The Rundown - OpenAI Burned $3.7B in Cash Despite Surging Revenue, Snap's New Glasses Tank the Stock

Starting point is 00:00:00 Public.com presents the rundown. Your daily market update in 10 minutes. My name is Zaid Admani, and today is Wednesday, June 17th. In today's episode, we'll preview Kevin Warsh's first Fed meeting as chairman and what falling oil prices could mean for interest rates. We'll also break down Open AIs, leaked financials, and tell you why the market was not a fan of Snap's new $2,200 smart glasses. Then stick around to the end of the show to find out how SpaceX just shattered every options trading record on its first day.

Starting point is 00:00:36 We got a great show for you today. Let's go. Markets took a bit of a breather on Tuesday after a solid three-day run. The S&P 500 fell by 0.6%, while the NASDAQ dropped 1.2%. The Dow did finish in the green and hit record highs, but nobody cares about the Dow. So tech was back to selling off yesterday. It was the worst performing sector, especially chip stocks like AMD, Intel, and Micron, which were all down between 6 to 7%.

Starting point is 00:01:06 Energy stocks were also down yesterday as oil prices continue to fall. Brent crude fell to under $80 a barrel for the first time since March, as the U.S. and Iran are expected to sign a deal on Friday that would reopen the Strait of Hormuz and also allow Iran to sell their oil into the global market. So this is a pretty major development. and that this deal holds, it could be a huge relief for inflation and also give the Fed some breathing room when it comes to interest rates. You know, inflation has been running above 3% for the last few months, mainly because of higher energy prices from the war. And remember, the Fed's inflation

Starting point is 00:01:40 target has historically been 2%. That's why recently several Fed officials have been openly talking about raising interest rates this year to get inflation under control, especially since the labor market continues to be stable. In fact, the market is pricing in a 60% chance that the Fed raise interest rates by the end of the year. We should get more information today on what the Fed is thinking as the Fed meeting wraps up. This is the first Fed meeting under new Fed Chair Kevin Warsh, and the Fed is expected to keep interest rates unchanged between 3.5 and 3.75% at this meeting. But the market will be paying really close attention to what Kevin Warsh says in his press conference.

Starting point is 00:02:17 Remember, President Trump constantly criticized previous Fed Chair Jerome Powell for not cutting interest rates. So I'm sure he's expecting Kevin Warsh to cut interest rates at some point. But with where inflation is at right now, I mean, that puts Kevin Warsh in a tough spot. Maybe Kevin Warsh won't hammer the 2% inflation target the way that Jerome Powell did at every single one of his press conferences. And look, now with oil prices coming down, thanks to the Iran deal, Warsh can probably make a stronger case to the rest of the Fed committee to keep interest rates where they are. So it should be an interesting day, and I'm really curious to see how the market reacts.

Starting point is 00:02:49 The Fed meeting wraps up at 2 p.m. Eastern with a Kevin Warsh press conference at 230. Now, I'm actually going to be on a plane headed to L.A. for a family vacation during the press conference. So hopefully they have good Wi-Fi on this flight. And also, just another reminder, today is the last episode of the rundown for this week. We're not going to have a show tomorrow and Friday and also no deep dive this weekend either. You know, the stock market is actually going to be closed on Friday for June 10th. So we decided to take an extended break for the first time. In fact, Thursday will be the first time in the rundown's history that we skip a show on a day the stock market is open.

Starting point is 00:03:24 But we'll be back to our normal daily schedule on Monday with a full recap of everything that came out of the Fed meeting. So if you're new here, definitely get subscribed to the podcast and we'll see you guys back here on Monday. Let's run through some headlines, starting with OpenAI. We finally got a peek under the hood at Open AIs financials and the numbers are pretty interesting and kind of concerning. The information was able to obtain internal Q1 financial documents and according to the report, Open AI's revenues and losses are both surging. Let's start with the top line first. Open AI brought in $5.7 billion in revenue in the first quarter of 2026.

Starting point is 00:04:04 That's triple from the same period last year. But here is the problem. Open AI burned through $3.7 billion in cash and had an operating loss of $9.3 billion. The company spent $8.6 billion in R&D and more than $2.3 billion in stock-based compensation for its employees. But you know, what really stood out to me was that OpenAI's gross margins were only 39%. Now, that's an improvement from the 33% from last year, but I mean, a 39% gross margin for a tech company isn't that great. For reference, Microsoft's gross margins are around 70% and meta is more than 80%. And I think that's the biggest issue investors will focus on ahead of the IPO.

Starting point is 00:04:48 Like, yeah, it's great that opening eyes revenues are exploding, but the cost of delivering that revenue is also enormous, and that's not typical for a big tech company. Let's shift gears and talk about Snap. Snap showed off their state-of-the-art augmented reality smart glasses yesterday, which they're calling specs, and oh my God, are these glasses hilariously ugly? If you're not watching this on video, the best way that I can describe them is that they look like the glasses worn by the old guy from Up, except they're powered by a Qualcomm chip, and they cost $2,200. Now, to be fair, the tech in these glasses looks impressive on paper. It uses advanced displays to overlay high-resolution 3D images and information onto the real world.

Starting point is 00:05:31 Think like navigation and live translation, notifications, and it's all projected right through the lenses, which is pretty cool, I guess. The problem, though, is that people don't want to wear ugly and bulky glasses on their face, especially if it's going to cost $2,200. The reason the meta glasses were so successful is because they look like normal glasses and they cost about the same as normal glasses. Like most people can't tell you're wearing smart glasses when you're wearing the meta glasses. But you can definitely tell if someone was wearing these snap spec glasses. So yeah, the internet was just dunking on these glasses yesterday and the market hated it too. Snap stock fell nearly 10% following the announcement. What blows my mind about all of this is that CEO Evan Spiegel called the specs his life work and the company has spent a decade

Starting point is 00:06:16 plus and billions of dollars developing the technology. What I don't understand is that Nobody had the guts to tell Evan after seeing the prototype that these glasses were going to be an instant laughing stock? I guess that explains why Snapstock is down 90% over the last five years. Let me know in the comments of what you guys think. Is anyone out there actually interested in getting these glasses? And if so, why? Let's talk about some stocks making moves today. Shares of AST Space Mobile are rising this morning after the company successfully launched three.

Starting point is 00:06:51 satellites into orbit with the help of SpaceX. AST's Bluebird satellites lifted off from Cape Canaveral aboard SpaceX's Falcon 9 rocket, and that brings AST's total satellites into orbit to 9. AST Space Mobile is a company trying to build a space-based cellular broadband network that connects directly to regular smartphones, and these bluebird satellites that they have are massive, each one roughly 2,400 square feet. The company's goal is to get 45 of their satellites into orbit by the end of. of the year. So this successful launch was a relief because just a couple months ago,

Starting point is 00:07:25 AST lost a satellite when it suffered from a failed launch by Blue Origin, which is Jeff Bezos's rocket company. AST shares are up around 6% this morning, and SpaceX stock is up around 2%. On the flip side, shares of Lionsgate are falling today after Netflix denied reports that it was interested in acquiring the movie studio. Lionsgate is the movie studio behind franchises like John Wick and The Hunger Games, and they saw their stock surge 14%. on Tuesday on reports of a potential takeover from Netflix. But then Netflix came out and bluntly said that they are not pursuing Lionsgate, so the stock is giving back some of those gains this morning.

Starting point is 00:08:01 Shares are down around 5% at the time of this recording. Quick context here, Lionsgate actually spun off from Stars back in May of 2025 to position themselves as a standalone acquisition target. At the time of the spinoff, shares were trading around $6, but now the stock is trading above $15, So that spin-off strategy seems to have worked so far. Let's wrap the show with the fun fact. SpaceX Options started trading yesterday, and they absolutely shattered every record in the book.

Starting point is 00:08:33 There was about 1.8 million SpaceX Options contracts traded on day one. The previous record for an Options debut was Facebook back in 2012, which had about 365,000 contracts traded. So SpaceX blew that record. out of the water by 5x. And if you look at it in dollar terms, about $2.8 billion worth of SpaceX Options Premium traded in a single day, and the activity was heavily bullish. Call options outnumbered put options, meaning that traders were mostly betting the stock would keep going up. And some of these bets being made are just insane. CNBC reported that more than 20,000 contracts traded on calls would only pay if SpaceX jumped nearly 80% in less than 4%.

Starting point is 00:09:18 48 hours. So yeah, we're already seeing some funky stuff happening in the options market and, you know, SpaceX has become a full on meme stock already. Here's a bonus fun fact. SpaceX was the most popular IPO ever on the public app. In fact, half the people who bought stock on public last Friday bought SpaceX. So yeah, a lot of the enthusiasm in SpaceX is being driven by retail investors. And look, the stock price keeps going up. SpaceX is up nearly 50% from its $135 IPO price and it's now the fifth most valuable company in the world passing Amazon and market cap yesterday. Now, I actually interviewed an analyst that thinks that SpaceX stock is worth closer to $63 a share. He actually broke down the math for how he came up with that number.

Starting point is 00:10:03 We'll post that conversation on Sunday. So keep an eye on your podcast feed for that. Well, all right, guys, that's the rundown for today. That's the rundown for this week. Remember, no show tomorrow or Friday, but we'll be back here on Monday for your regularly scheduled program. If you guys enjoy the show, consider giving us a five-star rating on Apple, Spotify, YouTube, wherever you listen to your podcast, you know, all that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching,

Starting point is 00:10:33 and commenting. Shout out to Mike for all the work behind the scenes. And we'll see you guys back here on Sunday for the interview.

The Rundown - OpenAI Burned $3.7B in Cash Despite Surging Revenue, Snap's New Glasses Tank the Stock

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