SpaceX beats earnings estimates as Elon Musk backs discussions over a potential merger with Tesla. Wild swings in oil prices and AI stocks expose growing market nerves over war and tech valuations. And Netflix disappoints with its slowest revenue growth in three years, sending shares lower. Podcasts, breaking news, and video analysis from the source. Download the Reuters app here.

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Mike Dolan Today, SpaceX beats earnings estimates and Elon Musk hints at a merger with Tesla.

Anna Szymanski Plus, wild swings on Wall Street on Tuesday riff off volatile oil and AI anxiety.

And streaming giant Netflix disappoints, sending its stock down 5% out of hours. This is Reuters Morning Bid, bringing you unfiltered market news and analysis straight from the Reuters newsroom. I'm Mike Dolan in London.

And I'm Anna Szymanski. It's Wednesday, October 21st. Well, Mike, yesterday we got one of our first big headlines out of this earning season. And unsurprisingly, it was from Elon Musk, when he hinted that there could be a merger between Tesla and SpaceX, calling it a good idea and saying that they were going to be in discussions about this. So you know, markets certainly seem to think that this was also potentially a very good idea. What's the logic behind this tie-up?

Well, this has been speculated about for some time now. I think certainly since the IPO of SpaceX in June, you know, there's been the two companies intersect quite considerably in areas around AI and that whole robotics and all of those areas that are, are in both buckets now. Even though you might kind of consider Tesla, as an automaker, the rocket side of the equation are just the two extremes. In the middle is all of the other ground about clouds and chips and infrastructure build out. So there are linkups that are obvious.

What it means for shareholders is of course, another question. Clearly it's an incentive for Musk himself. It's one of his targets. Now he says that it's a good idea, but he's not involved for conflicts of interest reasons. He's not in involved in the decision-making. So he says. So there are committees in both companies set up to examine this. Now, You know, was that the reason for the big jump in the SpaceX yesterday? Well, it's earnings beforehand were actually well above forecast. So, so from that point of view, it didn't need much of a lift. They weren't just above forecasts, they were also positive. Which was a big deal.

Of course. So only its second earnings since listing, and it looks like things are going okay. So we have to watch that. We have to obviously watch Tesla's report later this week as well, which clearly will have Moscow back on the analyst calls and back on the front pages, presumably talking more about what that merger could mean. This merger would, if you just crudely combine the two companies would be a market cap of $3.5 trillion. So that would put it right back up there in the, in the very top, most valuable Wall Street companies. And, you know, whether that changes with the terms of a merger, that would have to be, we'd have to see the details of how that's worked out.

And so the news yesterday from Musk came after a pretty volatile day of trading across markets. And one of the big drivers was obviously oil. At one point, we saw Brent hit a five-month high, but then it actually ended up down on the day. It's now up a little bit this morning. So what were some of the other forces moving things around yesterday?

It was a really peculiar day. Actually, we ended up little changed as is often the case. But there was a wild swing in the crude price. There was full top to bottom swing of $6 per barrel from $112 all the way down to $106. And, you know, just to show where we are, we're, we are back above $110 again this morning. So the market pointed at reports that there were mediation efforts in the Iran war and that perhaps the Pakistanis and the Qataris were trying to get Tehran back to the table.

There were comments from the Iranian side later that kind of threw cold water on that, more or less saying that its red lines in any negotiation hadn't changed and that the idea that there her talk's already underway. Where we're false. So that's party why we're back where we started. But there's one eye on the other big conflict of the moment which is the Ukraine conflict where Steve Witkoff the US diplomat is in Moscow today to meet Vladimir Putin. So where that goes in terms of possibly ending that war we have to wait and see. But clearly it will make a difference for energy markets as well.

In the meantime, we had, of course, the, not only just the earnings, but we had all this speculation that's been running through the whole data center. Part of the AI story. Which again has been a rollercoaster. One of the disturbances yesterday morning was, as we talked about that IPO from a Korean data center, Elice, which bombed about 30%. Now today that's back up about 30%, so you can see the levels of volatility and nervousness that are hard to map from hour to hour, never mind day to day.

And there's also news that OpenAI is trying to really ramp up its financing efforts in advance of the Anthropic IPO next month.

Well, this is a big question. I think with that level of volatility that we just talked about, it's certainly intraday volatility, you do have to worry a little bit about whether any of the big IPOs can get away in this sort of environment, you know, if people are that uncertain about what happens next. We still don't know if we get the Anthropic IPO, but the Reuters report yesterday shows that OpenAI is pushing ahead with a new financing round, probably trying to, and again competing with It's a big rival for the capital that's out there and that valuation, according to our reports, would put it up around $1.4 trillion of a valuation whenever it decides to come to market.

Now, it already is guiding into 2027, Anthropic still says it might come later this year, but again, that's a wait and see. But that would put both companies almost on par because, as you remember from last a week, Reuters also reported that the 2 trillion Anthropic valuation had been downgraded by insiders to roughly around 1.5.

And so then finally, one of the other big names that reported yesterday was Netflix. And the share price of Netflix has really been struggling all year and that continued. It was the slowest revenue growth in three years. There was also a disappointing advertising outlook. Why has Netflix been struggling so much?

Netflix as you remember once upon a time that people cast their minds back used to be part of this FANGs grouping number before we got the magnificent seven that used to be, you know, Facebook, Apple, Netflix, and Google. Right. So, so that was one of the leading camps. It didn't quite make the Magnificent 7 and it's kind of drifted away and still as a, you know, as a certainly a market leader, it has fallen away and the share price is down quite sharply this year and down 5% overnight after those earnings. There are lots of problems in in the streaming space. Advertising is a problem for Netflix, they also laid off a lot of workers recently and there's been broke boardroom reshuffles as well. So lots of sort out there and you know clearly it's it's now in a different position to any of the of the leading stocks and today is not a good moment for it to try and recover that.

For today's recommended read, check out Mike's column on how smoldering debt risk haunts the French market. The link is in the show notes. We'll be back tomorrow.