OpenAI is the World's Most Valuable Private Company & Tesla Sales Are… Up?

0:28The holiday shopping season is just around the corner. shopping season and beyond. Head to contentful.com slash Black Friday. That's contentful.com slash Black Friday. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Tesla had its best sales quarter ever. So why did the stock drop? Then OpenAI is now officially the most valuable private company in the world. It's Friday, October 3rd. Let's ride.

0:59Good morning and happy Friday. We made it. Not to add some stress to your plate this weekend, but have you picked out a Halloween costume yet? Time is ticking down to the Spookfest, which is now less than a month away. And if you need some inspiration, Spirit Halloween revealed its most popular costumes of 2025 so far. And number one, see if you can guess it, is K-pop Demon Hunters, which makes sense because that's become the most viewed movie in Netflix history. Other popular costumes are related to Wicked, animated shows like South Park and SpongeBob, and classic superheroes like Mr. Fantastic.

1:33Toby, what are you expecting to see out there among the trick-or-treaters this year? Well, first of all, Spirit, those are not very good. I have a lot of better ideas. Gather two friends and be the thruple from the Coldplay concert Kiss Cam, or you and a hundred of your closest friends could dress up as the 100 men versus one gorilla debate. I'm also partial to a little Katy Perry in space get up just a blue jumpsuit with some blue origin patches on it. And finally, you can always go as hair and makeup. Just don't show up to work to really sell it. Those are my ideas. That's what I think we're going to be seeing out there this year.

2:09All right. Now a quick word from our sponsor, LinkedIn Ads. Toby, what do you search for? Deeper meaning in my interpersonal relationships, a sense of belongingness I haven't experienced since childhood, and a really good pretzel bun. Well, that's very deep, Toby. But what I was going to say was, what do you search for in professionals when doing B2B advertising? Because with LinkedIn ads, you can target your buyers by job title, industry, company role, seniority, skills, company revenue, so you can stop wasting budget on the wrong audience. Ah, I see. Well, in that case, it's worth mentioning LinkedIn ads has a network of over 1 billion professionals and 130 million decision makers.

2:45Plus, LinkedIn ads generates the highest B2B, that's business to business, ROAS of all online ad networks. Spend$250 on your first campaign on LinkedIn ads and get a free$250 credit for the next one. Just go to linkedin.com slash mbd. That's linkedin.com slash mbd. Terms and conditions may apply. On your left, Elon, OpenAI is now the most viable private company in the world after completing a secondary share sale for employees at a$500 billion valuation, leapfrogging Elon's SpaceX in the process. OpenAI gave employees who'd been at the company for more than two years a chance to cash out of$10.2 billion worth of their stock, but in the end, only about two-thirds of that was actually sold.

3:29Inside the company, that's being read as a show of confidence. Many workers decided to hold on to their shares, even at that sky-high half a trillion dollar valuation. On the other side of the equation, there were plenty of investors still eager to buy whatever stock was available, And no wonder, OpenAI is starting to ramp up its money-making, hitting$4.3 billion in revenue in the first half of this year, which was 16 % above what it made in all of 2024, according to the information. It's still going through a lot of cash, though, projecting$8.5 billion in burn for 2025. So it's got explosive revenue growth that you want to see, but cash burn driven by R &D and server costs are still higher.

4:09Neil, this company just keeps seeing its valuation swell. It would now be the 20th largest publicly traded company in the world if it ever wanted to go that route. And I know it's got to be satisfying for Sam Altman to pass his rival Elon SpaceX in the process. Investors see just a huge growth trajectory for this company because compare this$500 billion valuation with other companies that are on the public market. So$500 billion is around what ExxonMobil is worth. Exxon Mobil has reported annual revenue of almost$350 billion last year and a profit of more than$30 billion. OpenAI, as you mentioned, did$4.3 billion in the first half of the year.

4:51It's expecting$13 billion of revenue and it is losing billions of dollars. And now those two companies are valued the same. It's a show that investors think that OpenAI, this$500 billion valuation, is going to jump a lot in the next few years. How is it going to live up to this valuation? Right now, it is torching cash, but every launch is kind of expressing how it does see a path towards profitability and a path towards revenue going forward. I mean, they just launched Instant Checkout, which allows users to buy products directly in chat GPT. So that's potentially a revenue stream. And then also, they have a hardware play in the works.

5:31They have Johnny Ive, who worked at Apple, creating something that they think can replace potentially mobile phones going forward. And then also, they just recently hired an Instacart CEO to kind of figure out its advertising network. Ads are likely coming to ChatGPT at some point in the future. Because right now, only 4 % of ChatGPT's nearly 700 million weekly users are on a subscription plan. And so a lot of those are unmonetized users right now. What's the way that the internet has traditionally monetized users? It is through ads. So it's giving some hints as to how it's going to finally move from this cash-burning enterprise into one that actually makes a lot of money.

6:14Maybe it's not ExxonMobil levels yet, but this is kind of the hints in the strands that they're pulling to finally make some money. And even if this fundraise happened on, or not a fundraise, share sale happened on the private markets. It did have a big impact on the public markets. Yesterday, Nasdaq hit its second consecutive record high, and the Nasdaq is composed of a lot of tech companies. The AI trade had kind of been wobbling for the past few weeks. Investors were wondering whether these companies had all this money to fund the trillions of dollars that are needed to build out these data centers that fuel the AI race.

6:49But after OpenAI got this, you know, vote of confidence from other investors that sent a bunch of other tech shares up. Sam Altman is also in Asia right now, inking deals with South Korean chip companies. And he's in Japan today. And those companies saw a huge boost. So the public market got a strong reaction from this because it was a sign that the AI trade is alive and well. I remember when a trillion dollar company was just a really big deal. Now we have startups. I mean, that's not quite the word to use for open AI, but these private companies that are halfway there in the private markets right now.

7:19So truly just staggering levels. And it is passing Elon's kind of business empire as well, which had to feel pretty dang good. Tesla finally reported the blowout delivery numbers investors have been pining for, selling nearly 500 ,000 vehicles globally in Q3, good for a 7.4 % increase year over year. So why the heck did the stock fall 5 % yesterday? It all comes down to that pesky$7 ,500 federal EV tax credit, which pulled demand forward, juicing short-term numbers as buyers rushed to take advantage of the cheaper prices. Still, Tesla beat analysts' expectations by a hefty amount. Wall Street only forecasted about 450 ,000 deliveries, which would have implied a decline in sales.

8:02But even with the beat, the market is still down on EV makers navigating a creditless future. GM and Ford also reported around 8 % Q3 sales growth, but both traded in the red yesterday. Rivian saw its shares retreat despite delivering 32 % more vehicles year over year. And Elon himself has warned Tesla is likely to face several, quote, rough quarters going forward as the incentives disappear and before it ramps up robo-taxis at scale. Despite his foreboding tone, Musk's pocketbook is doing just fine. He became the first person in history to cross a$500 billion net worth on Wednesday per Forbes' billionaire index.

8:38His wealth briefly touched $500.1 billion before slipping slightly, leaving Larry Ellison in the dust after the Oracle co-founder briefly overtook the mantle of richest person in the world earlier this year. Neil, such dissonance here. Elon being worth half a trillion dollars. Tesla reporting sales growth. And yet the vibes are still pretty bleak right now. And that's because this was expected. Every single electric vehicle seller, whether it's a legacy automaker or Tesla, had a huge quarter because of that pull forward in demand because the tax credit was ending. Electric vehicle sales in the United States jumped 22 % in the third quarter from a year earlier to set a new record of 410 ,000 vehicles.

9:18EVs accounted for 10 % of the new car market. That's a record. But this week, you had a bunch of automaker CEOs come out and say, well, the times are good now, but they're about to get a lot leaner. Ford CEO Jim Farley said that demand for EVs is going to be cut in half because of tax credit ending. And we're expecting the same thing for Tesla, which has not really done a very good job of putting new EVs out there. And so when this tax credit ends, the buyers are going to look at Tesla's lineup and say, well, there's nothing that's super attractive now that I can't get this tax credit. And that's what investors are responding to.

9:51And in Elon's mind, they're not even really a car company anymore. Remember, Tesla's master plan for is that they want to move away from just being an EV maker. AI, robotics and energy systems are its big plays in the future. They want to redefine labor, mobility and energy at scale. That's kind of the new manifesto at Tesla right now. So even with this credit expiring, Elon has come out and just said like, yes, it's going to be rough for us. But in his mind, the EVs are going to be a smaller and smaller portion of this business as this autonomous vehicle division ramps up, as the Optimus robot division ramps up, as even this battery storage division ramps up because it had a pretty good quarter in that as well.

10:33So yes, there is going to be this hit from it. But in Elon's mind, it is$500 billion mine right now. He's probably saying it's all right. At least we have these backup plans. Yeah, if you're looking at the calendar for Tesla, they have two big things that are circled on it. The first one is the rollout of this robo taxi program. They're going in Austin right now. They have tests going in the Bay Area. And Elon says that by next year, they're going to have hundreds of thousands of self-driving Teslas out in the United States. So that is a huge push that they're really banking the company on. And the next thing is this big annual meeting happening next month where shareholders are going to vote on this trillion dollar pay package.

11:11We know Elon Musk is worth 500 billion dollars, but he could be worth a trillion if this new pay package gets voted into the company bylaws. And that could that's worth a trillion dollars should Elon Musk hit these particular targets as CEOs. And you mentioned that the car aspect is going to be a smaller portion of the company. And if you look at the incentives that are set out for Elon Musk, that really exemplifies, you know, the sort of trajectory that Tesla is on, the targets for car sales really aren't that aggressive at all compared to profit, deployment of robots, self-driving taxis, and the stock price.

11:45So for Elon Musk to get this full trillion-dollar pay baggage, Tesla needs to hit an$8.5 trillion market cap in the next decade. Right now, it stands at about$1.4 trillion. So there's a lot of growth that needs to happen, and we'll be here to walk you through it. Okay, welcome to Stock of Dog of the Week, the segment where Toby and I pick one stock with a strong sweater game and another that should be taking notes from Harry and Sally. I won the pre-show game of Rock, Paper, Scissors, so I get to go first. And my winner is Fair Isaac, the company that created the FICO credit score. Isaac was looking extra fair yesterday, shooting up 18 % after giving the middlemen in its industry the old middle finger.

12:25Fair Isaac announced that mortgage lenders could access FICO scores directly from the company, whereas previously they had to buy them from the three credit reporting giants, Experian, Equifax, and TransUnion. It's one of the biggest changes to the home lending market in decades and one that could diminish the role of those middlemen credit reporting companies. All three, Equifax, Experian, and TransUnion, tumbled at least 4 % yesterday. Fair Isaac didn't necessarily make this move on its own. It's faced heated pressure from the White House to lower the costs associated with getting a home loan.

12:55In late July, top housing regulator Bill Pulte blasted Fair Isaac as a monopoly that contributed to higher credit score prices for consumers. Yesterday, Pulte seemed partially appeased with the move to go direct, calling it a first step in ensuring a competitive and safe and sound market. So it looks like first Isaac killed two birds with one stone here, got some regulatory heat off its back while potentially snagging market share from the big credit reporting bureaus. And Toby, there's nothing at Wall Street and Main Street like more than cutting out the middleman. Who are the winners and who are the losers here?

13:26The winners are borrowers in home buyers because now these credit polls, which are a lot cheaper now, which regulators have been on FICO for years now, even if it's just a few bucks a score, there are millions and millions of loans out there. So multiply that. It is some meaningful cost savings. And then FICO is obviously a short term or a winner here. They get much higher volume. They get much more control over their distribution of these all important magic numbers that determine if you can get a loan. And you see that with the stock pop. And then the regulators and politicians also, they were thrown a bone as well because, yeah, Bill Pulte has been after this monopoly that he calls it within the credit score industry.

14:07He's been trying to get another entity in this space, Vantage Score, to be another player to reduce the reliance on FICO. Now they can claim this win on affordability without actually having to legislate it. So it really was FICO did kill two birds with one stone because they damaged their rivals while also appeasing regulators at the same time. All right, we're going to move on to our dog of the week after this quick break. Toby and I don't work in accounting, so we're shielded from handling company ledgers, bank transactions and financial reports. But for the pros who do deal with all that, Fispan can help make your job easier.

14:45It embeds your bank right into your accounting software, so siloed data is centralized, and you can get more done and gain better visibility into daily cash positions. Imagine payments and remittances being sent directly from your accounting software, reconciliations that are completed in minutes, not hours, and financial reports that are consistently accurate and on time. You can do more than imagine all that. Head to F-I-S-P-A-N.com to transform how your firm manages money. That's F-I-S-P-A-N.com. Toby, the modern workplace is a digital mess. Is my laptop dusty again? Yes, but that's not what I'm talking about.

15:24Teams are scattered across locations using a chaotic mix of apps and devices. It's a logistical nightmare that creates security risks and eats up valuable time. Well, it's a good thing there's JumpCloud and Aaron Akan for that matter. JumpCloud is a unified IT management platform that securely manages all employee identities and devices from a single place, cutting through the chaos. By consolidating IT tools, JumpCloud helps businesses save money and avoid the complexity of managing multiple systems. Its AI-powered platform helps you protect, manage, and monitor your entire workforce so you can stay one step ahead.

15:58This isn't just about making IT easier. It's about giving your business a strategic advantage. JumpCloud frees you up to be more productive, flexible, and innovative, allowing you to work smarter and grow faster. Toby, you should really keep some screen wipes around. As for the rest of us, clean up the digital mess. Learn more at jumpcloud.com slash brew. That's jumpcloud.com slash brew. My dog of the week is Reddit because ChatGPT is sending a lot less traffic its way these days. Earlier this week, the data aggregator PromptWatch showed that Reddit appeared in just 2 % of chat GPT responses, down from nearly 10 % in August and a peak of 14 % in September.

16:39Reddit has long functioned as a search engine in its own right. People have gotten into the habit of adding Reddit to the end of their searches on Google in the hopes of getting an answer from the masses. But if AI replaces that behavior or stops citing it as frequently, Reddit's traffic flow is at risk. Reddit's longtime advantage has been its user-generated authenticity. A trawl through a Mexico City subreddit will likely yield better places to eat than an SEO-optimized article on Google. But it's a two-edged sword because Reddit threads are also messy or sometimes unreliable. So AI companies may decide they're not worth servicing going forward.

17:14Neil, this has shades of when Facebook nuked publisher traffic with a single algorithm tweak. Now it seems like OpenAI has similar leverage over Reddit, which is why its stock is down about 15 % over the last week. Yeah, Reddit has really hitched its wagon to these big distribution platforms like Google. And now as traffic has shifted from Google to AI searches like Perplexity or ChatGPT, it's also moved over there to sign deals with them. And Reddit has become a pretty key data supplier to AI companies because it has so much user-generated content that AI companies really want for their LLMs.

17:52It signed this deal with Google on the day that it IPO'd last year for$60 million a year that gave Google access to real-time content on Reddit's platform. And then a few months later, it struck a similar deal with OpenAI that is estimated to be worth around$70 million a year to allow ChatGPT to access Reddit's data. And now that traffic is dipping a little bit, going from ChatGPT to Reddit, it is spooking a little investors. But if you look at Reddit's stock price, it mostly has gone up from its IPO. But every time there is any sort of algorithm change on Google or ChatGPT, then you see a lot of volatility in Reddit's stock price.

18:29It's because it's what investors are paying attention to. It's all this referral traffic that goes from these big distribution platforms back to Reddit. Yeah, there's so much platform risk here because it is. You just live and die on this smallest of tweaks that other companies are making, which is just not necessarily what you want to see. For all this talk about AI, though, Reddit's core business is still advertising. It feels like every single conversation starts with AI but comes back to advertising. 93 % of Reddit's revenue still comes from ads, and it's doing well. Revenue growth in Q2 was up 84 % year over year.

19:03That's the fastest growth it's seen in three years. So it's still a pretty healthy advertising business. But again, if that traffic starts to dry up, then you can't sell ads anymore because you have less eyeballs. So definitely a vulnerable position it finds itself in, even though it's done pretty well as a public company so far. And what do you think of the fact that when you're querying a chat GPT or an AI for anything, it's mostly probably coming from Reddit. The analytics platform Profound showed that between August 2024 and June 2025, Reddit was the most cited domain by Google AI. Overviews and perplexity, the second most cited by ChatGPT.

19:40So when you ask a chatbot something, it's kind of going straight to Reddit and bringing together whatever people were saying on Reddit, which, you know, makes you think a little bit. Yeah, it's scary to think about. All right. The commercial supernova that is Taylor Swift is back on the airwaves, releasing her 12th studio album, The Life of a Showgirl, at midnight this morning. It's her first album since last year's The Tortured Poets Department, which set a Spotify record for the most streamed album in a single day and helped her become the first artist to hold the top 14 spots on the Billboard Hot 100.

20:09The life of a showgirl could be as big or probably even bigger. Over five million people have it pre-saved on Spotify, the most in history, while pre-orders for a special vinyl edition sold out in less than an hour. But when you listen to this album, as no doubt many of you rapid Swifties already have, you might notice something different about the music. Whereas the past couple of Swift albums have been more melancholy, sprawling, esoteric records, this one features choruses that are more singable. Swift said on her fiancé's New Heights podcast that the life of a showgirl would be more upbeat with, quote, melodies that were so infectious that you're almost angry at it.

20:44And that's because for this album, Swift teamed back up with Max Martin, the Swedish songwriter behind some of the most infectious, popular songs of the past three decades. Max Martin and his collaborator, Shellback, helped Swift make the transition from country to pop in the 2010s, co-writing hits like Shake It Off, Blank Space and Bad Blood. And now she's tagged them in to launch a new era of earworms. Toby, did you stay up till midnight to listen? Oh, absolutely. If that's why I'm sounding a little tired this morning. No, I did not do that. But this morning, I did get through about two-thirds of the album while we were prepping for the show.

21:18And the expectation going in that she's reunited with Max Martin, that this was going to be an album full of bangers. And there are certainly some bangers on there. His pedigree, though, is just unmatched, unparalleled in terms of the pop music canon. He has co-written 27 number one songs. That is second only to Paul McCartney. If you expand from the Taylor Swift discography, he's also worked on Britney Spears' Baby One More Time and sings It's Gonna Be Me, The Weeknd's Blinding Lights, and eight of Katy Perry's nine number one hits. So this dude just has his finger in every single popular song over the last few decades.

21:55So definitely a shift from her more exploratory genre albums of the past few years now back to kind of the meat and potatoes pop hits in Life of a Showgirl. I mean, he wrote, Max Martin wrote, I want it that way. I mean, even if he wrote that, it would have been enough. Another sort of business angle to look at with the release of Taylor Swift's new album is at the box office, interestingly enough. She is releasing a movie with AMC called The Official Release Party of a Showgirl, and that is tracking a debut of$35 to$40 million over the weekend. It's expected to be the top movie at the box office, and that would be her second consecutive number one box office debut.

22:35Remember, in 2023, she released Taylor Swift, The Eras Tour, which debuted with$93 million. So she's definitely going to conquer Spotify and all of the audio airwaves this weekend and probably beyond that. But she's also probably going to conquer The Box Office with this movie release. It's a different movie. It's not a traditional concert film like The Eras Tour was. It's behind-the-scenes footage. It's new music video. And she's selling tickets for$12, which everything has meaning in the Taylor Swift universe right now. That number is important to her as well. But yeah, going to have to finish listening to this album.

23:09I listened to Wood, and I'm not going to spoil anything for anyone who hasn't listened to it. There's a song called Wood. There's a song called Wood. Don't listen to it around your parents. You might start blushing a little bit. That's where we're going to leave it for now because this is a PG podcast. All right, let's sprint to the finish this Friday with some final headlines. Warren Buffett may have only three months left as Berkshire Hathaway's CEO, but he's not coasting into the sunset like I did senior year of high school. Yesterday, Berkshire struck its biggest deal in three years, buying Occidental's chemicals business, Oxychem, for$9.7 billion.

23:41It could be Buffett's swan song. The 95-year-old investing icon is stepping down January 1st as the head of Berkshire before handing over the reins to Greg Abel, who was the real mastermind behind this deal. Toby, for years, Buffett has said, I can't find any attractive takeover targets. Everything on the market is too expensive. And all that waiting around led to antsy shareholders and a cash pile that swelled to $344 billion. So why pounce now? This is just a classic Buffett business. I mean, there's nothing more boring and more money making than petrochemicals. He's been circling Occidental for years now.

24:17He actually helped them expand its oil and gas business with a lot of loans. And so he's accrued this big stake in it. So he's got a vested interest in this company. When OxyChem became up for sale, he said, this is kind of a win-win because it helps you pay down some of that massive debt that you've accrued. This is my kind of business. It just spits off cash. So investors, though, have reacted a little bit skeptically to this. Occidental share price actually fell by more than 7 % upon the news. Some analysts say that it's because the petrochemical sector has experienced a little bit of a downturn.