SpaceX Wants to Sell You a Phone Plan (Are They Doing Too Much)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, October 23rd. In today's episode, we'll tell you why treasury yields are dropping because of the AI sell-off. We'll also tell you about Elon Musk's plans to lease 80,000 cell towers to turn SpaceX into a major wireless carrier. Then stick around to the end of the show to find out how the Milwaukee Brewers pulled a Michael Scott and had to apologize to some of their fans before the World Series. We got a great show for you today. Let's go. Stocks got hit hard on Thursday. The S&P 500 fell by 1.2% and the NASDAQ dropped by 2.6%, which was its worst day since June. Now, what's interesting is that on the surface, it looks like a total bloodbath. But the majority of the stocks in the S&P actually finished in the green, not to mention the equal weight S&P actually gained 0.7%. Yesterday was actually the biggest gap between the equal weight S&P and the regular S&P in over two years. This sell-off right now is being completely driven by tech and AI stocks. These stocks have a bigger influence on the index because these companies are bigger. So when they sell off, the overall index feels it as well. Yesterday, tech was the worst performing sector, down 3%, and the semiconductor index fell by 6.7%. Some of the biggest losers yesterday include Meta, which fell by 7% thanks to their earnings, where the company posted their first negative free cash flow since 2012. We actually broke down Meta's earnings in detail on yesterday's show. SpaceX was also a big loser, dropping about 9%. We covered SpaceX's earnings on Wednesday's show, So go check that out if you missed it. You know, it's kind of interesting to see how the narrative around the AI trade has changed over the last couple of years. In 2024 and 2025, the market wanted to see these tech companies announce bigger and bigger CapEx numbers. Like there were times when these tech stocks would rally every time there was a bigger CapEx number announced. But that's clearly not the case anymore. We've officially entered the show me the money phase of the AI trade where investors want to see where the payoff will be for all that AI investment. Meta is a great example of that. They announced higher CapEx numbers and their stock got crushed yesterday. And because of these concerns around AI, investors are rotating out of tech and into other sectors. For example, consumer staples hit a record high yesterday. This sector includes companies like Walmart, Costco, and Coca-Cola. Investors are also now dumping tech stocks to buy up US treasury bonds for safety. The 10-year treasury yield closed at 4.95% yesterday, its lowest level in more than a month. See, typically when there's turbulence in the stock market, like we're seeing right now, investors get spooked out and like to buy treasuries to lock in a guaranteed return. And when the demand for treasuries goes up, yields go down, which is what we're seeing happen right now. So yeah, it's a very interesting time in the market. And this sets up a really critical week coming up. Next week is like the Super Bowl for Wall Street. We are getting earnings from Google, Microsoft, and Amazon. And there's also a Fed meeting. So we're gonna have a lot to cover over the next few days. If you're new here, you picked a great time to start listening to the podcast. Definitely get subscribed if you haven't already and tune in every day to stay in the loop. Let's run through some headlines and we're starting with SpaceX. Apparently, rockets, satellites and AI data centers aren't enough. It looks like Elon really wants to sell you a phone plan as well. According to Bloomberg, SpaceX is in talks to lease at least 80,000 cell tower sites across the country in a deal that could be worth billions of dollars. One of the main companies they're talking to right now is Crown Castle, which is one of the biggest owners of cell towers in the U.S. Now, daily listeners will remember we covered this two weeks ago when SpaceX bought a bunch of low bandwidth spectrum, which can send signal through walls and buildings. That is step one to being a phone carrier. Step two are the towers. From my understanding, the way this works is that carriers like Verizon and AT&T don't own most of the towers that their antennas sit on. What they do is they rent space from tower companies because it's cheaper than building your own. So Crown Castle is basically like a landlord and then SpaceX shows up, installs their equipment to broadcast their signal. So SpaceX wanting to be a phone carrier is great for these tower companies like Crown Castle because it means another tenant for their towers in fact crown castle stock is up more than 10 percent this morning in pre-market trading in reaction to the bloomberg report meanwhile the big three wireless carriers verizon at&t and t-mobile their stock continues to sell off all dropping between three and five percent this morning now just like i said a couple weeks ago i'm still really confused on why SpaceX wants to be a phone carrier so bad like i don't see how being a phone carrier fits into the overall SpaceX strategy. But you know what? If this leads to more competition in the carrier space and cheaper prices for consumers, I'm all for it. So yeah, SpaceX has their claws in a lot of different businesses right now. And can you imagine if this merger with Tesla ends up going through? I mean, this combined company is going to be a massive conglomerate with so many different business units. It kind of reminds me of like GE back in the day where they were making jet engines and dishwashers, and they also owned NBC for some reason and ran a massive bank at the same time. But the thing is GE eventually sold or spun off all these different businesses because the downside for a big conglomerate is something called the conglomerate discount. The market tends to value a combined company less than its separate pieces because it can become harder to understand and evaluate. So if this SpaceX and Tesla merger does happen and all the rumors are pointing to it happening, I'm really curious to see how the market's going to react to it let's talk about some stocks making moves today and we're doing four stocks all losers rapid fire style first up is Moderna their stock dropped nearly 18% yesterday and it's down another four percent this morning at the time of this recording after phase three trial data for their experimental cancer vaccine with Merck leaked early on social media. Now, the weird thing is, is that the data was actually good. Combining Moderna's personalized vaccine with Merck's Keytruda cut the risk of melanoma returning or death by 42%. But the problem is, is that Wall Street wanted even better results and the stock was already up more than 500% going in. So this was a classic sell the news situation. And that's why Moderna stock took a big hit yesterday and continues to fall today. Next up, let's talk about Decker's, the company behind the Hoka running shoes and Uggs boots. Their stock is down around 8% this morning after the company cut their full year sales forecast to around $5.7 billion. According to the earnings, both Hoka and Uggs miss quarterly sales estimates as shoppers hunted for discounts, but Decker's CEO said they refused to join the race to the bottom with Nike and Foot Locker by putting their shoes on sale. So this is hurting Decker's sales in the short term, but I do think it's a smart move in the long term. Still, Decker stock is down this morning, and the stock has dropped about 18% on the year. Next up, we have Western Digital. Their stock dropped more than 6% on Thursday, and it's down again this morning, despite the company crushing earnings. The hard drive makers saw revenues jump 55% to $4.4 billion in the third quarter, with gross margins hitting 58%, and they guided next quarter way above expectations as well. The company is seeing a massive surge in demand from AI data centers, but investors are spooked by the broader AI pullback right now and also of reports that Japanese rival Toshiba plans to double their production of AI data center hard drives. And that's why Western Digital is down more than 50% from its June peak. Finally, let's talk American Express. Their stock is down around 2% this morning after the credit card company reported third quarter earnings. Now, earnings per share did beat estimates, but revenues came in slightly under estimates. Also, total card spend of $454 billion also slightly missed estimates. The big news to come out of the earnings is that Amex is slashing 5% of their global workforce to keep a lid on rising costs. The key takeaway for me, though, is that affluent consumers are still spending money, and there isn't any signs of a meaningful slowdown from the credit card data. Let's wrap the show with a fun fact. Game one of the World Series between the Milwaukee Brewers and the Tampa Bay Rays kicks off tonight in Milwaukee, and ticket prices are absolutely out of control. According to TickPick, the average resale ticket for tonight's game one is going for around $2,800, and game two is averaging over $2,900. That makes them the third and second most expensive World Series games on record. I'm not going to lie to you guys. I was shocked to see the ticket prices this high. I think I would have been less shocked if it was for a big market team like the Yankees or Dodgers, but seeing $3,000 in Milwaukee was pretty surprising to me. All right. Now, one reason for the high prices might be because this is the Brewers' first trip to the World Series in 44 years. In fact, neither team in the World Series has ever won, so there's going to be a first-time champion crowned this year. Now, there's also some PR drama happening around this game. The Milwaukee Brewers might have pulled a Scott's Tots. See, back in 2015, the Brewers sold 1,000 tickets for $1,000 each called the Timeless Ticket. And the fans who bought these tickets were told they could redeem this ticket for the best available seat for any future home game. In fact, as part of this promo 11 years ago, the Brewers said it could even be used for a World Series game. Now, at the time, the Brewers were a really bad team, so they probably never thought they'd get to the World Series. Well, now they're in, and there are still hundreds of fans out there that held on to their timeless ticket they bought 11 years ago, and they're trying to use it to get into Game 1. Unfortunately, when the fans tried to cash in this timeless ticket, they were only given nosebleed seats or standing room only spots. So not surprising, the fans who bought these tickets are pretty upset about the whole thing. I hate to be that kind of finance guy, but if these fans just invested that $1,000 into the S&P 500 11 years ago, that $1,000 would be worth close to $4,000 today. Now, to their credit, the Brewers have publicly apologized to the fans, and they're letting them keep these nosebleed World Series tickets for this year and keep their timeless ticket to redeem again at a future game. We'll have to see if that's enough to overcome the bad sports karma by the team. Well, all right, guys, that's the rundown for today. That's the rundown for this week. Hope you guys enjoyed today's episode. Just a heads up, no interview this weekend. Producer Mike was out this week. But we should be back to regularly scheduled programming starting next week. We got some pretty big plans when it comes to interviews for the rest of the year. So please stick around for that. Thank you guys again for listening, watching, and commenting. shout out to mike and v for all the work behind the scenes and we'll see you guys back here on monday