The Rundown - Netflix Adds Record Number of Subscribers, A New AI Superteam Enters the Race

Episode Date: January 22, 2025

Stock market update for January 22, 2025. Check out the interview with Rocket Lab CEO here Follow us on Instagram! @TheRundownDaily

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadmani, and today is Wednesday, January 22nd. In today's episode, we talk Netflix. The streaming giant took a victory laugh and announced price hikes along the way. We'll tell you more. We also discuss a new AI big three forming to take on the giants, but Elon seems to be skeptical.

Then stick around to the end of the show to find out why TikTok's algorithm might get even better. All right, let's go. The stock market got off to a solid start this week. The S&P 500 was up 0.9% and the NASDAQ was up 0.6%. And it was a broad-based rally, too. It wasn't just dominated by big tech stocks. More than 400 stocks in the S&P 500 were in the green on Tuesday. I also want to point out that space stocks in particular had a big day yesterday.

Companies like Rocket Lab and intuitive machines were up more than 20% thanks to excitement about opportunities opening up for the private space industry in the Trump administration. Obviously, the two biggest players in the space industry are Elon Musk's Space X and Jeff Bezos's Blue Origins, but both those companies are privately owned. So me and you can't buy stocks in those companies just yet. But yeah, it's great to see all the enthusiasm for the space industry right now. I live in Houston, so the space stuff definitely hits close to home. If you want to learn more about this, you should go check out the leading indicator podcast from public.com. This week, they interviewed the CEO of Rocket Lab, Peter Beck. Rocket Lab was one of the

companies that had a big day yesterday. On the podcast, Peter gave us thoughts on the new administration and what it means for the space industry. And he also talked about the company's mission to go to Venus and more. Pretty cool stuff. We'll put a link in the description. But yeah, overall, vibes are pretty good in the stock market right now. I think it also helps that we've had good signs from earnings reports so far. It's still pretty early. Only 10% of companies have reported earnings, but companies are beating estimates so far, which is a good sign. We're going to be recapping some of those earnings on today's show and throughout the next couple weeks as more and more earnings come in. So if you're new here, it's a great time to get subscribed to the podcast.

Let's run through some headlines. And today we are starting with Netflix. Netflix shares are soaring this morning after the company reported earnings last night and announced a price hike. We're going to talk about the price hike in a second, but I want to start with the Blockbuster earnings report from last night. Netflix reported more than $10 billion in revenue. Their profits were up to $1.87 billion. Both those numbers beat Wall Street estimates. And the truly shocking stat was that Netflix added nearly 19 million subscribers in Q4, which is the most they've ever added in a quarter this decade. And their overall subscriber count has surpassed 300 million worldwide.

Netflix said that one reason for the big subscriber growth was season two of Squid Games and their original movie Carry On, which was a big hit during the holidays. Added the fact that they also added live sports in Q4 with the Jake Paul Mike Tyson fight in November, and they broadcasted two NFL games on Christmas. So Netflix is firing on all cylinders right now. And that has them feeling so good about their business that they're raising prices in multiple countries. In the U.S., the ad tier will increase by $1 to $7.99 a month,

and the premium tier is going to be increasing by $2, and it's going to cost $24.99 a month. So Netflix is starting to get pretty expensive now. Now, what's interesting is that the ad tier made up more than half of new subscribers in markets where it's active. So more and more subscribers are choosing to go with the ad tier. As much as I don't like the price hikes, it does kind of make sense. People just can't seem to get enough of Netflix.

I think Netflix will keep raising prices every year until their subscriber growth slows down. It is going to be interesting to see what Netflix does this year. The company says they don't plan to release subscriber numbers anymore. At this point, they don't really need to. They've clearly won the streaming wars. Netflix did cut back on content spent in 2024, but so did other streamers make it get harder for them to compete with Netflix.

Netflix still produces the most original series and movies, and they're now getting more involved in live sports. In fact, they kicked off 2025 with a 10-year streaming deal with WWE to broadcast Monday Night Raw. So investors are hyped about Netflix right now. Netflix stock is up more than 10% this morning in reaction to these earnings. Let's shift gears and talk about AI because there's a new big three forming in the AI arms race. Open AI, Oracle and SoftBank are forming a super team under a new company called the Stargate Project. These companies intend to invest $500 billion over.

over the next four years building new AI infrastructure in the U.S., with a hundred billion of that being deployed immediately. I mean, look, just like LeBron and KD, these companies are realizing that it's too tough to win on your own. No shade at both those guys. I'm a big fan of both. But sometimes you've got to team up with other superstars, and that's what OpenAI, Oracle, and SoftBank are doing.

Their competition includes Google, Microsoft, Amazon, meta, maybe Apple, if they ever get to act together. Those companies have deep pockets. As we know by now, a lot of capital is required to innovate. and execute in the artificial intelligence space. Those Nvidia chips aren't cheap. Now, in this new joint venture, SoftBank will take the lead on financial responsibility, which the jokes just write themselves.

And Open AI will take the operational responsibility. Oracle is going to be the glue guy for this team. They're going to be the key initial technology and funding partner. So pretty exciting stuff. They actually announced this initiative last night at the White House with President Trump. President Trump said that Stargate will build the physical and virtual infrastructure to power the next generation of advancements in AI while creating a hundred thousand jobs almost immediately. Now, what's funny is that Trump's BFF Elon Musk made sure to chime in on X by jumping

in on the replies of OpenAI's announcement. He seems kind of skeptical or maybe jealous of the whole thing. Elon has some well-documented beef with Open AI and he claimed that they don't have the money to actually do this. He followed that up by saying that SoftBank has under $10 billion secured. So there's already drama around this whole thing. Now, as far as funding is concerned, there's going to be some outside role players as well. Abu Dhabi's AI-centric state fund, MGX will provide funding, while Microsoft, Nvidia, and SoftBank-owned ARM will be technology partners in this initiative. So this seems to be a pretty big deal, and I'm excited to see where things go. Right now, the biggest beneficiaries seem to be Oracle shareholders, because Oracle stock

is up more than 5% this morning in reaction to this announcement. Let's talk about some stocks making moves today. Shares of Proctor and Gamble are rising this morning after the company report, reported increased sale volumes of their products like Gillette Razors, Charmin toilet paper, and other essentials in the company's product portfolio. Now, the reason this is getting attention is that previously Procter & Gamble was making more money by just increasing their prices. But they weren't actually selling more stuff.

But now they're actually selling more product. As a result, the company beat earnings estimates for the quarter, and the stock is up around 3% on this news. Now, on the flip side, shares of Ford are dipping after Barclays downgraded the carmaker and lowered their price target to $11 a share. The downgrade comes as Barclays expects weaker volumes as Ford works to reduce its inventory, which the bank expects to weigh down on pricing as well.

Shares of Ford are down nearly 2% this morning on this news. Let's wrap the show with the fun fact. TikTok's parent company ByteDance plans to spend $12 billion on AI tech this year, according to the information. More than $5 billion of that spending will go to AI chips, was 60% going to Chinese-made semiconductors and the other 40% going to Nvidia. BideDance is working to build AI

into the company's various platforms. Apart from just TikTok, BightDance also owns news and other video apps and an AI chat box. I mean, TikTok's algorithm is already so good, so I can't imagine what TikTok's algorithm is going to be with AI infused into it. If TikTok is still around after 75 days. Well, all right, guys, that's the rundown for today.

Hope you guys enjoyed today's episode. Thank you again for putting up with my, nasally voice today. I've officially come down with a cold. Thank you to everyone that left a comment on yesterday's show on Spotify, giving me suggestions on how to get over this cold and help with my sore throat. I've been drinking a lot of tea and honey and popping cough drops. It doesn't help that it's extremely cold outside here in Houston. In fact, we got a snowstorm yesterday. It snowed like four inches, which I don't think has happened here in a hundred years. It's the first time that my kid saw snow. We were playing outside yesterday, which was a lot of fun. So that definitely did not

help with my recovery. But I plan to stay indoors all day today. And I hope by the end of this week, I'll be back to 100%. Thank you. 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 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. 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. 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.