💉 Pfizer gets a dose of activism

Good afternoon! At just 33, Damola Adamolekun, former CEO of P.F. Chang’s, is now leading Red Lobster through a much-needed overhaul. His latest challenge? Reviving the brand after the costly Endless Shrimp promotion drained $11 million in a single quarter. While that promo was the final straw, Adamolekun points to years of underinvestment as the real issue.

Armed with $60 million from new ownership, Adamolekun is set on a full-scale refresh—starting with modernizing restaurants, upgrading tech, and cutting down that massive menu. He’s eyeing younger customers too, with plans to roll out value-focused items, similar to what Olive Garden does with affordable pasta. And it's not just about food—he’s targeting higher wages and reducing turnover to smooth operations. Adamolekun’s ultimate goal? To turn Red Lobster into a case study for the greatest restaurant comeback ever—minus the endless shrimp disaster.

MARKETS

• Stocks took a hit Monday, with the Dow shedding nearly 400 points and the Nasdaq dropping 1.18%, as investors braced for key inflation data and the start of earnings season. Rising oil prices, driven by Middle East tensions, and Treasury yields surpassing 4% for the first time since August added to market jitters.

• A selloff in major tech stocks, along with concerns about the Federal Reserve's next move, further pressured the markets. U.S. crude jumped over 3%, closing above $77 per barrel, as geopolitical concerns remained high.

STOCKS
Winners & Losers

What’s up 📈

• Arcadium Lithium ($ALTM) jumped 35.59% after announcing that Rio Tinto approached the company about a potential acquisition, though the approach is nonbinding at this stage.

• Super Micro Computer ($SMCI) surged 15.79% after revealing it's now shipping more than 100,000 GPUs per quarter, driven by the rising demand for AI applications.

• Air Products & Chemicals ($APD) gained 9.52% after CNBC reported that Mantle Ridge has acquired a stake in the company exceeding $1 billion.

• Generac Holdings ($GNRC) climbed 8.52% as Hurricane Milton intensified into a Category 5 storm, spurring demand for its power generators.

• Instacart ($CART) ticked up 3.81%.

What’s down 📉

• RenaissanceRe Holdings ($RNR) plunged 9.25% as consecutive hurricanes hitting the southern U.S. took a toll on insurance stocks.

• NextEra Energy ($NEE) fell 4.25%, likely due to the DC Circuit court upholding a FERC order requiring costly upgrades to the Seabrook plant's circuit breaker, with no compensation for lost power sales.

• Adobe ($ADBE) dropped 3.93%.

• Tesla ($TSLA) slid 3.70% as investors anticipate an event in Hollywood where the company is expected to unveil a robotaxi and provide updates on its self-driving technology. Analysts caution uncertainty around the announcements, leaving investors nervous about the potential impact on Tesla's EV and autonomous driving sectors.

• Amazon ($AMZN) fell 3.06%, with shares closing lower after Wells Fargo analysts downgraded the stock, citing concerns about challenges to its profit margins despite strength in the cloud services market.

• Netflix ($NFLX) dropped 2.47% after Barclays downgraded it to "Underweight," expressing concerns that paid subscription sharing may have pulled future growth forward, raising unrealistic long-term expectations.

BOARDROOM
Activist Investor Starboard Value Takes $1 Billion Stake in Pfizer

It's the classic tale of a corporate shake-up: missed targets, mounting investor frustration, and then the activists come knocking on your door. Starboard Value, helmed by the "most feared man in corporate America" Jeff Smith, has just taken a $1 billion stake in Pfizer, seeking to revive the pharmaceutical giant's fortunes.

Pfizer's stock rose 2.12% on the news but remains down 1.83% for 2024—a stark contrast to the S&P 500's 20% climb this year.

A Pandemic Peak and a Post-Covid Slump
Pfizer's pandemic glory days seem like a distant memory. During the peak, the company became a household name thanks to its record-breaking vaccine rollout. Revenues skyrocketed from $42 billion in 2020 to $100 billion in 2022. But as the world returned to normal, demand for its Covid-19 products took a nosedive.

The problem? Pfizer's other offerings couldn't pick up the slack. Even its much-hyped anti-obesity drug flopped, leaving the pharma giant without a clear path forward.

CEO Albert Bourla went on a spending spree during the pandemic—nearly $70 billion in acquisitions since 2020—while also boosting Pfizer's R&D budget. Despite these efforts, results have been underwhelming.

Just this month, Pfizer had to pull a sickle cell drug it acquired for $5 billion. Another setback in its acquisition-heavy growth strategy.

Reuniting with the Old Guard
Now, Starboard is looking to bring back some familiar faces: ex-CEO Ian Read and ex-CFO Frank D'Amelio. Both have expressed interest in returning to help steady the ship, according to reports.

Under Read's leadership from 2010 to 2018, Pfizer had a more focused approach, zeroing in on core businesses like vaccines and cancer. Starboard seems to hope that a dose of the old guard's discipline can turn things around.

Pfizer has already started reining in spending, with a $4 billion cost-cutting program announced last year. But it hasn't been enough to lift the company out of its post-pandemic slump.

Maybe Starboard's intervention, paired with a reunion of past leaders, can help Pfizer regain its lost momentum—or at least give the stock a much-needed shot in the arm.

NEWS
Market Movements

• 🚗 Tesla to Reveal Robotaxi Design: Elon Musk is set to unveil Tesla's ($TSLA) robotaxi design on October 10, with analysts predicting the global market for robotaxis could hit $50B in annual bookings by 2030.

• 🖥️ Super Micro Shares Jump on AI GPU Sales: Super Micro ($SMCI) shares surged 15% after announcing it’s shipping over 100,000 AI-related GPUs per quarter. The company, benefiting from the AI boom, also unveiled a new cooling product designed to cut costs for data centers that run GPUs continuously.

• 📉 Google’s US Search Ad Market Share Falls: Google’s share of the US search ad market is projected to fall below 50% for the first time in over a decade by next year, according to eMarketer.

• 🪨 Rio Tinto Eyes Major Lithium Acquisition: Rio Tinto ($RIO) is in talks to acquire U.S. lithium producer Arcadium ($ALTM), potentially making Rio one of the top three global lithium suppliers, behind Albemarle ($ALB) and SQM ($SQM).

• 📉 Amazon Downgraded by Wells Fargo: Amazon ($AMZN) stock dropped 3% after Wells Fargo downgraded the company’s shares, citing competition from Walmart ($WMT), higher costs from its satellite broadband project, and slower growth in its ad business. Wells Fargo lowered its price target for Amazon to $183 from $225, predicting near-term challenges to profit margins.

• 🛢️ Chevron Offloads Oil Sands Assets: Chevron ($CVX) plans to sell its oil sands and shale holdings in Alberta to Canadian Natural Resources ($CNQ) for $6.5B, part of a broader strategy to meet its $10–15B divestment target by 2028.

• 🔄 BP Reverses Course on Oil Production Cuts: BP ($BP) has scrapped its goal of reducing oil and gas production by 25% by 2030, as the company shifts focus back to more profitable projects in the Middle East and Gulf of Mexico.

• 🏭 Apollo to Take Barnes Group Private: Apollo Global Management ($APO) will acquire Barnes Group ($B) in a $3.6B all-cash deal, offering $47.50 per share, with plans to delist the company from the NYSE by Q1 2025.

• ⚖️ Stellantis Sues UAW Over Strike Threat: Stellantis ($STLA) has filed a lawsuit against the United Auto Workers, claiming the union violated contract terms by threatening to strike over delayed investments, seeking damages for potential revenue losses.

• 📉 Samsung Sticks with Chip Business Amid Losses: Samsung Electronics ($SSNLF) has confirmed it has no plans to spin off its foundry or logic chip divisions, despite ongoing annual losses.

LEGAL
Google Play Must Allow Rival Android App Stores, Judge Rules

Big news in the tech world: a federal judge has ordered Google to loosen its grip on the Android app market. Starting November, the tech giant must allow rival app stores to compete more freely with Google Play—a move that could reshape how apps are distributed across Android devices.

The ruling comes after Epic Games, the maker of Fortnite, scored a significant victory in its long-standing antitrust battle against Google. The judge concluded that Google abused its power by restricting developers and creating barriers for competing app stores.

Now, for the next three years, Google can't force developers to exclusively use its app store or its billing features. Rival stores will also get a shot at accessing Google's app catalog.

Antitrust Pressure Mounts
The court's decision is the latest blow in Google's ongoing struggle with antitrust authorities. Just this August, the search giant lost another major case over claims that it monopolized online search and advertising markets. The pressure on Google keeps mounting, and it's not just in the U.S.—regulators worldwide are eyeing similar app store practices.

Judge James Donato, who issued the ruling, made it clear that his aim is to restore fair competition. Google will have to let developers tell customers about alternative ways to download apps, allow rival stores to have access to its platform, and ensure that app developers aren't forced to use Google's billing services.

The injunction lasts until 2027, giving competitors time to establish a meaningful presence in the Android ecosystem.

Epic Games Is Not Done Yet
Epic Games, which has had mixed results in a similar lawsuit against Apple, isn’t backing down. CEO Tim Sweeney took to social media, announcing that Epic will launch its own app store on Android next year. He sees this ruling as a major opportunity for developers, carriers, and app store makers to create a more competitive Android ecosystem.

Google, for its part, is gearing up to appeal. The company insists its practices benefit users by enhancing security and consistency on Android devices. The judge allowed Google to implement "reasonable measures" to ensure platform security, but those measures will be under scrutiny by a committee formed by both Epic and Google.

The battle over app stores is far from over.

But one thing is certain: this ruling opens the door for a lot more competition in the Android world.

Calendar
On The Horizon

Tomorrow

Tomorrow brings the release of the NFIB Small Business Optimism Index for September, offering a glimpse into how small businesses are feeling about the economy. Last month, the Index dipped 2.5 points to 91.2, marking the 32nd straight month below the 50-year average of 98. Inflation was the main worry for most businesses, but with the first rate cut now in effect, it’ll be interesting to see if small business sentiment changes—or if they’re still feeling the pinch from higher costs.

Before Market Open:

• PepsiCo ($PEP) stock is coasting into its earnings report without much movement. But honestly, shareholders are unfazed—it’s all about the solid dividends and reliable earnings growth with this snack and beverage giant. PepsiCo’s strong margins and steady performance keep investors happy, and as long as the trend continues, there won’t be any complaints. Expectations are set at $2.29 EPS and $23.81 billion in revenue, so it’s more about maintaining the status quo than delivering a surprise.

NEWS
The Daily Rundown

• 💰 Amazon’s Prime Big Deal Days Begin: Amazon’s annual early holiday shopping event kicks off tomorrow, offering discounts on a wide array of products. Prime members can start shopping for deals at 3:01am ET, with recommendations to prep carts early for lightning deals.

• 🎬 Joker Sequel Flops at Box Office: Joker: Folie à Deux, the musical sequel to 2019’s Joker, earned just $40 million domestically in its opening weekend—less than half of the original’s debut haul.

• 🚢 US Obesity Rates Reverse Course: New data shows the US adult obesity rate fell by two percentage points between 2020 and 2023, potentially marking the end of a decades-long rise. Experts suggest that weight loss drugs like Wegovy and Zepbound played a major role, with one in eight American adults reportedly using them. If the decline holds, it could be as impactful as the drop in cigarette smoking.

• ⚖️ Supreme Court Tackles New Cases: The US Supreme Court is back in session with cases involving “ghost guns,” sex-transition treatments for minors, and age verification for online porn sites on the docket. Tomorrow, the justices will hear arguments about regulating untraceable firearms.

• 🌪️ Hurricane Milton Approaching Florida: Hurricane Milton, now a Category 1 storm, is projected to intensify and hit Florida’s west coast as a Category 3 by midweek. Coming just after Hurricane Helene, it’s a double test for FEMA as it scrambles to manage both storms.

• 🕊️ Israel Marks One Year Since Hamas Attack: Memorial events are being held worldwide to remember the Oct. 7, 2023, Hamas attack on Israel, which killed 1,200 people. Israel’s response, including airstrikes in Gaza, has resulted in nearly 42,000 deaths over the past year. The conflict now extends to Israel’s northern front with Hezbollah and involves direct skirmishes with Iran.

• 🤖 Google AI Turns Podcasts into Realistic Explainers: Google’s AI research tool, NotebookLM, has gained attention for its eerily realistic, AI-generated podcast-style summaries. Initially designed for text distillation, its viral audio feature allows for explainers on any topic—even Reddit-inspired nonsensical discussions like "poop" and "farts."

• 🏡 Americans Spending More Time at Home: A new analysis reveals that, on average, Americans spent an additional 1 hour and 39 minutes at home daily between 2003 and 2022, largely driven by the pandemic and the rise of remote work. Young adults aged 15–34 are venturing out less, contributing to this trend.

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