The Rundown - Tesla's Delivery 'Disaster', Endeavor's $13B Private Equity Buyout

Episode Date: April 3, 2024

Stock market update for April 3, 2024. Get started with Public: ⁠⁠⁠⁠⁠⁠Click here⁠⁠⁠⁠⁠⁠ The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Wednesday, April 3rd. In today's episode, we talked about the rough start in the markets to start Q2, and that there's a vibe shift happening right now. We also recap the Tesla Q1 delivery numbers and why one Wall Street analysts called it an unmitigated disaster. And then we wrap the show highlighting some stocks making moves today, and explain why natural gas is free in Texas.

Stick around to find out what I mean. Let's get into it. Well, guys, it's been a bad start for the stock market in Q2. Stocks were down again on Tuesday. The Dow, S&P, and NASDAQ, all finished lower. In fact, this has been the worst two-day stretch for the Dow since October of last year. But, you know, nobody cares about the Dow, so who cares? So what's going on here?

Why are the stocks dipping all of a sudden? One reason might be because of rising oil prices. They're starting to make investors kind of nervous. Oil prices are around $90 a barrel, which is the highest level since November of last year. And when oil prices start going up, that impacts everything else in the economy. We're talking food costs, transportation costs, everything. So some investors are worried that all the progress made towards lowering inflation could take a hit because of rising oil prices. And there's even some chatter on Wall Street that the feds might not cut interest rates at all this year.

Despite Jerome Powell and the Federal Reserve saying they plan to cut rates three times later this year, if inflation starts going back up because of rising oil prices, they might hold off altogether. And that's one reason why the 10-year treasury yield is rising now. It's up to 4.4%, which is the highest level it's been since November of last year. And I know we don't talk a lot about treasury bonds on this show a lot, but it can be an important thing to look at. And with the 10-year treasury yield rising right now, that's an indication that investors are anticipating higher interest rates for longer, aka maybe no rate cuts this year. So overall, there's been a bit of a vibe shift happening right now to start off Q2. I mean, I know it's only been like two days, but this is like the part of the party where someone's changed the music.

and you're not really sure if you want to stick around or if the music is going to be changed back to some of the good stuff. Now that being said, this thing could just be a temporary dip and we might be back to making an all-time highs by next week. It'd just be like that sometimes. All right, let's run through some headlines. Speaking of vibes, vibes coming out of Tesla, not great right now. Tesla reported their Q1 delivery numbers yesterday and yikes. Tesla said they delivered 387,000 units in Q1. That number was way below Wall Street estimates and down 9% year over year.

year. Wall Street analysts were throwing words around like shockingly disappointing and unmitigated disaster to describe these results. Those are also the same words that my wife uses whenever I make dinner. I'm more of a breakfast guy. Now, not surprisingly, Tesla stock dropped 4.9% on Tuesday after those results, and the stock is now down more than 30% for the year. Quick fun fact, Tesla's market cap peaked at $1.2 trillion in 2021. Now their market cap is around $500 million. So it's been cut by than half. Look, things are pretty bad for Tesla right now. Now, to be fair, Tesla did warn investors at the start of the year that 2024 would be a slow year for growth. But I guess analysts didn't think that it would be this bad? What is y'all's reaction to Tesla's deliveries? I mean,

is Tesla peaked? Because investors definitely seem to be nervous. We're going to make that the Spotify poll today. If you guys are listening to the show on Spotify, tap today's episode and vote in today's poll. And let me know what you guys think. Another company facing some challenges recently is Disney. Now, while their stock is up 35% this year, they're fighting a proxy battle with rich guy activist investor Nelson Peltz. Peltz is this billionaire activist investor and he's not happy with the way Disney's being run right now. He thinks that Disney's stock could be doing better. And as a result, he wants to influence how Disney's business is ran by getting two seats on the board of directors. Disney's current board of directors and Disney's CEO Bob

Eiger doesn't really want him there. So there's a proxy fight happening. Today is the annual shareholder meeting for Disney and we're going to finally find out if Nelson Peltz ends up winning these two board seats because shareholders will vote to determine if Peltz is voted on the board or kept off. The early results with 60% votes counted have Disney keeping pelt off the board. But we won't know for sure until all the votes have been counted, which is supposed to happen by this afternoon. We had another entertainment company make some noise yesterday. Endeavor is going private. Now, if you guys haven't heard of Endeavor, they're a major player in entertainment, especially sports. They own UFC and WWE. Their portfolio also includes a talent agency, WME. They have a sports betting

platform open bet and a bunch of other sports and entertainment assets. Well, the company is being acquired by private equity firm Silver Lake for $27.50 a share, which would value Endeavor at $13 billion. This is three years after Endeavor went public, and it's been kind of a bumpy ride for them. The stock was up and down, and the CEO, Ari Emanuel, didn't really like answering to public investors. But now with the company being taken private, Ari Emanuel can kind of do his thing and continue his aggressive acquisition strategy without having to explain. to public investors. By the way, Ari Emanuel was the inspiration behind the character Ari Gold in Entourage, which is one of the greatest shows of all time. Maybe the greatest show of all time.

That's not a hot take, is it? All right, let's talk about some stocks making moves today. Starting with Paramount Global. Man, we are talking about a lot of entertainment companies in today's episode. Paramount Global stocks are up more than 2% this morning after the New York Times reported that the entertainment giant was in discussions to possibly sell itself to skydance media. If you haven't heard of them, they're the production company behind Mission Impossible movies. They're also owned by the son of one of the richest men in the world, Larry Ellison. Now, there's been a lot of rumors about Paramount being sold for like months now. Still hasn't happened yet. A lot of companies seem to be interested. They also received an $11 billion offer

from Apollo for its movie studios a couple weeks ago. I guess that deal hasn't gone through. Skydance is trying to buy the whole thing and who knows if this deal is going to go through. But whenever a rumor pops up, the stock seems to jump. And that's what's happening today. On the flip side, Intel off to a bad start this morning. The stock is down more than 4% after the company revealed a $7 billion operating loss within its chip manufacturing division in 2023. The loss is almost $2 billion more than the previous year. Intel is pushing further into the manufacturing business after receiving $8.5 billion in funding from the Chips Act to help expand chip manufacturing in the U.S. Right now, many notable chip companies, such as Nvidia,

AMD, only designed chips and then send them off to manufacturers like TSM in Taiwan to be actually built and manufactured. But the U.S. government wants to diversify away from its reliance on chips being built in Asia over supply chain issues and political risks. That's why they're giving so much money to Intel to help build more manufacturing stateside. Intel's management has already said that 2024, they're going to experience record losses in the manufacturing unit because not surprisingly, building foundries and manufacturing

facilities is very expensive. But they estimate that its chip manufacturing business will break even around 2026. So we'll see if investors have that much patience. All right, let's wrap the show with a fun fact. Today's fun fact is about natural gas. At the start of the show, we talked about how oil prices are at five-month highs. Well, the exact opposite is happening with natural gas. Natural gas prices are hitting all-time lows.

And in fact, they've dropped to negative in Texas, which means that natural gas producers are literally paying people to take the natural gas from them. Now, the reason for natural gas prices hitting all-time lows is the warmer than usual weather, which has lowered the demand for natural gas for heating. And in some parts of the country, natural gas producers have already cut back on drilling for more natural gas. Well, in Texas, that's not the case. Producers in Texas continue to drill for natural gas, mostly because natural gas is a

byproduct of drilling for oil. As I said, oil prices are at five-month high. So these producers want that oil, but as a result, they also get a ton of natural gas as well. So they're willing to pay to get rid of the natural gas just so they can make the money from oil. It's kind of a weird market dynamic happening over in Texas. But yeah, if you want some free natural gas, come to Texas.

Thank you guys again for listening in today's episode. Kind of a long one, but I hope you guys liked it. If you did, hit us with that five stars on Apple and Spotify. 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. Rendown 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. Respected professionals. Learn more at public.com disclosures. In partnership with Zaidamani, brokerage services for U.S. listed registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.