Market Snapshot

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📉 Banana Bits

• The economy added 165,000 jobs in October, more than double what economists expected. Unemployment dipped to 4.1%.

• DraftKings stock sank 21.3% Friday after a revenue miss and a pile of new spending on its prediction-market app.

• Musk says Tesla will wind down Cybertruck production in Texas around mid-2027 to make room for the Cybercab. RIP, stainless steel doorstop.

• Japan's Nikkei fell 5.96% Friday to its lowest level in almost seven months as Thursday's chip selloff spread to Asia.

Market News

Equities managed a bounce on Friday, however calling it a recovery would be very generous. The Nasdaq gained 1.09% and the Russell 2000 rose 0.89%, pulling the S&P 500 to a 0.31% gain while the Dow slipped 0.46%. Step back to the full five sessions and the damage is still visible: the S&P lost 2.7% on the week, and the Nasdaq shed 3.4%.

Chip stocks drove nearly all of Friday’s green after getting pummeled on Thursday over worries that a Democratic Congress will slow down permits for AI data centers. AMD surged 11%, while Intel and Lam Research both jumped roughly 8% (with Lam sweetening the pot by authorizing a $25 billion buyback). Even so, it was a pretty hollow rebound. Nvidia only clawed back about 3%, the chip sector as a whole recovered barely a third of Thursday’s losses, and the majority of S&P 500 stocks still finished Friday in the red. Traders mostly just dumped the consumer staples they hid in on Thursday to go bottom-fishing in tech.

Meanwhile, October payrolls came in blazing hot. The economy added 165,000 jobs, blowing past the ~65,000 consensus estimate, with upward revisions to the prior two months to boot. Unemployment ticked down to 4.1% and hourly wages rose a stout 0.4%. Beneath that headline strength however there is a weird freeze in the labor market: once people lose a job, it's taking them an average of 27.1 weeks to land a new one. Outside of the pandemic, that’s the longest stretch since 2016. Companies aren't firing en masse, but if you're on the outside looking in, hiring managers are taking their sweet time.

For the market, a blowout jobs print means the Fed stays firmly on the warpath. Futures are now pricing in a 76% chance of a quarter-point hike at the Dec. 8–9 meeting, especially after NY Fed President John Williams went out of his way to call inflation "absolutely too high." Overseas central banks are already moving in the same direction; the Bank of England hiked earlier this week, and the ECB could follow suit next month.

That puts everything on Tuesday’s 8:30 a.m. ET October CPI print. Corporate fundamentals aren't the problem right now (Q3 S&P 500 earnings are tracking toward 31% year-over-year growth, with 84% of companies beating estimates), which leaves macro firmly in the driver's seat.

Peel Take: Friday’s rebound gave tech stocks some breathing room, but it didn’t erase Thursday’s damage. The Nasdaq still finished the week down 3.4%, while the VIX remained near 26, signaling that investors are far from relaxed. Attention now turns to Tuesday’s CPI report, where hotter inflation could strengthen expectations for a December rate hike and put additional pressure on highly valued AI stocks. The big question is whether Friday’s bounce marks the beginning of a broader recovery or just a temporary break in the selloff.

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What's Ripe

IonQ (IONQ) 23.42% 

• Third-quarter revenue more than quadrupled to $173.8 million, blowing past Wall Street’s $141 million target, and management hiked its 2026 sales outlook past the $500 million mark.

• Now for the fine print: nearly half that revenue came from SkyWater, a terrestrial chip foundry IonQ bought in July. Strip out the accounting gymnastics and adjusted losses actually widened to $133.6 million.

• Peel Take: The problem here is that IonQ’s favorite product to sell isn't quantum computers, it’s IonQ stock. Management casually printed $2 billion in fresh equity over the last month alone and handed over another $1.15 billion in shares to buy Elisity. Given that the stock had cratered 32% heading into Friday, this smells like a classic short-squeeze relief rally.

Airbnb (ABNB) 11.67% 

• Consumers are apparently still willing to pay $400 a night to do their own dishes and strip the beds: Q3 revenue jumped 19% to $4.9 billion (its fastest clip in over three years), EPS of $3.16 topped expectations, and holiday-quarter guidance came in hot.

• It also raised its full-year growth forecast and approved up to $12 billion in buybacks, roughly a tenth of the whole company. Shares closed at $189.99.

• Peel Take: It’s refreshing to see a tech company crush earnings without saying the words "hyperscaler" or "liquid cooling" forty times on the call. Airbnb showed $1.9 billion in quarterly profit because, as Friday's blowout jobs report confirmed, employed people still like going on vacation. Our only hesitation here is positioning. With software getting treated like a biohazard and chip stocks whipsawing on D.C. rumors, every fund manager on Earth is about to pile into Airbnb as the "safe" consumer tech play.

What's Rotten

Axon Enterprise (AXON) 18.18%

• Revenue grew 28% to a record $909 million and still missed the $937 million analysts wanted. Axon also pushed about $130 million in federal counter-drone work out of 2026 and blamed slower government buying, thanks to funding issues and the elections.

• It cut its full-year growth forecast to about 30% from 32-34%, and its profit outlook missed Wall Street's too. The same night, Axon said it's putting $1.2 billion into drone maker Skydio, its biggest investment ever, which takes its stake to 37%. Shares closed at $313, a new 52-week low.

• Peel Take: Announcing delays in federal contracts alongside a $1.2 billion investment in drones gave investors plenty to digest. Look beyond the challenging timing, though, and the core business is still a monster: software and services revenue surged 43%, and Axon's AI suite (which can draft police reports from body-cam audio) is already clearing $100 million in annual recurring revenue. Plus, dispatching Skydio drones as automated first responders could become another major growth driver.

Atlassian (TEAM) 16.15%

• Fiscal Q1 (July-September) was a textbook beat on paper: revenue climbed 24% to $1.77 billion, cloud sales jumped 31%, and remaining performance obligations (contracted backlog) surged 44%.

• None of it mattered because the forward guidance spooked the herd. Management barely nudged full-year growth targets to 13.75% (up a measly 75 bps from 13%) and warned that operating margins will compress from 32% down to 26% next quarter. Shares sank to $153.68.

• Peel Take: Wall Street is increasingly concerned that AI coding agents could reduce demand for traditional software seats, and since Atlassian relies partly on per-user pricing, the company is caught in that debate. When you beat Q1 handily and barely touch your full-year guide, traders start questioning how much growth lies ahead. A 16% drop is a steep reaction for a company whose Service Collection business has already crossed $1 billion in ARR, but the cautious outlook and margin pressure clearly gave investors something to worry about.

🧠 Technical Trip

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Marvell is buying Lumentum in a $115 billion all-stock deal, the year's biggest by equity value

• Anthropic's expected IPO valuation fell to $1.2-1.3 trillion from as much as $2 trillion last month

• The New York Times is in exclusive talks to buy Letterboxd for about $330 million. Wordle's getting a roommate

• Salesforce agreed to buy Cresta, a voice-AI startup, for a reported $2.7 billion

• AST SpaceMobile is building its own rocket with Firefly engines, and Firefly stock jumped 36.8%

• Agility Robotics started trading on the Nasdaq Thursday after its SPAC merger and raised about $465 million

📊The Daily Poll

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If you had to choose one, which would you pursue to advance your finance career?

• CFA: 50.9%

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Student Success Corner

Banana Brain Teaser

Previous

A company generates $80 million in annual net income and has 40 million shares outstanding. Its convertible bonds carry $12 million in annual interest payments and can convert into 8 million new shares. Assuming a 25% tax rate and no other changes, would converting the bonds increase or decrease EPS, and by what percentage?

Answer: EPS decreases by approximately 7.29%

Today

A company's founders own 100% of a business valued at $200 million before a financing round. An investor purchases $50 million in newly issued shares and another $30 million in existing shares directly from the founders, both at the same per-share price. What percentage of the company will the founders own after the transaction?

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Happy Investing,
Elie, Mitchell, Fernanda, Nick, & Patrick

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