Nike Sinks After China Sales Plunge, Delaying Turnaround

Summary

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Bloomberg Intelligence Podcast

Episode: Nike Sinks After China Sales Plunge, Delaying Turnaround
Date: December 19, 2025
Hosts: Scarlet Fu and Paul Sweeney
Key Guests: Poonam Goyal (Senior U.S. eCommerce and Retail Analyst), Lee Klaskow (Senior Transport Logistics and Shipping Analyst), Brian Nagger (Senior Gaming and Lodging Analyst), Mandeep Singh (Senior Tech Analyst)

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Episode Overview

This episode centers on the financial and strategic struggles of Nike as its stock drops sharply following another quarter of plunging China sales, raising major questions about the timing and execution of its turnaround plan. The episode also touches on developments with FedEx, the cruise industry, casinos (especially in Las Vegas and Macau), and the high-profile TikTok-Oracle joint venture, drawing on in-depth research and data from Bloomberg Intelligence analysts.

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Key Discussion Points & Insights

1. Nike's Turnaround Hindered by China Sales Slump

(02:15–07:22)

• Nike down 9.5% in today’s market session due to the latest earnings revealing deepening troubles in China.

• U.S. turnaround showing progress:

  • Nike’s new CEO, Elliot Hill, has been in the role for about a year.
  • U.S. momentum rebuilding; signs of success in the domestic playbook.
  • China remains the significant drag, not likely to turn before 2027.

    “It may be a 2027 story to see any resurgence in China, if that.” — Poonam Goyal, 03:02

• What’s the issue in China?

  • Brand perception problem — Nike has been overexposed to discounting and off-price channels, eroding its prestige.
  • Chinese consumers see the brand as less premium, while competitors like Lululemon thrive.
  • Solution: Reduce discounting, clear outdated inventory, restore “brand heat”.

    “Nike really just needs to get its stuff together when it comes to product branding and marketing in that region.” — Poonam Goyal, 03:35

• Strategic playbook going forward:

  • Direct regional reporting to CEO for accountability.
  • Inventory clean-up and sharp reduction in off-price/discounting.
  • Emphasis on execution of classic retail fundamentals (“Retail Playbook 101”).

• Converse brand less of a focus:

  • Represents <10% of revenue; struggling, but China is a much larger priority.

• Performance vs. Lifestyle:

  • Nike’s core strength is performance.
  • Goal is to have innovation in performance “spill over” into lifestyle usage, driving both segments.
  • Example: Performance shoes becoming streetwear staples.

• Tariffs and margin pressure:

  • Most footwear/apparel made in Vietnam (20% tariff).
  • Over half of Nike’s recent gross margin compression is tariff-related.
  • Selective price increases and ongoing mitigation efforts expected in 2026.

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2. FedEx: Earnings Strength and Headwinds

(11:55–18:03)

• FedEx reported Q2 performance:
  • Strong results, mid-to-high single-digit peak season volume growth.
  • Underlying headwinds: $600 million drag expected in the second half due to:
    • Higher compensation costs,
    • Weak “less-than-truckload” (LTL) segment,
    • Grounding of MD11 aircraft fleet following a recent crash.

  “In their second half they’re going to be having a lot of headwinds… higher variable compensation expenses... less than truckload market... grounding of their MD11 fleet… about a $600 million headwind.” — Lee Klaskow, 12:35

• Industry outlook:
  • ISM Manufacturing Index signals continued weak LTL demand (industrial contraction).
  • Most headwinds are temporary except for structural weakness in LTL.
• FedEx’s business structure:
  • Plans to spin off its LTL (FedEx Freight) division in June next year, aiming for better valuation; LTL business is consolidated and valued at higher multiples.

  “They’re planning on spinning that out in June of next year.” — Lee Klaskow, 15:19

• FedEx vs. UPS:
  • Both are restructuring for e-commerce growth.
  • UPS spun off its LTL business earlier; FedEx still in process.
  • Both focused on SMB customers over less profitable bulk shippers.

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3. Carnival & the Cruise Industry

(22:36–28:43)

• Carnival’s Q4 earnings and outlook:
  • Yield growth (+2.5% next year), cost control, and limited supply growth suggest stability.
  • Concern: Industry supply growth (mainly competitors) could pressure pricing, especially in the Caribbean.

  “Going to next year, they are expecting to see about 2.5% revenue yield growth... that's encouraging because there were some concerns…” — Brian Nagger, 23:22

• Converting first-time cruisers:
  • Key driver of North American growth, but penetration still well below other vacation types.
  • Loyalty programs remain important for repeated bookings.
• K-shaped economy and cruise demand:
  • Yields more resilient than hotels in downturns.
  • Leisure (vs. business) travel holding up; supply growth (~1% in 2026 for Carnival) keeps balance.
• Operator comparisons:
  • Viking (luxury sector) +64% YTD,
  • Carnival +23%,
  • Norwegian -11%,
  • Royal Caribbean +30%.
  • Viking’s luxury niche and Carnival’s efficient capital return strategy both cited as success factors.
• Las Vegas & Macau outlook:
  • Vegas: Modest end-of-year growth, but mid-market segment is weak, luxury faring better.
  • Macau: Strong recovery, particularly in “mass business”; different from Vegas but interconnected trends.

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4. TikTok U.S. Sale/Joint Venture with Oracle

(33:01–38:20)

• Oracle-led consortium to acquire TikTok U.S., forming JV with ByteDance:
  • Main U.S. concern was algorithm control and data security.
  • Oracle seen as the natural fit to lead JV; deal has U.S. government support, awaiting China’s okay.

  “The main point of contention was the algorithm... there is a decoupling of that versus the app... this should be palatable to both the US and the Chinese government.” — Mandeep Singh, 33:32

• TikTok’s competitive position:
  • Losing ground: Instagram Reels now at a $50B revenue run-rate, YouTube Shorts catching up in engagement.
  • TikTok’s growth, user engagement, and US revenue ($12–15B) have slowed.

  “Instagram reels... have surpassed $50 billion in run rate. That would have been unimaginable...” — Mandeep Singh, 35:02

• Meta (Facebook) and algorithm power:
  • Meta’s AI-powered ad stack outpaces TikTok, driving Reels revenue.
  • TikTok must rebuild its core algorithm and ad system under new JV; expect a lag in business improvement.
• IPO potential:
  • Too early; technical and talent-related integration needed first.
  • Oracle’s focus is still on building its cloud, not TikTok’s direct revival.

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Notable Quotes & Memorable Moments

• On Nike’s China problem:

  “So unlike in the US the Nike brand isn't perceived as a higher athletic brand. In fact, it sold way too much and off price and at discount.”
  — Poonam Goyal, 03:35

• On retail execution:

  “It's Retail Playbook 101. They just need to execute. So execution is huge here.”
  — Poonam Goyal, 04:24

• On FedEx's restructuring:

  “They’re planning on spinning [LTL] out in June of next year… So, you know, it'll be pretty interesting to see how that company operates as a standalone provider.”
  — Lee Klaskow, 15:19

• On cruise industry resilience:

  “The leisure consumer travel has been really resilient… Historically, passenger growth has kept up with supply.”
  — Brian Nagger, 24:51

• On TikTok’s lost advantage:

  “If you look at the run rate of Instagram reels, they have surpassed $50 billion… That would have been unimaginable given the kind of lead TikTok had.”
  — Mandeep Singh, 35:02

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Important Segment Timestamps

• Nike Turnaround & China sales: 02:15–07:22
• FedEx earnings & structure: 11:55–18:03
• Cruise industry analysis: 22:36–28:43
• TikTok-Oracle JV explained: 33:01–38:20

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Tone & Style

The hosts and guests deliver data-driven, jargon-light analysis, mixing insightful commentary with direct, sometimes wry observations about industry realities and company challenges.

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Summary Takeaways

• Nike’s recovery is stalling internationally, with China as the critical and most challenging market; restoring brand equity there will require years and disciplined execution.
• FedEx faces short-term earnings headwinds but is restructuring for an e-commerce future, with a significant corporate spin-off on the horizon.
• Cruise industry yields look stable for Carnival despite industry capacity growth, with luxury travel outperforming mass offerings.
• TikTok’s U.S. restructuring is a win for regulators but leaves its competitiveness in question as Instagram and YouTube outpace its growth—major operational rebuilding lies ahead.

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This summary provides a comprehensive view of the episode’s discussions and insights, capturing the essence of Bloomberg Intelligence’s real-time, expert business analysis.

Transcript

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[Podcast Host (Bloomberg Intelligence)]

Bloomberg Audio Studios Podcasts Radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app Listen on demand wherever you get your podcasts or watch us live on YouTube. One of the big losers in today's session so far is Nike, down nine and a half percent right now. Quite a bit going on there. So let's bring in Putam goyal, the senior U.S. e Commerce and Retail analyst at Bloomberg Intelligence. Poonam Nike is in turnaround mode. Elliot Hill is no longer a new CEO. He's just the CEO because he's been there for about a year. How is his effort to turn this company around shaping up.

[Elliot Hill Analyst]

I think his efforts to turn US Business is shaping up quite nicely. We are seeing momentum rebuild in the US the issue is outside of the United States, in, in China specifically, where sales have really plunged and we don't think that they can quickly rebound those sales anytime soon. It may be a 2027 story to see any resurgence in China, if that.

[Paul Sweeney]

What is the issue in China? Is it their brand specific? Is it the Chinese consumer? What's going on there?

[Elliot Hill Analyst]

I think the biggest issue is brand specific. So unlike in the US The Nike brand isn't perceived as a higher athletic brand. In fact, it sold way too much and off price and at discount. So the brand needs to build brand momentum and brand heat. And yes, the Chinese consumer isn't particularly, you know, on its best feet right now. But if you compare what's happening in China and you look at Lululemon, Lululemon has had outstanding results in China, much smaller, but, you know, they've been able to do really well there. So Nike really just needs to get its stuff together when it comes to product branding and marketing in that region.

[Podcast Host (Bloomberg Intelligence)]

What is the playbook for that? Have they detailed, have they outlined something that sounds reasonable or is it kind of still throwing things at the wall?

[Elliot Hill Analyst]

I think the playbook will be similar to what they did in the US the first thing that they've done so far, and we'll see how that works out, is changed the reporting structure. So now all regions report directly into Elliot Hill. So I guess he just has more authority over those regions saying things, you know, firsthand. The other thing that they're going to try to do is just clean house there. Right. They have to get rid of the inventory that's just not speaking to the customers and has been aged for some time. They have to get out of off price and they have to stop discounting. And then once you get new product to flow in, you get the right brand message across. It's Retail Playbook 101. They just need to execute. So execution is huge here.

[Paul Sweeney]

Talk to us about the Converse brand within, within the Nike household there.

[Elliot Hill Analyst]

Yeah, so you know the Converse brand, yes, it's struggling, but to me it's less of a concern than China. The brand is less than 10% of their total revenues from what we see. And while sales are down and while it is a brand that we'd like Nike to see step up, especially when it comes to lifestyle, other companies have done particularly well there. We'd say the focus, you know, if I needed Them to put focus on one thing first, it would be China. Right. Numbers after that. And that's what we're looking for.

[Podcast Host (Bloomberg Intelligence)]

And I know that there's been a lot of discussion between performance and lifestyle over at Nike. What is the path forward for Nike? I mean has it chosen performance across all of its markets or are some markets better for performance versus lifestyle?

[Elliot Hill Analyst]

So they're sticking to performance and I think that's the right choice because performance is what Nike is about. It is what drives the sports momentum. What we'd like to see happen is that performance turns into lifestyle. So a lot of shoes that are worn for the sport or for the game have become lifestyle shoes too. So that's a natural shift that we like to see with the new innovation that Nike is launching.

[Paul Sweeney]

So we have some experience now. 9 months, 10 months, 11 months of just tariff discussion, pun. I think you were one of the first analysts we talked to to say oh boy, what's this going to mean for various industries? What's it mean for the, the, your business, the athleisure business. Kind of the Nikes of the world, the Adidas of the world.

[Elliot Hill Analyst]

Yeah. So footwear is largely imported into the US and so is apparel. When you think the athletic wear space, notably the footwear, it's predominantly made in Vietnam and the current tariff there is 20%. It will have an impact on margins. In fact, Nike's gross margin, if you look at it, even what was recently reported, more than half of it was due to tariffs and same with their guidance. So I think 20% exposure. They are increasing prices selectively. They probably will have more efforts in place in 2026. That's calendar 2026 to mitigate some of this. But it's not going entirely away. It is a head to margin.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Baillie Gifford Narrator]

What is actual investing? We believe that it's a real world task to deliver thoughtful capital deployment. It's not about speculating over the short term. It's about understanding the long term opportunities for companies through technological progress or new business models. So we seek out those exploring big new ideas that will change the world. Then we back them to give those ideas time to flourish. Bailey Gifford actual investors find out [e-mail] running a business is hard enough so why make it harder with a dozen different apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. Before you know it you are drowning in software instead of growing your business. This is where Odoo comes in Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins, just one seamless system that makes work easier. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business, whether you are just starting out or already scaling up. Plus, it's easy to use, customizable and designed to streamline every process so you can focus on what really matters and running your business. Thousands of businesses have made the switch, so why not you try Odoo for [e-mail] that's o d o o.com hello.

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Hello, I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna and I asked him how can companies use AI to its fullest potential to create smarter business? My one advice to them Pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive.

[Paul Sweeney]

Yeah.

[Elliot Hill Analyst]

Wow.

[Malcolm Gladwell]

So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We are happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology is getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

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[Podcast Host (Bloomberg Intelligence)]

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. All right.

[Paul Sweeney]

A bellwether for some, including myself for the US economy is FedEx. FDX is the ticker. They reported some numbers, stock trading a little bit lower here. They had some issues with some of their aircraft, but I don't know, I kind of think it's just an awesome company. The stock is up about it's about flat this year. Hasn't really done anything here, but it's got a market cap of $67 billion. I've always been a big fan of FedEx. The MD11 is a great aircraft, but it's an older aircraft and they have some reliance on that. Lee Klaskow does this stuff for a living. Senior transport Logistics and Shipping Analyst for Bloomberg Intelligence. Lee, I knew FedEx reported some numbers. What did you learn?

[Lee Klaskow]

Well, I mean their second quarter, they performed pretty well and they gave us some color about the peak season. Peak season from an average daily volume growth, they're looking at mid single digits that could increase to high single digits because there's one extra operating day in the quarter or during peak season, I should say. So you know, they seem to be executing on their restructuring plan. The problem is, is that in their second half they're going to be having a lot of headwinds that they're going to have to deal with. And those headwinds relate to, you know, higher variable compensation expenses and a less than truckload market, which they're the biggest player in that market that has been pretty depressed over the last couple quarters and it's going to probably continue to be depressed. And then you have, as you mentioned, the grounding of their MD11 fleet following the tragic accident of a UPS plane a couple of weeks ago. So, you know, you add those three things up plus some other things, it's about a 600 million headwind to its earnings. So they have to deal with that. And some of the restructuring that they've done probably, you know, you're probably not going to see hit the bottom line at least really directly until they're 2027.

[Podcast Host (Bloomberg Intelligence)]

So the $600 million charge clearly not impressing investors even with the beat in the quarter that ended. Is this a one time thing or is this something that could drag out beyond the second half of this year. Next year. Excuse me.

[Lee Klaskow]

Yeah, so on the MD11, I think expectations are, you know, they should be back in service sometime early next year. I don't really know exactly when that's going to happen, but so you could view that as a kind of a near term headwind. The variable compensation, you know, that also is against difficult comparisons. So that's also short term in nature and not, not something that is continue. The biggest unknown for me at least is the less than truckload demand. The ISM manufacturing index, which has been contraction territory for 35 out of the last 37 months, is indicating that less than truckload demand, which is mostly industrial manufacturing, is going to continue to be weak in the coming months ahead. Because that, that, that index, the ISM index, is really a bellwether to an early indicator of where LTL demand is heading.

[Paul Sweeney]

Lee, as you know, I am an expert on trucking. I know what LTL means and TL means. I had no idea that FedEx was the largest LTL provider. Do you like them that they're in that business or would you rather them farm it out to somebody?

[Lee Klaskow]

Well, that's a great question, Paul, because they're planning on spinning that out in June of next year.

[Paul Sweeney]

Boom banker.

[Lee Klaskow]

Yeah, there you go. The argument always was that maybe they could cross sell their LTL and get more profitable parcel business. That model really might have not played out as much as, as, as they hoped. And so they also hope to get a better valuation because that LTL business, while it's been pretty depressed, it does trade at a higher, higher multiples. And so they're trying to unlock kind of some of the value there. So, you know, it'll be pretty interesting to see how that company operates as a standalone provider. That industry is pretty consolidated and has a lot of pricing discipline. And we just hope that, you know, once FedEx freight gets out there and they're on their own, they're not going to try to use pricing to, to, you know, gain share. But we would note they are still the largest player. So it's not like they're looking to, to gain a lot of share anyway.

[Mandeep Singh]

So.

[Lee Klaskow]

But you know, it will be an interesting thing to see once that, once that gets spun out in June.

[Podcast Host (Bloomberg Intelligence)]

You know, I'm looking. Paul. Excuse me, Lee. I'm looking at Paul and talking to Lee. In the past six months, FedEx shares up about 29%. Total return versus UPS up up almost 6%. Can you compare and contrast their approach to some of the macro challenges that faces the industry.

[Lee Klaskow]

Yeah. So they're both in the process of restructuring their networks to deal with the new realities that, you know, B or E Commerce is really where the growth is going to come from. And these networks were created a long, long time ago with the idea that a carrier would go to a lawyer's office with 100 envelopes, drop off those envelopes and pick up 50 envelopes. And that density really can drive profitability where as you know, if you get like if you order rubber bands from Amazon, that one package that goes to your doorstep is a lot more expensive to deliver. So they're just dealing with that reality and they've been slow to kind of change their networks. And UPS and FedEx are both in that process. You know, UPS has done things a little earlier, I would say and you know, whether it is they spun out or I should say sold their less than truckload business, the TFI Canadian provider, you know, a couple of years ago. Right. They're all looking to try to gain more share of the small and medium sized person and get away from the large shippers like Amazon, which really aren't that profitable.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

[Baillie Gifford Narrator]

Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other, one for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software. Instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything, CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business whether you are just starting out or already scaling up. Plus it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you try Odoo for [e-mail] that's o d o o dot com.

[Malcolm Gladwell]

Hello.

[Brian Nagger]

Hello.

[Malcolm Gladwell]

I'm Malcolm Gladwell, host of the podcast smart talks with IBM. I recently sat down with IBM's chairman and CEO Arvind Krishna and I asked him how can companies use AI to its fullest potential to create smarter business? My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example, if anybody has more than 10% of what they had for customer service 10 years ago, they're already five years behind. If anybody is not using AI to make their developers who write software 30% more productive today with the goal of being 70% more productive. Yeah.

[Elliot Hill Analyst]

Wow.

[Malcolm Gladwell]

So we are not asking our clients to be the first experiment on it. We say you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process. Because the biggest change is not technology. It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit IBM.com smarttalks.

[Ed Helms (Amazon 5 Star Theater)]

Amazon five Star Theater Presents Real Customer Reviews performed by Ed Helms Tonight's review Tactical Jacket I was living a simple life. Didn't get out much. Then I bought this jacket and everything changed. Women came flocking to me from lands domestic and foreign. I bought a motorcycle, started hanging out with drug dealers. But like rich ones and we flew helicopters. I ended up taking down a communist regime with a band of rebels. On the 245 day sailboat voyage home, I was attacked by a shark. I knew it was the jacket he was after. I tossed it, giving up the jacket in exchange for my life. I'm alive today, but jacketless. We'll buy this jacket again soon. 5 stars Amazon Customer 69 thank you for listening to Amazon 5 Star Theater. Looking for unforgettable gifts this holiday season. Like a jacket that becomes your whole personality. Shop the perfect gift this holiday on Amazon.

[Malcolm Gladwell]

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[Paul Sweeney]

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[Lee Klaskow]

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[Elliot Hill Analyst]

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[Podcast Host (Bloomberg Intelligence)]

You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple Carpl Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Paul Sweeney]

Scarlett, I have breaking news. You may want to get the red headline ready for this one.

[Podcast Host (Bloomberg Intelligence)]

Okay, tell me.

[Paul Sweeney]

Today I put a deposit down on my first cruise ever.

[Podcast Host (Bloomberg Intelligence)]

What? What prompted this?

[Paul Sweeney]

Well, my partner, my Girlfriend, she's. We're going, we're doing it in the fall. She just told you Viking Cruise? Yeah, basically Viking Cruises Europe, France in the fall.

[Podcast Host (Bloomberg Intelligence)]

And how are you feeling about this?

[Paul Sweeney]

I'm a little nervous, but it's baby step. She says it's not like a big Carnival cruise. We got like 5,000 people on. It's a little riverboat, you know, kind of cruise.

[Podcast Host (Bloomberg Intelligence)]

Okay, so in two years we should look for you on a Carnival.

[Paul Sweeney]

Could be, could be. But that brings us to our next guest, I mean Brian Edgar. He's reading the research note right now as we speak. Sweeney in the cruise business. Brian Nagger, he's a senior gaming and lodging analyst for Bloomberg Intelligence. Brian, we had Carnival Cruise Lines reported some numbers today. What, what, what did they have to say?

[Brian Nagger]

Yes, I mean the fourth quarter, the fiscal fourth quarter ended November 30th was a pretty decent quarter in terms of yield growth. And I think more importantly going to next year, they are expecting to see about 2 1/2% revenue yield growth or so with good cost control. And that's encouraging because there were some concerns that industry growth of supply, particularly in the Caribbean, not by Carnival but by its competitors, might dampen yield growth going into next year. So while there's still some uncertainty, I think overall the takeaway was fairly encouraging on that front.

[Podcast Host (Bloomberg Intelligence)]

How much of their business depends on converting people like Paul Sweeney from a never cruiser to a maybe cruiser to a, you know, a reliable cruiser. Basically increasing their market share with. By bringing in new customers.

[Brian Nagger]

Yeah, historically it's been a big factor in North America trying to attract that first time cruise customer. It's far less penetrated than other forms of vacationing. That's even more true if you go into other parts of the world like Europe and Asia. But it's definitely part of that. That first time customer, on the other hand, you know much what they do depends on loyalty programs and getting repeat business as well.

[Paul Sweeney]

So Brian, give us the. The consumer is kind of wavering a little bit there. I mean the K shaped economy. How does the cruise industry deal with that? Because I know there's different tiers of cruising out there. How do you see that in the cruise business?

[Brian Nagger]

I mean if you go back historically the cruise industry is moderately cyclical. Probably yields have been more resilient than for example business travel oriented hotel room rates. So there are some, obviously some vulnerability. But that being said, the leisure consumer, the leisure consumer travel has been really resilient. It held up extremely well throughout this period of economic uncertainty. Historically, passenger Growth has kept up with supply. I mean the good news for Carnival is they've only looking at about 1% supply growth in 2026. There's certainly more coming from their competitors. But you know that that's play out for them specifically is a healthy backdrop even if we do see a setback in consumer spending.

[Podcast Host (Bloomberg Intelligence)]

Speaking of their competitors, I'm just looking at a comparison chart of all the big cruise operators and Paul's Viking is up about 64% so far this year. Carnival up about 23%, Norwegian Cruise Line down 11% and Royal Caribbean up 30%. How are their strategies different? I mean for those who don't cruise, it might seem like they're all one in the same.

[Brian Nagger]

Yeah, I think there are different ways you could interpret those disparities in stock price performance. But I think the way I think about it is Viking certainly very focused on the luxury kind of niche cruise segment. Paul is fancy good for good for Paul. And I think generally speaking that part of the business has held up well. You know, Carnival probably is, is maybe gained some note because it's done a good job at achieving its return on invested capital goals. Done so sooner to get to that 12% range than they expected. And because they've got so little supply growth that does provide a little bit more conservatism. But you know there, there are certainly some differences across the brands.

[Paul Sweeney]

All right, Brian, how are my friends on this trip in Vegas doing these days?

[Brian Nagger]

Yeah, I mean Vegas is finishing up the year with modest growth. But it's been a tough, it was a tough summer period in Las Vegas particularly kind of the mid market segment. Much like I said about cruising the high end business, high end hotel business, luxury oriented demand is held up better. But the mid market, midweek demand during kind of shoulder periods and the mid market has experienced some disruption probably because of construction, probably because of difficult comparisons, probably because we are seeing that luxury end of the market holding up a bit better.

[Podcast Host (Bloomberg Intelligence)]

So is everyone then going to double down on chasing after the luxury customer?

[Brian Nagger]

It really depends on what part of the business companies are in. On balance when which is more high end has performed better in terms of its revpar, let's say in Las Vegas than some of its rivals. But you know those are these, obviously these trends shift but I think that's been notable across the leisure travel sector is the relative outperformance of luxury high end with perhaps a little bit more challenging comparisons and difficult conditions for kind of the, the mass market or those dependent on other sources of business.

[Podcast Host (Bloomberg Intelligence)]

And we know that these gaming companies, these casino companies, rely a lot more on China than they do on the Strip overall. How's Macao looking for them?

[Brian Nagger]

So, I mean, Macao has been recovering. You know, the, particularly the, what we call kind of the mass business in Macao that has some ancillary effect on Las Vegas as well. Although low luck levels and Bacchride in Vegas have been a bit soft in some periods this year. But that business is certainly coming back in Macau. It's coming back a lot after obviously the pandemic. It's just a different type of business.

[Paul Sweeney]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Podcast Host (Bloomberg Intelligence)]

You'Re listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple, Apple CarPlay and Android Auto with the Bloomberg business app Listen on demand wherever you get your podcasts or watch us live on YouTube news story.

[Paul Sweeney]

That'S got a lot of people's attention. Like my kids are paying attention. TikTok is being bought by a group of buyers led by Oracle Corporation, with the company and ByteDance signing binding agreements to create a US joint venture. I don't care, but a lot of people do. Mandeep Singh, senior tech analyst for Bloomberg Intelligence, joins us. Mandeep, talk to us about this structure here. I know that the government was either to ByteDance was the Chinese company either sell this thing or shut it down. Does this satisfy kind of the requirement here?

[Mandeep Singh]

I think so. And look, the main point of contention was the algorithm. So clearly, you know, there is a decoupling of that versus the app. And you know, in terms of the ownership, Oracle was the most likely sort of candidate when it comes to leading this joint venture. And that turned out to be the case. So from that perspective, I do think this should be palatable to both the US and the Chinese government.

[Podcast Host (Bloomberg Intelligence)]

Although we don't know if the Chinese regulators will definitely approve it. Right. They have yet to say whether they'll transaction.

[Mandeep Singh]

I mean, we have seen that many times a lot can go wrong. But in this case at least the joint venture that was formed here had the blessing of the U.S. government. So it sounds like this was the intended proposal and that's how it turned out to be in terms of ByteDance agreeing to sell the app to this joint venture.

[Paul Sweeney]

What I like about this is it includes Silver Lake and from my money, but based upon my career, the smartest technology PE money out there by far is Silver Lake. Some really smart folks there. So if they're involved, it's got to be a good deal. That's how I look at it. Mandeep, talk to us about like, what the competitors are thinking here. Is TikTok still as formidable going forward, do you think, as it has been?

[Mandeep Singh]

Not really. I mean, if you look at the run rate of Instagram reels, they have surpassed $50 billion in run rate. That would have been unimaginable given the kind of lead TikTok had over Instagram. And Instagram reels came from behind and now they have a $50 billion run rate. Same thing with YouTube shorts. They have an engagement share that's almost surpassed TikTok at this point of time. So clearly, you know, the last couple of years, TikTok seems to have lost steam when it comes to the pace at which they were adding users and the engagement growth, etc. And if I had to ballpark, you know, the US revenue of TikTok would not be, you know, over 12 to 15 billion dollars. So Reels being at 50 billion dollars just goes to show what kind of a missed opportunity that was for TikTok.

[Podcast Host (Bloomberg Intelligence)]

Interesting. So what does this mean for Metta, which owns Instagram and Reels and of course is now firmly in the lead and is no longer playing catch up to TikTok.

[Mandeep Singh]

I mean, a lot of this, you know, revenue ramp up for Reels was driven by the fact that, you know, Facebook or Metta had a better ad stack and they kept, you know, improving that with more personalization. Now with applying generative AI on top of that, that has helped them with ad pricing. So these are incremental things where TikTok, you know, couldn't even keep its algorithm. So the fact that, you know, they have to redo the algorithm, redo the ad part, the personalization part is likely the reason why their ad revenue hasn't ramped up and it's going to take them a while even if, you know, this joint venture would start putting money into the company to, you know, improve its algorithm and personalization. I don't think it's going to happen that quickly in terms of where they were, you know, two, three years back.

[Paul Sweeney]

Should we expect this new joint venture to maybe go public at some point?

[Mandeep Singh]

Oh, still early days, I would say, given the algorithm change is a big one. I mean, you have to. Even though, you know, users are used to coming to the app, you have the traffic. But we know in the world of AI it's about personalization, it's about that recommendation system and rewriting the algorithm. I do think it's going to take a while and it comes down to what kind of talent they can attract into this new entity. So a lot has to go right before we can look at this joint venture going public anytime soon.

[Podcast Host (Bloomberg Intelligence)]

That would be really interesting.

[Paul Sweeney]

I'm still going to go make the pitch. If I were a banker, I'd be right on the doorstep today. No doubt. I want to be the first guy there and saying, let's take this thing public. Here's what you need to do.

[Podcast Host (Bloomberg Intelligence)]

And you think they're ready? This is something that they want to do?

[Paul Sweeney]

I don't know. I would think so. I mean, I can, I can bring a lot of money.

[Podcast Host (Bloomberg Intelligence)]

Is the administration going to play a role in that?

[Mandeep Singh]

Oracle would focus a lot more on their cloud business right now and the ramp up there, they, I don't think they have the time to focus on reviving TikTok.

[Podcast Host (Bloomberg Intelligence)]

This is the Bloomberg Intelligence podcast available on Apple, Spotify and anywhere else you get your podcasts listen live each weekday 10am to noon Eastern on Bloomberg.com, the iHeartRadio app TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.

[Ed Helms (Amazon 5 Star Theater)]

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