TheChek News Flow

The Delaware Supreme Court has reinstated Elon Musk’s $56 billion Tesla pay package from 2018, overturning last year’s ruling by the state’s Chancery Court, according to an opinion published Friday.

In a unanimous ruling, the judges on the highest court in Delaware said that canceling Musk’s package left him “uncompensated for his time and efforts over a period of six years.” Adjusted for Tesla’s current stock price, which hit all-time highs this week, the reinstated package would be worth around $140 billion, according to Bloomberg.

The state supreme court’s decision likely draws to a close a years-long battle that left such a bad taste in Musk’s mouth that he moved Tesla’s incorporation from Delaware to Texas, which prompted other companies to follow suit.

“Vindicated,” Musk posted to X on Friday in response to the news. “Thank you for your unwavering support,” he replied to Alexandra Merz, a vocal shareholder known as “TeslaBoomerMama.”

Tesla will now likely revoke a $29 billion pay package it offered Musk earlier this year, which was meant as a hedge against the possibility that the company could lose the Delaware Supreme Court appeal. The $1 trillion compensation package awarded to Musk in November is separate from that, and will continue to exist going forward, giving Musk a series of lofty goals to hit in order to unlock the full value.

The 2018 award also set out a number of milestones that Musk had to hit in order to unlock the full value. Musk and Tesla hit all of those goals, but not before a shareholder filed suit over the award in 2018, arguing that it had been improperly negotiated and that shareholders weren’t properly informed of the conflicts of interest at play.

Musk and the many Tesla supporters decried the lawsuit as absurd, particularly the fact that the plaintiff — a former corporate defense lawyer and heavy metal drummer named Richard Tornetta — only owned nine shares of company stock.

After years of back-and-forth, including a trial where Musk testified, the Chancery Court judge overseeing the case agreed with the plaintiff and initially struck down the pay package in January 2024. Tesla held a vote at its annual meeting in 2024 where shareholders “re-approved” the package, but the judge confirmed her decision in December 2024. Tesla appealed soon after.

With the winter holiday season nearly upon us, this was likely the last busy week of 2025 for big funding announcements. And as weeks go, it was certainly an active one.

Perennial megaround raiser Databricks was the top funding recipient by far, securing a fresh $4 billion in Series L funding (yes, that is a thing) at a $134 billion valuation. Next on the list were data security platform Cyera and nuclear microreactor company Radiant, followed by startups in healthcare, biotech, fintech and AI.

1. Databricks, $4B, data and AI: Databricks announced that it is raising over $4 billion in a Series L financing at a $134 billion valuation, led by Insight Partners, Fidelity and J.P. Morgan Asset Management. The 12-year-old, San Francisco-headquartered company also said it crossed the $4.8 billion revenue run-rate in its third quarter, growing over 55% year over year.

2. Cyera, $400M, cybersecurity: New York-based Cyera, provider of an AI-enabled data security platform, reportedly secured $400 million in a funding round led by Blackstone Group at a $9 billion valuation. The financing brings total funding to date for the 4-year-old company to $1.7 billion.

3. Radiant, $300M, nuclear power: Radiant, a maker of portable nuclear microreactors, says it closed on over $300 million in Series D funding led by Draper Associates and Boost VC. The El Segundo, California-based company said it plans to break ground early next year on a factory in Oak Ridge, Tennessee.

4. Tebra, $250M, healthcare software: Tebra, a provider of patient record software for healthcare private practices, says it raised $250 million in equity and debt financing to invest in AI and automation. Hildred Capital Management led the equity financing, which constituted most of the round, while JP Morgan provided the debt funding for the Corona del Mar, California-based company.

5. (tied) Imprint, $150M, fintech: New York-based Imprint, a provider of credit cards affiliated with consumer brands, raised $150 million in Series D funding at a $1.2 billion valuation. Khosla Ventures led the round, with participation from Thrive Capital, Ribbit Capital, Kleiner Perkins, Hedosophia and Timeless.

5. (tied) HawkEye 360, $150M, satellite intelligence: HawkEye 360, a provider of technology to detect, geolocate and characterize radio-frequency emissions, says it landed $150 million in Series E equity and debt financing. NightDragon and Center15 Capital co-led the equity funding, while Silicon Valley Bank provided the debt. The Herndon, Virginia company says it also completed its acquisition of Innovative Signal Analysis.

7. Chai Discovery, $130M, biotech and AI: Chai Discovery, a startup that uses AI to predict and reprogram interactions between biochemical molecules, landed $130 million in a Series B round. Oak HC/FT and General Catalyst led the financing, which set a $1.3 billion valuation for the San Francisco-based company.

8. (tied) Ambros Therapeutics, $125M, biotech: Irvine, California-based Ambros Therapeutics launched publicly with a $125 million Series A financing co-led by RA Capital Management and Patient Square Capital‘s strategic health care investment arm Enavate Sciences. The company licensed the rights to neridronate, which is used to treat Complex Regional Pain Syndrome.

8. (tied) Mythic, $125M, microprocessors: Mythic, an Austin-based startup developing semiconductor architecture to make AI computing more energy efficient, raised $125 million in a funding round led by DCVC and joined by a long list of venture investors.

10. Atavistik Bio, $120M, biotech: Cambridge, Massachusetts-based Atavistik Bio, a developer of allosteric small molecule therapeutics, raised $120 million in Series B funding led by The Column Group and Nextech Invest. Founded in 2021, Atavistik has raised $220 million in known funding to date, per Crunchbase data.

Key Points

The battle between Waymo and Tesla for control of the robo-taxi market is heating up. Both companies have some things in their favor.

On Tuesday, CNBC reported that self-driving company Waymo was raising an additional $15 billion in capital, valuing the company at up to $110 billion. Waymo didn’t immediately respond to a request for comment.

Alphabet controls Waymo, but the tech giant has other investors in its robo-taxi business. The money would be used for expansion. Waymo operates in five cities—San Francisco, Los Angeles, Austin, Phoenix, and Atlanta—and plans to expand soon into a dozen more, including New York, Miami, London, and Tokyo.

More cities mean more cars, which cost money. Cars are one advantage Tesla has over Waymo. Tesla can produce millions of cars a year, and each Tesla rolling off the assembly line has the hardware required to run its most advanced self-driving technology.

Waymo doesn’t take a back seat to Tesla, though. It completes more than 450,000 fully autonomous cab rides per week. Tesla still has safety monitors driving along with robo-taxi riders in Austin, Texas. What is more, Alphabet itself has the financial power to support Waymo’s expansion.

Waymo’s progress is impressive. Tesla bulls would counter that millions of Tesla vehicles on the road feed data to Tesla, helping the company train its cars to drive themselves.

Both companies’ self-driving efforts are impressive.

Exactly how the robo-taxi market will develop in the U.S. is hard to say. How fast will services roll out across the country? Who will own the cars? Who will insure the cars? How high will demand be? Will households eventually buy fewer cars and rely on AI-trained rolling robots to drive them around?

These are all important questions. What is more certain is that Tesla and Waymo will be two of the key players, whatever comes next.

Tesla stock lost 4.6% on Wednesday, but Waymo wasn’t the likely reason. The market was lower amid a sell-off in AI-related stocks.

Alphabet shares fell 3.2%, while the S&P 500 and Dow Jones Industrial Average dropped 1.2% and 0.5%, respectively.

Tencent is using a Japanese cloud service to access Nvidia Blackwell chips that remain banned to Chinese customers.

Tencent Holdings has secured access to high-end Nvidia artificial-intelligence chips that remain restricted to Chinese buyers even after President Donald Trump’s recent semiconductor agreement with the country. The owner of the WeChat social-media app is China’s largest company by market value.

The access comes through a cloud service operated by Tokyo-based Datasection, which recently announced a deal to buy Nvidia’s flagship Blackwell chips to use in data centers in Japan and Australia, a person briefed on the plan tells Barron’s. Tencent is the client for those data centers, the person said.

Accessing Blackwell chips in the cloud avoids violating U.S. export restrictions that bar Chinese companies from owning those chips themselves. The situation has been flagged by members of Congress as a regulatory blind spot.

Tencent would be the highest-profile user of the gap in the rules, which are aimed at maintaining U.S. dominance in artificial intelligence.

The arrangement also undermines a recent assurance by Trump that Nvidia’s top technology would remain off limits to China.

Datasection has announced deals for 15,000 graphical processing units, or GPUs, from Nvidia’s flagship Blackwell line for data centers in Osaka, Japan, and Sydney, Australia. The data centers will be used by “one of the world’s largest cloud-service providers,” says Datasection.

The person who identified Tencent as that customer learned of the connection from business interactions in Japan.

In an interview with Barron’s, Datasection CEO Norihiko Ishihara declined to share further details.

“I don’t say yes; I don’t say no,” he responded when directly asked if the customer was Tencent.

In response to questions about Datasection and Tencent, a Nvidia spokesperson said, “By design, the export rules allow clouds to be built and operated outside controlled countries by approved firms.” Controlled countries are nations that are subject to embargoes or other trade restrictions.

“Winning the business of those clouds is critical to maintain American technology leadership and promotes both national and economic security,” the spokesperson said.

When Trump moved last week to allow Nvidia to sell one high-performance AI chip, the H200, to Chinese buyers, he drew the line at the Blackwell generation, as well as the upcoming Rubin line.

“Nvidia’s U.S. customers are already moving forward with their incredible, highly advanced Blackwell chips, and soon, Rubin, neither of which are part of this deal,” Trump posted on his Truth Social website. “My Administration will always put America FIRST.”

Export rules bar Chinese companies from acquiring advanced U.S. chips, but don’t stop them from accessing those chips’ computing power remotely unless the companies are considered special security risks, says Collmann Griffin, a lawyer at Miller & Chevalier who previously served as a U.S. government sanctions policy adviser.

Some industry figures and their allies have argued that this allows U.S. chip makers to benefit from Chinese demand, with the assurance that trusted companies in allied countries won’t allow the products to be misused.

But others, including New York Rep. Mike Lawler (R.), have described the practice as a dangerous loophole.

“Our export controls are only as strong as the weakest link,” Lawler, who sponsored legislation that would provide regulators with tools to deal with the vulnerability, said in a statement earlier this year. “And right now, China is exploiting us.”

Liu Pengyu, a spokesperson for China’s embassy in Washington D.C., said in a statement to Barron’s that the U.S. is “politicizing, over-securitizing, and weaponizing trade and technology issues.”

In an October report, investment group Wolfpack Research said it had taken a short position on Datasection—which trades on the Tokyo Stock Exchange—based on its expectation that regulators may interfere with its cloud deal, hurting the company’s share price.

Short sellers borrow shares and sell them immediately in anticipation of being able to buy them back later at what they expect to be a lower price.

Datasection’s stock declined almost 14% after Wolfpack’s report was published on Oct. 8, but has since recovered those losses.

Datasection CEO Ishihara says his business deals have been vetted by U.S. legal counsel to confirm their compliance with export regulations. He says Datasection has initiated a legal action against Wolfpack over its short report, but declined to discuss whether a complaint has been formally filed against the investment group.

Wolfpack declined to comment on its report.

To date, most known instances of Chinese companies remotely accessing U.S. chips have involved data centers in countries outside America’s close orbit, such as those of Southeast Asia.

In July, Malaysian officials cited reports that a Chinese company had used servers equipped with chips from Nvidia and other makers to train large language models when announcing tighter rules around the movement of AI chips from the U.S., The Wall Street Journal reported.

Last month, the Journal reported on an Indonesian data center with 2,300 Blackwell chips that was providing computing power to a Shanghai-based AI start-up. The Indonesian business said the Chinese AI company has no physical access to its chips, and the deal would support AI applications tailored for use in Indonesia and Southeast Asia.

Griffin said he knew of no prior cases of a Chinese company accessing an AI data center in one of the U.S.’s most trusted countries, such as Japan.

Soon after Wolfpack published its report on Datasection, Kunihiro Tanaka, CEO of a leading Japanese data-center operator, Sakura Internet, expressed alarm in an X exchange over “the existence of dubious companies in Japan that attempt to circumvent export regulations.”

“I just don’t think chasing immediate gains is healthy for investors,” said Tanaka, who chairs Japan’s Data Center Association. “Especially now, when so many people are willing to side with shady Chinese interests for short-term profits.”

Tanaka said in a later post that he wasn’t referring to a specific company. A Sakura spokesperson declined to elaborate on Tanaka’s remarks, saying the CEO had made them in his personal capacity, not on the company’s behalf.

Beyond its projects in Osaka and Sydney, Datasection has presented to investors a pipeline of data centers planned across Japan, Australia, and Southeast Asia that are part of what it says is a plan to grow into a competitor to global players such as CoreWeave and Nebius. The hundreds of thousands of advanced chips planned for these facilities include some 170,000 Grace-Blackwell “superchips,” according to company announcements.

Even if all of its data-center projects move ahead, the business would still amount to a fraction of Nvidia’s overall sales.

The semiconductor maker expects to generate roughly $500 billion in revenue from its Blackwell and next-generation Rubin platforms from the start of this year through the end of 2026, a company official said in November. Recent months have seen major deals announced with big buyers including OpenAI, Microsoft, and CoreWeave.

Still, smaller orders also play an important role in semiconductor makers’ sales strategies, says Harsha Madannavar, a tech-infrastructure specialist with LEK Consulting.

Nvidia and other chip designers pay high development costs to design GPUs to spec for buyers of huge quantities. But once they’re designed, the incremental cost of manufacturing more units is relatively small, so makers routinely overproduce, and sell any excess to smaller providers with less specific needs, Madannavar says.

“It’s like when you go to Noah’s bagel in the afternoon,” Madannavar says, in reference to a popular California-based bagel chain. “You can get the same bagel for half the cost.”

Since Ishihara’s elevation from Datasection chairman to its president and CEO in June of 2024, the former business-data and analytics company has been in growth mode as a data-center developer. It recently announced a partnership with Tokyu Land—the real estate development arm of one of Japan’s biggest corporate conglomerates—to collaborate on projects including a data center on the northern Japanese island of Hokkaido.

Datasection has added high-profile names to its slate of directors and advisers, including Anders Fogh Rasmussen, the former Danish prime minister and secretary-general of the North Atlantic Treaty Organization; Pablo Casado Blanco, who had led one of Spain’s main political parties; and Jeb Bush Jr., the nephew of former President George W. Bush.

Tokyu Land, Rasmussen, Casado, and Bush didn’t respond to messages seeking comment.

Concurrently, Datasection has taken some steps that appear unusual for a company growing in size and stature.

At the same board meeting when Ishihara became CEO, directors also voted to change the company’s auditor from Japan’s affiliate of PwC—one of the so-called Big Four accounting businesses—to a small Tokyo-based firm called Amaterasu, according to Datasection filings.

Datasection said at the time that Amaterasu had been selected for its expertise and independence, as well as cost considerations.

Datasection is just one of five public companies audited by Amaterasu over the past year, according to Tokyo Stock Exchange data. Affiliates of the Big Four firms, which also include Ernst & Young, Deloitte & Touche, and KPMG, audit a majority of listed Japanese firms, an industry board said in a report last year.

Amaterasu managing partner Satoshi Fukudome declined to comment on his firm’s engagement with Datasection, citing confidentiality obligations.

“Please refrain from making such unreasonable inquiries or sending emails in the future,” he said in response to Barron’s outreach.

PwC Japan said it has a policy of not commenting on individual companies.

Datasection’s partner on its Osaka and Sydney projects is a firm called NowNaw Japan that Ishihara founded in 2022.

When announcing NowNaw Japan as its data-center development partner in August 2025, Datasection said it was selected for its “large number of engineers with a wealth of experience around the world.”

NowNaw Japan has four employees enrolled in Japan’s mandatory social-insurance system, according to Japan Pension Service data.

NowNaw Japan was initially established as the Japanese branch of a now-defunct U.S. video sharing app, also called NowNaw, Ishihara says. He says he left the business to avoid any conflicts of interest when he became Datasection’s CEO. Ishihara says he doesn’t know anything about his successor in the role, Reika Omi.

Contact information for NowNaw Japan and Omi couldn’t be found.

Datasection announced in August that an initial shipment of servers from Taiwan-based Giga Computing, equipped with Nvidia Blackwell B200 chips, had arrived at its Osaka data center.

Ishihara says the cluster of chips occupy part of an existing facility at what’s known as a “collocation” site, rather than being housed in its own server warehouse. He declined to share specifics of the facility’s location.

A Giga representative declined to comment on behalf of the company.

On Dec. 15, Datasection announced an agreement to purchase servers housing 10,000 higher-tier B300 chips from the Blackwell line from Inventec, also of Taiwan, for the Sydney data center, to be used by the same client.

Inventec didn’t respond to requests for comment.

The person who does business in Japan said in an interview with Barron’s that they were told by someone close to Datasection that Tencent had been lined up as the user of the Osaka and Sydney data centers, which house the Nvidia Blackwell chips.

Datasection had been unable to raise funds for the projects from mainstream Japanese banks that typically fund such initiatives because of concerns about the regulatory and reputational risks raised by Tencent’s involvement, the person said.

Funding for the data-center projects was ultimately secured through the sale of purchase options known as warrants to Singapore-based First Plus Financial, a significant Datasection shareholder since early 2024.

Ishihara says the Singapore company was better equipped to finance the projects. “No players in Japan have that kind of sophisticated understanding of this sector,” he says. “Even investors.”

It seems like perfect timing. Chile, the world’s top copper producer, elected a pro-business president in a 58% to 42% landslide, as world copper prices surge to record highs on expected demand from electric vehicles and artificial intelligence data centers. Just don’t hold your breath for a supply surge.

Jose Antonio Kast rode to his Dec. 14 triumph largely on promises to fight crime and curb migration from crisis-racked Venezuela. Rightist candidates rode his coattails to within two seats of a majority in the Chamber of Deputies.

His platform also included investor crowd-pleasers: lower corporate taxes and accelerated permitting of mining projects. “Everyone in the mining sector is very excited, very positive about Kast,” says Lucas Rodriguez, an associate director at FTI Consulting.

Chile’s copper output has slumped by 5% from a 2018 peak of 5.8 million metric tons. Part of that was driven by Kast’s predecessor Gabriel Boric, a one-time student activist who swept to power in 2021 pledging income redistribution and environmental protection.

He hiked copper royalties and set a high bar for mine expansion in the ore-rich but water-starved Atacama Desert. “Environmental permitting has been the biggest issue for mining companies,” Rodriguez says.

Up to $100 billion is waiting on the sidelines for a more relaxed government attitude, estimates Juan Carlos Guajardo, executive director of Santiago-based consultant Plusmining.

Most of this capital is focused on copper, though Chile also boasts the world’s largest reserves of lithium. Prices for the battery metal have crashed 90% since 2022, and Australia’s mines proved more economical than Chile’s brine extraction methods. “I see no boom of interest in lithium,” Guajardo says.

Chilean copper output has also been dwindling from natural causes. Mines that started producing in the late 20th century are becoming exhausted, costing more to deliver lower-quality ore. There are no mother lodes left to find. The huge majority of pending investment is in the “brown field” category, Guajardo says: expansion of existing sites that can only hold output steady for the next five years. “The bad news is that net growth isn’t expected until next decade,” he says.

Rodriguez worries that Kast’s law-and-order hard line could upset the fragile peace that miners have established with indigenous peoples around their mines. Neighboring Peru shows what can go wrong. Copper extraction there is plagued by blockades, wildcat mining, and occasional armed conflict.

The good news for Chile is that the world has no better option for digging out the copper it needs. The second-ranking producer, Democratic Republic of Congo, presents challenges of its own, to put it very mildly. Peru is No. 3 and China No. 4.

Argentina has abundant, all-but-virgin reserves. But it will take more than two years of market-friendly President Javier Milei to lure mining investment scaled for decades, says Nicolas Jaquier, a portfolio manager for emerging markets debt at asset manager Ninety One. “Argentina is very far from posing serious competition to Chile,” he says.

Boric’s progressive tilt paradoxically illustrated the firmness of Chile’s mining commitment. He had to compromise on royalties, failed to pass a constitution that would have enshrined “nature’s rights,” and in the end turned to streamlining permitting himself. “Boric’s reforms were really OK,” Jaquier says.

Even Jeannette Jara, Kast’s defeated Communist opponent, supported increasing copper production by 10%. “That’s testimony to the stability of the sector,” FTI’s Rodriguez comments. “I’m very bullish on copper in Chile.”

Walmart, Target, and Kroger are competing with national brands by promoting their own products with healthy ingredients and innovative flavors to lure customers.

Key Points

• U.S. private-label dollar sales increased by 4.4% in the first half of 2025, while national brands grew by 1.1%.
• Store brands’ market share has reached a record high of 21% of grocery purchases, driven by quality and innovation.
• Retailers such as Walmart, Target, and Kroger are expanding private-label offerings with unique, high-quality products.

Private labels are no longer just cheaper knockoffs of national brands. At Walmart, Target, and Kroger, store brands are pitching healthy ingredients and innovative flavors to lure picky consumers.

Private-label growth has outpaced that of national brands since 2022, says the Private Label Manufacturers Association, citing Circana data. In the first half of 2025, U.S. private-label dollar sales rose 4.4% from a year ago—led by a 13% growth in refrigerated food—while national brands gained 1.1%. This has pushed store brands’ market share to a record high of 21% of grocery purchases.

While affordability continues to be a draw for store brands, the battle goes beyond prices. For years, Costco Wholesale has hooked shoppers with its premium Kirkland Signature products, while Trader Joe’s has built its identity on products that shoppers can’t find anywhere else.

According to a 2025 study from retail consulting firm First Insight, 84% of consumers trust in the quality of store-brand products more or the same as national brands, and nearly three-quarters can’t identify a private-label product when shown side-by-side images of store brands and national brands.

“Shoppers aren’t loyal to brand names the way they used to be. They’re loyal to price, quality, and marketing. This creates a highly competitive arena where the best—yet not necessarily the most well-known brands—will win,” says First Insight CEO Greg Petro. “When a national brand stumbles, it opens up an opportunity for private labels to grow their market share.”

Since 2019, Target’s annual food-and-beverage sales have grown by more than $8 billion, to $24 billion as of 2024. Half of the growth came from private brands like Good & Gather—products made without artificial flavors, colors, sweeteners, or high-fructose corn syrup—indulgences line Favorite Day, and budget brand Market Pantry.

With its own team of trend analysts, food scientists, product designers, and sourcing managers, Target is adding hundreds of new items to its private brands every year, most under $5. Popular items launched this year includes Good & Gather Organic Peppermint Chocolate Coffee Creamer and Favorite Day Gingerbread Cookie Dough.

“Food-and-beverage-owned brands are not just a replacement for national brands. We spend a lot of time understanding what consumers need, designing into it,” Jasmine Vasquez, Target’s vice president of food and beverage for its owned brand division, said last year, noting that over 60% of Target’s private-label items don’t have a national-brand equivalent.

Last year, Walmart launched Bettergoods—its largest private food brand in 20 years—which features chef-inspired flavors, healthier ingredients, and products that accommodate different dietary demands, mostly priced under $5.

Scott Morris, Walmart’s senior vice president of private brands, tells Barron’s that the retail giant studies global culinary trends to identify emerging flavors that haven’t yet found their way into mainstream products, and features them in simple formats that people are familiar with.

Some customer favorites include Beef Bulgogi Empanadas, Garlic Butter Dry Rub Chicken Wings, and Pistachio Nut Butter. “We want it to be approachable, so it doesn’t feel like it’s such a stretch that people don’t understand what we’re trying to sell them,” says Morris.

Early data suggest that strategy is resonating. Morris says over 60% of the people buying Bettergoods have never bought private brands from Walmart before. CFO John David Rainey recently said 40% of customers who bought Bettergoods returned to buy again.

At Kroger, private-label growth has outpaced national brands for nine consecutive quarters. Interim CEO Ronald Sargent called private brands a “critical strategic asset” for the grocery chain that not only drives sales, but also helps build loyalty and carries better margins.

Premium and healthy products are particularly attractive as high-income customers try to save money without sacrificing quality. In September, Kroger added more than 80 high-protein meals and snacks—from french toast sticks to jalapeño cheddar puffs—to its Simple Truth healthy and organic line. That’s the largest product expansion for the brand yet.

Other countries indicate that American retailers have room to expand store brands. Private-label penetration is above 40% in Europe, and 25% to 30% in Canada—much higher than the 20% share in the U.S., says Angus McOuat, a McKinsey partner of consumer practice.

“Almost all of my clients in the retail space are looking to grow their private-brand business,” he tells Barron’s. “They want higher penetration, more products, and bigger teams to support it.”

Private labels have been gaining share particularly in salty snacks and candy —categories that were historically well protected—as high prices force consumers to reconsider their purchases.

While national brands still have advantages in marketing muscle and emotional resonance, earning the premium is getting harder.

“It definitely raised the bar,” says Nik Modi, co-head of global consumer and retail research at RBC Capital Markets. “Value equations are very complicated. What companies have been challenged with is, how do you get the combination right to create relevancy?”

At General Mills, sales of Pillsbury doughs rebounded from earlier weakness after the company improved product recipes, lowered prices, and launched marketing campaigns around its Pillsbury Doughboy mascot to boost consumer engagement.

The company’s Cheerios Protein cereal has also been doing well—now a $100 million business and bigger than any small competitors, according to the firm. Management says that while the product contains less protein than alternatives, it costs less and tastes better.

“That’s our sweet spot,” said CEO Jeffrey Harmening at an investor conference in November.

McKinsey’s McOuat says that many packaged-food companies have been dissecting their portfolio to see which parts need to lower costs, which parts need to become more premium and innovative, and which parts they need to exit.

That might come in the shape of mergers, acquisitions, and asset sales in the coming months. “Companies need to focus resources and make decisions on what they want to be and what they don’t want to be,” says Modi.

As prediction markets surge, Wall Street is grappling with an uncomfortable question: Is there any distinction left between investing and gambling?

On any given Sunday, Americans flock to their couches to watch hours of football on TV. Wall Street trading floors are closed, but the American pastime has become prime time for upstart financial platforms known as prediction markets. This past weekend, National Football League fans placed more than $200 million worth of NFL trades through Kalshi, the leading prediction market in the U.S. The financial contracts, like sports bets, pay out depending on the outcome of each game.

Many of those trades are powered by Robinhood Markets’ popular stock trading platform, meaning that viewers can use their NFL profits to buy shares of Nvidia, Nike, or Netflix —all from one app.

Robinhood, which was home to the meme-stock revolution, has gradually brought prediction markets onto its platform over the past year and added Kalshi’s NFL contracts for the current season. It sees event contracts, which allow clients to place money on Yes/No predictions about coming events, as a democratizing force in the world of finance.

“Adding pro and college football to our prediction markets hub is a no-brainer for us as we aim to make Robinhood a one-stop shop for all your investing and trading needs,” Robinhood said in a blog post announcing the Kalshi-NFL partnership.

But that one-stop shop is raising uncomfortable questions across the world of wealth management: If the same app allows the same trader to place money on the outcome of sports events and corporate earnings growth, what’s the difference between gambling and investing?

“The lines of investing and gambling are being blurred like never before,” says James Martielli, head of investment product for Vanguard’s Personal Investor business.

And this week, those lines blurred even more, with Robinhood announcing sports trades linked to a series of related events. One possibility: The San Francisco 49ers will win on Sunday, Christian McCaffrey will rush for more than 100 yards, and the total score will be more than 50.

The latest trades, which resemble parlay bets in traditional gambling, pay out only if each event within the combination resolves correctly. Robinhood says the new combos give customers “another way to turn their nuanced sports knowledge into an investing opportunity.”

Incumbents like Vanguard, known for its buy-and-hold approach to investing, and Charles Schwab, which itself upended the world of retail investing in the 1970s with discounted stock trades, have steered clear of prediction markets.

“I just don’t want young people in our country to think gambling on the Monday Night Football game is the same as investing in stocks and bonds,” Rick Wurster, Schwab’s recently installed CEO, told a room of 5,000 financial advisors in November.

“The challenge I see with this is that investing over the long run pays off,” he said. “And you have all dramatically enhanced the financial lives of your clients by helping them identify how to invest and what to invest in.”

Wurster’s defense highlights the stakes of the debate. It isn’t just incumbent versus start-up or young versus old. The rise of prediction markets is testing the meaning of an investment.

“Prediction markets, especially sports outcome contracts, are primarily gambling and entertainment products and are not aligned with Vanguard’s mission to give investors the best chance for investment success,” says a Vanguard spokeswoman.

No brokerage firm has embraced prediction markets more fully than Robinhood, which has catered to a younger audience since it was founded in 2013. It offers a range of topics to trade on, but sports and elections are the most popular. The company says its prediction markets are now generating $100 million in annualized revenue with 11 billion contracts trading hands since the end of last year.

Prediction markets allow investors to wager on the outcome of seemingly any event you can think of—from who will win an election to whether the CEO of Costco Wholesale will say the words “dividend” or “hot dog” on its next earnings call. And, of course, sports. On Sunday, Dec. 7, prediction market Kalshi saw $329 million traded on its platform, according to analytics firm Dune.

“Prediction markets are really on fire,” said Robinhood CEO Vlad Tenev during the company’s third-quarter earnings call, adding that he loves being an early mover with regard to this “new asset class.”

But for now, the new asset class looks mostly like a sportsbook. Of those Dec. 7 Kalshi transactions, 97%, or $318 million, were traded on sports.

Sensing a threat to the sportsbook business, DraftKings launched its own prediction market platform on Friday, which will enable the company to operate in states where sports gambling is otherwise banned. FanDuel says its prediction market is coming soon.

The event contracts sold on prediction markets are built around yes/no questions. “Will the Cowboys win Sunday’s game?” If the odds are 70% in the Cowboys favor, the “yes” side of the contract costs 70 cents, while the “no” side would cost 30 cents. At the conclusion of the event, the correct trade pays out the full $1.

While a sportsbook is effectively the counterparty for any sports bet, prediction market platforms like Kalshi and Polymarket serve as a facilitator. Put another way, there is no “house.” Their exchanges connect customers on each side of a given contract and take a transactional fee, usually a penny per contract. Robinhood takes an additional penny for contracts traded on its site.

Robinhood’s Tenev has said that prediction markets give investors the ability to price any event and to hedge against risk.

A landlord worried about New York City Mayor-elect Zohran Mamdani’s pledge to freeze rent hikes could have theoretically hedged against potentially lost rental income by buying event contracts related to the recent mayoral election.

Those financial hedges remain mostly a curiosity for now. This past month, while options markets were abuzz with traders trying to find an arbitrage opportunity in shares of Warner Bros. Discovery amid a bidding war for the company, prediction markets were notably quiet. After six days of trading, one event—“Who will successfully take over Warner Brothers?”—had $96,000 worth of bets. “Pro basketball champion?” by comparison, had more than $11 million.

Thomas Peterffy, chairman of Interactive Brokers Group, may be prediction markets’ biggest bull among the old guard. His firm, which traces its roots to 1977, has its own prediction market, ForecastTrader, which is focused on economic and climate indicators. It doesn’t offer sports-related contracts.

“In my mind, prediction markets will be the biggest space for investors in the coming years,” says Peterffy, “I think it will far exceed the popularity of even the stock market. It will eventually get to the point where people get up in the morning and any questions they have about that day, that year, or the coming decade, they can go get the consensus from the prediction markets.”

Global volume on prediction markets reached $13 billion in November, according to Dune, up from less than $100 million in April 2024.

That growth is spurring keen interest from other parts of Wall Street, as well. Kalshi recently raised $1 billion from big name venture-capital firms like Sequoia Capital and Andreessen Horowitz at an $11 billion valuation.

In October, Polymarket got a $2 billion investment from Intercontinental Exchange, the owner of the New York Stock Exchange, valuing the prediction platform at $8 billion.

Jeffrey Sprecher, CEO of Intercontinental Exchange, recently told investors that half of the company’s 10,000 institutional clients could be buyers of data from Polymarket. “Hedge funds have the Polymarket app up, and traders are using it for hot news,” Sprecher said. “We think for our legacy business of oil and gas and cocoa and coffee and all kinds of basic commodities—even interest rates—that people are going to want to see: OK there’s something hot here, and I better pay attention to it.”

While Wall Street titans seek to recruit customers with prediction markets, some in the industry are going the other way.

In November, New York–based online brokerage Public ran a full-page ad in The Wall Street Journal emphasizing its mission: “Wealth is not won in a bet. If you’re looking for a broker that’s not also your bookie, we invite you to try Public.”

Leif Abraham, co-founder and co-CEO of Public, tells Barron’s that the firm’s ad campaign is intended to help attract customers who are serious about investing and creating long-term wealth.

“Event contracts may have a place, and sports contracts can be fun, but that place shouldn’t be your investing account,” Abraham says. “We want people to be able to trust us with their finances and perhaps one day their financial inheritance.”

He says his firm could one day offer event contracts related to financial matters but not sports—even if it means sacrificing revenue. “In the brokerage space, I think there is always a tension between short-term revenue and a long-term relationship with a customer.”

Financial advisors, who manage much of the country’s wealth, also see a threat from betting’s encroachment. “We’re not in favor of sports and investing being side-by-side,” says Sean Hanlon, co-founder and chief investment officer of VestGen Investment Management, a wealth manager that has $7 billion in assets under management.

For now, it’s the bookies that are taking the biggest hit from prediction markets’ rise. Shares of DraftKings and FanDuel-parent Flutter Entertainment are down 8% and 16%, respectively, this year as their moat dries up and sports bettors are drawn to the simplicity of prediction markets.

Piper Sandler analyst Patrick Moley has estimated that as much as $8 billion in revenue could flow to prediction markets if they take 20% of market share from sportsbooks. Moley thinks prediction markets can become more than just sports, and that, as they do more, brokerage firms may want to offer access to investors. But right now, growth is being driven by sports. “There’s no doubt that’s the case,” Moley says.

The term invest, as defined by the Securities and Exchange Commission is “to engage in any activity in which money is put at risk for the purpose of making a profit.” The commission doesn’t include gambling in its glossary, but certainly the same words could apply.

Maybe it’s just a vibe, or as Supreme Court Justice Potter Stewart once wrote about obscenity: “I know it when I see it.”

Some market experts distinguish investing from gambling by the time horizon at work. “The closer you are to win everything, lose everything, in some kind of short time frame, the closer you are to gambling,” says Vanguard’s Martielli.

Kalshi tells Barron’s that prediction markets’ “structure, utility, and business model make them wholly different from gambling, while their broad cultural appeal differentiates them from standard financial markets.”

Polymarket didn’t respond to requests for comment.

Robinhood and Tenev see prediction markets as a natural evolution in finance.

“Prediction markets are often dismissed as ‘gambling’—just as cars were once dismissed as ‘horseless carriages,’ ” the Robinhood CEO wrote in a post on X. “Like any new innovation, they don’t fit neatly into any one category.”

Casinos and gambling oversight were once the sole domain of the states, while financial markets are generally regulated by the federal government, notably the SEC and Commodity Futures Trading Commission.

But now those regulatory distinctions are collapsing, courtesy of prediction markets. The CFTC, which regulates event contracts, approved Kalshi’s move into political and sports betting markets. The next battle revolves around whether courts determine sports event contracts to be investing or gambling.

Thus far, the CFTC isn’t taking a stand. “I would look to what the courts say,” said Michael Selig, President Donald Trump’s nominee to lead the CFTC, at his recent confirmation hearing.

Webull, a relatively new entrant to the world of online stock trading, began offering financial-related event contracts in 2024 and expanded to sports in September.

“We saw some client activity moving to other platforms to get access to these products,” says Webull’s U.S. CEO Anthony Denier. The company offers contracts for NFL, college football, National Basketball Association, Nascar, and F1 events.

More than 30 million event contracts were traded in October on Webull’s platform. That’s nearly twice the volume of September. Denier says November saw similar growth.

He doesn’t see much difference between trading sports event contracts and other kinds of futures or options products. “When you are offering a futures product, you can be talking about where the price of gold will be trading, or soybeans or oil,” he says. “This is just a contract for another specific event.”

Chris Grove, partner emeritus at gambling industry market research firm Eilers & Krejcik Gaming, says gambling versus investing is an age-old debate. “The reality is we’ve drawn a line somewhere and said things on this side of the line are capital-G Gambling.”

Webull’s line is drawn at pop culture. It’s skipping Kalshi trades like, “Who will win Survivor season 49?” or “Will Trump attend another UFC event this year?”

“There needs to be enough market participation,” Denier says. “If you go too far down the tail, you can get contracts that don’t really trade, and customers can be frustrated.”

After his cautionary speech to financial advisors in Denver, Schwab’s Wurster remains pragmatic about the future of prediction markets.

“I prefer we don’t get into sports gambling,” he says. “The reality we face is that if our competitors are making so much money in sports gambling that it gives them an edge to invest in brokerage—that’s something we have to keep an eye on.”