The Rundown - OpenAI Seeks $150B Valuation, McDonald's Extends $5 Value Meal

Episode Date: September 12, 2024

Stock market update for September 12, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zaydanmani, and today is Thursday, September 12th. In today's episode, we tell you about comments from NVIDIA's CEO that sparked an epic market rally. We also recap wholesale inflation data and tell you how much money OpenAI is looking to raise. Also, we tell you why McDonald's is planning to keep their value meal around. Then stick around to the end of the show to find out why Campbell's Soup is dropping the soup from its name. All right, let's go. Stocks finished higher for the third day in a row on Wednesday,

but it took a pretty big comeback to make that happen. The S&P 500 was actually down 1.5% to start the day in reaction to the CPI report, even though that report was pretty decent. We recap the CPI report on yesterday's episode, so go check that out if you missed it. So I was a bit confused by the initial market reaction, but stocks made a nice comeback to finish the day in the green.

The S&P 500 finished the day up 1%, and the NASDAQ was up over. over 2% thanks to a continued rally in tech stocks. In fact, all of the Mac 7 stocks were in the green yesterday, with Nvidia being up the most, up over 8%. Invidia CEO Jensen Huang did make some comments yesterday at an AI tech conference in San Francisco that really hyped up investors. He said that every single AI company and data center in the world

is waiting on Nvidia to deliver their AI chips. Jensen goes on to say that the demand is so high that the day these chips are delivered is a very emotional moment for these companies. It kind of sounds like me when my parents bought me a PS2 back in the day. Like that was a big deal. I think I cried. I mean, those are some pretty powerful words and the markets ate that up. I think I've said this before, but Jensen might have more influence in the markets than

Jerome Powell at this point. Speaking of Jerome Powell, remember the Fed has a meeting next week where they're going to make a decision on interest rates. We know they're cutting rates. We just don't know by how much. But we did get some more economic data today that could influence that decision. The PPI report just dropped this morning, which measures inflation at a wholesale level. and the August report showed that PPI is down to 1.7%,

which was lower than the 1.8% that was expected. So that makes it back-to-back days of cooling inflation data, and it sets the stage for the Fed to cut rates next week. Let's run through some headlines. And we got to start with OpenAI. A couple weeks ago, there was reports that Open A.I. was looking to raise money at a $100 billion valuation. Well, Open A.I. is looking to pump those numbers up.

The latest reports are now saying that Open AI is looking to raise 6.8. $5 billion at a $150 billion valuation. That would almost double their valuation from just nine months ago. This would make OpenAI one of the largest private companies in the world, only behind ByteDance, which is the parent company of TikTok. On top of the new money being raised, Open AI is talking to banks to get a $5 billion line of credit. Now, nothing is official yet, but rumor is that Microsoft, Nvidia, and Apple will be investors

in this round. I mean, look, I get it. OpenAI is the leader in the space. ChatGPT is a name. name brand, probably a bigger name brand in the AI space than any other AI tool. But like the $150 billion valuation seems pretty rich. Open AI hasn't released any official revenue numbers. There was a report from the information over the summer that Open AI's annual revenue

was around $3.4 billion. So that's the case. $150 billion valuation would value the company at almost 50 times their annual revenue. Not to even mention profit because who knows if Open AI is profitable. I mean, AI chips are pretty expensive, right? Just to give you more perspective, $150 billion is equivalent to the market. cap of Disney. Maybe it's worth it. But like I said, last time, Nvidia is probably the biggest winner out of all this because all the money that Open AI is about to raise is going to go

straight to Nvidia to buy more AI chips. So I guess the end of the day, this is just great for Nvidia. Let's shift gears and talk about McDonald's. McDonald's is keeping their value menu around until December. Remember, McDonald's brought back the $5 value menu over the summer, which made people pretty happy. The value menu includes a McDouble or McChicken, small fries, four piece chicken nugget and a small soft drink. So that's a pretty good deal for five bucks. Now, McDonald's originally planned to keep the $5 value meal around just for the summer, but I guess it's been such a hit that they plan to keep it around until December. I mean, you love to see it, because food prices had gone up so much over the last four to five years. Like a McDonald's executive

himself, so that McDonald's menu prices have gone up by nearly 40% since 2019. And I think consumers finally had enough, which started to hurt the sales of McDonald's and other restaurants. But now that McDonald's brought back the value menu, I'm sure it's resumed. resulted in more people eating at McDonald's. In fact, other fast food chains have also followed suit. Wendy's and Burger King have also launched their own $5 value menu. So it looks like restaurants are finally starting to lower their prices. I'm sure we're going to learn more about the success of the $5 value meal for McDonald's

at their next earnings call, which is on November 4th. On a side note, McDonald's also launched the Mini McFlurry a couple days ago, and I'm, I'm excited because personally, I didn't want to eat the full McFlurry. It was always too big. Mini McFlurry sounds perfect. As long as the machine is working the day I order it. Let's talk about some stocks making moves today. Shares of Alaska Airlines are rising after they raise their Q3 guidance.

Management said they're raising their guidance due to higher summer demand. I mean, I did see a lot of people go to Seattle and Hawaii over the summer, which are popular locations where Alaska Airlines flies to. Shares of Alaska Airlines are up more than 3% on this news. On the flip side, Moderna shares are plummeting after the firm announced plans to cut $1.1 billion in expenses by 2020. moderna also plans to launch 10 new products to pass the regulatory approval process through 2027 the company is working on multiple vaccines to treat various ailments including rsv norovirus and a flu vaccine but while the drug maker does have a pipeline going through

2027 the company plans to cut r&D spending to a range between 3.6 and 3.8 billion dollars down from the expected 4.8 billion dollars so that's a pretty significant cut and as a result of stock is down more than 10% on this news. Let's wrap the show with a fun fact. The Campbell Soup Company is dropping the soup from the company name. And there's a reason why this 150-year-old company is going through a rebrand. It's because they're not a soup company anymore. It's actually more of a snack company.

If you look at their numbers, soups only account for about 25% of their total sales, while snacks make up for more than half of their sales. I think it's because they own one of the greatest snacks ever created, Goldfish. I think if you were to ask a kid to rank their favorite, snacks, goldfish would have to be number one, right? Or at least in the top three. Maybe, you know, maybe some kids go for Oreo as their favorite snack. But goldfish is just iconic. Like, every time I open up a bag of goldfish for my daughter, I always grab a couple pieces before handing her to the bag. I mean, she has to pay the dad tax, right? So yeah, Campbell's Soup is just the

Campbell Company. It does roll off the tongue. Like Sean Parker once said, it's cleaner. Well, all right, guys, that's the rundown for today. We got one more episode for you guys tomorrow. It's been a great week so far. Stocks have been up every single day. Hopefully we end the week on a solid note. If you guys enjoyed today's episode, don't forget to hit us with a five-star rating on Apple and Spotify. And if you get an extra 20 seconds, write us a review on Apple.

People read that stuff. And that engagement really does help us out. And if you're listening on Spotify, don't forget to vote in today's Spotify poll. Thank you guys so much for listening. Shout out to Connor and Mike 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 its subsidiaries. You should make your own financial and investment decisions or consult. Respective 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.