Welcome back! |
Well, the government shut down, and no immediate reopening seems on the cards - but we feel like we should talk mainly about Sora in this opening note: |
On Tuesday, OpenAI launched an update to Sora, its text-to-video model, which should have everyone on high alert. |
While the Sora generated videos will have "Sora" watermarks to show its AI-generated, there's concern about our social media feeds being filled with AI content that is very hard to distinguish between real vs. fake. We have early access, and immediately made a post about Sam Altman promoting our business 🙂. Beyond the obvious identity and IP related issues, this is a massive pivot from OpenAI's core promises and is getting the same uproar that Meta's AI slop video release got last week. |
Why this pivot matters: Sam Altman and OpenAI have spoken to the good that AI can do, whether it's tutoring and teaching, or maybe even medical breakthroughs. But the pivot to having compute used on social media feeds that many would define as "slop" seems like a huge net negative from a societal standpoint and a waste of compute vs. more impactful endeavors. This could very well be a sign that OpenAI is struggling to monetize or dramatically improve AI use cases - a sign we first saw after the lackluster GPT-5 launch. |
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Earnings Corner 📈 📉 |
Nike $NKE ( ▲ 6.41% ) Top and bottom line beat. Revenue rose 1% to $11.7B, while EPS of $0.49 topped the $0.27 estimate, helped by wholesale growth, the NikeSkims launch, and gains in running from its new sport-focused structure. Those positives were partly offset by a 4% drop in Nike Direct and a steep 27% decline at Converse. Management said the turnaround has "just begun," though China's weakness and $1.5B in tariff costs remain headwinds. Formal guidance was not issued, in line with practice. |
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Today's Headlines 🍿 |
Government Shutdown: The federal government has officially shut down after Congress failed to pass stopgap funding bills. Democrats held firm to their demands to extend Affordable Care Act Credits that are set to expire at the end of 2025, while Republicans argued that it could be dealt with later in the year. Both sides are trading blame as the impasse continues Employees deemed nonessential will be furloughed and are typically brought back once the shutdown ends, but this time could be different - Trump has threatened to make a lot of these job cuts permanent, a move that could have near-term economic impacts
Fed showdown delayed: The Supreme Court blocked Trump's bid to immediately fire Fed Governor Lisa Cook, letting her stay in place while her lawsuit plays out. Justices will hear arguments in January, keeping the fight over Fed independence alive Private payrolls shrink: ADP says U.S. private employers cut 32,000 jobs in September, far below expectations for a 45,000 gain and weaker than August's revised 3,000 loss. Losses were led by leisure & hospitality and small firms, while large companies and education/healthcare added jobs, adding pressure for Fed cuts, as the official BLS report could be delayed by a shutdown Pfizer reaches deal to avoid tariffs: The company agreed to offer its drugs to Medicaid patients at lower prices in exchange for a three-year exemption from Trump's planned tariffs on pharmaceuticals made overseas. Pfizer also agreed to sell some of its drugs directly to consumers on TrumpRx, a new website that will be operated by the federal government Search for BLS Commissioner continues: The White House has withdrawn the nomination of E.J. Antoni to lead the Bureau of Labor Statistics, with a replacement nominee set to be announced "very soon." Criticism that Antoni was too partisan and inexperienced made it unlikely that he would get the votes to be approved BYD's sales stumble: The Chinese EV giant reported its first monthly decline since early 2024, with September sales falling 5.5% to just over 396,000 cars. Analysts say tepid domestic demand and curbs on price wars are pushing the company to lean harder on overseas markets for growth The AI boom is raising your electric bill: Energy-hungry data centers are rapidly being built across the U.S., pushing wholesale electricity prices up as much as 267% over the last five years in data center hot spots. Much of that cost is being passed on to households and businesses in the area through higher utility bills Rick Perry's energy REIT surges: Fermi jumped 19% on debut after raising $683M in its IPO, giving the firm a nearly $15B valuation. The Texas-based venture aims to power AI-driven data centers with a mix of natural gas, solar, and nuclear energy London IPO market slumps: The country dropped out of the world's top 20 IPO markets after volume this year declined 69%. Lower valuations and increased competition from rival countries have diminished London's importance amongst the biggest IPO players Meta will use AI chats to prompt and tailor your ads: Starting December 16th, the company will begin drawing on users' conversations with its AI chatbot to help personalize ads and content across Instagram and Facebook Intel in talks to add AMD as a customer: The companies have discussed manufacturing chips for Intel's foundry business, which is seeking big customers so it can invest in developing its manufacturing technology. AMD currently manufactures its chips with Taiwan's TSMC Fortress co-CEO dies unexpectedly: Joshua Pack, co-CEO of Fortress Investment Group, passed away at 51. A 23-year veteran of the firm, he was instrumental in its credit business and recent European expansion Microsoft hikes Xbox Game Pass Ultimate: The top subscription jumps 50% to $30 per month, offering 400+ games, day-one releases, and upgraded cloud streaming. Lower tiers stay the same price but get added perks as Xbox pivots from consoles to services Amazon launches budget grocery brand: The new "Amazon Grocery" line merges Fresh and Happy Belly, offering 1,000+ items — from produce to meat — mostly under $5. Available online and in Amazon Fresh stores, it targets inflation-weary shoppers seeking value Boston mayor secures mandate, alarms business leaders: Michelle Wu is cruising to reelection after her challenger quit, leaving her free to pursue higher commercial property taxes and strict real estate rules. Executives fear her second term will further burden employers as the city grapples with weak growth and federal funding cuts Utah lender fights $1.1B First Brands lifeline: Onset Financial, the auto parts group's largest creditor with $1.9B exposure, is challenging a rescue loan it says undermines its rights. The firm argues it was the "most significant provider of liquidity" and vows to defend its claims in the bankruptcy fight Reddit sinks on referral fears: RDDT fell ~9% on heavy volume amid chatter that ChatGPT is citing Reddit less after a Sept. 12 model update. A shift toward "more authoritative" sources could be cutting Reddit-linked traffic, pressuring sentiment Oil Giants Slash Jobs as Prices Drop: Exxon is cutting 2,000 positions, Chevron up to 20% of staff, and Conoco as much as 25%. With crude prices falling, tariffs rising, and consolidation accelerating, U.S. energy layoffs are up 30% this year Apollo Launches Sports Investment Arm: Apollo is rolling out Apollo Sports Capital, a $5B fund to back teams, venues, and media rights. Veteran sports investor Al Tylis takes the CEO seat, with Apollo partners Rob Givone and Lee Solomon as co-portfolio managers Anthology, Blackboard's Parent, Files for Bankruptcy: The Veritas Capital backed software firm sought Chapter 11 protection after a failed sale process. Carrying more than $1B in debt, Anthology will offload three business units, secure $50M in fresh financing, and shift control to Oaktree and Nexus while keeping its core teaching and learning platform alive
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M&A Transactions💭 |
VISUfarma, operator of an ophthalmic specialty pharmaceutical company, has reached a definitive agreement to be acquired for EUR 190.0M by Nanomi. EV/Revenue was 3.76x. Stifel advised on the sale. |
Kohlberg Kravis Roberts has entered into a definitive agreement to acquire The Solar Portfolio of TotalEnergies for $625.0M. The transaction values the asset at an estimated $1.25B. |
Merus (NAS: MRUS), a clinical-stage immuno-oncology company, has reached a definitive agreement to be acquired for $8.0B by Genmab (CSE: GMAB). EV/Revenue was 142.28x. Jefferies advised on the sale. |
Mediobanca (MIL: MB), an Italian investment bank, was acquired for EUR 16.0B by Banca Monte dei Paschi di Siena (MIL: BMPS). Centerview Partners and European Investment Bank advised on the sale. |
Meade Pipeline Company, operator of a gas pipeline and a subsidiary of XPLR Infrastructure, has reached a definitive agreement to be acquired for $1.08B by Ares Management. The transaction was supported by $625.0M of debt financing. J.P. Morgan advised on the sale. |
The Aurelius Group entered into a definitive agreement to acquire 5 Production Sites of Landis+Gyr for $215.0M. UBS Group advised on the sale. |
Electric Arts (NAS: EA), one of the largest global developers and publishers of video games, has entered into a definitive agreement to be acquired for $55.0B by Saudi Arabia's Public Investment Fund, Affinity Partners, and Silver Lake. The transaction was supported by $20.0B of debt financing. EV/EBITDA was 30.78x and EV/Revenue was 7.36x. Goldman Sachs advised on the sale. |
Bedrock Production, operator of an energy production company, was acquired for $370.0M by BKV (NYS: BKV). |
ArmadaCare, provider of employee benefit consulting services, has reached a definitive agreement to be acquired for $250.0M by Ambac Financial Group (NYS: AMBC). Jefferies advised on the sale. |
The Tampa Bay Rays, operator of a baseball league franchise, was acquired by an ownership group led by Florida Based business executive Patrick Zalupski for $1.7B. EV/Revenue was 5.72x. |
Statkraft Varme, operator of district heating and energy recovery facilities, has entered into a definitive agreement to be acquired for EUR 312.0M by PATRIZIA and Nordic Infrastructure. |
Sojern, operator of an AI based travel marketing platform, has reached a definitive agreement to be acquired for $250.0M by RateGain Technology (BOM: 543417). |
SBI Rheos Hifumi (TKS: 165A), engaged in investment trust management business, has reached a definitive agreement to be acquired for JPY 22.2B by SBI Global Asset Management. EV/EBITDA was 9.12x and EV/Revenue was 2.0x. |
Esure Group, operator of an insurance company, was acquired for GBP 1.295B by Ageas. Goldman Sachs and Fenchurch Advisory advised on the sale. |
Private Placement Transactions💭 |
Glydways, operator of a transportation system company, raised $101.31M of venture funding from undisclosed investors. |
Flying Tulip, developer of decentralized financial infrastructure, raised $200.0M of seed funding from FalconX, SCB, and Tioga Capital Partners at a pre-money valuation of $800.0M. |
Vercel, developer of a cloud-based workflow platform, raised $300.0M of Series F venture funding led by Accel and GIC Private at a pre-money valuation of $9.3B. |
Star Therapeutics, developer of antibody-based therapeutics, raised $125.0M of Series D venture funding led by Sanofi Ventures and Viking Global Investors. |
Rebellions, developer of AI semiconductor-based full-stack alternatives, raised KRW 340.0B of Series C venture funding from KT Investments, Samsung Electronics, and ARM at a pre-money valuation of KRW 2.0T. |
Eve, developer of a data extraction platform, raised $103.0M of Series B venture funding led by Spark Capital at a pre-money valuation of $1.0B. |
Cerebras, an AI company, raised $1.0B of Series G venture funding led by Fidelity and Atreides Management at a pre-money valuation of $7.0B. |
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Odds of the Day 🍒 |
Kalshi traders are pricing in a 85% chance of Zohran Mamdani winning the NYC mayor election. |
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*New Traders on Kalshi receive a $20 bonus of trading credit when depositing $100+ with the code "HYH". |
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Noteworthy Chart 🧭 |
 | Per Bloomberg |
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Meme Cleanser 😆 |
 | seth @sethsetse |  |
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| |  | | | 6:19 PM • Sep 30, 2025 | | | | | | 7.72K Likes 434 Retweets | 108 Replies |
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Until next time! |
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