Good morning readers. Baseball star Shohei Ohtani just hit a grand slam in the financial league, signing a record-breaking $700 million, 10-year deal with the LA Dodgers. But here's the curveball: he'll earn just $2 million annually, deferring the bulk ($68 million/year) until post-2034. This strategic play, aimed at easing the Dodgers' payroll and maximizing tax benefits, sets a new standard in sports contracts. Despite this, Ohtani's annual take-home will be less than many rookies in 2024.

Talk about taking one (or in this case, $680 million) for the team.

Let’s jump into today’s storylines.

In today’s digest:

• OpenAI's billion dollar paradox

• Headline Hustle: UN demands immediate ceasefire in Gaza, S&P 500 rises to highest level since January 2022, Apple protects users from theft

• Meta's remarkable market resurgence

• Pulse Points: What’s Trending

TECH

OpenAI's $86 billion valuation mystery

In the world of tech startups, OpenAI stands out like a unicorn among horses. Valued at a jaw-dropping $86 billion by private investors, this AI juggernaut, known for ChatGPT, has us scratching our heads over its financial enigma. A company with a valuation that could make Scrooge McDuck's vault look modest, its official revenue was reported at a mere $44,485 last year, according to its IRS 990 filing. That’s not a typo.

From nonprofit to billion dollar valuation

Founded as a nonprofit in 2015, OpenAI morphed into a for-profit entity in 2019, mirroring the fundraising and equity distribution strategies of tech startups. This pivot was instrumental in fueling the development of ChatGPT and catalyzing the generative AI revolution. Despite reports by The Information of a projected revenue nearing $1 billion in 2023, OpenAI's elusive financial reporting has become a hotbed of speculation.

Amidst this financial conundrum, OpenAI's leadership faced its own shake-up.

• CEO Sam Altman was shown the door, then swiftly brought back in, following employee protests and investor pushback.

• The board's initial decision was linked to Altman's aggressive commercialization strategy, sparking a safety versus profit debate in an organization pledged to develop AI for the greater good.

Commitment to governance. In response, OpenAI has pledged to enhance its governance structure, though specifics remain vague. Board chair Bret Taylor's commitment to strengthening governance and focusing on humanity's broader benefits suggests a potential recalibration of OpenAI's strategic approach.

Looking ahead…as OpenAI treads the tightrope between nonprofit ideals and for-profit temptations, one question looms large: Can it maintain its nonprofit status amid these financial and leadership whirlwinds? Only time, and perhaps a clearer financial statement, will tell.

Headline Hustle

🇺🇳 UN General Assembly demands immediate ceasefire in Gaza. In a decisive move, the UN General Assembly voted for an immediate ceasefire in Gaza, defying the US's previous vetoes in the Security Council. A commanding 153 countries supported the resolution, emphasizing the urgent need for humanitarian access and adherence to international law. The vote, though nonbinding, carries significant moral and political weight. Amid escalating violence and a dire humanitarian crisis, this resolution reflects a global consensus for peace and the importance of international cooperation in addressing the conflict, with nations urging both sides to prioritize civilian safety and international norms.

🇺🇸 S&P 500 rises to highest level since January 2022. Wall Street's latest act saw a surge in optimism as Tuesday's inflation data hinted at a potential 'soft-landing' for the U.S. economy. The S&P 500, Dow Jones, and Nasdaq hit new 52-week highs, buoyed by the consumer-price report suggesting a slowing yet resilient economy. Investors now keenly await the Fed's rate decision, with Chair Jerome Powell's insights highly anticipated. Amidst the market upswing, Treasury Secretary Janet Yellen's comments further fueled hopes, although tech giants like Alphabet and Oracle faced their own hurdles.

📱 Apple makes security changes to protect users from thefts. Apple is upping its security game with the upcoming release of the Stolen Device Protection feature in iOS 17.3. This new safeguard kicks in when an iPhone is in an unfamiliar location, requiring both FaceID and the passcode for critical actions. Designed to combat thieves who learn users' passcodes, often through covert means, this feature adds an extra layer to Apple's already robust security system. It aims to make stolen iPhones less attractive to criminals, as it impedes full access to the device, signaling Apple's ongoing commitment to evolving user data protection.

BUSINESS

It looks like Zuck (and Meta) had a good year

Meta, once the social media giant known as Facebook, is making headlines with what's been coined a "year of efficiency." After a rocky 2022 that saw its market value and stock prices take a nosedive, Meta's shares have bounced back, skyrocketing by over 170% this year.

So, what's behind Meta's impressive comeback story?

• Efficiency Over Expansion: Meta shifted gears from splurging on metaverse dreams to tightening the belt. The company waved goodbye to over 20,000 employees in multiple layoff rounds, a move aimed at overcoming revenue dips, fierce competition, user growth woes, and losses in its Reality Labs division. It even put the brakes on several AI projects, leading to a robust cash flow rebound of $13.64 billion last quarter.

• Shareholder Satisfaction: Meta showed its shareholder love by repurchasing about $3.7 billion worth of shares in Q3, a clear sign of its commitment to investor rewards.

• Ad Market Rebound: The advertising market's revival played right into Meta's hands, boosting ad revenue that had seen a slump in 2022. Ad views jumped by 31% in Q3 year-on-year, while the average ad price drop slowed down, signaling a positive trend.

The road ahead. Despite concerns about potential conflicts impacting sales and a recent dip in stock momentum, some analysts remain optimistic about Meta's future. Bank of America maintains a bullish outlook, emphasizing AI-driven innovation and sustainable revenue models, while KeyBanc sees a measured growth approach. Both analysts have increased their price targets for Meta's stock, indicating continued faith in the company's prospects.

SNIPPETS

Pulse Points

• Netflix published its first engagement report, detailing the viewership statistics for its top shows during the first half of the year.

• SpaceX, led by Elon Musk, is offering insider shares at $97 each, raising the company's valuation to nearly $180 billion, as reported by Bloomberg News.

• Citadel plans to distribute approximately $7 billion in profits to its investors, earned during a tumultuous year for stock markets and interest rates, according to sources familiar with the firm.

• The Entertainment Software Association announced the termination of E3, a once-popular videogame expo, due to its recent struggles in attracting creators and top game companies.

• Three hedge fund associations filed a lawsuit against the U.S. Securities and Exchange Commission to overturn two new rules intended to increase transparency in short-selling.

• Andre Braugher, star of ‘Brooklyn Nine-Nine’ dies at age 61.

• Doritos is introducing an alcohol-infused version of their tortilla chips to attract more consumers.

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