Tesla’s stock may be on autopilot, but California just reminded everyone that the company’s cars definitely aren’t.

A California judge ruled that Tesla used deceptive marketing around its Autopilot and Full Self-Driving systems. If Tesla doesn’t fix the marketing issues within 60 days, the California Department of Motor Vehicles says it will move forward with a 30-day suspension of its licenses to sell and manufacture cars in the state.

Tesla’s branding suggested its cars could drive themselves, when in reality Autopilot and Full Self-Driving still require an alert human behind the wheel. Even after Tesla rebranded the feature as “Full Self-Driving (Supervised),” the judge wrote that a reasonable consumer could believe the car operates autonomously, a claim that is technologically and legally false. Tesla fell 4.62% today.

Right as things were going great…

The ruling comes a day after Tesla hit all-time highs, fueled by optimism about CEO Elon Musk’s long-promised robotaxi rollout.

Tesla has been testing driverless cars in Austin, and Musk says unsupervised driving is “pretty much solved.” He expects robotaxis to be operating in Austin by year’s end, alongside expansions in Florida, Nevada, Arizona, and Texas.

The hype has carried the stock well past its peers: Tesla has surged 25% since November lows, outpacing the Bloomberg Magnificent Seven Index’s 6% gain in the same period. It now trades at a sky-high 223x forward earnings, towering over both its own five-year average of 94x and the Mag 7’s 31x average. Shares are up 15.7% YTD.

Robotaxi-driven euphoria

Despite the recent run-up, 2025 hasn’t been smooth for Tesla. It has faced political backlash tied to Musk’s relationship with Trump and far-right European leaders, and intensifying competition from cheaper EVs in Europe and China. Shares fell 36% in the first quarter alone.

By November, US sales fell to a near four-year low. The end of the $7,500 federal EV tax credit hurt demand across the industry, and Tesla’s attempt to compensate with lower-priced “Standard” Model Y and Model 3 trims backfired. Sales dropped 23%, and analysts say the new versions are cannibalizing Tesla’s higher-margin models.

Layer on today’s ruling, and it’s fair to wonder whether the stock’s rally is more short-term hype than long-term momentum.

Then again, not everyone is bearish: Mizuho raised its price target to $530 from $475 this week, keeping a Buy rating on the belief Tesla’s AI and robotaxi narrative still has legs.—SY

🟢 What’s up

• Hut 8 surged 8.98% after signing a $7 billion deal to lease a Louisiana data center, marking its next step in pivoting from crypto mining to AI infrastructure.
• Spirit Airlines popped 15% after it revived merger talks with Frontier Group, a deal that would create the fifth-largest U.S. airline by passenger miles.
• Texas Pacific Land gained 7.59% after announcing a partnership with Bolt Data & Energy to develop AI-focused data centers on its West Texas acreage, backed by a $50 million investment.
• Udemy soared 12.66% following news of its $2.5 billion merger agreement with Coursera, combining two major players in online education.
• DBV Technologies jumped 25.42% on positive Phase 3 trial results for its peanut-allergy treatment in children.
• Medical product maker Medline skyrocketed 41.38% after its IPO, one of the biggest market debuts in years.

What’s down

• Oracle slid 5.39% after Blue Owl Capital pulled out of a planned $10 billion OpenAI data center project, reportedly over concerns about Oracle’s rising debt load.
• Spirits company Brown-Forman dipped 5.16% after Citigroup downgraded the stock to Sell and cut its price target.
• Home construction company Lennar dropped 4.53% following a Q4 earnings miss and softer-than-expected guidance for new orders and deliveries in the first quarter.
• Paramount Skydance fell 5.42% after Warner Bros. Discovery’s board urged shareholders to reject Paramount’s offer and proceed with a competing deal from Netflix.

There have always been investors who see stock picking as akin to gambling—but now the difference between going to the casino and logging into your brokerage app is completely blurred.

Between meme coins, prediction markets, and triple-leveraged single-stock exchange-traded funds, it feels like we’re slowly turning our financial markets into one giant slot machine. One reason: At the very same time young people feel like building wealth the old fashioned way, it’s less possible than ever.

Howard Lindzon knows this better than anyone. Stocktwits, the social networking platform he co-founded, is like honey to the retail trader bee, and his experiences there helped him coin the term “degenerate economy”—a colorful way to describe today’s market that he spoke about yesterday on Brew Market’s very own podcast.

“It's never been easier to be invested, but it's never been harder to stay invested—that's the thesis of the degenerate economy,” he explained to host Ann Berry. “We're going to be inundated with products that will get us trading more, which is probably not smart, and betting more, which is probably not smart.”

Case in point: Robinhood just announced a slew of prediction markets features yesterday, including parlay and prop bets on NFL games and players. And soon, traders will be able to combine up to 10 outcomes across NFL games into custom combos.

We’re not going to pretend we totally understand what that even means—which is the point. Investing has gotten far from profit numbers and balance sheets, and is transforming into something else entirely. Whether or not that’s a good thing remains to be seen.—LB

Looks like world peace and oil markets just don’t mix.

Just yesterday, crude slid to its lowest price since 2021 as Russia and Ukraine continued hashing out a ceasefire that could lift sanctions on Russian oil. Then today, more drama in another corner of the world—President Donald Trump’s “total and complete blockade” of sanctioned oil tankers in and out of Venezuela—caused oil to jump out of its slump.

Brent crude futures, the international benchmark, surged 2.51% today to over $60.40 per barrel. Shares of Exxon Mobil, Shell, and Chevron climbed 2.35%, 1.55%, and 1.89%, respectively.

Still, this rally may be short-lived, since the world is drowning in an oil supply glut. OPEC nations have ramped up production, and so has the US. Within our own borders, crude oil output hit a record-high of 5.9 million barrels per day in November, according to the US Energy Information Agency (EIA).

The good news is that high supply = lower gas prices, which should come as a relief to Americans as they fill their tanks on their merry way to grandma’s house this holiday season. AAA found that the average price of gas in the US this week dipped below the $3 threshold to $2.906 per gallon, down from $3.023 a year ago.

What this means for investors: Although lower gas prices make drivers happy, investors have reason to worry, with Brent crude futures down over 18% year to date. Nonetheless, those big oil companies we mentioned earlier (Shell, Exxon, and Chevron) are all up this year.

How can oil futures be down when stocks are up? For one, these companies don’t live or die on oil alone. They also harvest natural gas, and exports of liquified natural gas (LNG) surged this year, with the US on track to surpass Russia as the world’s top exporter, according to the EIA.

Even so, natural gas prices have been on their own rollercoaster lately for similar reasons: oversupply. But unlike crude, high supply doesn’t equate to lower prices: With an unusually cold winter ahead, Americans who heat their homes with natural gas are expected to face an 8.4% hike in prices.

Bottom line: Oil and natural gas aren’t discretionary purchases like the latest Labubu, so no matter what happens day to day, these companies aren’t likely to leave you completely out in the cold anytime soon.—JD

• OpenAI is in talks with Amazon about a potential $10 billion investment.
• #recessionindicator: US spending on video game consoles in November had its worst month in two decades.
• Least surprising news of the day: Prosecutors charged Tricolor executives with “systematic fraud” in the wake of the subprime auto lender’s implosion.
• Famed billionaire hedge fund manager Ray Dalio is joining Michael Dell in backing “Trump accounts” for kids.
• The IRS is trying a new strategy to get $16 billion in taxes from Meta.
• The Bank of Japan is expected to hike interest rates this week. Here’s why that’s bad news for the US.

It’s been a big week for economic data, and we’ve got another hot ticket tomorrow. The Fed’s dual mandate focuses on inflation and employment, which means all eyes are on the double whammy of November CPI and weekly initial jobless claims. CPI in particular should be revealing as the final inflation reading of the year, while initial jobless claims will give Jerome Powell yet another tidbit of data to consider as the Fed preps for its January 27 to 28 FOMC meeting.

As for earnings, the lineup is pretty impressive: Nike, FedEx, KB Home, BlackBerry, CarMax, Accenture, Cintas, and Birkenstock all report their latest quarters tomorrow.