The Rundown - Newsmax Jumps +1,500% Since IPO Debut, OpenAI Closes $40B Funding Round

Episode Date: April 1, 2025

Stock market update for April 1, 2025.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadadmani, and today is Tuesday, April 1st. In today's episode, we take a look back at the first quarter and tell you where U.S. stocks stack up against the rest of the world. We also dive into the Wild Newsmax IPO and tell you why the cable news network surged on its first day of trading. Then stick around to the end of the show to find out why Goldman Sachs just increased the odds of a recession. We got a great show for you today. Let's go.

Absolutely wild start to the week. Stock spent most of Monday in the red. The S&P 500 at one point hit a six month low in the morning, but then the market's been an afternoon comeback and the S&P pulled out a win, adding 0.5%. The NASDAQ unfortunately couldn't complete the comeback and finished the day down 0.1%. Yesterday also put an end to a chaotic first quarter. The year started off pretty great with markets making record highs back in early February. But then once President Trump ramped up the tariff talks and we had weeks of constantly changing tariff policy, the markets took a nosedive. You know, investors don't like uncertainty and investors are also concerned that tariffs could lead to a full-on trade war. So all of that led to U.S. stocks having their worst quarter since 2022, with the S&P 500 dropping 4.6% in the first three months of the year.

and the NASDAQ losing more than 10%. But you know, outside of U.S. stocks, other markets performed pretty well. The Euro Stocks 600 index, which is like Europe's S&P 500, was up 5% in Q1. The UK's FTSC 100 index was up 5% as well. And China's MSCI index was up 16% in the first quarter. So everyone seems to be having a good time right now, except for U.S. stocks. And nobody seems to have an idea on when things are going to turn around, especially with the uncertainty around tariff policy.

We might get some clarity tomorrow, April 2nd, where the president is expected to announce widespread reciprocal tariffs. Trump has been talking about this for weeks now, calling it Liberation Day. If these tariffs don't end up being so bad, maybe the markets could rally. Or it could also lead to more confusion and send the markets lower. You know what I find kind of funny about the Liberation Day? Trump said he thought about announcing the reciprocal tariffs today April 1st. But then he said he didn't want to do it on April Fool's Day.

You know, he wants everyone to take these tariffs seriously. I guess that makes sense. Even though I think at this point, everyone wishes these tariffs for just one big April Fool's Day joke. Let's run through some headlines. Starting with Newsmax. The conservative cable network went public on Monday, and the stock price went up 735%. The company IPOed at $10, raising $75 million in the process. by selling 7.5 million shares.

And by the end of the day, the stock was at $83. I mean, when was the last time a stock jumped 700% at an IPO? You know, it's funny how everyone thought that the hot IPO right now was going to be the AI company CoreWeave. But no, it's a cable news network. You know, I thought that cable was dead, but I guess there's still a ton of boomers watching cable news. Now, Newsmax has been around for a while.

The company was founded back in 1998, but they launched the cable news. channel back in 2014. And in just 11 years, the company now claims to be the fourth most watch news channel behind Fox News, MSNBC, and CNN. Now, they still have a long way to go before they start putting up Fox News numbers. According to Nielsen's Newsmax averages around 309,000 prime time viewers. Fox News on the other hand averages 3.1 million prime time viewers. So that's more than 10x the audience that Newsmax has. But despite that, the company is now valued at over $10 billion, And the stock keeps climbing.

It's currently up another 40% this morning. So we'll see how long this rally goes. The company's financial numbers are kind of a mixed bag. They generated around $80 million in revenue for the first half of 2024, which is up 35% from the same time in 2023. But they lost $55 million in the process. So I wouldn't really call that eye-popping numbers. I guess that's what makes the market's interesting, right?

Everyone thinks that an AI company is going to be the hot IPO. Turns out the market wants to invest in the cable news network. If you want to learn more about the company, check them out on the public app under ticker symbol NMAX. Let's shift gears and talk about OpenAI, probably the only company right now hotter than Newsmax. The company just closed a $40 billion funding realm, the most ever raised by a private company. And three quarters of that $40 billion is coming from SoftBank, which makes me kind of nervous about the whole AI space now.

The remaining 25% is coming from a basket of investors, including Microsoft, Thrive Capital, co-team management, and Altameter Capital. This new funding round values OpenAI at $300 billion. If Open AI was a publicly traded company, they would be the 27 largest company in the S&P 500, putting them right in between Coca-Cola and Chevron. In fact, there's only one private company right now worth more than Open AI. That would be Elon Musk's SpaceX. Their most recent valuation was at $350 billion.

TikTok's parent company ByteDance is valued at $300 billion as well. Now, as part of this funding round, Open AI receives $10 billion up front, and they'll get the remaining $30 billion by the end of the year. But here's where it gets a little interesting. There are some caveats as part of this funding round. If OpenAI doesn't complete its restructuring to be a for-profit entity by the end of the year, then SoftBank could trim its investments to as low as $20 billion. But investors know they can't risk missing out on the company's explosive growth.

Open AI is having another viral moment with ChatGPT's image generation feature. They said on Monday that ChatGPT now has 500 million weekly active users. That's up 25% from a month earlier. And last week, Open AI said they expect their revenues to triple to $12.7 billion by the end of the year. So I can see why investors are writing blank checks to the company right now. Let's talk about some stocks making moves today. Shake Shack stock is up this morning after the burger joint received an upgrade from Loop Capital with a price target of $127.

Shake Shakeshack stock is down 33% this year, currently trading at $88 a share. And Loop Capital thinks it's a good time to buy the dip because they believe Shake Shack will outperform expectations. As a result, shares of Shake Shack are up more than 4% this morning, on this upgrade. Now, on the flip side, shares of Johnson and Johnson are down this morning after the healthcare giant failed to settle a lawsuit backed by thousands of women who are diagnosed with ovarian cancer after using its baby and talcum powders. The settlement offer, which was denied by a court judge, stood at $10 billion. So I guess Johnson and Johnson's

going to have to boost that number up. And as a result, shares of J&J are down nearly 4% this morning on this news. Let's wrap the show with the fun. fact. Goldman Sachs just raised its recession odds for the next 12 months to 35%. And the reason for the hike is tariffs. Goldman believes that tariffs will hurt economic growth and cause both inflation and unemployment to rise. Goldman's forecast calls for GDP to grow by 1% in 2025, while the bank expects unemployment to reach 4.5% by the end of the year. Now, just because banks on Wall Street are expecting a recession doesn't mean that it's going to happen. Remember back in 2022, every bank was certain there was going to be a recession and we never got one.

In fact, we had back-to-back years in 2023 and 2024 where the stock market went up 20 plus percent with strong economic growth. So the same thing could happen this time, but there is a lot more uncertainty right now because of the tariffs. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like 12 extra seconds, consider giving us a five-star rating on Apple or Spotify. If you're 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. 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 a 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. Respect to professionals. Learn more at public.com disclosures. In partnership with Zayidimani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.