Short Seller Hindenburg Closes Up Shop & Bezos Enters the Space Race

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, more MBA grads are on the job hunt months after graduation.

0:39Has the degree permanently lost its luster? Then the founder behind the infamous short seller Hindenburg Research is shutting the firm down. It's Friday, January 17th. Let's ride.

0:55We lost a couple of legends yesterday. Visionary director David Lynch died at 78. He was beloved for his surrealist, eerie depictions of American life in works like Twin Peaks, Mulholland Drive and Blue Velvet. Many have tried to copy his style, but as our colleague Jen Walsh put it so eloquently, no one has matched his freak since. Lynch's family announced his death on Facebook, writing there's a big hole in the world now that he is no longer with us. But as he would say, keep your eye on the donut and not on the hole. Toby, last year I started watching Mulholland Drive because it is considered one of, if not the best movie of the last 25 years of the 21st century.

1:3920 minutes in, I was spooked. I turned it off. Maybe it's because I was by myself. It was late at night. So maybe we can watch it together because I do hear amazing things about that movie. Either that or his version of Dune, which is also iconic, albeit for different reasons. It's become a little bit of a cult classic because of just how weird and over the top it is. But yeah, David Lynch, an absolute legend. We also lost Bob Uecker, the iconic announcer known as Mr. Baseball, who was the voice of the Milwaukee Brewers for over 50 years. He was 90 years old. Even if you never tuned into a Brewers game, you likely know Uecker for his iconic cameos in sports cinema.

2:18His just a bit outside call from Major League is as quotable as they come. Norm MacDonald thought Euchre was one of the funniest men he ever met, and I encourage you all to go look up his appearances on the Johnny Carson's Tonight Show to corroborate Norm's claim they will never quite be a Mr. Baseball like him. Now a word from our sponsor, Public.com. Neil, you ever use any LLMs or AI chatbots? I'm kind of an AI Luddite for the most part, although I will pull one up to prove my brother wrong every once in a while. Well, maybe you just haven't found the right one yet. Publix AI Assistant Alpha is just like your typical chatbot like ChatGPT, but specifically for investing.

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3:37Over. Roger. Wait, is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. Our first story goes out to all the short kings out there, and I'm not just talking about height. Nate Anderson, the man behind the famed short-selling firm Hindenburg Research, tossed in the towel saying he was closing his firm due to the stresses of the job.

4:17Hindenburg made a name for itself by going after the giants of the corporate world, including the Indian conglomerate Adani Group, the once high-flying hydrogen truck startup Nikola, and household names like Carvana, Icon Enterprises, and Jack Dorsey-owned Block. Between Block, Adani Group, and Icon Enterprises, Hindenburg's deeply researched reports knocked as much as$173 billion off their market value. It's not easy to destroy that much value amidst one of the best bull runs U.S. equities have seen in decades, but Hindenburg's approach created a loyal following that allowed it to punch above its weight.

4:55Not all of its shots hit its target, though. Since publishing a report about Roblox in October, the children's game platform has seen its stock rise 50%, and shares of its most recent target, Carvana, have recovered and are up about 5 % this month. Still, it's going to be weird living in a world without a Hindenburg report randomly dropping from the clouds and causing a ruckus kneel and shows that activist short sellers are increasingly becoming a dying breed. So our first thought when this news hit the wires on Wednesday was that financial regulators are knocking at his door because short selling is not for the weak stomach.

5:33He launched this firm in 2017 and immediately was sued by three of the firms that he was targeting. There are legal challenges facing other short sellers as well. Andrew Left, who's a very prominent short seller, is now was indicted for manipulating stock. So I don't I'm not speculating at all. It's just this is the first thing that came to everyone's mind here at Morning Brew because short sellers are operating in a legal gray area. and many of them have just hung up the cleats in recent years because they say it's not worth it. Hindenburg guy says it's because he just has a terrible work-life balance.

6:09Yeah, I mean, for a long time, short sellers have been advised by their lawyers that as long as your reports that you issue contain no material inaccuracies and are not based on inside information, you're pretty much in the clear. But again, they are these destructive forces in the financial world. So, of course, some of the companies that are the targets of short sellers do start to push back, do sue, do try to pursue legal action against them. So they aren't loved, nor are they very well understood. But Hindenburg kind of bucked that trend a little bit. I think it's because its big break was taking on Nikola Motors, which this was just kind of emblematic of that time, is that 2020-2021 era where these SPACs were these high-flying companies.

6:52Hindenburg looked under the curtain of, looked under the hood of Nikola Motors and found that in a lot of their videos, they weren't even powering their trucks via the ways that they were supposed to be powered. They were rolling them down hills and those sort of revelations kind of endeared people to Hindenburg because then they were seen as this small upstart firm going after these potentially fraudulent companies, which is why it created sort of this cult following, just emblematic of that cult following. Nate Anderson signed off by sending his team this link to a deep house set by this British DJ in Bali.

7:27It's this very nice video. But if you go and look at those top comments, most of them are mentioning Hindenburg saying, RIP Hindenburg, we loved you. So that sort of kind of love for a short seller is not something you see very often. It was unique to Hindenburg. No, especially in 2021 with the GameStop fiasco. If you remember what that was all about, you had these Redditors trying to push up the stock of GameStop because it was being shorted by a hedge fund, Melvin Capital, and they wanted to put the quote unquote squeeze on the short seller Melvin Capital. Melvin is no longer with us. It is defunct after that GameStop rise in share price.

8:06But a number of short sellers in recent years have just said, this is not worth it. Bill Ackman had that very, very prominent short on Herbalife and he lost billions of dollars on that. So he's like, I'm not doing that anymore. Citron is another guy who's like, he had a$6 billion short fund and he's like, I'm just not doing this anymore. So we may see a decline in short sellers. They may be going extinct after Hindenburg is gone now. And, you know, some would celebrate that. They think that short selling is illegal and it causes all sorts of chaos in the market and people can manipulate stocks that way because they are making money on this.

8:44They're betting that the stocks will go down after they issue these reports. And then others say, no, actually, short sellers are an important part of our market's ecosystem. It's important to have a check on market euphoria. So, you know, I just, the future for short sellers does look extremely quality. The billionaire space race is officially on. Jeff Bezos' space company, Blue Origin, successfully launched its new Glenn rocket into orbit for the first time early Thursday. It's a huge step for the world's second richest man to begin competing in space against the world's first richest man, Elon Musk, whose SpaceX holds a near monopoly on rocket launches.

9:23This launch has been a long time coming. Bezos founded Blue Origin 25 years ago, only six years after he launched Amazon with the goal of enabling millions of people to work and live in space. But in the years since, Blue Origin has only managed to send people up to the edge of space, certainly not orbit, in a small rocket named New Shepard. And the launch of this big rocket, the towering 322-foot-tall New Glenn, was initially slated for 2020 before delays pushed it back five years. Meanwhile, SpaceX launched rockets 134 times last year alone, is valued at$350 billion, and has built out a Starlink satellite internet service that's set to rake in nearly$12 billion in revenue this year.

10:08So as it stands now, Musk has built a commanding lead over Bezos. Let's call it 28-3. Toby, can Bezos pull off a Patriots-level comeback and present the first real challenge to SpaceX? Who knows? There was a lot of reasons to doubt Blue Origin before this because they literally had not gotten anything up into orbit in 25 years. It is kind of wild to think about how much kind of airtime we've thought about Blue Origin, but how little they'd actually accomplished. So this did silence a lot of those initial doubters because even though Blue Origin has been lagging behind, NASA is counting on New Glenn to actually deliver two spacecraft into orbit around Mars.

10:48So it has a contract with them. The U.S. military also has a few contracts with Blue Origin as well. Blue Origin has also poured a ton of money into getting its ambitions off the ground. They've put$1 billion into New Glenn's launch site. It's near historic Cape Canaveral. So there's a lot on the line here. They needed to get something into orbit, and they finally got it off the ground. The mission didn't go perfectly. they weren't able to land the booster like SpaceX has done in the past, but they did have a successful orbital mission, which is really the main purpose of this latest launch. And Bezos has been entranced by space since a young age.

11:26He appeared at the Dealbook Summit last year and he said, I think it's going to be this. He's talking about Space Blue Origin. It's going to be the best business that I've ever been involved in, but it's going to take a while. Might I remind you that he's been involved in another big company, Amazon. So he's pretty bullish on space. And I just kind of want to take a step back here. We used to talk about the space race in terms of U.S. versus Russia versus China. And now we have the new space race here in 2025 is between the two richest people on Earth, Elon Musk and SpaceX against Blue Origin and Jeff Bezos.

12:01It's just an entirely different thing that's going on. And NASA is relying on these private companies to deliver payloads into orbit and take it, uh, take into its new frontier. And maybe that's another way of America establishing its, its soft power. And we did have a little bit of a frenemy moment or just a friendly moment between, uh, Jeff Bezos and Elon Musk. Elon Musk did congratulate Blue Origin that he wrote congratulations on reaching orbit on the first attempt. And then we had some nice parallelism as well because SpaceX launched its Starship yesterday. It was a little bit of a mixed bag.

12:37They actually lost communication with Starship, which led to it breaking up in orbit, which also led to some really cool pictures. It looked like a full-on meteor shower as this Starship broke up, but they did end up catching their heavy booster with the chopsticks again, which is just always a very cool thing to watch. So it was almost the perfect, you know, antithesis to the new Glenn launch, which successfully completed their orbital mission, but wasn't able to catch their booster. SpaceX did the exact opposite. So maybe if you're NASA, you're like, well, in aggregate, we had a pretty good day here.

13:08There was a time when a Harvard MBA was a first class ticket to, well, a first class ticket, but times are changing in this rough market for white collar workers. According to the Wall Street Journal, nearly a quarter of job seeking Harvard MBAs who graduated last spring are still on the hunt for work three months after leaving school. That's up from 20 % the year before and way up from 10 % in 2022. And I'm not just going to pick on Harvard. This MBA recession has impacted all of the top B schools. Wharton at Penn, Stanford's Grad School of Business, NYU Stern. They all saw lower job placements last year than at any point in modern history, the journal wrote.

13:48I'll give you one more number to put a point on it. The share of 2024 MBAs still on the job market months after they graduated has more than doubled at most elite business schools over 2022. The big picture, even though the economy continues to add jobs at a rapid clip, demand is just not strong for white collar high wage employees who come out of places like HBS. The big four consulting firms are slimming down. Tech has adopted Mark Zuckerberg's year of efficiency model. And of course, AI replacing human jobs is always in the back of your mind. Toby, the thorny question here, is this a blip or more of a permanent trend of MBAs declining in status?

14:27Yeah, I mean, there's definitely cycles when it comes to hiring. I mean, after the big tech bubble popped, you saw the share of MBA grads going into tech drop precipitously. So it is a cyclical industry and a cyclical business. And also, just because you have a fancy MBA and a fancy degree next to your name doesn't mean you're completely immune to the difficulties experienced in this job market right now. It still is a pretty, even though we have had great jobs data coming out, it is not necessarily the most gangbusters job market that we've seen. So, of course, you're going to feel a little bit of pressure just like every other person trying to get a job is feeling.

15:05It's a two-sided marketplace, too. If Amazon, if Google, if the McKinsey's, if the Baines of the world don't want to hire people, if they are cutting back, of course, you're going to see people lagging on the job market as well. So I don't know if it's an existential threat or if it's just a cyclical thing, but whatever's happening, less MBAs are getting hired. That was the big conversation on social media. Paul Graham, the venture capitalist, said this is a secular trend when quoting this article. And he said and by that, he is implying that this is more of a permanent downward trend in the fact that demand for MBAs specifically are just going down.

15:39And I do want to talk about AI. I think that is maybe the chatbot elephant in the room here. Google said it's already writing 25 % of its code using AI. A new report from Bloomberg found that global banks are going to shed 200 ,000 jobs in the next three to five years due to AI. And I don't know how much of this NBA downturn people can't find jobs. Is companies already using AI to replace workers? But, you know, it's certainly something that, you know, we'll have to watch because when you're talking about this kind of AI, we've talked about automation for centuries, replacing human jobs. But in the past, it's been blue collar work, manufacturers.

16:24Let's get a robot to build this widget instead of a human. It's a lot safer and more efficient. This kind of AI that we've seen, this AI revolution over the past few years, is really going after white collar work, knowledge workers. So that's where this white-collar recession could come from, and MBAs are perhaps on the front line of that because they're very expensive. Meanwhile, chatbot's mostly free. So I think AI, if it's not a part of this story now, will be one in the coming years. Let's take a quick break. After it, we're going to Stock the Week, Dog the Week. Eczema isn't always obvious, but it's real.

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18:02When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. It's Friday, which means it is Stock of the Week, dog of the week time where Neil and I pick one stock that is struggling with prolonged flu-like symptoms and one stock that has had a clean bill of health.

18:41Neil, you fought hard, but I won the pre-show chess boxing match, so I'm up first. And my stock of the week is Nintendo because the Japanese video game maker finally has a new console coming out. After eight long years, Nintendo unveiled the successor to its popular Switch console, the Switch 2. Set to launch later this year, the hybrid console will feature a 7-inch screen and redesigned controllers that attach to side ports magnetically instead of sliding in mechanically like the original model. The Switch 2 is a big deal for Nintendo, but also the wider gaming industry. The first edition of the device is the second best-selling console of all time behind just the PlayStation 2.

19:22It propelled Nintendo to its most profitable era ever, but it's been out since 2017 and momentum in sales are lagging, causing Nintendo's profits to hit a banana peel. So analysts are hoping that the Switch 2 can power a comeback both in the hardware and in the game sales divisions. The Switch will be looked at as a remarkable console. It's a hybrid of a home console and a handheld one. And it was home to some legendary games that Nintendo put out. Legend of Zelda Breath of the Wild, Legend of Zelda Tears of the Kingdom, Super Mario odyssey mario kart 8 deluxe some very legendary games here all came out on the switch and people who are looking to get the new switch should know that these will be compatible on the new device as well so i mean yeah you're right like the switch sold like gangbusters for its first four to five years but actually over the past few years i mean it has been showing its age nintendo's profits have declined for five straight quarters so it really needs this new switch to gin up sales And they are taking a safer approach than Nintendo has in the past because they are using a familiar silhouette.

20:32They're kind of just updating the Switch 1 instead of redesigning a whole new form factor, which in the past the company has definitely done. It has had some big swings and some big misses. What comes to mind is the Wii U following up the Wii, the Nintendo GameCube as well. Both were flopped compared to their predecessors. So maybe in an effort to just say we need to revive sales a little bit, let's go with what we know works instead of trying to redesign an entirely new gaming system like they have in the past. Okay, what's your favorite Nintendo console? Well, the Wii. That was the only console I had growing up.

21:05I didn't have an Xbox and we didn't have anything. My parents weren't big video game people. So they fell for the propaganda of, oh, they're going to be moving while they play it. So I'm a huge Wii guy. My dog of the week is United Healthcare Group, the owner of the health insurance company whose CEO, Brian Thompson, was fatally shot in December, sparking a national debate around the industry. United Health stock fell 6 % yesterday after dropping its first earnings report since that assassination, notching record revenues of$400 billion for the full year, but missing profit estimates, which sent the stock tumbling.

21:39Net income for 2024 plunged 35 percent from 2023 as the company took a big hit from a massive cyber attack, one of the worst ever, on one of its subsidiaries last February. Its costs have also jumped from greater demand for health care under Medicare plans for older adults, lowering profit margins. Financials aside, everyone on the earnings call wanted to hear what CEO Andrew Witte would say after the shooting of his direct report shined a spotlight on his company's tactics and put the entire health insurance business on the defense. Witte praised Thompson as a leader who dove into projects passionately and also acknowledged that the health system needs to function better and lower costs for everyone.

22:19Yeah, there was definitely a magnifying glass on this latest earnings call for the reasons that you just described, but also because there is right now a lot of pressure on the healthcare industry as a hold. UnitedHealth's annual medical cost ratio, which is actually the percent of premiums it pays out for medical care, that hit 85 % this quarter. It's usually the industry average is around 80 % historically. So that highlights the problem that a lot of these healthcare companies are beginning to face, and that is higher medical costs due to more demand from aging Americans, more Americans utilizing these Medicare plans.

22:56So there's definitely some nervousness around the industry right now as these medical cost ratio continue to creep upwards. Let's bring to the finish with some final headlines. Donald Trump's pick for Treasury Secretary Scott Bacent had his confirmation hearing before the Senate yesterday. The billionaire hedge fund manager defended Trump's plans to enact sweeping tariffs and extend deep tax cuts from 2017, which is important because as Treasury Secretary, he'll be in charge of carrying out those policies. Democrats are less enthused than Republicans over Besant's nomination, expressing concern that the tariffs will lead to inflation and the tax cuts will benefit rich people and companies more than the middle class.

23:35Still, he's expected to sail through the nomination process and replace Janet Yellen as the president's top fiscal policy advisor and manager of the national debt. Yeah, Bessent stuck pretty closely to the preferred talking points, Trump's preferred policies. His big, you know, kind of things that he spoke about were the 2017 tax cuts. He called extending those the single most important economic issue of the day. And he warned that failing to extend them would represent a huge tax increase on a lot of Americans that he says he called it the largest tax increase in history on Americans. So definitely tariffs is going to be a talking point.

24:12But then these tax cuts are probably going to be some of the storylines that will be swirling around Bessent as he kind of eases in, assuming he gets approved, the nomination gets approved, as we ease into these first 100 days of the Trump administration. Zen lovers rejoice. Your favorite lip pillows aren't in danger of getting taken off the shelves anytime soon. The FDA formally authorized the nicotine pouches yesterday after conceding they were safe through testing. The big finding that went in Zin's favor is that they posed a lower risk of cancer and other health conditions when compared to cigarettes and smokeless tobacco products.

24:49Not only are they better, but the evidence also showed that Zin's could help smokers quit the habit as well. Neil, this was a big win for Zin and a big win for everyone who loves a cheeky little upper decky from time to time. Yeah, this was, this is huge. You have to balance two things to get the FDA's green light for this nicotine product. You have to show that your products will reduce disease among adult tobacco users. So you have to show that they will come over to use your products and that it won't lead to an uptick in bad health outcomes. At the same time, you can't be attracting teens and adolescents.