Fox's FanDuel Option Amidst AI Inflation and Market Volatility

Key Quotes

"Flutter Entertainment's FanDuel is a juggernaut in US sports betting with market share north of 30%. And that success could be a big plus for Fox, which holds the rights to acquire an 18.6% stake. The right dates back to 2019 when Fox bought a 4.99% stake in The Stars Group and launched Fox Bet, gaining options over Stars' US betting business. When Flutter later bought Stars and folded it into FanDuel, Fox negotiated a 10-year call option on 18.6% of FanDuel stock, struck off a $20 billion valuation with a 5% annual escalator and an all-cash, all-or-nothing exercise requirement."

This quote highlights the strategic financial arrangement between Fox and FanDuel, detailing how Fox secured an option to acquire a significant stake in FanDuel. The host, Kim Khan, explains that this option originated from Fox's earlier investment in The Stars Group, which was later acquired by Flutter and integrated into FanDuel. This demonstrates a long-term play by Fox to capitalize on FanDuel's market dominance.

"Among active stocks, LifeMD and GoodRx are higher after both companies added Novo Nordisk's Wegovy weight loss pill to their product offerings. The news follows Novo's US launch of the once-daily oral GLP-1, the first and only pill formulation, priced at $149 a month for cash-paying customers after FDA approval last month."

Kim Khan reports on the market activity for LifeMD and GoodRx, noting their stock increases due to the inclusion of Wegovy in their offerings. The host clarifies that Wegovy is a new once-daily oral GLP-1 medication from Novo Nordisk, which has recently been approved by the FDA and is available at a specific price point for cash customers. This illustrates how new product offerings, particularly in the pharmaceutical sector, can directly impact stock performance.

"Samsung Electronics and SK Hynix are reportedly looking to raise server memory prices by up to 70% in Q1, as surging AI demand tightens global supply. Memory makers, including Samsung, SK Hynix, and Micron, were already facing shortages of older DRAM after cutting production to focus on high-bandwidth memory for AI accelerators."

Kim Khan discusses the potential price increases for server memory from companies like Samsung Electronics and SK Hynix. The host explains that this surge in demand is driven by the rapid growth of Artificial Intelligence (AI) and a resulting tightening of global supply chains for memory components. This situation shows how increased demand for advanced technologies like AI can lead to significant shifts in component pricing and availability.

"In other news of note, Amazon has rolled out Alexa.com, expanding its AI assistant Alexa Plus across a wide range of devices. Amazon says Alexa Plus is designed to take action, helping with tasks like managing to-do lists and family calendars, controlling smart homes, making reservations, and more. It also offers persistent context, carrying chats, preferences, and personalization across devices, so you can pick up where you left off."

Kim Khan reports on Amazon's expansion of its AI assistant, Alexa Plus, through the launch of Alexa.com. The host details that Alexa Plus is engineered to perform various tasks and maintain context across different devices, allowing for a seamless user experience. This announcement highlights Amazon's strategy to enhance its AI capabilities and compete more directly in the growing market for AI assistants.

"In the Wall Street research corner, OakTrees Howard Marks is asking the big question echoing everywhere: Is AI in a bubble? In a characteristically measured look at the AI mania, his conclusion is blunt. AI is currently the subject of great enthusiasm. If that enthusiasm doesn't produce a bubble, conforming to the historical pattern, that will be a first."

Kim Khan presents Howard Marks' perspective on the current enthusiasm surrounding Artificial Intelligence (AI). The host relays Marks' observation that the widespread excitement about AI is significant, and he suggests that if this enthusiasm does not lead to a market bubble, it would be an unprecedented deviation from historical patterns. This quote captures a critical analysis of market sentiment and its potential implications for the AI sector.

"Marks distinguishes between inflection bubbles, built around truly transformational technologies, and mean-reversion bubbles, like subprime. Inflection bubbles can speed up progress, but they still destroy wealth for many of the investors who fuel them. He draws parallels between today's AI wave and railroads in the 1860s, radio and aviation in the 1920s, and the internet in the late 1990s, noting that aviation and broadcast radio were wrapped in huge uncertainty and powerful narratives that helped inflate a bubble so big, its bursting fed into the Great Depression."

Kim Khan elaborates on Howard Marks' analysis of market bubbles, specifically differentiating between those driven by new technologies and those related to market corrections. The host explains that Marks uses historical examples like railroads and the internet to illustrate how even transformative technologies can fuel speculative bubbles that ultimately lead to wealth destruction for investors. This comparison underscores Marks' caution regarding the current AI enthusiasm, suggesting a potential for a similar outcome.