ENERGY

Sam Altman’s Nuclear Energy Startup Oklo Goes Public via SPAC, Bringing Chamath Vibes

How many tech CEOs does it take to change a lightbulb? None. They’re all focused on powering it in new ways. And the quest for endless power has brought OpenAI CEO Sam Altman to the world of nuclear energy, investing in several companies in the field. Now, he’s bringing retail investors along for the ride — but before they hop on board, there are a few factors they should consider.

Embracing Alt-mania: Last week, Sam Altman’s SPAC, AltC Acquisition Corp. ($ALTC), officially took nuclear energy startup Oklo public. The company plans to produce carbon-free energy using mini fission reactors — which have just 15 megawatts of capacity compared to the traditional 1K megawatt capacity nuclear plants. Altman, who also invested in another nuclear fusion startup, Helion, believes that nuclear is the best way to generate enough energy to meet the growing demand from AI. But there are just a few problems:

• Oklo generates no revenue, has no nuclear plants deployed, and isn’t expected to have one live until 2027.

• Before last Friday, investors pushed the SPAC’s shares up more than 76% — just to collapse 50% on Friday after the deal was finalized, highlighting one of the many problems with SPACs.

Cult of personality

Trump, Chamath, and Shaq — there’s power in a name, but some have carried more weight than others. In recent years, celebrity SPACs have been hit or miss (mostly misses). In 2021, the SEC cautioned against investing based on celebrity endorsements or involvement.

• Two of Chamath Palihapitiya’s SPACs — Clover Health ($CLOV) and Virgin Galactic Holdings ($SPCE) — are both down ~90%. Another, SoFi ($SOFI), has fallen 30%.

• However, Donald Trump’s Trump Media & Technology Group ($DJT) has been a rare winner — despite the company continuing to lose users and its auditor being shut down for “massive fraud.”

Hype can’t replace profits: Past SPAC performances offer insights into how Altman’s SPAC could perform. Bloomberg reports that nearly 25% of the companies that went public via SPAC since 2019 have seen over 90% declines — erasing $46B in market value. Last year, at least 21 companies, including electric scooter company Bird and electric vehicle (EV) maker Lordstown Motors, filed for bankruptcy. While hype may drive initial interest, sustained success hinges on profitability and revenue — a timeless principle in investing.

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LARGECAP RECAP

😼 Investors cheer the return of Roaring Kitty by sending GameStop up 74%

Just when investors seemed to be regaining their rationality, GameStop ($GME) spiked over 60% in a single day, and all it took was a one tweet from Roaring Kitty, a.k.a. Keith Gill — the man who famously kicked off the meme rally. The tweet, which shows a meme of a man leaning forward in his chair, marks his first post in nearly three years. But this time, investors can’t rely on the same catalysts that sent GameStop to the astronomical levels of 2021.

• According to S3 Partners, the percentage of shares sold short stands at 24%, a significant drop from 140% in 2021 (BBG).

• Retail investors also lack a common adversary: hedge fund Melvin Capital, which closed its doors after losing billions from shorting GameStop.

For what it’s worth: Before May, $GME had plummeted over 90% in value since 2021, sinking from a peak of $120.75 when meme stock trading was in full swing to just $9.95. And the gaming industry isn’t experiencing the same boom it did during the height of COVID-19 — when game and console sales skyrocketed. In its latest earnings report, GameStop attributed its 19% sales decline to weakened consumer spending and the ongoing shift of game sales to online platforms, leading to several rounds of layoffs. But by now, we know that meme stocks don’t trade on fundamentals. Whether those jumping in late are aware of this fact remains uncertain.

Read: GameStop’s return reignites retail trading to pre-pandemic levels

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Markets & Economy

Doomsday mentality boosts S&P 500: Two years of fearing a recession may be paying off for corporate America. An impressive 79% of S&P 500 companies beat earnings this quarter — partly thanks to cost-cutting as businesses shore up their fundamentals amid fears of a downturn. [Read]

Over a third of home purchases are all-cash: Wealthier buyers looking to avoid high interest rates are buying their homes in cash — and using their new home as a sort of “savings account.” Meanwhile, mortgaged home sales declined as would-be buyers resisted high mortgage rates. [Read]

As other meat gets pricey, chicken is a winner: Overall retail sales of chicken products were up 3% year-over-year (YoY) as consumers trade down from beef — where ground beef prices increased 12% YoY in March. Now, fast food spots like Wingstop ($WING) and meatpacking giants like Tyson ($TSN) are reaping the rewards. [Read]

Business & Wealth

TX judge blocks Biden’s credit card fee cap: A new rule aiming to cap credit card late fees at $8, a fraction of the average of $32, would save Americans $10B a year overall. But several businesses and credit companies are suing the Consumer Financial Protection Bureau, arguing that the rule violates federal laws. [Read]

Phone theft is up — here’s what to know: You can cut thieves’ access to your personal financial information by using new apps like Nuke From Orbit, which is like a “panic button” that disables your SIM card and key accounts. It’s also worth considering separating cards from your phone and diversifying passwords. [Read]

Parents sue video game companies over addiction: Over a dozen lawsuits have been filed — and if they’re successful, video game companies could face hundreds of millions of dollars in damages. Similar social media addiction cases may set a precedent for these suits. [Read]

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DIGIT OF THE DAY

Retail Media Ads Have Grown Nearly 50x Over the Past Decade, Challenging the Dominance of Linear TV

It’s not just viewers getting tired of traditional TV commercials; advertisers are also tuning out. Hershey’s US head of media and analytics revealed that the portion of ad dollars allocated to TV has fallen from 80% to 30% over the past few years (WSJ), a trend mirrored across other consumer goods companies. Instead, advertisers are redirecting their marketing budgets towards social platforms like Instagram and TikTok, which are increasingly making their way into “retail media.”

• Mondelez ($MDLZ) is among those doubling down on platforms such as Amazon ($AMZN) and Walmart ($WMT), whose advertising sectors have emerged as some of the fastest-growing segments.

• By 2025, expenditures on retail media ads are projected to surpass traditional TV advertising for the first time.

The last pillar of TV: One aspect of linear TV that remains resilient is sports programming. In 2023, sports broadcasts accounted for a staggering 96 out of the 100 most-watched broadcasts. Yet, even this arena is witnessing a transition to streaming platforms like Amazon and Apple ($AAPL) — and ad dollars could follow. Molson Coors, for instance, has significantly adjusted the portion of its TV ad budgets allocated to sports, from nearly half to 80% over the past five years. That’s sent the value of TV deal rights skyrocketing — with the NBA set to sign a $76B broadcasting deal over 11 years, marking a threefold increase in value from its current agreement.

Read: The digital ad market is heating up in 2024