The Rundown - OpenAI Scraps For-Profit Transition, Palantir's Stock Nosedives on Q1 Earnings Release

Episode Date: May 6, 2025

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Public.com presents the rundown. Your daily market update in five minutes. My name is Zadadmani, and today is Tuesday, May 6th. In today's episode, we'll tell you about the latest corporate drama surrounding OpenAI and what it means for the future of the company. We'll also recap earnings from Palantir, Hymns, DoorDash, and more. Then stick around to the end of the show to find out how many toys in the U.S. come from China and what the tariffs might mean for the toy industry.

We've got a great show for you today. Let's go. Well, guys, the S&P 500's nine-day win streak came to an end on Monday. The S&P 500 was down 0.6% to start the week, and the NASDAQ dropped 0.7%. Honestly, it's hard to be too upset, though, after the run the market just had. But it does feel kind of weird having such a calm day

after the wild swings we were having on a daily basis in April. I think investors have settled into a wait-and-see mode right now, waiting for trade deals to be announced. And also, we have the Fed meeting which kicks off today, and that can definitely cause the volatility to spike. We previewed the Fed meeting in yesterday's episodes, so go check that out if you missed it. Overall, the markets aren't expecting the Fed to cut rates at this meeting, but at some point the Fed is going to have to cut, and the markets will be paying attention to Jerome Powell on his comments to get a hint of when that's going to happen. The press conference is tomorrow at 2.30 p.m. Eastern time, so we're going to be tuning into that, and we'll recap all the best up on Thursday's episode.

And depending on what Jerome Powell says, we might even do an instant reaction on our Instagram account. So go follow our Instagram page if you don't want to miss that. I might make a Fed meeting bingo card just to make this press conference even more interesting. Let's run through some headlines. And we're going to start by talking about OpenAI's corporate structure. And normally I wouldn't lead the show

talking about something boring like corporate governance, but this story is actually pretty interesting. Open AI has officially abandoned their plans to convert from a nonprofit to a for-profit company. Now, quick refresher here, OpenAI was founded back in 2015 as a non-profit. But after the success of Chad GPT, they've been trying to convert to a for-profit company to make it easier to raise money. Now, that plan sparked a ton of backlash from ex-employees to AI researchers, even a few attorney generals.

Basically, no one was thrilled about giving investors more control over over OECD. Open AI. And then Elon Musk raised the heat by suing Open AI to block them from being a for-profit company. Remember, Elon Musk was actually a co-founder of Open AI, but he left back in 2018. He now runs his own AI company called XAI. So that might have something to do with trying to block Open AI from raising a ton of money. Or maybe he just cares about the future of humanity. Who knows? Anyways, Open AI just backtracked their plans. They decided to stick with the nonprofit structure at the top, which means the board is still legally obligated to act in the interest of humanity and not just for profits. But the company is still going through a restructure.

The profit arm of Open AI will now convert into something called a public benefit corporation, which is technically a for-profit entity, but it has to balance profit with social goals. And we don't have time in today's episode to do a deep dive on that structure, but it does matter, especially since Open AI is in the middle of raising $40 billion from investors. and investors care a lot about how the company is set up. Now, Elon Musk is lawyers. They're not satisfied with this move. They still plan to move forward with their lawsuit.

So yeah, this drama isn't over yet. I think we'll have to do a deep dive episode on this topic pretty soon because there's a lot going on. Open AI is one of the most important companies in the world today and their corporate structure is so weird. Oh, one more thing about Open AI. They just agreed to buy an AI startup called WinSurf. It's an AI powered coding tool for $3 billion.

So all of this corporate drug, drama hasn't slowed down open AI's ambitions in the consumer AI space. Now, speaking of confusing AI corporations, let's talk about Palantir. The company reported earnings last night, and they pulled off the earnings triple crown. The revenues and profits came in higher than expected, and they raised their full year forecast. Palantir's revenues jump 39% year over year, fueled by what the company called ravenous demand for its AI software. Palantir now expects to bring in $3.9 billion in revenue for 2025.

that's up from the previous forecast of $3.75 billion. So that upbeat guidance helped ease fears that Palantir might be taking a hit from the looming defense budget cuts that are expected. The Defense Secretary Pete Hegseth recently announced over $5 billion in non-essential spending reductions, but the White House is proposing a 13% increase to the Pentagon's 2026 budget,

specifically focused on AI. So there's a chance that Palantir benefits from this because government contracts are still the core of Palantir's U.S. business, making up 59% of their domestic revenue. Federal sales were up 49% last quarter, but here's what was shocking to me about their earnings. Palantir's commercial side is growing even faster than their government business. Sales two corporations jumped 71% last year. So a pretty solid earnings report all around, but their stock still dropped in reaction to the report, and it might have to do with the fact

that the stock was already up more than 60% heading into the earnings, and just meeting profit expectations wasn't enough to get investors excited. Plus, while Palantir's U.S. sales are crushing it, their European growth did come in a little soft. Still, if you're a long-term investor in Palantir, there's more to Palantir than just quarterly numbers. Like, you should read CEO Alex Carp's investor letter. It gives you a sense of how Palantir sees its role in the world. We'll drop a link to that earnings letter if you want to read it yourself. Also, spoiler alert, this weekend's deep dive episode is going to be on Palantir. So keep an eye out for that. Let's talk. Let's talk about some stocks making moves today. Lemonade shares are up this morning after the online

insurance provider beat earnings expectations for the quarter. Their revenue and their annualized premiums both grew by 27% year over year and the company added 21% more customers bringing the total to just over 2.5 million. Lemonade says their car insurance is now their fastest growing segment. They also mentioned their monitoring Trump's proposed auto tariffs. The company expects only a single digit impact on losses from the proposed 25% tax. So investors are liking what they heard. Shares of Lemonade are up more than 8% this morning on this news. Now, another big mover this morning is Hymns.

Shares are rising after the online pharma giant reported Q1 earnings. They posted some pretty impressive numbers. Their revenues were up 111% year over year, and their subscribers jumped 38% to 2.4 million. On top of that, the company teased new partnerships with pharma companies down the road. I mean, just last week, Hymns announced, a big partnership with Nova Nordisk to sell their weight loss drug we govy on their platform. So the company expects to do more partnerships like that. And as a result, investors are sending

the stock higher. It's up more than 7% this morning at the time of this recording. Now, the stock that is heading lower this morning is DoorDash. Company reported earnings and a pair of acquisitions. DoorDash is going on a buying spree right now. They're spending $3.9 billion to buy Deliveroo, which is a London-based food delivery platform. And they're paying $1.2 billion to buy seven rooms, which is a hospitality tech platform focused on restaurant reservations. DoorDash is already the dominant player when it comes to the U.S. delivery market. They own two-thirds market share right now, but buying Deliveroo would expand their reach to over 40 countries and give them a combined 50 million monthly active users.

So it seems like a pretty smart acquisitions to me. And the seven rooms acquisition is pretty interesting. DoorDash would essentially have a reservation platform, kind of like Open Table or Rezi. So they're really trying to own the food experience. from reservations all the way to delivery. And this makes me wonder if DoorDash's biggest competitor, Uber, is gonna feel pressured to make some M&A moves of their own. Now, as for DoorDash's earnings,

it was kind of a mixed bag. Total order value and number of orders did hit record highs, but their revenue came in below Wall Street estimates. And I think that's what's sending the stock lower today. It's down more than 7% at the time of this recording. Let's wrap the show with a fun fact. China accounts for 80% of all toys sold in the US. It's a massive share of the $42 billion U.S. toy market,

which makes it very vulnerable to the ongoing trade war with China. Mattel, the company behind Barbie and other toys, warned on Monday that tariffs could lead to higher prices. They even pulled their financial guidance due to all the uncertainty. And then Hasbro, the maker of Monopoly and Play-Doh and a bunch of other toys, also echoed concerns saying that tariffs could raise their costs by about 20%. Now, President Trump also weighed in on this toy story. Listen to what he had to say.

You know, somebody said, oh, the shelves are going to be open. Well, maybe the children will have two dolls instead of $30, you know. And maybe the $2 will cost a couple of bucks more than they would normally. So yeah, if your holiday shopping list included toys for your kids or nieces and nephews, you might want to stock up early this year to get the best deals. Well, all right, guys, that's the rundown today. Hope you guys enjoyed today's episode. My voice feels a lot better today.

I pretty much didn't talk all of yesterday, so I got my voice back. Thank you guys again for all the concerns in the comments. Speaking of comments, if you guys enjoyed the show and have like 12 extra seconds, consider leaving us a comment on Spotify. Vote in today's Spotify poll. Leave us a rating on Spotify. All that engagement really does help us out and it helps other people find the show. You can also do the same if you're listening on Apple Podcasts.

Thank 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.