The Rundown - Paramount to Merge with Skydance, Southwest Adopts 'Poison Pill' to Fend Off Activist Investor

Episode Date: July 3, 2024

Stock market update for July 3, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Wednesday, July 3rd. In today's episode, we update you on the summer stock rally of 2024 and what to look forward to in July. Also, Southwest Airlines just activated a poison pill to fight back against an activist investor. We'll explain all the drama. Then stick around to the end of the show to find out why sales of fireworks are down more than 40% from their peak. All right, let's go. Half of the country might be on vacation this week, but that hasn't stopped the stock market

from making record highs. Both the NASDAQ and S&P hit record highs yesterday, and unlike on Monday, more than two-thirds of stocks moved higher on Tuesday. So far, the second half of the year has been off to a great start. And quick fun fact, July historically has been the best performing month for the stock market. To be even more specific, according to Bank of America, the first 10 days of July have historically been the best trading days of the year going back all the way to 1928. And July is about to really kick into gear. Q2 earnings season is about to kick off. So let's hope the good vibes keep rolling all summer.

Summer stock rally of 2024 looking to be historic. Let's run through some headlines. Starting with Southwest Airlines. Southwest has a new plan to fight against an activist investor. A few weeks ago, Elliott Management, an activist investor, acquired more than 10% ownership of Southwest Airlines. and they're looking to remove the company's CEO. Southwest's business hasn't been doing so great recently, and their stock is underperform compared to other airlines. So Elliott Management came in, but a bunch of stock for $1.9 billion,

and now they're looking to remove the current CEO and get someone else in charge to turn around the company. That's kind of what activist investors do. Well, Southwest Airlines isn't cool with this plan, and they're fighting back. The current CEO says he's not going to resign. In fact, the company announced they plan that Wall Street calls the poison pill. Essentially, the way it works is

if Elliott Management or any other investor requires more than 20, 12.5% ownership of Southwest Airlines, the company will offer existing investors the opportunity to buy one additional share at a 50% discount for every share they currently own. Southwest Airlines is willing to harm themselves just to fight off Elliott Management's influence over the company. Again, those executives at Southwest really want to keep their jobs. So yeah, a lot of drama for a holiday week. We'll see what happens. But one thing is clear, the vibes at Southwest are not great right now. Speaking of drama, Paramount has agreed to a merger deal with Skydance. Again, I'm getting, I'm going to...

I'm getting sick of this story. This has been an on-again, off-again thing for like the last few months, and I guess it's back on now? You guys remember, a few weeks ago, there was rumors that Skydance had agreed to a deal to buy Paramount, but then last minute, Paramount walked away because I couldn't agree to terms, but I guess they figured things out now, and the deal is back on. The new offer from Skydance sweetens the deal for Sherry Redstone. Sherry Redstone and her family owns the holding company National Amusement, which owns the

majority voting shares in Paramount. Paramount has a very weird corporate structure and governance. I'm not going to bore you with the details. Anyway, Skydance's new offer to buy national amusement is $1.75 billion, up from the $1.7 billion that was previously offered. I mean, look, guys, I know $50 million is a lot of money, but like in this situation, it seems like a bit of a nickel and dime, right? Supposedly, though, the original deal talks were ended over fears of a potential lawsuit from existing shareholders. Now, the new deal will offer more protection against lawsuits, according to the New York Times. I don't exactly know what those new protections are, but apparently this deal is going to be protecting the Redstones.

But the drama is not fully over. Paramount still has 45. days to find a better deal and it needs to be approved by Paramount's special committee. This is a lot of drama for a dying media company. I mean, come on. Let's talk about some stocks making moves today. Starting with Tesla. Tesla continues to climb after reporting better than expected delivery numbers on Tuesday. We covered this briefly in yesterday's episode. Tesla delivered approximately 444,000 cars in Q2 and even though that's down more than 4% from last year, that's more than the 439,000 cars that Wall Street was expecting.

And that's why Tesla stock jumped more than 10% yesterday, and it's up another 3% in the pre-market today. Tesla seems to be making a nice comeback lately. It's up more than 25% since the start of last week. We're going to learn more about Tesla and their financial health on July 23rd when they report their Q2 earnings. On the flip side, I stock not doing so good this morning is Nvidia. Honestly, there wasn't any notable stocks having a bad day this morning.

So I just went with Nvidia because it was down like 1%. And it doesn't look like it's because of any news. It might just be profit taking from investors. Hard to blame investors for taking profit when the stock is up more than 150% this year. All right, let's wrap the show with the fun fact. Firework sales are down big this year. According to the U.S. International Trade Commission, the U.S. is estimated to import $350 million worth of fireworks in 2024, which is down from the $600 million that was imported at its peak back in 2022. I think some people really got into fireworks during COVID.

But that boom seems to now be over. Get it? Boom. Okay. Now, even though sales are down, I still feel like I see a ton of pop-up fireworks stands selling fireworks on every corner. Those things just pop up like a week before the 4th of July in New Year's and they disappear right after. It's kind of crazy.

Also, another thing to note, the price of fireworks is up like 42% from last year. So that could be another reason that people are not spending as much money on fireworks. Well, all right, guys, that's the rundown for today. Remember, tomorrow is the 4th of July. The stock market will be close. and we're not going to have a show tomorrow. Hope you guys enjoy the day. Do some grilling, do some fireworks.

Stay safe out there. We are going to be back on Friday to end the week. Thank you guys again for listening. If you guys enjoy the show and have like eight seconds, go hit us with that five-star rating on Apple and Spotify. That engagement really does help the show. I think we crossed 2,000 five-star ratings on Spotify this week. So that's incredible.

Thank you guys so much for all the support. 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. Rundown guests are not financial advisors and are not affiliated with public holdings or its subsidiaries.

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