← CNBC's "Fast Money"
CNBC's "Fast Money"
Appeals Court Upholds TikTok Ban… And UnitedHealth’s Worst Week Since 2020 12/6/24
00:43:53
Social stocks gaining momentum as an appeals court upholds the law requiring a ban or sale of TikTok. What it means for the likes of Meta and Snap… and when the social media platform could get blocked. Plus UNH notches its worst week since before the pandemic. The fallout from the company’s CEO’s murder… and how the company will move forward from here. Fast Money Disclaimer
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Melissa Lee
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Here's what's on tap tonight. Tick tock, tick tock. US Regulators have stepped closer to forcing a sale or ban on the viral video app. And it's having a big positive impact on some names here at home. Will these trades still be the ones to bet on in the new year? We'll debate that and stretch valuation. Shares of Lululemon seeing their best day since 2018 on the back of earnings last night. But with the stock up a whopping 95% from August Lowe's, is it in danger of pulling a muscle? Plus, UnitedHealth sees its worst week since 2020. Chevron makes some cuts to its spending plans. And we're live at the Reagan National Defense forum with the CEO of AeroVironment. I'm Melissa Lee coming to you live from Studio BE at the NASDAQ. On the desk tonight, Seagrass Obama, Ise and Guy Adami and former Bridgewater chief strategist Rebecca Patterson. Welcome, Rebecca. And we start off with new records for the Nasdaq and S and P led by some major momentum in mega cap stocks. Amazon surging nearly 3% today. Metta more than a percent. Both stocks as well as Apple hitting all time highs during the session. Though the iPhone maker ended the day just in the red. And it wasn't just big gains today. The so called MAG7 have added a combined $872 billion in market cap just this week. And now a new ruling from an appeals court could be a catalyst for even more gains. Julie Boston's got all the details. Hey Julia, that's right. Mel Meta, Snap and Alphabet all moved higher today after a federal appeals Court upheld the January 19 ban on TikTok if ByteDance does not divest its ownership by then. Meta shares up about 2 1/2% to an all time high today as those tech giants are seen as beneficiaries of any ban, potentially gaining TikTok's consumers, advertisers and creators. The court ruling acknowledging the impact on competitors, saying, quote, Tick Tock, some millions of users will need to find alternative media of communication. Now Wells Fargo taking this news and predicting that TikTok's rivals will definitely benefit, saying that if this does go through, TikTok's nearly $26 billion in ad revenue would go 75% to Mehta, 20% to Google and 5% to Snap. Tick Tock, which plans to appeal, says the law would censor the American people. And this is far from a done deal. President Biden could grant a 90 day extension if it seems that a divestiture is in the works. The Supreme Court could allow the app to keep operating while litigation proceeds or the court could rule on the suit before January 19th. And then once inaugurated, President Elect Trump could choose not to enforce this ban. So a lot of moving parts here, Melissa, what is the latest in terms of President Trump's stance on TikTok? It seems to have changed over the years from his first administration. It certainly has changed, Melissa, because back in his first administration he was trying to get this done. He was trying to enforce a ban on phone foreign ownership of TikTok. But he seems to have changed his perspective on this more recently when he was on the campaign trail. He said that he would protect Tick Tock. So based on the most recent comments that Trump has made publicly about this, we do expect him to take some sort of action to keep Tick Tock alive though. This was legislation, so we'll have to see how this could all be unwound. But he did sort of change his perspective on this. So we have to note, Melissa, that the people that Trump has working for him or that will be part of this new administration do seem split on this issue. All right, Julia, thank you. Julia Boorstin, how many days this week, guy, are we on the seven days in this week? Oh, I thought that was a question. So call saying met is up again. Met is up for no apparent reason. But. And here we are up 8.6% on the week at an all time high. All week. All week. All week. Five days. Because there are five business days when the market, Steve, is correct that there's seven days now for now 24. You can't do this. I understand. So please don't me on Twitter. But if you were to somehow magically back out the fall of 2021 into the fall of 22 when Facebook went from 375 a share to $100 a share and just sort of said, you know what? Those were the, that was the last year of Facebook and just said, okay, that didn't exist. And then looked at the chart through that lens. This has been an incredible story the entire time of its publicly traded Life. And at 25 times earnings, forward earnings, it's still not expensive, Mel, despite the fact that it seemingly had this parabolic move. So you're right to bring up the fact that we've talked about Facebook all week on the call, but you're equally right to point out that, you know what, maybe there is no reason. Maybe it's just because this is one of the most valuable companies in the world still trading at a very reasonable valuation. And let's just think who had dinner with Trump? Zuckerberg had dinner with Trump. So we went from him saying let's ban it to not ban it to possibly not interceding now because maybe he's getting cozy with two tech giants. Maybe it's Musk, maybe it's Zuckerberg. That wouldn't be beyond comprehension. If you look at what was. What would Julia just show us? 75% of ad dollars will go there. I think everyone could agree upon that. Snap gets 5%. But it's all sort of a crapshoot right now is where everything is going to go. We all agree that they'll be the biggest recipient of ad dollars and maybe cozying up to Trump helps him in the long term. You know, I think we've talked a lot about Alphabet and some of the overhang there. And then, you know, Guy mentioned the drop from the precipitous drop down to $100. And a lot of the, a lot of the issue with that drop was that the capex spend seemed to be out of balance. The investment in the metaverse that wasn't going to be monetized for what, however, for, for whatever period of time, we just really couldn't see through that. We couldn't really discount that forward and really understand what the, what the earnings potential was there. They have completely changed that. And even though there is still this AI Capex spend, they are able to monetize that in terms of ad positioning. So I don't think that they're coming under the same scrutiny that some of the other players have in terms of capex spend and capital discipline. So it would make sense that when you are seeing things being elevated, keep in mind they were at like 25 times forward across the market. Why not pay for a company that still has growth potential and still has a cash on balance to provide some some downside protection? We are just getting this headline from the CEO of Tik Tok saying we will seek a Supreme Court review to halt this ban. This is according to the information. This is the latest the response from Tick Tock. They're going to do everything they can to keep on operating here in the US while this whole thing is being sorted here. Rebecca, it doesn't necessarily change either way the fact that the Mag 7 right now is the place where people want to be. And in your view is that the place you want to be in this market environment? Well, I certainly want to be at least neutral, weight the sector, not necessarily exactly those companies weights, but broadly I want that exposure. You know, in the case of Tick Tock, who the heck knows exactly how this is going to play out. So putting a big bet just on the possibility of an increase in ad revenue for X or Y, to me that's not a smart play. But thinking about this new cabinet is going to be more tech friendly broadly, maybe to some companies more than others. It's going to be less regulatory. It's certainly pushing the freedom of speech thing. Now the challenge with TikTok is that you have the China element as well. Right. So if Trump is saying he's going to be hawkish on China, how do you square that circle with the freedom of speech? And I'm going to be curious to see how he explains that one, if he allows this to be sold to Mnuchin or just stay in business or whatever he does. Right. Or whoever. But I do think back to your question, that when you think about the free cash flow these companies are generating and the amount they're able to reinvest every year in their own innovation, they're going to continue to grow. There's going to be fits and starts. Yes, they're highly valued overall. But I want to stay in that game. Rekha brings up an excellent point, as she often does, as she always does when she participates on this show as a panelist, the China aspect to it. And if we do this to TikTok, what will China do to our tech companies? And so you have to wonder, you know, for our tech companies, Apple, who is working Feverishly to get that AI the you know, element in their phone there. I don't know, China can make it a lot more difficult to do that. And I've thought that Mel, and you know this for a long time and it's been unfounded in terms of the concerns around Apple and China because we're sitting here today and Apple's at an all time high. So I don't think it's gone away. But market doesn't seem to care about it. The good news about Facebook is they don't have that problem. And amongst the existential risks out there for Facebook, I'm not, I've never been convinced Tick Tock is one of them. There are other ones like the economy slowing down and them being obviously can. So much of their business is relying upon small and medium sized business which is lifeblood of this economy. So if the economy were slow, Facebook would have a hit. But you know, Tick Tock is a nuisance I think, but I don't think it's an existential risk. We've got a news alert on Supermicro. The company saying it has received an extension from the Nasdaq giving until February 25th to file its tax 10k annual report for the fiscal year ending last June. Shares are up 2% after hours. But of course it has risen substantially since the reports. Initially it's short sellers entering this one. It's, you know, questions about its accounting, etc. Etc. It's really been mired in this. But we're watching shares of Supermicro. You know, you brought this up on the call the day you always bring up good points as well as does Rebecca does. And you said when we got to about 43 and a half dollars or so, it almost got back to the entire move from that downdraft from 48. And here we are approaching that level. I don't think their problems have been fixed. That outside counsel was one person that did the special committee, special committee comprise of a single person. But this shows you you can't short it, right? It doubles your point. Again your point. It doubled. And that's why when you first enter Wall street, unlimited risk is when you short stocks, right? Anything could go to zero. You have a finite amount of risk. This is one that you have unlimited risk if things go their way. All right, let's get some more on Tick Tock here. Let's bring in fast money friend Gene Munster. He is managing partner at Deepwater Asset Management. Gene, great to see you. So you know I know you were listening to the discussion very intently that we were having here on the desk, that it has upside, but not necessarily any doubt. I mean, do you think that there could be any sort of retaliation on the part of China if a ban on TikTok goes through? Absolutely. I'll add my kudos to Rebecca for pointing that out too. I do believe that this is ultimately part of the chess game, chess match that's going on with the Trump administration, with where his relationships are growing potentially with Zuckerberg and what that means for Tick tock and potentially your question is that if this in fact does happen, if the US does go and ban this, I think there's two paths. One is that China just basically folds and it's a negotiating piece. By saying they don't want to sell. I say China, China basically controls TikTok. It's a negotiating point. They say they don't want to sell. That negotiating piece is basically to scare lawmakers that their constituents would be disappointed if the app got banned. But at some point, if it's clear that they are going to get banned, they could fold and take the 100 billion and walk the TikTok show. But if not, it's going to come down to if this does in fact get banned and they don't take the money, there's going to be some form of retaliation. The two obvious targets are Tesla and Apple. In what way do you think the Chinese could exert, I don't know, pressure on, I mean Tesla, they could do whatever to their factories. In terms of Apple, what would be the way you would be concerned about retaliation? So China is the master at red tape. And I spent seven years, spent a lot of time in China covering a lot of the China Internet companies, worked with a lot of Chinese people. And I was taught just in terms of what they want to do, things is below the fold. And so the master of red tape would be just making it difficult. How many hours a week? They could change some laws about number of hours a week that potentially someone could work. They could change how much power a given Foxconn factory can use in a given week. They can work. They did this to Tesla. They can impact the shipping, the trucking companies that would take the Teslas to port to be exported to Europe. They could do something like that with Apple. So I would. I don't think it would be something where it'd be a big headline. The last piece that they could do is they could have a big influence in terms of how Chinese people think about Apple products or Tesla products. They obviously Control, like what Weibo and that languages and they can influence that conversation. And so there's a lot of levers below the fold that can be used. Unfortunately for investors, it's not going to be an obvious headline. It's just going to be something where it just the gears of progress just slow. So Gene, is Apple mature enough and diverse enough now that, you know, maybe five years ago this would have been huge for the stock but in today's Apple world, you know, it's not going to necessarily move. We're sitting here, it's at an all time high despite the fact that we're having this conversation. So this is my biggest concern. I own Apple, our firm owns Apple. I think that the stock is a big opportunity ahead of it relative to AI, but this is the biggest concern related to China. And to answer your question is that if we look at the total revenue from Apple, we estimate about 45% of that is somehow related to manufacturing in China. As you said, that's been coming down, but it's still a relatively big piece. And what I described about that red tape that slows things down, it doesn't take it to zero, it would be a slowing factor and you'll know it and lead times going up for products that are impacting the quarter. So I think investors are going to have some room to watch how these dials are progressing before any quarters reported. Gene, great to speak with you. Thank you. Thank you. Have a good weekend. Gene Munster, Deepwater Asset Management in terms of Apple, Bono and Gene brings up all these good points and it doesn't necessarily have to happen these sort of soft ways of throttling their production just because TikTok gets banned. It could be for a number of other reasons, other sort of conflicts the US has with China. I do think that's the pervasive risk with Apple is that there's not an explicit attack, so to speak, that there's just kind of these things that are bubbling under the surface that make it a less efficient operation going forward. And I think the rhetoric coming out of Washington right now might lead to some of that being done in a more preemptive way than is currently being priced into the stock. It would be really ironic if tick tock is actually the way the trade war accelerates. Right. Everyone's been glass half full. It's going to be negotiating. We're not going to see the big broad tariffs that were talked about on the campaign trail. And that's definitely part of how the market's risen so much. But wouldn't it be interesting if shutting down Tick Tock leads to these quiet retaliatory measures that actually gets things going and catches people off guard and it could deflate equities a bit. Let's get to shares of Chevron dropping more than two and a half percent today. The energy giant announcing capex cuts of about 2 billion less in 2025 than this year. That's its first budget cut since the pandemic. Chevron also taking up one and a half billion in fourth quarter charges for restructuring and asset sales. Guy, this is not the C. I don't believe in your clam. I always get confused. I think you have Conoco, I believe Chevron my clamor. Mm, yeah, no, go ahead. Well, but I think again, yeah, I believe, I believe that is correct. However, all three of those stocks of the two season, the Exxon Mobil. So whether that's an X or an E depending on how poorly you play the game, we'll see. But it's interesting to hear this. Now some people said this is a positive. The market's not taking it that way and you know, I can understand why there's some apprehension being a space. But I will tell you on valuation alone, these names are still compelling. And until a week or so ago, names like Exxon were trading right around a prior all time high. Which I think is interesting given the backdrop where everybody's in technology and other service names, nobody wants to be in energy. Yet these stocks have held in there. So I'm not running too far from this. The first go around with the Trump presidency, energy names did not do well because there was a lot of supply on the market. But the way you introduced this segment, you said the first time since the pandemic they cut capex. There's nothing positive about that pandemic cutting capex. Right. They also had ebony. Right. So they're increasing cash flow. Guy mentioned that. Normally free cash flow, normally that's a positive for a stock. But I think the market's looking at this is why. Why do you need cash flow now? I mean one thing we've seen with these companies over the last several years going to technology is that they become much more productive. They're doing more with less workers and more tech. And so their break even to be profitable has come down. They don't need oil prices as high as they did five, 10 years ago. So it's interesting to me, oil prices have been coming down somewhat. They're expected to come down more next year as supply outstrips outstrips demand globally. I kind of go with you guy on this one. I see that it's, you know, the valuation is attractive. They can make money at lower prices. They're focusing on free cash flow. The question on why, I think is totally valid, but assuming there's a decent answer on the why, I'm really happy about free cash flow as a shareholder, whether you claim to see the clan, you know, Rebecca makes great points. Until Shell is like, well, maybe not so much. I see it in your face. Rebecca makes a great point. Coming up, Lululemon didn't even break a sweat beating its latest earnings expectations. Just how much higher the Athleisure name could strike stretch after its best day in six years. Next, with bank of America betting its bottom dollar bottom dollar on Dollar General. Why this long struggling discount retailer just bagged a double upgrade right after this. This is Fast Money with Melissa Lee right here on cnbc. Slowing growth, geopolitical uncertainty, shareholder unrest in an increasingly complex world must consider their strategy from every dimension. Creating long term value requires ambitious and achievable strategies enabled by the right experience, tools and capabilities to prepare for the journey ahead. Powered by 10,000 strategists, EY Parthenon works with you to see opportunities from every angle and execute on that vision. Learn more@ey.com US EY Parthenon waiting for Dinner? 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From geopolitics to inflation to liquidity, PJM brings disciplined risk management expertise that spans 30 market cycles. Our active approach finds opportunities and volatility helping our clients to navigate risk and achieve their long term goals. PJM Our investments shape tomorrow. Today we've got a news alert on some entrance to the S&P 500. Bertha Coombs has got the details. Bertha. Hi, Bertha. Yes, Melissa. Two changes, two additions, Apollo Global Management and Workday are being added to the S&P 500. They will be replacing chip maker Qorvo and aerospace company Momentum. So Apollo Global and Workday will now be part of the S and P 500. Back to you. All right, Bertha, thank you. Bertha Coombs, Lululemon surging nearly 16% for its best day since 2018. On the back of earnings last night, the stock is now up 70% in just four months. Will it stretch higher from here? Amazing. The sound effects. So, so here's my problem with Lulu. First of all, when we've talked about this guy has not adopted the pants. I went to Lulu and now I'm in Vineyard Vines. I think they're much better. There's too much competition. But when you see them perform like this, you think, okay, they're out of the woods, everything's fine. U.S. north America was only 2% of the growth. International was 33%. Do you want to buy this with Internet just banking on International. International is only 28% of the pie for them. So you're placing also 70% of the pie is either moving sideways or, you know, up slightly for the international growth. I'd rather leave it alone. I don't know. I mean that's a pretty big a sizable core business to be stabilizing at this point, which is what it's viewed as US Business is stabilizing when you have the upside kicker of say China mainland was up 27% year on year. I mean these are tremendous numbers on the growth part of the of the pie, 100%. Still a North American story though, I think to Steve's point. But you're right to bring that up now. They got their inventories in line against sales growth, which I think the market took its excuse from. We had Courtney here last night. She broke it down and margins were better. All good. You just said it though at the top mean the stock is up almost 80% from those lows we saw a few months ago, which gets us back to a 50% retracement of the all time high in this recent low on big volume today. So I think if you've enjoyed this move, which many people have, I'm sort of with Steve on this one. I'm pulling the ripcord. Yeah. Now to the call of the day here. Dollar General popping two and a half percent on a double upgrade from bank of America analysts pumping the stock from underperform to buy saying the dollar stores back to basic strategy seems to be paying off with improved inventory positioning. It's interesting given the tariffs that might come down the pike which could really pressure all of the dollar stores. They only have so much leeway to pass that cost onto the consumer. Yeah, I mean I think that coupled with the fact that you really have exposure to the lower earning cohort in terms of the consumer and I think there was a lot there. Now this stock did, I think top out around November and kind of and then immediately bottom out. So I do think part of the trading action that we're seeing and part of the call is just a retracement of that. With that said, I think they're strapping on like a 13 or 14 multiple on 20, 27 numbers and they've lowered 26 numbers. So I do think there was probably a little headwind still existing. And the question is, do you want to be, you know, allocating the incremental dollar here versus somewhere else? And you know, in your complex is this somewhere else Walmart? Because that's the way I took it for me, because to your point, 65% of their revenue comes from people that are earning less than $35,000 a year. Walmart is grabbing those people and they're also grabbing, I think it was 100k plus. Exactly. So I'd rather, I'd rather sit and look at a chart like Wal Mart than look at a chart like this. I'd rather get the extra dollar going to Walmart versus Dollar General. Yeah. How do you think through that premium that Wal Mart trades at? Although granted with the execution that it, that it provides. Right. No, I'm with you on this one. I'd much rather have some of that upper income consumer as part of my base to count on because it's not clear to me things are going to get a lot better if at all for the lower income consumer. Next year we might get a couple rate cuts but even through, you know, we have four between today and the end of next year. That to me probably feels optimistic. So they're not going to get a lot of love there. The job market is doing fine, but it's moderating. It's getting harder to find a new job that's hitting that part of the, of the consumer. So I'd much be happier in a Wal Mart despite paying the premium. I think it's a safer bet as I look at the year ahead with the risk of tariffs as well that you mentioned. When you think of retail analysts, what name comes to your mind? We had her on Dana. Chelsea. That was unbelievable. That was like I knew even before you asked me the question. You know, looking for no. And she always dresses in black. Go ahead. No, but that's amazing. Like you didn't even flinch. And Chelsea, just their advisory group, the analysts are just lowered the price target on the back of this. So I go with what they're saying. Still an 88 hour price target, but I think the stock is sort of topping out yet again. All right. There's a lot more fast money to come. Here's what's coming up next, an exclusive sit down with the CEO of one of the defense industry's most exciting names. We'll get a sneak peek at the road ahead for a company on the cutting edge of robotics and beyond. Plus, UnitedHealth's worst week in more than four years. But our next guest says this embattled insurance stock could be a top pick for 2025. The headlines and the bottom lines moving this name next. You're watching Fast MONEY live from the NASDAQ market site in Times Square. We're back right after this. If bonds are back today, why wait for tomorrow? At pjum, our fixed income strategies help investors uncover hidden value and unlock opportunities. Whether you're looking to enhance your income or diversify your portfolio, our broad range of strategies bring together local expertise and deep credit research to help you achieve your long term goals. Pjem, our investments shape tomorrow today, first and foremost, the thing that powers your business is power. And when it comes to power, Ford Pro has options. Now scratch that. We've got every option. Diesel, gas, hybrid and all electric. Plus they're all connected, so you're always in the driver's seat. The power is yours. Visit FordPro.com today to learn more. Welcome back to Fast Money. The S&P 500 and NASDAQ both clinching fresh record closes to end the week. The Dow in the red following 123points. Shares a DocuSign surging nearly 28% to its best stay ever. On the back of their earnings report yesterday, the company topping Wall street expectations, delivering strong guidance. That Stock is up 80% this year. Shares a Peloton getting a bump up 4%. Analysts at UBS upgrading the name from sell to neutral, citing benefits from cost cutting and an optimistic view on the company's recent CEO transition. The stock is up 270% from May lows. And sports betting stocks taking a small hit. Some members of Congress asking the FTC and Justice Department to investigate DraftKings and FanDuel over antitrust concerns. What's notable about the letter is that it was signed by both a Democratic as well as Republican senator. So it seems to be a bipartisan effort to look into whether or not these two have some sort of monopoly. True. And I think, listen, I'll say this. I think any further sell off in this space, and Danny Moses was on the other day mentioned genius sports. I mean, I think you buy the weakness in this space. I think this is just noise right now. I think weakness will be bought. I tend to agree, particularly when you're looking at consumer trends and, you know, just the mania around sports as you're seeing Netflix bridge into that area. I just think there's an hysteria there that you definitely want to tapping into. Robinhood is basically affirming this business model by saying we want to be in betting, too. I mean, there is something there when Robinhood right now, arguably, you know, at its sort of peak, is saying we want to enter this business. Yeah. And I also think to both of the panelists, gentlemen, cohorts, whatever other word you want to use for him, guy and guy and Bono. And when you look at this, you don't want to buy. When you look at, when you look at Las Vegas Sands, we look at mgm, you have a bunch of noise there. But when you think about where those dollars, when you're sitting on a, on a fund and you have to allocate dollars to a betting stock, they become a lot fewer. And when you start to look at to your point hood, that becomes something where you're like, you know what? I get a whole assortment of stuff that I'm not afraid of. But I don't have to worry about China. I don't have to worry about Macau. I don't worry about Singapore. I don't worry about anything. See what it did. Yeah. Self. Would you rather. Thank you. Okay. Good for Grasso. Coming up, UnitedHealth closing out its worst week in more than four years. The tragic murder of the CEO. And now new scrutiny on how the company and the sector handle medical insurance claims. We'll ask the top analysts what investors in UNH should do now. Missed a moment of fast. Catch us anytime on the go Follow the Fast Money podcast. We're back right after this. Welcome back to fast money. UnitedHealth closing out its worst week since March 2020, down almost 10%. This follows the killing of United Healthcare CEO Brian Thompson outside a hotel in midtown Manhattan on Wednesday. Though the shooter's motives are still unknown, the tragic event putting more scrutiny on insurers and their claimed denial practices. For more on the market impact, let's bring in Mizuho Healthcare strategist Jared Holtz. Jared, great to have you with us. Thanks so much for having me. I appreciate it. And this really, you know, as you had mentioned, this sort of opens up this bigger question. Are insurance companies really denying a lot more claims than they should be at this point? And certainly if you look at social media and sort of the outpouring, there's a lot of enmity in general on the part of the US Population towards insurance companies in general. And what that says to me is that there will be more scrutiny on insurance companies. And more scrutiny is usually a bad thing because that means more regulation. And I'm wondering, you know, is that what is sort of pressuring UnitedHealth and what should pressure the sector at this point? I think that's exactly what's happening. 5 to 10% moves for the sector, you know, based on, you know, obviously a tragic event for the company and for the space. And I think all of all that it's doing is kind of putting the target back on the industry again. We don't know what the motives of the shooter were. A lot of investors and other lookers on are kind of assuming or guessing that it has something to do with the denial process. So assuming that that's part of it, does this new government, this new regime come in and take a harder look at the sector? I think it's very fair to say that some of those things were already being contemplated with the new Trump administration, with these nominees he's put forward. But now I think it's kind of a little bit of a slippery slope. And I think everything you mentioned is probably correct. What is so shocking in sort of looking into this and whether or not UnitedHealthcare actually did deny many patient services that they need, is that there isn't actually a number that the transparency in this sector is very. I mean, it's a very opaque system. And if you are a customer shopping around and you want to go to the insurance company and pay the insurance company for a premium, you know, that doesn't. That will approve the most procedures, be, you know, the most sort of generous when it comes to procedures and treatments and medications. You can't shop on that basis. The numbers aren't there. Do you Think that is something that will have to happen at this point because that could really put the insurance industry on its head. I think that's an existential risk. It's something that the industry has talked about for a while. Agree fully. There's no transparency at all in this industry when you really think about it. I mean, you go into a hospital and have a procedure, you have no idea what your bill is going to be. That's very different than pretty much every other services industry that we have. In not knowing the price until you get the invoice. I mean it's sort of unheard of. So I think some of these things in terms of hospital transparency, managed care or health care insurance transparency have been out there for a while. Maybe this brings it more to the forefront. I mean, to me that's what the stock moves kind of indicators suggest this week as it relates to managed care. You know, kind of uniquely not really sure what can be done over the near term. But I fully agree in that when you get a health plan or you are under some employer's plan, you have no idea what the coverage is going to be until you get sick or need something done. So there's no way to know. And I would, I would argue that the transparency is non existent. It's not limited. There is none. Jared, let's play a little stock market here. So unh was I think the biggest part of the XLV. It's now number two at 10%. If this plays out and things start to go a little pear shaped and we are at critical support levels in unh, I mean there's a chance that, you know, if the ETF starts going pear shape, it can drag the entire space with it. Thoughts on that? Agree, 100%. I mean I put something out earlier this week as kind of like a preliminary view of the sector and I think when you look at it, two things have to happen for the XLV to kind of stay where it is or go higher. One is managed care has to go higher and the second is large cap pharma has to go higher because those are really the only two subsectors we have with any notable market cap, as you mentioned. So I think it's really important. I mean we need UNH has to be an outperformer in a way or at least hold serve in order for the industry to hold up or for the XLV to hold up. The guidance that the company ended up releasing later that day, the fundamentals for the story look decent, Jared, and you acknowledge that too. And so I'm wondering at what point do you say, you know what, this is an interesting stock to buy or is there just too much regulatory overhang, potential regulatory overhang to actually be a buyer here? Yeah, I think we should wait a little bit just to get some more details on exactly what happened this week. You know, I do think the space is obviously very noisy now, a lot of headline risk. But agree. And based on the guidance and the numbers that the company put out there, I think there's a level of conservatism baked in. They're actually guiding for an increase in mlr. I didn't think it was really possible to have a utilization trend higher or stronger than we've seen this year, but they're forecasting that. So I think that's embedded conservatism on their part. The revenue looks fine, it was a little bit below. But I think when you kind of piece everything together, you're kind of ending the year closer to the lows than the highs. It sets up pretty well. But I do kind of want to understand if the police, FBI, whatever can get a hold of exactly what happened here. I think that would make people feel better. It might make them feel better, but it still has brought out a lot of anger towards the insurer. I mean, it doesn't change the reaction. Right? I mean, it sort of. It doesn't change the fact that we are now even more aware of the fact that there is no transparency in the sector and that consumers are even further outraged. Right. I mean, it doesn't matter what the. It matters for justice, for the family. It doesn't matter from a regulatory standpoint. If you are a senator sitting on Capitol Hill and your constituents are complaining, it doesn't matter what you do because you're going to haul those CEOs to the Hill at some point. Probably. Yeah. They're. They're always under scrutiny. I mean, under every political administration, there's so much scrutiny on the managed care industry. And it's interesting because when you look at large cap health care, United's earnings growth is one of the fastest in the entire industry. As a company that probably shouldn't be putting up mid teens earnings growth on a relative basis versus some of these other much faster growing companies. So the earnings growth, if you just take that as one metric, is incredibly strong or fast, however you want to define it. That alone, I think makes the company and the industry susceptible. But I think I'm not sure that anything changes here. What I just don't like about it is that the headline risk. And some of the information that is going to be coming out right is going to be probably more negative than positive over the near term. So I think stocks can slide more. But at some point there's going to be some valuation support here, too. Jared, thanks. Great to see you. Jared Holt of Mizuho. Just quickly, Steve, would you be a buyer? No, I wouldn't be a buyer. Right. Even quicker, you're going to be forced to your point to pay out more. And if you pay out more, it's less to your bottom line. So I think the whole industry is going to suffer from the microscope that's going to be put on the whole the whole sector coming up from Staples to AI to Meme stocks, a huge week of earnings ahead. We'll dive into how the options market is betting on the biggest reports. Plus, but first, an exclusive sit down with the CEO, defense contractor Aero Vitamin. What is next for one of the industry's rising stars? Right after this, more FAST MONEY to welcome back to FAST money. A rough week for defense stocks in airvironment. The drone maker posting earnings that missed estimates on Wednesday, sending shares sharply lower. But the stock is still up 30% this year. Our Morgan Brennan joins us for an exclusive interview with CEO Waheed Nawabi. Morgan? Melissa. That's right, Waheed, it's great to be here with you at the Reagan National Defense Forum. Thank you. Great to be with you, Morgan. So let's start right there because you did have earnings this week. It was a mixed, it was mixed results. You did maintain your full fiscal year guidance, though. Some of the choppiness we saw in the quarter had to do with Puma sales, which are the reconnaissance drones that you make to Ukraine. That's. How does that speak to what you are seeing in Ukraine? Well, I mean, our business is very, very strong. We are exactly on track with our plans that we predicted and we guided at the beginning of the year. First half has still been a growth first half. This is going to be another record year for us. We're exactly on track with our plans. The demand for our systems is way beyond Ukraine. We've said it many times before, if you recall on your show before that we've had a lot of Ukraine demand historically in last year. So the comparisons are difficult. However, we're still growing. We still have tremendous amount of demand for our systems. The world is not a safer place. Even if the war in Ukraine were to stop tomorrow, we've got demand from not only Ukraine, but the US Military has to really revamp and retain a lot more of these systems. And then internationally, we've very, very strong pipeline of, of customers, contracts, orders and even program records. And of course, I mean, aerovironment, you are very much the poster child of AI, AI and autonomy drones, these unmanned systems. I am going to ask one more question on this though, because investors have been debating or speculating about what a Trump administration coming in, changing policy around Ukraine, whether it's funding or actually finding a resolution to that conflict is going to mean for aerovironment. Yeah, so we knew from the beginning that this war is not going to be forever. Everybody knew that essentially. And we actually had a very specific, specific and deliberate plan to make sure that we de risk our strategy and our business from the demand that was in Ukraine. Regardless of that, if the war would stop tomorrow, the world is not a safer place. We've worked with both parties and all administrations in the past. The, the fundamental strategies of defense, and defense warfare has changed since the Ukraine conflict. Drones, loitering munitions and things that we lead. The industry is going to become a much bigger part of the fabric of defense in general. And all of our allies around the world, including the United States, has to really ramp up in terms of their capability and volume at much more affordable costs, which we are basically the poster child of. And so we feel very good about our business because there's lots and lots of multibillion dollar program records as well as contracts and a pipeline of opportunities that are coming our way. And we're going to again have a, have a record year this year. So we, we welcome a peace agreement within Ukraine. We always wanted that. And. But the demand for our systems are fundamentally shifted. There's been an inflection point in the defense industry with the things that we've provided to Ukraine and we continue to provide to the United States military. So given that fact, I mean, I think about the video and the smack Talk of the F35 that Elon Musk did. He's obviously part of this administration and where he talked about the importance of drone warfare moving forward. How quickly can you produce what's needed and what doesn't exist that is being developed, that is going to be needed. So we have a ton of exciting technologies and innovations in our business. That's why we invest really a lot in R and D because we see the opportunity, opportunities. What US Military has to do and all our allies, they all know this. The fundamental strategy in defense has changed the wars and conflicts in the future, which there are lots of them going on even beyond Ukraine today. And we have lots of, you know, bad actors around the world which we currently are in, you know, major threat to the United States and our allies. They all we must have systems that can counteract and give our warfighters a superiority. And those things are more, a lot more drones as well as a lot more loitering munitions like Switchblade and Pumas and Ravens. The pipeline of our technology and innovation is fantastic. This industry is going to change dramatically. So much. So many questions I have just off of that statement, but we are out of time. Waheed Nawabi, the CEO of AeroVironment, thank you so much for joining me here at the Reagan National Defense Forum. Mal. I'll send it back to you. All right, Morgan, thank you. Morgan Brennan with the CEO of AeroVironment, AV AV Rebecca well, what I'm looking forward to is with the new administration, can they find greater efficiencies in process? In the Defense Department, we have the Defense Innovation unit. We have a lot of effort being put towards getting procurement done more quickly, especially with things like this where the tech changes overnight. You've got to have the fast stuff. How much can they make that change? Because the faster they can change that, the more companies like this can get through the pipeline and make revenue. So I want to see what Doge is actually able to do or others within Defense to make this process faster that'll go straight to these companies bottom lines. Coming up, a big time chip maker on deck to report. And big bets are flooding in from the options market. Why Broadcom might be about to enter rally mode. That's next. And this Sunday, do not miss an exclusive interview with President elect Donald Trump on NBC's Meet Press, his first network interview since the election. Airing live on NBC. Peacock and NBC news.com more fast money into welcome back to fast money. Earnings season continues with a number of big reports on deck next week. Software, homebuilders, retail names all on the calendar and the options pits expecting some major moves when results results cross the wires. Mike Co has the action. Hey Mike. Yeah, so Oracle and Adobe, both of those are implying big moves, about 8%. Both traded above average daily options volume. Today, Broadcom implying a move of about 6% and it traded more than three times its average daily options volume. Today we saw calls outpacing puts in Broadcom by more than three to one. And the busiest contract was the December 180 calls. We saw over 10,000 of those trading for just under seven bucks a contract. So traders there are obviously betting that the rally that we saw today could continue following earnings. What are you looking for out of Broadcom? That's one at least on valuation you can wrap your head around. I mean, that's a name we've been, I think positive on for quite some time. So you know, people are going to point out and say it's how to run, it's how to pull. But I like Broadcom here. I've always liked that. I think you stay with Avgo, I'm with you and I like the call play. There it is bumping against, up against that resistance around that 181, 182 level. So I think that's the way to play it for their future upside. Garcia, soldier sold. That was quick. Up next, final trades. Thanks, Mike. We're watching shares of Bioage plunging in the after hour session. The company saying it is discontinuing clinical trials for its obesity treatment. It was an oral obesity pill that was in phase two. We did have the CEO booked for obesity week for tonight. Last night the company called us, said the CEO was no longer available. We understand why now the stock collapsing. It is down 67% right now. Time for the final trade. Let's go around the horn. Steve Grasso. It's a mobility company. The symbol is grab excited about. This one's a cheap one, but it's a $20 billion market cap. Grab Final Beauty just broke through its 200 day moving average. If it holds, I'd be looking for the rub site. Rebecca. We give the free cash flow the benefit of the doubt and I'm going to buy Chevron on this dip. Always great to have you here on the desk. Thank you, guy. Not so much. It's okay to have you. You know, it's amazing, before, before last night's show, you said you had a really funny feeling that Jacob Truber was going to get moved before this game, as it turns out. So, I mean, once again, Melissa just showing her range. It's really remarkable. What else is remarkable is the fact that I think FXI might be turning for the first time in a while. Mel. All right, thank you for watching Fast Money. Have a terrific weekend. See you back here on Monday. Mad Money with Jim Kramer starts right now. 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