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Shares in Disney dive. We look for pixie dust and the company's earnings. Q. Q. Q, the widely held tech ETF why are its investors being hounded on a vote and Prediction Markets Enter the Octagon. We break down the impact of UFC's new partnership with Polymarket for Thursday, November 30th. It's blue markets Daily and I'm Anne Barry. More market details to come. But first, TKO ticked on up slightly today in response to a new multi year partnership with prediction market leader polymarket. TKO market cap over $14 billion revenue over two and a half billion owns UFC and Zafa Boxing and these will be the first sports organizations to incorporate prediction market technology into live events. Users of polymarket will not only be able to bet on the outcome of a match, but also buy and sell these contracts during the event itself. In addition, UFC and polymarket will launch a new custom social series called Matchup Predictions who's Next? That will run following UFC events to gen up interest in future fighter pairings. While TKO said in its press release this morning that quote, the speculative nature of these posts will spark social debate and engagement and create a topical market for polymarket to host on their platform. And engagement really was the repeated word of the day around this deal. Now, UFC currently has an agreement with DraftKings, which is the $15 billion market cap sports betting giant and stockholders there did not like today's news. DraftKings down over 6% with investors reading this as a step up in competition from the exploding prediction market space. And there's very good reason for them to be afraid. UFC's sheer scale enables the mixed martial arts organization to take prediction markets truly mainstream in sports in a very new way. It produces more than 40 live events each year, distributing programming to over 950 million households worldwide. So this threat to traditional sports betting is very, very real. And the irony being DraftKings itself isn't that old. Now general adoption is clearly also spreading more widely. I watched Robin Hood's Chief Brokerage Officer interview on CNBC this morning and he said that the prediction markets piece of the Robin Hood business is the fundamental, fastest growing product line that company has ever launched and it's done so in partnership with Kalshi. Faster adoption to date at Robinhood, by the way, even than with crypto. Well, TKO shares up just under a percent at the end today on that polymarket news, but let's zone in there because polymarket, by the way was reported last month to be raising a new round of capital at a valuation of 12 to 15 billion dollars. That was right after announcing in early October an investment of up to $2 billion from Intercontinental Exchange, or ICE, at a 9 billion valuation. ICE incidentally owns the 233-year-old New York Stock Exchange. This is very symbolic of the old world meeting the new. We're going to keep on watching. Coming up, shares pop for a department store you may not actually have heard of. What's going on with Blockbuster ETF qqq and why a tidal wave. It's about to change Verizon. But first Brew Markets daily is sponsored by Public, the investing platform for those who take it seriously. Now, before the show today, our producer John mentioned a feature he recently found on Public that's right.
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I've been digging into crypto lately and I discovered that on Public, along with stocks, options and bonds, you can also trade crypto. Lots of tools to build and manage your wealth. Public has access to over 40 cryptocurrencies including Bitcoin, Ethereum, Dogecoin and more.
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BrewMarkets paid for by Public Investing. Full Disclosures in Podcast Description While we.
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Continue to be in the heart of earnings season with some big names reporting today, so let's start with the Mouse House itself.
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Disney and shares of Disney started the day down more than 8% after posting mixed results.
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Massive company, just reminder market cap of $193 billion. Let's talk about the revenue to start with. 22 and a half billion reported for the quarter, missed estimates and was flat year over year. And unpacking what's working versus not is really the key to getting our mind around this. Let's start with experiences. Personally I'm a big believer in experiences generally and that kind of thesis is really coming through in Disney's earnings. It has been for a while, John. But here we see in particular Disney's parks accounting for more than half of the company's profits. Operating income for this segment up 13% to 1.9 billion. Pretty pretty strong. And then you look at the international parks and experiences. Operating income up 25%. So even stronger than the US market. Just one more nugget there which is the growth of cruises within Disney's portfolio. Now cruises have done pretty well in terms of demand, particularly since that post Covid travel resurgence. Disney specifically looking to double its current Cruise line fleet to 13 ships over the next decade, which may not sound like a big number, but that is a lot of capex going into that floating tonnage.
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The big decline was in linear television and the business headlines were all that revenue from linear television and that's like channel ABC was down 16% year over year.
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Also in terms of content distribution, let's talk about Google versus Disney because there is this issue happening right now. So this is not part of the earnings, but it's certainly going to have some influence into how this upcoming quarter pans out. Disney programming is currently blacked out on YouTube television. It's been two weeks and there are reports, I think it was a Morgan Stanley analyst calculating that Disney's probably losing $4 million of revenue a day. Now Chief Financial Officer Hugh Johnston said something today on cnbc. What is Disney's perspective on this? John?
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We're ready to go as long as they want to.
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So when we looked at this and John was telling me about this quote, I was thinking, does that mean we're ready to go strike a deal as long as they want to, or does that mean we're ready to go stare you down for as long as you want to? Well, we can debate whether they could really afford to lose YouTube or not, but just to give a sense of what we're ready to go as long as they want to might actually mean for both of these companies, I went and took a look to see what the revenue impact here could be. So again, Disney losing about $4 million a day in lost revenue by virtue of this dispute with YouTube. Now, Disney's full year revenue is above $90 billion, right? YouTube's full year revenue last year was about $54 billion. So whether they're enjoying it or not, the truth is that both of these companies can in fact weather the storm or miss and stare each other down to see who blinks first. This is to me the content equivalent of the government shutdown that we've just been living through. Well, revenue for direct to Consumer for Disney, which is a streaming business, did increase 8% again, that was last quarter. This current situation with YouTube will impact the quarter through December 31st. Let's talk a bit about the share price performance of this one, John, because Disney, I'm going to be sort of personal on this one. I bought Disney stock several years ago and I've got to tell you, and Bob Iger came back to be CEO. I was pretty excited, I was pretty optimistic that he was going to whip this company into shape. The problem is it hasn't really moved. Right. The share price does seem to be stuck in neutral.
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Right? Exactly. I bought some shares for the first time five years ago and the shares have been down 22% over that time. I've been casually paying attention and there's this hundred dollar mark that it goes above, it goes below.
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I got to tell you that when I saw that there was going to be share repurchase and an increase in the dividend, it did cause me to ask myself a little bit. This is just one person's view, should Disney be doing that at this time or should they be, for example, building even more cruise ships than they're planning to do? If that is an area that they think is working, should they be sending cash back to shareholders or should they be doubling down on the parks and finding more global locations for them? It's not easy to do. It's very hard to find places that actually are going to yield the return that Disney shareholders are used to. But there's often this debate right around should cash get sent back to shareholders or should it be reinvested into the business? I'm not completely convinced in this case that this is the right call, that sending it out is the right answer. It feels as though, given what's going on in linear tv, but. Chime in, John. Given what's going on there, there's a very clear decline. There isn't a plan to turn it around. There's a question mark over streaming giving this YouTube dispute. It is a vulnerability. Whether there's alternatives for Disney content or not, do they need to keep building out another leg of the stool? We'll just wrap on Disney. The succession plan has been in the spotlight again. Bob Iger has a phenomenal track record of retiring, putting in place a successor and frankly getting in their way and then finding his way back into the top job. He is said to name a successor early next year. And I do recall that the board went out of its way to try and make sure that there was a succession planning committee with some very credible people leading that charge. Well, let's move on to talk about a company I'm really excited to dig into and that is Dillard's. Yeah, that's a department store company. Ticker is dds. And we heard from a listener who reached out to us saying that they want to hear us talk about Macy's when that company reports, which isn't actually going to happen, I believe, until early December. We're eagerly watching to see that date confirmed. But Dillard's earnings came out and it really caught our eye for lots of different reasons.
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John, shares were up 20% today. And have you ever been in a Dillard's?
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I actually have and I want to talk about how I've done it. So I live in New York and for work, you know, a lot of my travel takes me to the coasts, but spent a lot of time in Texas, I've spent a lot of time in the south. And it's actually in those markets that I've been to Dillard's. And when you take a look at where the company has its concentration of stores, just to paint the picture, Dillard's is headquartered in Little Rock, Arkansas. It's been around for a long time. It's founded in 1938. And if you live on the coast, if you live in the Northeast, this is probably the retail company that you haven't really heard of because you haven't really been exposed to it because it's not in the west, it's not in the Northeast. As I said, mostly in the South. Again, that market cap 11 and a half billion dollars. This is a really, really big company. Despite that, it doesn't get a ton of coverage. There are only, you know, less than a handful of institutions actually covering the stock probably because to all intents and purposes, this one is essentially a family run business. Just to put it in perspective, the founder's son is the chairman and CEO today, another son is the president. There's a son who's an executive vice president and the family still controls a large amount of the vote for this kind of company. So this to me is a really interesting one. It's a story of a retailer that's known for providing great customer service. It has survived in this department store arena which has really struggled and it's really found its strength by focusing on core geographic markets. And clearly this sort of family run culture has worked for it. It's extraordinary.
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That's right. Last year, activist investor Barrington Capital called on Macy's to focus more on shareholder value, citing Dillard's as an example. Quote, Barrington believes Macy's should look at its department store peer Dillard's for a successful model in capital allocation.
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Well, revenue of just under one and a half billion dollars for the quarter beat estimates up 3% year over year. Same store sales. That magic metric for retail up 3% year over year. One thing that's very interesting in terms of trying to assess this business, I John, you found this. Dillard's is one of only 21 publicly traded companies in the Fortune 1000 that when they have their earnings calls, they don't take questions from investors, which perhaps explains why there are so few analysts actually covering the stock. One other thing I found very interesting here, and again, I think this is about the family influence and the heritage of this business. Something we don't talk about all the time with public companies. A big chunk of the company's total outstanding stock, nearly 30%, is actually held in an employee stock ownership plan, including some retirement savings for the employee base. So this really is one where the employee success is very, very explicitly tied to the stock performance and to wealth creation there. So pretty unusual. I'm going to dig into more. Into that one a little bit more.
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Yeah, very interesting.
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Well, let's talk about Cisco. I know that many of us are suffering from AI fatigue and this question of if we are in a bubble. Nevertheless, we do want to touch on Cisco, the networking company, because although the market was broadly down throughout the day, shares in Cisco were up nearly 5%, hitting around $77 after reporting strong earnings last night. I mean, John, some of these numbers are pretty, pretty interesting, right?
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Revenue rose 8% to nearly $15 billion. Profit nearly $3 billion, and earnings of a dollar a share beat estimates by 2 cents. The company raised its fiscal year outlook.
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It's the raise that the market keeps looking for. It's so interesting. We're seeing these companies coming out, they're beating earnings, but without that raise of outlook, not all of them are getting rewarded with the kind of share price increase we saw with Cisco today. There's just one other thing that struck my mind actually too. First of all, Chief Executive named Chuck Robbins, great name. Second of all, industrial Internet of things IoT orders grew more than 25%, supported by, quote, ruggedized equipment and onshoring trends. So first of all, whenever someone uses the word ruggedized, it's worthy of digging in to figure out what that means. And this is basically equipment that has to be pretty rugged, it has to be robust. This is equipment that's going into manufacturing plants, it's going into ports and yards and electric grid systems. And management said we expect this demand to increase because we are seeing two things. US manufacturing onshoring, which I thought was fascinating because I've been trying to find tangible statements by public companies that tariffs are actually motivating a move back to Made in America. And the second reason that management said they saw this 25% growth in industrial IoT was quote, physical AI adoption. So borrowing the language there from Nvidia CEO Jensen Huang let's take a quick break and when we come back, holders of the popular ETF QQQ are being harangued to take part in a vote. I am one of them. Perhaps you are too. So I'm digging into what on earth is going on. And now a word from our sponsor, Surf Air Mobility. Surf Air Mobility is focused on building a platform aimed at transforming air travel.
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Surfair Mobility Inc. What is going on with QQQ? One of the most popular and recognizable ETFs is in the world. Very recognizable ticker with a 243 billion dollar market cap. Its holders run the gamut from 401k plans to retail investors. And if you're one of them, which I have been for a long time, you've probably been blitzed with emails, letters, that's good old fashioned snail mail, and messages from your broker asking you to vote on something related to it. I haven't been nudged this much since Duolingo's little green owl was nagging me to get back to my language homework. So what is the deal? Well, first in Context, launched in 1999, Q. Q. Q. Has become synonymous with big tech. Consisting of over 100 stocks listed on NASDAQ. About 50% of its holdings sits in Nvidia, Microsoft, Apple, Broadcom, Amazon, Tesla, Meta and Alphabet. Now ironically, given that its investments are predominantly in Forward thinking tech, QQQ's structure is pretty old fashioned. It's a unit investment trust with an older, more rigid structure and which limits what it can do. This is why Invesco, the firm that manages it, wants to modernize QQQ setup, converting QQQ into a standard open end management company. And Invesco needs holders to vote to make that change. Now the proposed adjustment would not alter the stocks the ETF holds. Instead it would give Invesco more flexibility in how to manage them, for example, enabling Q. Q. Q. To engage in securities lending and more efficient dividend reinvesting. The new format is supposed to bring stronger oversight and more frequent reporting. And Invesco also claims that the change would drop annual expenses from about 0.2 cents per dollar held today to 0.18. Now, that expense difference is teeny, teeny tiny in a vacuum, fractions of a cent. But the fund manages more than $400 billion in assets, so even a small expense reduction translates into significant savings over time. And at the same time, Invesco stands to make more revenue itself as a result of the structural change. Now, an initial vote happened last month, and while those cast were reportedly, quote, overwhelmingly in favor of the conversion, the total number of votes submitted fell short of a required threshold. This is the logistical challenge of having so many investors 40 to 50% of QQQ. It's held by individuals. And unlike typical votes where non responses are ignored, in this case, non votes count as no votes, which is why the fund is spending so much time to attain a quorum here. So Invesco has pushed the vote deadline to December 5th to get more participation. And that is why QQQ holders, who specifically held the ETF as of August 15th, that's something called the date of record. That is why holders are getting blitzed. So that vote, if you hold the stock and if you haven't voted yet, they're probably still coming out to you to try and get you to mobilize. We're going to keep on watching for the outcome of this one. Well, it's 4:00pm on the east Coast. There's the closing bell. The market's wrapping up for the day and we don't have a ticker tape, but we'll throw it over to our human ticket. John that's right.
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The S&P 500 and the Dow both finished down nearly one and seven, 10% today. The Nasdaq finished down two and a third of a percent. A quick market headline. Shares in Comcast, the parent company of NBC, were up a percent today after reporting that the company is going to launch a new sports cable channel called NBC sn. That name may sound familiar because the company shut down its NBC SN channel in 2021 because of limited sports inventory. But since then, NBCUniversal has been aggressively acquiring sports rights, including an 11 year, $27 billion NBA package. So while we keep hearing about broader declines in linear television and cable networks like those owned by Disney, sports programming continues to buck that trend.
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Well, as A final thought. It was something that caught my eye this morning, which is a thought around what on earth is about happened to Verizon. Now, the reason this came up is I was watching Mark Bertolini, who is the chair of Verizon, getting interviewed today. And he wasn't getting interviewed about Verizon. He was getting interviewed about something else. He's actually the CEO at Oscar, the health insurance business. But right at the end, he was asked what is going to be going on at Verizon now that he is the on the board and now that there is a new CEO, Dan Schulman, more famously known for his work at PayPal. Well, I just wanted to touch on some of the things that Bertolini had to say because it was very clear, at least to me from his comments, that this was no longer a story about the CEO simply stepping away from the company. It was pretty clear he was fired. Bertolini went to say explicitly losing 30% share is an issue. And that's what Verizon's been experiencing. Dropping from number one to number three in market cap. Also a problem that they're looking aggressively at their cost structure and quote, the board needed to act and we did. So that's code to me that the board really wanted to shake things up, including changing out the CEO. Now, that interview again was on CNBC very early this morning. Sure enough, later, over the course of today, news broke. There were reports that Verizon is planning a 15, 000 person reduction in force. So it feels as though I didn't know whether that interview prompted it. Some stuff sometimes that does happen, but really a sign that there is change coming at Verizon because the board is committed. We're going to keep watching that one. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Crateau, Tarkab Delatif and Emily Milian. Our technical director is Felicia Edwards and our audio engineer is Brittany De Taco. The president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with a Morning Brew newsletter and tune in to Toby and me filling in for Neil on Morning Brew Daily. I'll be back here tomorrow also in the afternoon with Brew Markets back here, same time, same place.