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  • 🔻 Tesla Drops 6% Due to Rival

🔻 Tesla Drops 6% Due to Rival

+ Activist Elliott Management Turns Up the Heat on Phillips 66

February 11, 2025

Good afternoon! Elon Musk just lobbed a $97.4 billion takeover bid at OpenAI, only to have Sam Altman swat it away with a quick “no thanks.” Altman, who’s actively working to restructure OpenAI into a for-profit giant, claimed Musk is just trying to throw a wrench in his plans. Musk, meanwhile, insists OpenAI has strayed from its original nonprofit mission, conveniently ignoring the fact that he tried to buy the company himself years ago.

The back-and-forth is more than just billionaire drama—it could actually force OpenAI to justify its sky-high valuation as it spins out its for-profit arm. If Musk’s offer is legit, OpenAI might have to prove it can fetch an even higher price from investors, adding a whole new layer of chaos to Altman’s roadmap.

MARKETS

*Stock data as of market close*

  • Wall Street played it safe on Tuesday, with the S&P 500 barely budging as traders digested Fed Chair Jerome Powell’s testimony. Powell signaled no rush to cut rates, reinforcing expectations that March will be another hold. Meanwhile, tariffs and trade tensions lingered in the background, keeping investors on edge.

  • The Dow managed a 123-point gain, lifted by Apple and IBM, while the Nasdaq slipped 0.4% as Tesla and Nvidia dragged tech stocks lower. With Powell’s remarks setting a cautious tone, all eyes are now on tomorrow’s CPI report to see if inflation throws another wrench into rate-cut expectations.

STOCKS
Winners & Losers

What’s up 📈

  • Lattice Semiconductor climbed 7.66% following a strong Q4 revenue beat, reporting $117.4 million vs. $117.1 million expected. ($LSCC)

  • DuPont de Nemours gained 6.85% after posting better-than-expected Q4 earnings of $1.13 per share, topping estimates of $0.98. ($DD)

  • Ecolab rose 6.22% following a Q4 beat, with $1.81 EPS vs. $1.80 expected and revenue of $4.01 billion surpassing estimates. ($ECL)

  • Coca-Cola jumped 4.73% after reporting Q4 earnings of $0.55 per share, beating the $0.52 consensus estimate, alongside higher-than-expected revenue. ($KO)

  • AutoNation moved up 1.3% after the auto retailer surpassed Wall Street estimates with a Q4 profit of $4.97 per share. ($AN)

What’s down 📉

  • Fidelity National Information Services plunged 11.5% after posting weaker-than-expected Q4 revenue and softer-than-expected guidance. ($FIS)

  • Astera Labs sank 10.89% despite surpassing Q4 earnings expectations, as weaker-than-expected forward guidance weighed on shares. ($ALAB)

  • Coty dropped 9.3% after missing Q2 earnings and revenue estimates while warning of foreign exchange headwinds in 2025. ($COTY)

  • Marriott International fell 5.4% after issuing lower-than-expected 2025 earnings guidance, citing economic uncertainty in China. ($MAR)

  • Humana dipped 3.6% after issuing weaker-than-expected full-year earnings guidance, despite beating Q4 estimates. ($HUM)

EV
Tesla Drops After BYD Partners With DeepSeek

Tesla just can’t catch a break. Shares tumbled 6% on Tuesday, extending a five-day losing streak that’s erased over $200 billion in market value. The latest blow came from Chinese EV giant BYD, which announced a partnership with DeepSeek to roll out advanced driver-assistance tech across nearly all of its new models—at no extra cost. While Tesla is still charging $99/month for its Full Self-Driving software (which requires constant supervision), BYD is handing out self-driving capabilities like Oprah giving away cars. The move underscores just how much Tesla’s dominance in AI-powered driving is slipping.

Musk’s Side Quest: OpenAI

If that wasn’t enough, Musk is back in the spotlight for yet another outside venture—this time leading a $97.4 billion bid to take over OpenAI. While Tesla has rebranded itself as a “physical AI” company, analysts are questioning whether Musk’s latest distraction is helping or hurting. Oppenheimer analysts weren’t shy about their concerns, calling the move a “distraction from Tesla’s challenges” at a time when competition in the EV space is heating up. Meanwhile, Waymo is quietly expanding its robotaxi service, securing a key edge in autonomous driving while Tesla remains stuck in regulatory limbo.

The Market’s Verdict

Morgan Stanley is still bullish on Tesla, setting a $430 price target, but the broader sentiment is shifting. Oppenheimer warns that rising competition from BYD and other AI-driven automakers could squeeze Tesla’s future profits. Even Tesla’s longtime advantage—brand power—is showing cracks, with vehicle registrations dropping sharply in key markets like California and Europe.

Bottom Line

Tesla is facing a two-front war: competition from Chinese automakers slashing prices and rolling out superior tech, and Musk’s ever-growing list of side projects pulling his attention away from the company that made him a household name. Investors aren’t panicking just yet, but as Tesla’s once-dominant AI edge erodes, the clock is ticking on how long it can hold its lead.

NEWS
Market Movements

  • 🎖️ Anduril Takes Over Microsoft’s $22B U.S. Army Headset Program: Defense-tech startup Anduril will assume control of Microsoft’s augmented reality headset project for the U.S. Army, overseeing production and development. Microsoft will continue to provide cloud and AI capabilities, while Anduril awaits Department of Defense approval. ($MSFT)

  • 📉 GM Plans to Mitigate Up to 50% of Tariff Impact, Ford Calls It ‘Chaos’: General Motors expects to reduce the impact of President Trump’s proposed tariffs on Canadian and Mexican imports by up to 50% without deploying capital. Meanwhile, Ford CEO Jim Farley warned that the tariffs are creating industry-wide “chaos” and adding significant costs. ($GM, $F)

  • 🏠 Powell Warns Insurance Crisis Could Make Mortgages Unavailable in Some Areas: Federal Reserve Chair Jerome Powell cautioned that banks and insurers may stop providing mortgages in disaster-prone regions over the next decade. Rising climate risks have already led insurers to pull out of fire-prone and coastal areas, potentially reshaping the housing market.

  • 📱 Apple Partners with Alibaba for AI Features in China: Apple is collaborating with Alibaba to introduce AI-powered tools for iPhone users in China, moving away from Baidu due to development delays. The partnership aims to reclaim market share as Apple faces growing competition from Huawei. ($AAPL, $BABA)

  • 🥤 Coca-Cola Beats Q4 Earnings Estimates: Coca-Cola reported Q4 earnings of $0.55 per share, exceeding estimates of $0.52. Revenue rose 6% to $11.54 billion, surpassing forecasts of $10.68 billion, driven by strong global demand. Shares climbed 2% premarket. ($KO)

  • 🛢️ BP Q4 Profits Plunge 48% as Refining Margins Weaken: BP reported Q4 underlying profit of $1.17 billion, down 48% year-over-year. The company announced a $1.75 billion share buyback and plans to scale back renewable investments while increasing oil and gas production. ($BP)

  • 💉 Novartis Acquires Anthos for Up to $3.1B: Novartis will acquire Anthos Therapeutics from Blackstone for up to $3.1 billion, expanding its cardiovascular portfolio. The deal includes a $925 million upfront payment and up to $2.15 billion in milestone-based payments. ($NVS)

  • 🏨 Hyatt Buys Playa Hotels & Resorts for $2.6B: Hyatt is acquiring Playa Hotels & Resorts for $2.6 billion, expanding in Mexico and the Caribbean. The deal values Playa at a 40.5% premium to its December 20 closing price. Hyatt plans to sell Playa’s owned properties, targeting $2 billion in asset sales by 2027. ($H)

  • ⚖️ Binance and SEC Seek 60-Day Pause in Legal Battle: Binance and the SEC have requested a 60-day pause in their lawsuit, citing potential regulatory changes under a new task force. The move hints at a possible shift to a more crypto-friendly stance under President Trump. ($BNB)

ENERGY
Elliott Turns Up the Heat on Phillips 66

Activist investor Elliott Investment Management is back at it, this time taking aim at oil refiner Phillips 66. After increasing its stake to over $2.5 billion, Elliott is demanding the company sell or spin off its pipeline business, arguing that the move could fetch a valuation north of $40 billion. The firm, known for its aggressive shakeups, also wants new independent board members and a tighter focus on refining.

The Case for a Split

Phillips 66 has been under pressure since Elliott first got involved in 2023, when it revealed a $1 billion stake and pushed for operational improvements. While the company has made some concessions—like selling $2.7 billion in assets and adding one Elliott-backed board member—the activist firm argues that progress has been too slow. Phillips 66’s stock is down roughly 11% over the past year, lagging behind broader market gains of 21%, making Elliott’s call for change more urgent.

Elliott’s Track Record

Elliott isn’t new to the energy sector. The firm has successfully pressured companies like Suncor and Hess to streamline operations and boost shareholder returns. And Phillips 66 isn’t the only oil giant in its crosshairs—reports suggest Elliott has also built a stake in BP, urging it to double down on oil and gas instead of its broader green energy push.

So far, Phillips 66 is playing it cool. The company insists it’s “on the right path” and points to strong 2024 results as proof. But with Elliott now one of its top five shareholders and the activist’s influence growing across the industry, the pressure to make big changes isn’t going away.

Bottom Line: Elliott’s push for Phillips 66 to offload its pipeline business isn’t just about unlocking value—it’s about forcing the company to rethink its entire strategy. But Elliott isn’t known for making empty threats—if Phillips 66 drags its feet, expect the activist to escalate its campaign, potentially pushing for boardroom changes or a leadership shake-up. Either management moves or Elliott forces their hand.

Calendar
On The Horizon

Tomorrow

Tomorrow’s main event: the Consumer Price Index (CPI) report.

This inflation gauge tracks price changes across everything from groceries to gas, but all eyes are on car prices, which have stayed stubbornly high. Economists expect inflation to hold steady, with a 0.3% monthly bump in January, keeping the annual rate at 2.9%. Core inflation (excluding food and energy) is also forecasted to rise 0.3% month-over-month, landing at 3.1% for the year.

While CPI will dominate headlines, earnings season isn’t taking a backseat. Heavy hitters like CVS Health ($CVS), Vertiv Holdings ($VRT), Kraft Heinz ($KHC), Barrick Gold ($GOLD), Dominion Energy ($D), CME Group ($CME), and Dutch Bros ($BROS) are all set to report.

After Market Close:

  • Robinhood Markets tried to cash in on America’s love for sports betting, but the CFTC shut that down fast. No worries—Robinhood still has the stock and crypto crowd hooked, and with markets swinging wildly, trading volumes are likely up. The firm also rolled out new events contracts just in time for the presidential election, giving investors even more to bet on. Analysts expect a strong quarter, with consensus calling for $0.53 EPS on $930.22 million in revenue. ($HOOD)

  • Reddit is Wall Street’s new social media darling, with shares skyrocketing 395% since its March 2024 IPO. A lucrative AI deal with Alphabet and its dominance in real search results (just add “Reddit” to a Google query) have fueled massive revenue growth. The valuation looks stretched, but after consistently crushing expectations, shorting this one might not be the smartest move. Consensus: $0.23 EPS, $403.15 million in revenue. ($RDDT)

NEWS
The Daily Rundown

  • 🤖 Meta Lays Off 4,000 Workers as AI Becomes the Priority: Meta has started cutting 4,000 jobs—about 5% of its workforce—as it shifts investment toward AI. The move follows similar layoffs at Salesforce, Google, and Workday, as tech giants pour billions into artificial intelligence despite investor concerns over profitability.

  • 📉 Trump Introduces a 25% Tariff on Steel and Aluminum: President Trump has reinstated a 25% tariff on all steel and aluminum imports, impacting key suppliers like Canada, Mexico, Japan, South Korea, and Germany. While the move is expected to benefit U.S. metal producers, it could raise costs for the construction and auto industries. The EU has warned of retaliatory tariffs if necessary.

  • 🏠 Burned-Down LA Home Gets 60+ Offers, Sells for Over $1M: A fire-ravaged home in Los Angeles’s Pacific Palisades received over 60 offers and is in escrow for well above its $999,000 listing price. The high demand highlights the region’s tight housing market, forcing homeowners to decide between rebuilding or selling at a loss.

  • 💰 Judge Rules Trump Administration Must Release Frozen NIH Funds: A federal judge has ruled that the Trump administration has not fully complied with an order to unfreeze NIH grants. The court emphasized that the administration must release the funds promptly, underscoring legal limitations on executive actions affecting federal funding.

  • 🚫 Trump Suspends Enforcement of Anti-Bribery Law for U.S. Businesses: Trump signed an executive order pausing enforcement of the Foreign Corrupt Practices Act, which bars U.S. businesses from bribing foreign officials. The administration argues the law puts American companies at a disadvantage, while critics warn the rollback could encourage corporate corruption.

  • 🪙 Trump Moves to Eliminate the Penny Over Cost Concerns: The Treasury will stop minting pennies under Trump’s latest executive order, citing wasteful spending. The coin costs more than twice its face value to produce, resulting in $85.3 million in losses last year. Businesses may begin rounding prices, further accelerating the shift to digital payments.

  • ⚖️ Justice Department Drops Corruption Case Against NYC Mayor Eric Adams: The DOJ has instructed federal prosecutors to drop their case against New York City Mayor Eric Adams, citing concerns that it was interfering with his ability to address illegal immigration and violent crime. The decision has sparked debate over whether the Justice Department is being politicized.

  • 📊 Fed Chair Powell to Testify Before Congress on Inflation and Economic Outlook: Federal Reserve Chair Jerome Powell will appear before Congress today and tomorrow to provide a semiannual update on monetary policy. Lawmakers are expected to question him on inflation management, labor market dynamics, and the effects of recent fiscal policies.

  • 🏨 Hyatt Acquires Playa Hotels & Resorts for $2.6 Billion: Hyatt Hotels has agreed to purchase Playa Hotels & Resorts in a $2.6 billion deal to expand its all-inclusive resort offerings. The acquisition strengthens Hyatt’s presence in luxury vacation destinations as demand for all-inclusive travel continues to rise.

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