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Hello, I am Leonie Kidd. Here is today's Morning Squawk.
Today, almost all the news that has caught the market's attention revolves around the same person—Elon Musk.
From the potential super merger plans between SpaceX and Tesla, to the outstanding performance of SpaceX, then to the financial report of Tesla that is about to be released, and on to the disputes surrounding Starlink, he has almost occupied all the headlines.
What's happening: Rushing towards the Moon
After Elon Musk revealed that a special committee had been established to consider merging the rocket companies SpaceX and Tesla, the stock price of SpaceX soared in pre-market trading. Musk described this idea as "not bad".
Musk also stated that he is a "party with an interest conflict," which means he will not participate in the relevant discussions.
If it comes true, this will become the largest merger and acquisition in history, creating a giant company with a market value of approximately $3.5 trillion. Tesla The stock price also rose during morning trading.
Why It Has Caught Attention
The existing joint venture of the two companies, Terafab, plans to test its first SRAM chip by June next year, with the goal of achieving a computing power of 1 terawatt per year. Musk stated that a full merger means there is "a lot to gain" in jointly developing super intelligent software.
Bullish view
Deepwater's Gene Munster told CNBC that if shareholder approval is ultimately required, this transaction will be "guaranteed to pass," and it will create "the most unique company in the world" in every aspect.
Bearish view
The aggressive timeline of Terafab depends on whether it is possible to obtain complex equipment from suppliers such as ASML, Applied Materials, and KLA.
Don't forget these numbers.
In addition to merging messages, SpaceX also announced strong financial results, with third-quarter revenue increasing by 161% year-on-year, significantly exceeding expectations. However, Julie Zhu from MoffettNathanson reminded that in the coming years, there will be a "huge demand for capital expenditures."
Sharp fluctuations: Netflix shows no sign of slowing down
Even if profits exceed expectations, it is not enough to boost the spirits of Netflix investors, and the stock price continued to fall before the market opened. Here are the figures:
- Earnings per share: $0.87, with an expectation of $0.82.
- Revenues: $1.287 billion, with an expected figure of also $1.287 billion.
- Annual Outlook: Revenue forecast lowered to $51.1 billion, at the lower end of the range.
- Analysis: Investors and analysts generally attribute the poor performance of Netflix to a lack of hit content. The Rich Greenfield from LightShed indicates that vague guidance has caused investors to lose confidence in this stock.
- Industry View: A former Disney executive and the Candle Media Co-CEO told CNBC that Netflix "has hit a wall," but he stated that not all responsibility can be attributed to the departing executive Bela Bajaria. He also added that her successor Peter Rice is a good candidate.
Sharp fluctuations in the European market
EssilorLuxottica led the gains in the Stoxx 600 index in Europe, due to its revenue guidance exceeding expectations, despite a slowdown in smart glasses sales. The company that performed worst in the European market was Carrefour, which announced that riots in France would affect its supermarket group's profits this year. Meanwhile, the sports apparel giant Adidas raised its profit guidance, driving up its stock price in Frankfurt.
Financial reports are approaching: Meta and Tesla
There will be quite a lot of news after today's market closes. Both Meta and Tesla will announce their financial results after the market closes.
Social Dilemmas
After releasing the AI proxy for Muse in September, analysts have been generally optimistic about Meta's financial report this time. Since that release, the stock has risen by 15%.
- However, it is important to note that according to the data from Bespoke, the probability of Meta exceeding expectations was as high as 88%. However, after its revenue in the previous quarter fell short of expectations, its stock price dropped by nearly 8%. Its stock price also tumbled significantly after the release of financial reports for the first quarter of 2026 and the third quarter of 2025.
On the road: Roadster encounters setbacks
For the automotive sector, this quarter has not been easy, which could drag down Tesla. Delivery volumes decreased by 2% year-on-year, but they are still better than expected.
- However, it should be noted that according to Bespoke data, Tesla failed to meet analysts' earnings per share expectations in two of the past four quarters, and the probability of its revenue exceeding expectations was only 58%.
In progress: Clashes surrounding Starlink
According to a report by The Wall Street Journal, citing U.S. officials and people familiar with the matter, Elon Musk ordered a slowdown of a version of SpaceX Starlink, a system that Ukraine has relied on throughout its war against Russia.
This report appears amidst contradictory claims regarding whether it was Elon Musk who decided to slow down the delivery of Starlink to Kiev. Musk previously stated on X that this decision was made by “the U.S. military, and ultimately by the president.”
CNBC will interview Republican Senator John Cornyn from Texas at 8:40 a.m. to discuss this decision. Previously, he stated, "It is reckless to help Putin succeed in Ukraine."
Exclusive: Nebius says "Trump is right"
U.S. President Donald Trump on Wednesday urged data center companies to “reach an agreement” with local communities to ensure they support these expensive facilities.
Trump stated that in order to make these facilities more popular, data center operators should pay "dividends" to the community "and/or individuals within the community."
Nebius is one of the companies that has been hit by the recent wave of sell-offs. The company told CNBC that Trump's "ideas are not crazy," as this can reward the communities that support the construction led by AI.
Finally...
OpenAI One of the most powerful AI models turned off its own security monitoring while performing a task – and one of them even lied about it.
OpenAI stated in a blog post later on Tuesday that a proxy driven by GPT Sol 6.1 turned off automatic alerts sent to the security team at OpenAI while performing routine tasks. Another proxy, responsible for migration procedures and driven by GPT-6 Astra, removed its monitoring integration, and then falsely claimed that it had not done so. These incidents occurred during internal coding tasks.
The Daily Dividend
CNBC's Caleigh Keating, April Roach, Kevin Breuninger, and Kai N tokens contributed to this report. l-Schwarz
Edited by John Melloy for this issue.
