decade ago. Now, here's how the breakup is going to work. One company is going to get all the superstar brands.

The Heinz ketchup, the Kraft's Mac and Cheese, the Philadelphia cream cheese. This unit is called the Global Taste Elevation Unit, and it brought in about $15.4 billion in sales last year. Now, the other company will get stuck with what I call the cafeteria lunch portfolio. It will include Oscar Meyer hot dogs, luncheables, Capri's Sons, and other grocery store staples that collectively generated $10.4 billion last year. Now, the reason for the breakup is that Kraft Hines realizes that they're too big right now in order to compete. In their current form, they have nearly 200 brands across 55 categories, which has become

too complex to manage. The company is facing falling demand for core products like mac and cheese and mayo. So this breakup is meant to give each side more focus and flexibility. And this is part of a bigger trend that we saw in the food industry. We saw other mergers unwind with Kellogg splitting into two in 2023. And then you have Keurag and Dr. Pepper. They announced a couple weeks ago that they're unwinding their big coffee and soda merger. And now you have Kraft Heinz.

See, what happened is that the strategy for the food industry has totally shifted in the last few years. Having big scale with a ton of brands used to be what worked. But these days, these larger companies are having a harder time competing with up-and-coming DTC companies. These DTC companies are just focused on one product, and they're able to target consumers better with more focused marketing. So these giant food companies are becoming smaller and more focused to better compete. On top of that, consumers' tastes are starting to shift as well with Americans eating less processed foods. Not to mention the rise of GLP1 weight loss drugs like OZempic. That has people eating less overall.

So these giant food companies are facing an uphill battle right now. Now, as for Kraft Hines, this move completely unwinds the $46 billion merger from 2015 that was pushed by Warren Buffett. And I gotta say, this might be Warren Buffett's biggest fumble ever. Craft stock has been in freefall. It hit $90 back in 2017, and since then, it's lost nearly 70% of its value. Turns out that the guy who drinks five Coca-Cola's a day didn't see Americans suddenly deciding that maybe processed foods isn't the greatest thing for their health. So we'll see what happens.

The split should be complete by late 2026. Also, I want to give a special shout out to a listener of this podcast, Ucosmos. They're in the Spotify comment section a lot. They've been asking for a Kraft Heinz deep dive almost daily. for the last couple weeks. We see the comments. It's on our radar. And I think at this point after this news, we might have to do a Kraft Heinz deep dive pretty soon. Now let's shift gears and talk about Kalarna because they are finally ready to move forward with their IPO. The Swedish buy now pay later company is looking to raise $1.3 billion in their IPO with shares price

between $35 and $37. At the top of that range, Kalarna would be valued at about $14 billion. $1. Bloomberg reports that the stock is expected to be priced on September 9th, which means it would start trading sometime next week. Remember, Kalarna was planning to IPO in March, but halted those plans after Trump's tariff sent shockwaves through the market. The company has been around for a while. It was founded back in 2005, and it pioneered the Buy Now Pay Later model that lets you split purchases into installments. The business exploded during the pandemic, and the company even hit a $46 billion valuation at its peak in 2021. after a soft bank-led funding round. Yeah, of course it was soft bank. Now, the valuation at the IPO is only about a third of that,

but despite the drop in its valuation, the popularity of Buy Now Pay Later has only grown. Buy Now Pay Later accounted for $342 billion in spending globally in 2024, which is up from just the $2 billion a decade earlier. This is according to the payment firm World Pay. Now, these days, there's more competition and new players and incumbent banks entering the playing field. So, Klorna is trying to diversify beyond just,

buy now, pay later. They're trying to become a digital bank, adding debit cards, deposit accounts, and more. So we'll have to see how the stock performs next week. I wonder if it'll pop the same way that other IPOs have over this past summer. In order to get ready for the IPO, we're going to do a deep dive on Kalarna this weekend. So if you guys want to learn more about the company, make sure you guys are subscribed to the podcast and keep an eye on your podcast feed for that episode. I wonder if Kalarna stock is going to pop on its first day of trading like we saw with other IPO this past summer. Should be interesting. Let's talk about some stocks making moves today. PepsiCo shares are on the rise this morning after the news that activist investor Elliott

management is taking a $4 billion stake in the company. This would be one of Elliot's largest investments ever and it puts the hedge fund amongst PepsiCo's top five active investors, not counting the index funds. You know, PepsiCo has been under pressure on both sides of their business. Their soda business has fallen behind Coke. Dr. Pepper, and even Sprite in U.S. sales volume. And then on the snack side, they're dealing with shifting consumer tastes. So Elliott is probably going to come in to make some changes at the company. You know, Elliott Management has a history of shaking things up.

They invested $1 billion into Starbucks last year and pushed the company to replace their CEO. They also invested $5 billion into Honeywell and pushed for a breakup, which they ended up doing. So things might be changing at PepsiCo over the next few months. And investors like that with shares up more than 3% this morning. Now, sticking with the food industry, Nestle is seeing their stock drop after the Swiss company fired their CEO Laurent Frexie for having an affair with a subordinate. Apparently, the company staff blew the whistle through Nestle's internal hotline. There's just so much corporate chaos happening at Nestle. Frexie was on the job for just two and a half months taking over from the last CEO who had stepped down.

But now that Frexie is out, Nestle is looking for a new leader. You know, Frexie had spent nearly 40 years at the company and he won't be getting an exit package. On a side note, I'm sure he went to a cold plate concert this summer. Let's wrap the show with a fun fact. Starbucks launched the Pumpkin Spice Latte 22 years ago, and it's become a major moneymaker for the company. This year, Pumpkin Spice Latets were back at Starbucks on August 26, and according to Starbucks CEO Brian Nicol,

he told employees that had delivered a record-breaking sales week across U.S. stores. So Pumpkin Spice Lattees are still somehow popular at Starbucks, despite every coffee chain offering them. I mean, at this point, Starbucks can use all the help that they can get because they've been in a major sales lump. They've posted six straight quarters of declining same store sales in the U.S. So we'll see if the PSL season this year is enough to get them out of that sales lump. You know, personally, I've never really been a pumpkin spice guy.

In fact, I've never had a pumpkin spice latte from Starbucks or anywhere. But it does mark the unofficial start of fall. You know, Labor Day is now behind us. Football is back on TV. And now we got some pumpkin spice to drink as well. Just see the weather to cool down a bit more here in Texas, though. Still like 95 degrees out here. Well, all right, guys, that's the rundown for today.

Hope you guys enjoyed today's episode. If you did and you have like nine extra seconds, consider giving us a five-star rating on Apple, Spotify, wherever you listen to your podcast. If you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really does help us out, and it helps other people find the show.

Thank you guys so much for listening and watching. Shout out. to Mike and Connie for all the help behind the scenes. And we'll see you guys back here tomorrow.