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An investigation released earlier this month found Instacart's AI pricing tool charged users different prices for the same items

Key Takeaways

• The Federal Trade Commission is reportedly investigating Instacart after a study found the grocery delivery giant used AI tools to charge shoppers different prices for the same items.
• Consumer Reports, Groundwork Collaborative, and More Perfect Union estimated the variations in pricing could add up to about $1,200 per year in additional costs for the typical household shopping on Instacart.

Instacart's use of AI-driven pricing is drawing attention from federal regulators. 

The Federal Trade Commission, a consumer protection agency, is looking into the grocery delivery giant's use of AI pricing tools after an investigation found it was charging customers substantially different prices for the same items, according to a Reuters report Wednesday.

An investigation by Consumer Reports, Groundwork Collaborative, and More Perfect Union published earlier this month found prices for about three-quarters of surveyed items on Instacart varied by up to 23% from user to user among volunteers shopping at the same time. The report estimated such price variations could add up to about $1,200 per year in additional costs for the typical household shopping on Instacart. A review of an Investopedia editor's transactions on Instacart found that prices for a range of products at Costco (COST) also varied from one order to the next.

"Much of what’s been reported has mischaracterized how pricing works on Instacart," a company spokesperson told Investopedia. "First, our retail partners control their pricing strategies, and we work with them to align their online and in-store pricing wherever possible. Second, these tests are not dynamic pricing nor surveillance pricing—prices on Instacart do not change in real time nor are they based on supply or demand, and we never use personal, demographic, or user-level behavioral data to set item prices. These tests are a form of randomized A/B testing, similar to the way retailers have long run pricing tests between different stores,” the spokesperson said.

The FTC said in an emailed statement Thursday that it has a "longstanding policy of not commenting on any potential or ongoing investigations. But, like so many Americans, we are disturbed by what we have read in the press about Instacart’s alleged pricing practices."

Why This Matters to You

Instacart isn't the only company that's been experimenting with AI-driven pricing tools, and as a growing number of companies across industries implement them, it could affect how much you pay for a variety of goods and services.

The FTC sent Instacart a civil investigative demand over its Eversight pricing tool, named for a company that Instacart acquired in 2022, Reuters reported. The tool helps retailers test consumer reactions to different prices, and retailers who use the tool could see a 1% to 3% bump in revenue, according to Instacart's website.

Separately, the FTC said Thursday that Instacart is set to pay $60 million in consumer refunds to settle allegations it engaged in deceptive membership enrollment practices and false advertising concerning refunds for unsatisfactory orders and free delivery on first orders.

Instacart acknowledged the settlement in a blog post Thursday, but said it denies "any allegations of wrongdoing by the agency."

Shares of Instacart parent Maplebear (CART) slid 1.5% Thursday. They've lost about 9% of their value since the start of the year.

This article has been updated since it was first published to include additional information.

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Inflation dropped to 2.7% in November, according to the CPI report released Thursday.

Key Takeaways

• Inflation decelerated significantly between September and November, with annual "core" inflation falling to its lowest since 2021.
  
• Housing inflation slowed dramatically, and prices for clothing and hotel rooms fell, pushing down overall inflation.
  
• Economists were skeptical of the data since the Bureau of Labor Statistics' price survey was disrupted by the government shutdown in October and November.
  

Inflation fell to its lowest in years in November, according to one important measure.

Consumer prices rose 2.7% over the 12 months through November, the Bureau of Labor Statistics said Thursday. That was down from a 3% annual increase in September and lower than the 3.1% increase forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. "Core" inflation, which excludes volatile prices for food and energy, rose 2.6% over the year, down from a 3% annual increase in September and hitting its lowest since 2021.

The reduction in core inflation was especially notable because economists consider core inflation measures to be a more accurate indicator of price trends. Food and gas prices can fluctuate for reasons unrelated to broader inflation trends.

What This Means For The Economy

If it's not reversed in the coming months, the sudden decline of inflation in November could mark a turning point in the trajectory of the economy, signaling the uptick of inflation caused by tariffs is fading.

Inflation decelerated because of falling prices for hotel rooms, recreation, and clothing, and a relatively small increase of 0.2% in shelter prices between September and November.

"At face value, the signal is positive and suggests we may be past the peak in inflation," Oren Klachkin, financial markets economist at Nationwide, wrote in a commentary. "However, the latest data demands more nuance than usual, given sampling and data collection issues caused by the government shutdown."

Indeed, Thursday's report had been delayed by just over a week because of the government shutdown in October and November, and the bureau did not publish a report for October's prices.

Potential distortions in the data due to the shutdown caused some economists to take Thursday's report with a grain of salt. The bureau started collecting prices in late November, when holiday sales were underway, for instance.

"The canceling of the October report makes month-on-month comparisons impossible, for example, while the truncated information-gathering process, given the shutdown, could have caused systematic biases in the data," Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, wrote in a commentary.

Grocery prices rose 1.7% over the year in November, the lowest annual inflation since February, although the figure provoked some skepticism from economists.

“It’s hard to read too much into the November inflation data," Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. "The shutdown clearly had a big impact on data collection. Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”

Update, Dec. 18, 2025: This article has been updated with more information from the CPI report and commentary from economists.

News of the day for Dec. 18, 2025

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Tech stocks are looking to rebound after sliding earlier this week amid AI bubble fears

Stock futures are trending higher Thursday ahead of the release of inflation data for November.

The pending release of the Consumer Price Index is expected to show inflation rising by just over 3% in the month, the highest jump in well over a year; Micron shares are soaring after the memory chip maker posted strong results last night; Nike is scheduled to give its latest update on the shoe maker's turnaround plan and the impact of tariffs this afternoon; and there's some notable news in the ranks of corporate executives.

1. Stock Futures Rise Ahead of Inflation Data

Stock futures are pointing to a higher open Thursday ahead of a key reading of inflation data, with tech stocks looking to reverse their recent slide. Futures tied to the Dow Jones Industrial Average and S&P 500 were up 0.3% and 0.5%, respectively, while those connected to the tech-focused Nasdaq 100 were up 0.8%.

On Wednesday, the major indexes declined as the Dow lost 0.5%, and the S&P and Nasdaq sank even further as tech stocks tumbled. Oil futures are down to roughly $56 a barrel, with gold futures still slightly below record highs at about $4,350. Bitcoin is trading around $87,000, where it has been for most of the week. The yield on the 10-year Treasury bond is at about 4.13%.

2. November CPI Due This Morning With Inflation Expected at 3.1%

Investors will get another look into the state of the U.S. economy today, with the CPI report for November scheduled to be released at 8:30 a.m. The key inflation metric is expected to show that inflation rose by 3.1% last month, the biggest increase since May 2024, as tariffs continue to drive prices higher. The inflation reading will impact how the Federal Reserve thinks about interest rates ahead of its next meeting in January, but inflation rising at the same time that unemployment is also increasing and the job market looks stagnant makes for a difficult decision.

3. Micron Stock Surges on Strong Results

Micron (MU) shares are surging after the maker of memory chips posted better revenue and profits in its latest quarterly report after the market closed Wednesday. Micron supplies memory components to other chipmakers like Nvidia (NVDA); it has seen its stock nearly triple this year, closing at a record high last week before the recent tech sell-off started.

Analysts said ahead of the report that an AI-fueled demand surge has led to a shortage in the memory components Micron and other companies make, leading to historically high prices in the sector. Micron shares are up more than 11% premarket.

4. Nike Slated to Give Update on Turnaround Effort, Tariffs

Nike (NKE) is scheduled to release its own results for last quarter after the closing bell today, with sales expected to decline slightly while profits are cut nearly in half by high tariffs and other costs. The stock has recovered from the lows it fell to after President Donald Trump announced plans to enact massive tariffs in April, but is still down for the year as the companay manages a turnaround plan that analysts say would have taken time even without the weight of tariffs.

The company beat revenue estimates in its last report in September, but raised its projected tariff payments to $1.5 billion from $1 billion. Nike CEO Elliott Hill took over the top job at the athletic apparel giant just over a year ago. Nike shares are up just under 1% premarket, and options pricing suggests the stock could swing up to 7% in either direction following today's report.

5. BP Announces Succession Plan; Activist Investor Reportedly Pushing Candidate for Lululemon Job

Some high-profile corporate leadership changes were in focus this morning. One of the world's biggest oil and gas companies has a new CEO, as BP (BP) announced a succession plan on Thursday. Current CEO Murray Auchincloss is stepping down effective Thursday, and Meg O’Neill will become the British energy company's new CEO April 1, 2026. Current EVP of supply, trading, and shipping Carol Howle will serve as BP's interim CEO, the company said. BP's U.S.-listed shares are down nearly 1% Thursday morning.

Meanwhile,The Wall Street Journal reported late Thursday that activist investor Elliott Investment Management has built a $1 billion-plus stake in Lululemon (LULU) and is looking to push for its own CEO candidate. The athleisure brand said last week that its current CEO will leave at the end of January. Lululemon's stock was recently up more than 6% premarket.

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Coinbase Global announced new products and services including stock trading, prediction markets.

Key Takeaways

• Coinbase Global rolled out a slate of new offerings including stock trading, a tokenization platform, prediction markets, and an AI-powered investment advisor.
• Coinbase CFO Alesia Haas said that the company intends to be the "No. 1 financial app" in the next five years.

The largest publicly-traded U.S. crypto exchange just entered the race to build a financial "everything app."

Coinbase Global (COIN) on Wednesday evening announced a raft of new products and services, including stock trading, prediction markets, a tokenization platform, and an artificial intelligence-powered roboadvisor. "We are building to become the face of the future of finance," Coinbase CFO Alesia Haas said in an interview with Investopedia, saying its goal in the next five years is to be the No.1 financial app.

A so-called everything app or "super app" has been the holy grail for many companies in retail, social media, dating—and, of course, financial services. Trading platforms including Robinhood (HOOD) and SoFi (SOFI) appear to be converging in the same space, rolling out similar services and products such as banking services, credit cards, and events contracts.

WHY THIS MATTERS TO YOU

Super apps like China's WeChat or Korea's KakaoTalk haven't really arrived in the U.S. If one does, it might resemble those—which users rarely close because if they're not using them to call or chat with loved ones, they're using them to shop and pay for things.

Haas said Coinbase's "primary goal" is to deepen relationships with existing customers; the broader set of offerings could also open up its potential customer base.

"What this will enable us to do is gain more share of wallet from our customers," Haas said. "So before, I think many of our customers would trade crypto with Coinbase and trade their stocks at another platform, and now we have the opportunity to serve them in more of their trading needs."

As Coinbase advances in its goal of becoming more than a crypto exchange, its business and stock should be less subject to the swings of coin markets—though it would also move the company to a realm already populated by other large financial services companies.

"This strategy should substantially widen the firm's addressable markets (both retail and institutional), diversify its product/service range, while helping to mitigate potential future pricing pressure within retail crypto trading," Deutsche Bank analyst Brian Bedell said in a research note Wednesday.

Bedell initiated coverage of Coinbase with a Buy rating on the stock and a price target of $340, implying upside of almost 40% from Wednesday's closing price of $244. Of the 12 analysts tracked by Visible Alpha, eight have a buy, or bullish, rating on the stock, and four, a hold, which is effectively a neutral position; the average price target is $380.

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Federal Reserve Governor Christopher Waller said officials can keep lowering interest rates.

Key Takeaways

• Fed officials took opposite views over how the Fed should respond to rising unemployment and inflation.
  
• One prominent Fed official said the central bank should cut interest rates to boost the job market, and another said they should keep rates higher for longer to fight inflation.
  
• Fed officials have been divided about strategy as the government shutdown delayed key economic reports, and the release of belated jobs data Tuesday didn't resolve the issue.
  

Fed officials have been divided about whether to boost the job market by further lowering interest rates, and a surprise uptick in the unemployment rate Tuesday wasn't enough to resolve the debate. 

Several Fed policymakers spoke in the wake of Tuesday's belated report from the Bureau of Labor Statistics, which showed the unemployment rate unexpectedly rose to a four-year high in November. As they have been for months, the officials were divided about whether the Fed should keep interest rates higher for longer, prioritizing the fight against inflation, or continue lowering them to prevent a surge of unemployment.

The contrasting viewpoints reflected the central bank's difficult position. Members of the policy committee are trying to fulfill its dual mandate of keeping inflation and unemployment low at a time when both key economic metrics are headed in the wrong direction.

The Fed can only address one of those goals at a time with monetary policy: raising rates to cool inflation risks slowing the economy too much and spurring unemployment. In contrast, lower rates can help job creation but risk stoking inflation. Last week, the Fed cut its key interest rate by a quarter-point, the third cut in as many meetings, bringing it to a range of 3.5% to 3.75%.

What This Means For The Economy

Fed officials are still divided over strategy, making interest rate policy harder to predict.

The government shutdown delayed key reports on inflation and job creation that the Fed relies on to make those decisions. The belated release of job data Tuesday, however, seems not to have cleared up the disagreement.

On Wednesday, Fed Governor Christopher Waller said the labor market is in danger, and the Fed should lower rates by up to an additional percentage point. Speaking at the Yale CEO Summit, Waller said the official statistics on job growth are likely too optimistic, and that the economy is actually creating about 60,000 fewer jobs each month than the BLS says, according to the Fed's own estimates.

 "We're close to zero job growth," Waller said. "That's not a healthy labor market."

Waller is on the shortlist of possible replacements for Federal Reserve Chair Jerome Powell when his term ends in May. President Donald Trump has said he will only consider nominating candidates who are willing to cut interest rates.

Taking the opposite view, Atlanta Fed president Raphael Bostic said inflation is the greater priority and the Fed should not cut interest rates.

In a blog post Tuesday, Bostic noted inflation has been higher than the Fed's goal of a 2% annual rate since 2021, and that it was showing no signs of cooling all the way down to that level anytime soon.

"If underlying inflationary forces linger for many months to come, I am concerned that the public and price setters will eventually doubt that the FOMC will hit the inflation target in any reasonable time frame," Bostic wrote. "Will the public lose faith after five years of above-target inflation? Six years?"

Bostic, who was not a voter on the Federal Open Market Committee, is retiring in February. (The Fed's policy committee has four seats that rotate yearly among 11 regional Fed presidents.)

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Shares of Micron have nearly tripled in value in 2025 through Wednesday's close.

Key Takeaways

• Micron Technology posted earnings that topped analysts' estimates, sending shares higher in extended trading Wednesday. 
• CEO Sanjay Mehrotra said growing AI demand drove record results for the memory chipmaker and Nvidia supplier.

Worries about an AI bubble have weighed on the tech sector lately. Micron is still riding the AI boom higher.

Shares of the memory chip maker were up over 5% in extended trading Wednesday after the company posted earnings that blew past analysts' estimates, driven by growing demand for AI hardware.

Micron Technology (MU) posted adjusted earnings per share of $4.78 for the fiscal first quarter, well above the $3.96 analysts surveyed by Visible Alpha were looking for. Its revenue jumped nearly 60% year-over-year to a record $13.64 billion, also exceeding expectations.

Why This Matters to Investors

As a supplier for leading AI chipmakers including Nvidia and Advanced Micro Devices, Micron has seen strong momentum in its data center business this year, helping it earn a reputation as a winning "pick-and-shovel" play for the AI trade.

"Micron delivered record revenue and significant margin expansion at the company level and also in each of our business units,” said CEO Sanjay Mehrotra, who called the company an "essential AI enabler."

Micron projected adjusted earnings per share of $8.22 to $8.62 on revenue of $18.3 billion to $19.1 billion for the second quarter, well ahead of consensus estimates.

Micron's stock, though well off record highs seen earlier this month, has largely avoided the worst of the recent slump in the AI sector. It's continued to benefit from a shortage in the memory market, supporting stronger pricing and higher margins. Micron's GAAP gross margin jumped to 56% in the first quarter, up from around 38% a year earlier, with the company saying it expects that to climb as high as 68% in the current quarter.

Shares of Micron have nearly tripled in value in 2025 through Wednesday's close, making it one of the top-performing stocks in the S&P 500 for the year.

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Shares of Nvidia partner Rigetti Computing have pulled back from their October highs, but are still up nearly 50% for 2025

Key Takeaways

• Quantum computing stocks have taken a hit recently as worries about an AI bubble pressure the tech sector.
• Downbeat sentiment around the sector could continue in the near term, but may change as the technology becomes more widely adopted, according to one Wall Street bull. 

Could quantum computing stocks be due for a rebound?

Shares of quantum computing favorites Rigetti Computing (RGTI) lost about 6% Wednesday, while D-Wave Quantum (QBTS) slid 7%, IonQ (IONQ) fell 8%, and Quantum Computing (QUBT) dropped 9%, extending a pullback in recent weeks amid worries about an AI bubble. But one Wall Street bull expects that to change—eventually.

Analysts at Wedbush initiatied coverage of all four stocks with "outperform" ratings on Wednesday despite expectations they could remain pressured in the near term, viewing quantum computing as a "transformational" technology able to supercharge advances in AI, with potential for significant growth in the years to come.

"We expect that by the end of the decade, quantum computing companies will represent a larger share of the total spend on compute from what is a very small base today," the analysts said, highlighting Rigetti, IonQ, D-Wave, and Quantum Computing as the only publicly listed pure-play companies in the U.S.

Why This Is Significant

Quantum computing stocks have been among the biggest beneficiaries of the AI boom this year, amid expectations that growing demand for AI will raise computing needs.

The Wedbush analysts issued a $60 target for IonQ, suggesting nearly 30% upside from Wednesday's close, while their $12 target for Quantum Computing would point to a 16% gain. Their $35 targets for Rigetti and D-Wave would suggest they see the stocks adding roughly half their value in the next 12 months.

Though well below their October highs, D-Wave shaves have still nearly tripled in value this year so far, while Rigetti has climbed close to 50%, and IonQ has added 10%. Quantum Computing is the only stock among the four in the red for the 2025, with shares down close to 40% over the period.

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The S&P 500 is on track to post its third year of gains after another strong showing for AI stocks.

Key Takeaways

• The chief strategist at Interactive Brokers expects 2026 to be the first negative year for the S&P 500 since 2022.
• Steve Sosnick said his forecast for a modest decline from Tuesday's close was "cautious," not outright bearish.

The stock market is headed for a third consecutive year of gains. One analyst warns that you shouldn't expect a fourth.

Steve Sosnick, chief strategist at Interactive Brokers, expects the S&P 500 to finish next year around 6,500, more than 3% below the benchmark index’s close on Wednesday. 

Sosnick’s is one of the most bearish forecasts on Wall Street. In an interview with CNBC Wednesday, however, he said he’s not outright pessimistic. “It’s just more of a cautious number,” he said. Sosnick echoed comments made by Bank of America's lead U.S. equity strategist, who earlier this week predicted 2026 would be a "lackluster" year for stocks.

Why This Is Important

Wall Street analysts generally expect stock returns to moderate after three years of big gains driven by soaring AI stocks. Concerns about an AI bubble have weighed on the market's leaders in recent months in a potential precursor to next year's trading.

History advises caution, according to Sosnick, who said midterm election years tend to be tough for stocks. Uncertainty about what party will control Congress often puts investors in wait-and-see mode leading up to November. Since 1950, midterm years have been the most volatile and worst-performing years in the presidential cycle, according to an LPL Financial analysis.

In recent history, leadership changes at the Federal Reserve have also coincided with market turbulence, said Sosnick. President Donald Trump is interviewing potential successors to Fed Chair Jerome Powell, whose term is set to end in May. Trump has pressured the Fed all year to more aggressively lower interest rates, which the central bank has done three times since September. Investors expect Trump's pick to lead the Fed will be more sympathetic than Powell to the president’s wishes. 

Some on Wall Street are also unnerved by President Trump's efforts to direct the Fed, which historically has operated independent of elected politicians. The perceived loss of that independence could have painful consequences in the bond and stock markets.

Then there's the ever-present question of the health of the tech sector. "We’re also just reassessing the AI trade that’s brought us so far,” Sosnick said. After three years of an AI-driven bull market, investors are increasingly nervous about stretched stock valuations and unsustainable spending on AI infrastructure. 

Broadcom’s earnings report last week was a prime example of the high bar AI beneficiaries will need to clear to impress Wall Street next year, according to Sosnick. The company easily topped estimates on the top and bottom lines, and forecast growth would accelerate in the coming quarters. 

“By any normal stretch of the imagination, Broadcom said everything they needed to say to get a stock to do well," said Sosnick. "Instead they fell double digits in two days."

AI stocks were under pressure again on Wednesday. Broadcom (AVGO) shares finished down 4.5%, while Advanced Micro Devices (AMD) dropped more than 5%. AI chip leader Nvidia (NVDA) was off nearly 4%. Oracle (ORCL), which earlier this year was an AI-powered darling, has seen its market cap slashed in recent weeks; it finished today off 5.4%.

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CEO Elon Musk has refocused electric car maker Tesla on autonomous cars and robotics this year.

Key Takeaways

• Tesla stock closed at a fresh record high on Tuesday, completing a monthslong rebound from severe losses earlier in the year.
• Investors have looked past slumping electric vehicle sales to focus on the rollout of Tesla's robotaxi service and its broader mission to pioneer physical AI.

Elon Musk says the future is autonomous. Investors appear to be on board.

Tesla (TSLA) stock rose 3% on Tuesday to close at $489.88, its first record high of the year. Shares got a boost this week after Musk said Tesla had begun testing unoccupied self-driving cars in Austin, Texas, a major step toward realizing Musk’s vision of operating a ride-hailing network of autonomous vehicles. Tuesday’s gains put the stock up 21% for the year, capping off its rebound from a tumultuous first half. (The shares fell today amid a broader pullback.)

Tesla stock started the year on a high note. Elon Musk was vital in returning Donald Trump to the White House, and investors were betting his close ties with the president-elect would benefit Tesla despite Trump’s opposition to clean energy policies aimed at boosting demand for electric vehicles.

Then Trump was inaugurated—and everything changed.

Why This Is Important

Investors appear to have bought CEO Elon Musk's pitch that Tesla is first and foremost an AI and robotics company. The outlook for its stock now likely hinges on the company's ability to meet ambitious targets for its full self-driving software and robotaxi service.

Tesla shares plunged in February and March as Musk’s work with the Trump administration and political advocacy abroad sparked consumer backlash. Investors, meanwhile, worried Musk’s government work was distracting him from leading Tesla. All the while, Trump pursued tariff policies that whacked the stock market. By mid-April, the stock had lost more than half of its value since a December 2024 record high.

The stock regained momentum once Musk stepped back from his work with the White House. And despite some hiccups—including a public falling-out between Musk and Trump in June—shares have been trending higher ever since.

Tesla’s ambition to become a leading AI and robotics company has been vital to its turnaround, helping it benefit from investor enthusiasm for artificial intelligence that has lifted a range of stocks this year. Tesla in late 2024 unveiled its Robovan and Cybercab at an event laying out Musk’s vision for the company’s AI-driven future. He said fully autonomous Teslas would be operating in Texas and California by the end of 2025, and showcased Tesla’s humanoid robot, Optimus, which he predicted would be “the biggest product ever.”

Tesla began piloting its robotaxi service in Austin in June, and expanded to the San Francisco area the following month. Musk is aiming to enter several other major metros, including Phoenix and Las Vegas, next year. 

Optimism about Tesla's autonomous technology has offset continued weakness in its EV business. Sales jumped to a record in the most recent quarter as Americans rushed to buy EVs ahead of the expiration of federal tax credits. Still, Tesla is expected to deliver far fewer cars this year than in 2024 after a sharp drop in the first and second quarters.

Investors worried about Musk's commitment to Tesla—he also leads space exploration company SpaceX and AI start-up xAI, among other things—got reassurances last month when shareholders approved a compensation plan valued at up to $1 trillion.

Wedbush analyst and noted Tesla bull Dan Ives predicted in a note on Monday that 2026 will be a “game changer” for the company. Ives expects Tesla to begin volume production of Cybercabs by May and accelerate its robotaxi rollout with the help of federal regulators. “We believe the march to an AI driven valuation for TSLA over the next 6-9 months has now begun,” wrote Ives, who thinks Tesla stock could rise more than 60% to $800 by the end of next year.

Most on Wall Street are more cautious. The mean price target of analysts tracked by Visible Alpha is below $400, suggesting a retreat.

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Warner’s response to Paramount's hostile takeover offer was to be expected.

Key Takeaways

• Warner Bros. said Paramount's tender offer comes with "an untenable degree of risk" and was "inferior" to the proposed Netflix merger. Paramount maintained that its deal was "superior."
• The response from Warner to Paramount's offer last week was to be expected, and likely means shareholders of all three companies will be in for a ride.

The biggest entertainment deal in history promises more drama.

The latest: Warner Bros. Discovery (WBD) on Wednesday published a letter criticizing Paramount Skydance's (PSKY) offer to acquire the company, saying its all-cash bid—which followed an agreement by Warner Bros. to merge with Netflix (NFLX)—came with "an untenable degree of risk" and urging shareholders to reject Paramount's "illusory" all-cash deal.

The response from Warner to Paramount's hostile takeover offer last week was to be expected, and likely means shareholders of all three companies will be in for a ride until a deal closes. Paramount's stock was down about 4%, while Netflix's rose more than 1%. Warner Bros.' shares were off almost 2%. The volatility likely won't stop after a deal is nailed down, as the companies that do proceed would likely undergo a long regulatory review.

WHY THIS MATTERS TO YOU

The biggest issue for regular people in the battle for Warner Bros. is that streaming prices have risen substantially in the last five years, and industry consolidation has historically led to higher cost of goods. (See: Cable TV.)

Warner Bros. in its letter said Paramount's tender offer is "inferior" to the Netflix merger. The company said that Paramount "consistently misled" shareholders that its proposed deal came with a "full backstop" from the Ellison family. Between that and the debt levels implied by Paramount's proposed deal comes with "an untenable degree of risk and potential downside," the letter said.

Paramount has said that its $30-per-share cash bid was not its "best and final" bid, indicating that the company could top up its offer. The company on Wednesday said it wasn't going to back down, reiterating that its deal was "superior" and would get timely regulatory approval because it "would enhance competition in the creative industries rather than entrench a dominant streaming monopoly."

The saga to buy Warner Bros. will continue after a deal is pinned down as regulators get their turn to review terms and decide whether it runs amok of anti-trust laws. Tim Wu, a law professor, in a New York Times essay said both plans "are illegal."

"The message to Warner Bros. Discovery should be: If you must sell, maybe try finding a buyer who is not a direct competitor," he wrote.

While both deals raise antitrust issues, Paramount's is "more easily defensible," according to Jennifer Rie, Bloomberg Intelligence Senior Litigation Analyst in a podcast interview with Bloomberg earlier this week. She also said the Justice Department, rather than the Federal Trade Commission, would likely be involved.

Warner Bros. said that its board of directors doesn't believe there's a substantial difference in regulatory risk between the two deals—countering Paramount CEO David Ellison's argument that its deal would more easily pass regulatory muster.

Netflix co-CEO Greg Peters in an interview with CNBC on Wednesday appeared optimistic, saying that its deal "doesn’t hurt creators in any way, and we’re already engaged with competition authorities, including DOJ and E.U. Commission, to explain that to them."

This article has been updated since it was first published to incorporate fresh market data and Paramount's response to Warner Bros.