← CNBC's "Fast Money"
CNBC's "Fast Money"
Apple Nears $4T Market Cap… And Netflix’s NFL Double Feature Follow Through 12/26/24
00:43:49
Shares of Apple at record highs, and nearing a major milestone. What the elusive $4 trillion market cap means for the tech giant, and if the stock can keep climbing in 2025. Plus Netflix’s Christmas Day NFL double feature. How the live games fared over the holidays, and what it means for a potential ad-tier. Fast Money Disclaimer
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- [00:00]
Melissa Lee
At pgm. Expertise across public and private markets today helps build resilient portfolios tomorrow. As a leading global asset Manager with over $1.2 trillion in AUM, PGUM has navigated over 30 market cycles with active investing and disciplined risk management. Our combined global expertise and local insights give us these strategic perspectives we need to help you reach your long term goals. Pjum our investments shape tomorrow today.
- [00:31]
David Wu
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more at discover.com/credit card based on the February 2024 Nelson Report.
- [01:02]
Courtney Garcia
Live from the NASDAQ Marketsite in the heart of New York City's Times Square, this is fast money. Here's what's on tap tonight. Closing in shares of Apple hitting a fresh all time high and nearing the $4 trillion mark. How big is this milestone for the market? We will debate that + gridiron game plan. What is next for Netflix fresh off its Christmas NFL doubleheader? We'll break down the roles. Live Sports will have streamer looks to build its ad supported service. And later, did Roaring Kitty just signal game on for GameStop, the Chartmaster set to dive in on Dollar Tree. And some happy returns for the retailer retailers this holiday season. I'm Melissa Lee coming to you live from Studio B at the nasdaq. On the desk tonight, Courtney Garcia, Botto and Ice and Mike Co and Julie Beal. We start off with Apple's steady march toward a historic milestone. Shares of the iPhone maker adding another.33% today, setting a new record and closing with a market cap of more than $3.9 trillion. Shares need to rise another six bucks or so to hit the never before seen $4 trillion mark. The stock has climbed more than 34% this year, adding over $900 billion to its market cap. Already bigger than one hole Eli Lilly and nearly as big as Berkshire Hathaway. But even with those gains, some on Wall street are still bullish on the stock. Wedbush's Dan Ives raising its price target to a new street high of dollar share. That's another 25% upside from today's close. Here's what he had to say about why he is so bullish.
- [02:29]
Dan Ives
Checks last 48 hours are showing I think strength from a holiday season perspective. It's our view this is going to.
- [02:36]
Julie Beal
Be a record year.
- [02:37]
Dan Ives
240 million iPhones I believe they ultimately sell. And what's wild, this is just the beginning of an AI driven super cycle that's multi year and that's why look, haters continue to hate on Apple. But I believe 4 trillion is just to start.
- [02:51]
Courtney Garcia
So can this trade keep rocking higher in the new year? Courtney, are you going to be a hater or are you going to be a lover of the story in 25?
- [02:58]
Julie Beal
You know I kind of approach this with a little bit of caution. So Dan Ives increased his price target here and he noted some things like as being the golden era of growth with artificial intelligence. And he pointed out some of the features they have like AI emojis and chat GPT on Siri And I just don't know if I can really buy into this yet that that is going to be the super cycle upgrade of the iPhone that everybody is expecting because this went from people assuming this cycle that was going to happen with this new iPhone now oh, this is going to be a multi year problem. So you know, I just don't know if this is a catalyst to get into the stock right now, especially after it's done so well. So it just had five weeks in a row where is up 2% or more and after that happens that tends to be a bad thing in the short term for Apple and after such optimism now that it's getting close to $4 trillion I think it's just having this really high bar. So think long term. It's absolutely going to benefit from artificial intelligence. I think short term a lot of that's probably priced in. So I would stay on the sidelines here myself.
- [03:51]
Courtney Garcia
Even if AI is a longer term story to play out when you have the, the normal super cycle of people, the really old phones needing to upgrade their phones driving the immediate, you know, the near term at this point. So what do you think of the prospects and where it's valued in, in relationship to that?
- [04:07]
Mike Coe
So that's the real question. I think it's fully valued.
- [04:10]
Courtney Garcia
So just the plain old correct upgrade cycle certainly.
- [04:14]
Mike Coe
Right. And so and I think kind of identifying that or calling that to issue doesn't necessarily make you a hater. I am behind the fact that you essentially have a $2 trillion valuation based off of a services business that is recurring revenue which is what you want to see. I'm with the fact that this company pretty much generates one times whatever its debt load per year. There are a lot of fundamental reasons to like this, to like it, but we're talking about a relatively short or medium term trade. Do I want to put the incremental dollar towards Apple? To Courtney's point, I am a believer of the AI story in general but I think that there are so many other alternatives in terms of ways to leverage AI that all these other companies have made available. And I like AI emojis or integrating chat GPT like you can already get access to chat cbt, Perplexity and Google and all these other AI features that I just don't know if having it at the proverbial fingertips is what's going to induce me to spend the additional money on another iPhone now the install base having to upgrade. I understand but I don't think that's an AI specific phenomenon that is already built into and the valuation reflects that. That is just the way of the fundamental story behind Apple.
- [05:26]
Courtney Garcia
Julie, where are you on Apple?
- [05:29]
Melissa Lee
Well, you know, as the official slow moving sloth of the fast money desk for me I've owned this name for 12 years and for 12 years I have had to tell my myself not to sell this thing right. There's been so many times where the valuation gets well out ahead of its, you know, fundamentals and you see that in, in the periods over the long term the problem with this is always the same which is the idea that you're going to be able to get out and time it just right so that when you have one of these downdrafts you're going to get back in. I think for long term guys it makes sense. The thing about AI that I really, that with Apple that I really like when it comes to AI is I think of all the brands and technology this one has the most trust. And I think when AI starts to get useful is when we will actually need to have the most level of trust to feel confident that it's not going to mess with us having correct data or be problematic for our privacy. And I think this is the best position consumer company to do that.
- [06:25]
Courtney Garcia
The privacy issue is huge for consumers as Julie points out. Mike and then there's also just the issue of Apple. It may be late to the game so to speak, maybe relative to some others and some other engines that exist out there but usually it's still becomes one of the best products out there on the market and maybe we're discounting that aspect of it. So far in the Apple story they've always managed to, even if they seem like they're A step behind a competitor to really nail it in the end.
- [06:55]
Carter Braxton Worth
Yeah, I mean they do produce the best consumer electronics product on the market. I think everybody recognizes that. I think the difficulty of course is whether or not you want to rush out and buy the shares here. Trading at 35 times forward earnings when growing at probably adjusted eps at about 10% when you could pick up in video at the exact same forward multiple growing adjusted EPS at 50% or you could pick up Alphabet at 22 times forward and growing at 15% or you could get pick up Metta you know, at a discount to this price. Also growing at you know, a much faster pace. In fact of the mega cap companies this is the one that's actually growing the slowest on the adjusted EPS side and the top line probably is going to grow along with the economy maybe a little bit better than that. So if you're deploying new capital, look, I mean I'm not going to say to Julie the good idea here to start paring your position because I think they're going to continue to grow faster than the economy, they're going to continue to grow faster than S and P earnings but they're not going to grow faster than those other mega cap companies which are trading cheaper. And that's where you want to put your money?
- [07:55]
Courtney Garcia
I think so. So you would rather Mike Nvidia over Apple even though the fears of a pull forward in terms of chips may exist out there? I mean I'm just trying to understand, you know, valuation is one thing and projected growth is one thing but if you, you believe that there's any sort of hiccup in the, in the chip story of it, then maybe Nvidia is not the choice over Apple.
- [08:17]
Carter Braxton Worth
Well, I mean the forecast, yeah the forecast for Nvidia right now is already for much slower growth year on year when we take a look at full year 20, 25. So you know, we're looking at probably 35 times number on a 50% growth rate which is less than half what they achieved over the trailing 12 month period that you know, we just completed. So it's not growing as fast as it did and I don't expect it to because things don't grow to the moon. But it is also fair to say that 35 times forward on it, 10% annual EPS growth is just pricey for Apple. It's pricey relative to Apple's own history and it's pricey for any stock. And there are other companies that are growing faster that cost less.
- [08:55]
Julie Beal
Yeah. And I think one Thing we want to think about with Apple here too. And I think the general consensus here is we like Apple. It's just not necessary where you want to add your future money to right now, I think those are two separate conversations. But one other additional thing you want to consider is the fact that they have a lot of their supply chains in China and Taiwan, which in the current environment we're at, that does oppose additional risk. And on top of that, when you really look at them, they're. They're antitrust regulations, right? I mean they're going to be another one who the government is continue to look at to see is this something they're going to come after them and is that going to affect their bottom line. So there's a lot of issues here where I think it's not a bad stock to own, but a lot of people are overexposed here because it is embedded in most ETFs that we see people own. Most mutual funds, people are now right. Just something you want to say. Maybe I take my extra dollars and add this somewhere else right now.
- [09:42]
Courtney Garcia
Maybe that's what puts the floor in this stock and the Mag 7 in general. Bottom the idea that so much money is passive money going into ETFs, all these ETFs own the same stocks S&P 500 ETF obviously mirrors the weight of the Mag 7 out there. I mean, does this sort of provide a support for this group of stocks going to 25 knowing that just incremental dollars passively invest in the market go to the Mag 7?
- [10:09]
Mike Coe
I think it brings up two things. I think yes, to your point, I think capital flows really dictate performance whether we want to. I'm sure not everybody agrees with that. You know, we have the active versus the passive argument all the time. And I think there are periods where, you know, you can find data that will support one versus the over. Over the longer term, I think there are a lot of people that would argue that passive gives you better performance on a net basis. And if that is the case and that's the underlying fundamentals that are going into your investing decisions, then really what you have to do is look at capital flows. And to your point, what is it 20 or 25% of the weighting is a top seven or eight names within the S and P. That isn't going to change. That doesn't mean that there will not be muted volatility. That does not mean that volatility necessarily gets muted as flows run in and out. But if you are allocating to equities, by definition, you are allocating to those names. And I do think it does provide a floor.
- [11:02]
Courtney Garcia
I mean, David Einhorn sort of made that point, Mike, and saying the markets are broken in that way. I mean, the plight of the value investors, all this passive money not going to value strategies and going to these same groups of stocks.
- [11:15]
Carter Braxton Worth
Yeah, I do think that that is a little bit of a problem. I mean, first of all, there is plenty of data that supports investors doing that. I mean, the Spiva reports, which, you know, S and P puts out, I think 90% of active managers, once you start factoring in things like taxes, you start factoring in fees, are going to underperform something like spy, for example, as an etf, one of. One of a few that actually track the s and P500 or other passive strategies that you can get from other sources. So it makes sense when you look at it that way. It sort of takes a lot of stress off of investors too. But I also think it presents a risk because you can get too much of a good thing. There's a lot of reasons to follow a passive investment and systematic investment strategy, but it does have this effect where you are getting more and more money piling into fewer and fewer stocks. Many of them have done very well, but if something in that group turns, that could be very painful, I think.
- [12:12]
Courtney Garcia
Yeah. And Julie, I guess you've owned Apple, you said, for 12 years at this point, so you are exposed to the max seven, but your focus is small caps. And I don't think that that group has benefited at all from this sort of huge influx of retail money going into the largest stocks out there through the S&P 500 and various iterations of it.
- [12:32]
Melissa Lee
Yeah, I think that's right. You know, I keep talking to financial advisors and most of them do not have any exposure to small caps. And when they get these large rallies in small caps that they miss out on, they tend to do that by investing passively. And that's the place where I don't think that makes a lot of sense for passive inflows because 40, 45% of the index is nonpro. So I think that's the one place where I would say active management can really make a lot of sense and have an impactful point on returns. It's a place where investment managers tend to do better than in large cap because I think there's less price discovery and those markets are generally a little less efficient. But I think Mike's point is really, is really the one you do get too much of a good thing if you're investing for diversification into some of these passive instruments and you end up actually having a ton of exposure. That's pretty concentrated. Unwittingly.
- [13:24]
Courtney Garcia
Yep. All right. Meantime, the dollar also having a memorable year. The greenback trading near its highest level since November 2022 and it's up more than 7% just this quarter. Our next guest warns the dollar's strength may be on borrowed time. David Wu held top foreign exchange roles at bank of America and Barclays. He's now CEO of David Wu Unbound, a global forum devoted to promoting fact based debates. David, great to have you with us. What's going to cause a dollar to come back down to earth at this point?
- [13:50]
David Wu
You know what, I'm going to sound a cliche. I want to say world peace, you know, because let's remember, you know, U.S. foreign policy under Biden has been pushing the world to the edge of World War three, hurting US Allies and adversaries alike. I think this is one of the reasons why the dollar has been so strong in the last three years. US out the US Stock markets outperform. US Economy is outperformed because the US Is relatively speaking, less exposure to slowing global trade and the dollar benefit from the safe haven insiders. So to the extent that Trump is coming in wanting to improve ties with China, that he wants to basically end the war in Ukraine, you know what, this is very good news for the rest of the world. And I think from that point of view, I'm not saying this is bad news for the dollar. I just think it's better for basically currencies of the other countries.
- [14:39]
Courtney Garcia
Sure. Those particular countries. And I like the theme of world peace, especially at this time of year. David, don't get me wrong. But there are a lot of other factors that are sort of, you know, particular to various countries. Canada's political turmoil, France's political turmoil, the policy in Japan. We're not sure what the path of the yen is going to be at this point where we might see further weakening. And then also of course, the weakness in China economically. I mean, these are things that world peace will not solve. I don't think. David, I think you're right.
- [15:10]
David Wu
I mean, but that's what you have to look at these countries on a case by case basis. For example, I'm actually the only dollar position I've got on, short dollar position I've got on is actually vis a vis the Mexican peso. I happen to like the Mexican peso, probably because I think Trump will have to be super nice to the Mexicans if he wants to deliver on his promise in terms of, you know, controlling illegal immigration. I think Mexico is already going out of its way to meet Trump halfway. You know, as you probably know, they just cracked down 1, 1 ton of fentanyl actually two weeks ago, a record seizure. Canada is actually very interesting. I actually think Trudeau, who's facing re election, okay, you know, over the next 12 months, actually has no choice but to play ball with Trump. I think this is the reason why, you know, Freeman, his, you know, deputy prime minister, resigned last week because Trudeau actually decided to make peace. I think France is a lost cause. I think the bigger story, I think, is going to be what happens in Germany, whether the federal election to be held in February can produce actually a governor majority. I think it's still too close to call right now, but we shall see. Finally, with China, I think a lot is riding on what is Xi Jinping is going to accept Trump's invitation to basically 10 his inauguration. I think if he doesn't come, I think the R and B will be in trouble because the implication would that, you know, there's no deal to be made. Trump is going to basically go hard on tariff. But I think if Xi Jinping were to agree to come, which was just a deal is in the making, I think that should be viewed generally speaking as very bullish for emerging market currencies.
- [16:46]
Courtney Garcia
Okay. So right now, sort of a question mark over the Euro, question mark over China. Depending on how Xi Jinping proceeds with the inauguration, Canadian dollar should strengthen, and also the Mexican peso. So where else are the trades? Because it seems like investors are assuming that there is going to be at least a trade war within North America, that these border wars are going to flare up. I mean, there was just the article in the Journal this morning about, you know, the price of the affordable vehicle going up by about $3,000 because of. Because they made. They're made in Mexico. I think we lost David's feed. We'll try and get him back. This is a very interesting topic, though, in terms of the dollar strength. I mean, we watch this very carefully, Mike, obviously because of the impact of a strong dollar on earnings. We've already heard some companies refer to the strong dollar as a headwind.
- [17:35]
Carter Braxton Worth
Yeah, I mean, obviously, I wonder a lot about what's going to be going on with, with China. I mean, I think there has been some conversation, sort of, to David's point, about the potential increase in trade. Even though the NAFTA countries. So Canada and Mexico in particular, everybody was talking about the potential for tariffs and things going on there. The fact is that there is some migration into Mexico for trade, so much so that even China was sort of disguising some of their trade through Mexico to try to take advantage of that. I think that that relationship is going to remain strong. Look, strategically for us, it's far better for us to improve our trading relationships with immediate neighbors. And I think that one way or the other we're going to find, find a way to do that.
- [18:18]
Courtney Garcia
All right, David, I'm going to bring you back. So are investors offsides in terms of their assumption that there will be tariffs, that there will be some sort of a trade war amongst the NAFTA countries?
- [18:30]
David Wu
I think definitely, I think, I mean, I don't think nafta, I think less clear cut. I think with China right now. I think one of the reasons, for example, the dollar is so strong today is because everybody is actually banking on a tariff war on China already starting the day after the inauguration. This is why people are thinking, what inauguration is only three weeks away. Let's basically build a long dollar and short treasury position. Now. I personally think, though, I actually personally think I would give it a 66% chance, a 2/3 chance that actually Xi Jinping will come to the inauguration. I think Trump is going out of his way to sound very sincere. I don't tell you. Just last week, Trump in his first press conference after the election called Xi Jinping an amazing guy and he said that China and the US should work together and they'll be able to solve all the problems in the world. Xi Jinping has not heard those words from a U.S. president for four years. This is an opportunity of a lifetime. I think, you know, Jinping is not a natural risk taker, but I think this is almost like if he's ever going to take risk is now. I actually think that this is an amazing opportunity for reset. I think from that point of view, I'm willing to bet the next two or three weeks the dollar is going to go up because people are going to be basically putting on the Trump terror trades. But I will be looking to basically sell it as we get closer to the, to the inauguration.
- [19:55]
Courtney Garcia
All right, always interesting conversation, David. Thank you. David Wu. David Wu, unbound. What do you think of that, Julie Beal, in terms of seeing that dollar weaken from the levels it's at now? Basically two year highs, because a lot of people are just assuming that things are going to be so bad around the world still tariff wars, Ukraine, etc.
- [20:20]
Melissa Lee
Yeah, it's not, you know, people who are making that bet are just benefiting from the previous data that has really shown that if you had a major domestic focus in your portfolio, you've outperformed. It's been the better place to be since the pandemic, and I think that has surpr a lot of people the strength and the resilience that is happening here despite our government in absolute chaos. So I think going forward, it's still the case that probably economically this is the better positioned and more dynamic economy that can withstand any kind of changes globally. However, it is the most expensive one too. And so I think there's opportunities for investors to be able to diversify into less expensive markets that are growing probably just as well and maybe a little bit more uncovered to find.
- [21:07]
Courtney Garcia
All right, and we do have some sad news to report. Richard Parsons, a titan of the business community, has died at the age of 76 years old. He held leadership positions at Citigroup, Time Warner, CBS, and a host of other companies. His passing was confirmed by Lazard, where he was a longtime board member. He spent much of his career stepping in during corporate emergencies, including at Citigroup during the financial crisis, clean up the AOL Time Warner merger, and most recently at CBS after the departure of Les Moonvest. Mr. Parsons was also a major advocate for the arts, serving as chairman of the Apollo Theater, the Jazz foundation of America, and on the board of the National Museum of African American History and Culture.
- [21:50]
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- [22:46]
Melissa Lee
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- [23:14]
David Wu
You still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide and every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com creditcard Based on the February 2024 Nelson Report.
- [23:46]
Courtney Garcia
Welcome back to Fast Money. The holiday shopping season may finally be over, but was it nice or naughty for retailers? MasterCard saying in its latest Spending Pulse survey that holiday spending was up 3.8% this year, but that shopper were searching for value. Online shopping, holiday promotions and experiences like restaurants driving the jump in sales, retail names across the space getting a nice pop post holiday. Macy's, Foot Locker 5 Below Dick's and Ulta all seeing gains. And take a look at shares of Target, the beaten down big box store up 3% today, posting its highest close since its Q3 earnings report last month. So what is a retail trade looking like for 2025? And looking through that spending poll survey, what was interesting was this uptick in spending on stuff. So apparel, electronics, I mean the stuff that we used to put under the tree is now back under the tree or was back under the tree.
- [24:35]
Mike Coe
Bonoin Yes, I listen, I think given that there has been concern around the consumer, this retail sector does have the propensity to outperform just because it's a counter. It's a bit of a counter trade, I would say. In addition to that MasterCard data was also data showing that the additional credit card debt loads debt load was about twelve hundred dollars of unexpected additional debt load. And you add that on to the 1.1 trillion and 1.2 trillion that we already have. I don't think that we can persist to have increasing debt, higher interest rate, higher debt service cost and still have healthy consumption. So I think one of those levers has to pull and ultimately I think that in the short term perhaps retail has a has a chance to continue to run. But that is also the very first place I would be looking at in terms of cracks, possible cracks and the proverbial canary in the coal mine.
- [25:31]
Courtney Garcia
I get that as a commentary on the sector. But that additional twelve Hundred dollars in debt, depending on who has it may not really make a difference in terms of the household income of that particular person who has that extra debt, Courtney. And that's a story that's played out all year in terms of the bifurcated retail sector. The haves and the have nots.
- [25:49]
Julie Beal
Exactly. Yeah. And I think that's what you're seeing is the higher income consumer has been much more resilient, obviously, which makes more sense. But when you're looking at the overall debt compared to income, it's still really not at concerning levels. I mean, especially when you look at pre Covid, it's not higher than it was back then. So I think that's a thing is cancer. Consumers, generally speaking, sustain the debt to your point, and currently they can. And especially you're seeing a tight labor market. And we just got labor data that came out again which is showing you do have a cooling but very consistent labor and that is going to continue to keep the consumer strong. So I would not write off the consumer here. I think people keep trying to find reasons to do it, but we do have a resilient economy and especially when we look at things happening with immigration. But also when you look at the amount of baby boomers who are retiring every single week and every single year, it's taking more and more people out of the labor market, which I think we're probably going to continue to have a tight labor market which continues to keep your younger consumers in a better standpoint.
- [26:42]
Courtney Garcia
All right, so Mike Coe, I want some retail stock picks if you have any, if you, if you can stomach retail. What was under the CO tree? Do you think that's an indicator of any sorts?
- [26:52]
Carter Braxton Worth
I do. You know, I have that Holly index that I'm always watching when. And you know, I have two teenage sons also, so I get a pretty good sense of where it is on athletic apparel in particular. And the winner this year was Owen Holdings. Actually, there was more than one item from Owen holdings for everybody this year. And also I think Lululemon, you know, this was obviously has not had a good year. But you know, I think this is actually a bargain relative to names like Nike. So I'd much rather be in Lulu than Nike. But Owen holdings was certainly high on the list. And you know, I also think you could also, if you want to skew towards, you know, a better demographic on the payment side. So what people are using to throw down to buy these things, you know, maybe you could go to American Express, although they've had quite a run I think that's, you know, pretty good place to go as well.
- [27:42]
Courtney Garcia
All right, there's a lot more fast Monday to come. Here's what's coming up next.
- [27:46]
David Wu
Santa's closed up shop for the season, but GameStop's still getting gifts.
- [27:50]
Carter Braxton Worth
The Roaring Kitty post that's stuffing investor.
- [27:53]
David Wu
Stockings and how the options pits are handling the moves.
- [27:56]
Carter Braxton Worth
Plus, Netflix looking to move the sticks.
- [27:58]
David Wu
After a Christmas Day NFL double feature.
- [28:01]
Carter Braxton Worth
Were viewers tuning in?
- [28:02]
David Wu
And could it mean a big change.
- [28:03]
Carter Braxton Worth
For advertisers and fans?
- [28:05]
David Wu
You're watching Fast Money live from the.
- [28:08]
Carter Braxton Worth
NASDAQ market site in Times Square.
- [28:10]
David Wu
We're back right after this.
- [28:17]
Melissa Lee
As a global leader in alternatives today, PGM is capturing the potential of tomorrow. So as you look to diversify your portfolio, PGUM offers expertise in seeding, developing and managing a broad range of liquid and illiquid strategies. With over $320 billion in alts across public and private markets, we are helping clients achieve their long term goals. PGUM our investments shape tomorrow today.
- [28:46]
David Wu
Are you still quoting 30 year old movies? Have you said cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99% of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now it pays to Discover. Learn more@discover.com credit card based on the February 2024 Nelson Report.
- [29:21]
Courtney Garcia
Welcome back to Fast Money. GameStop getting a post Christmas present this year. Shares up nearly 6% after a cryptic post from who else? Roaring Kitty retail trader Keith Gill posting a holiday themed image of a present from his ex account yesterday morning. And with GME shares up more than 80% this year, options traders are hoping the good times keep ringing in the new year. Mike Coe's got the action. Mike, what do you see?
- [29:44]
Carter Braxton Worth
Yeah, so we saw more than 50% above average call volume in this one traded 300,000 calls. And this on a day when overall options volumes were about 16% below their 50 day moving average and the calls were outpacing puts cuts by about 5 to 1. The busiest contract with a 35 strike calls. We saw buyers of those, you know, paying a decent bit actually to make upside bets even just to the end of this week. But I would make one quick point which is that even though the short interest still remains quite high here, the short squeeze risk at least as measured by the options market, we can look out and see what the implied cost to borrow the shares is out through time is not nearly what it once was. So. So if people are playing for a short squeeze, could you get one?
- [30:28]
Courtney Garcia
Maybe.
- [30:28]
Carter Braxton Worth
But the probability is not nearly as high as it once was.
- [30:32]
Courtney Garcia
Yeah, and it's, it's not like this 80% gain on the year is based on any sort of glimmers of even a slight tick up in business. I mean, sales have declined year on year for five straight quarters, is expected to decline a sixth quarter when it reports earnings in January. Julie, maybe this is more of a commentary on the psyche of the market and the willingness to take risk.
- [30:57]
Melissa Lee
Yeah, I think that's absolutely right. I think people still are very much locked into this idea of get rich quick trading. And you know, I have spent time on these message boards and some of the ideas are actually based in fundamental analysis and they're quite good. This really is not one of them. Okay. To the level of market cap that this is, it's larger than many of the businesses that I typically trade in that are real businesses with cash flow and earnings. And this, it's really hard to understand what the end game looks like for this. So I just, I'm a little bit hands off for here.
- [31:29]
Courtney Garcia
Yeah, Bono.
- [31:30]
Mike Coe
Yeah, I tend to echo a lot of the sentiments. You know, short term trading strategies are now becoming longer term investment strategies. And that's, that's highly concerning to Julie's point and to Mike's point. First of all, the market cap, the, the float and shares outstanding coupled with the pullback in short interest and the cost to borrow mean that the technical aspect that was once exploited is no longer there. And given that there's already been an 80% run, you just really question the validity of continuing on this path.
- [32:00]
Courtney Garcia
Coming up, a two point conversate conversion for Netflix. How the Christmas NFL double feature fared for the streaming giant. And if it's enough to move the sticks for an ad supported tier. Or they'll need another Hail Mary. More on that when Fast Money returns.
- [32:15]
Melissa Lee
Missed a moment of fast.
- [32:16]
Julie Beal
Catch us anytime on the go follow.
- [32:18]
David Wu
The Fast Money podcast. We're back right after this.
- [32:34]
Courtney Garcia
Welcome back to Fast Money. Stocks closing mixed in a thin trading day. The S and P and Nasdaq both virtually flat. The Dow as well, but eking out a small gain now in a five day winning streak. And Vivek Swamy Strive Asset Management filing for a bitcoin bond ETF with the SEC according to the pro crypto stance, adding to the procryptive stance from the incoming Trump administration. This as bitcoin hovers under the $100,000 level. A lot of questions around that filing. Number one being what is a bitcoin bond? Netflix, we should talk about that. Upping the stakes in this live sports streaming market. The company broadcast two live NFL games on Christmas Day. The event marks its latest foray into live sports this year after The Jake Paul versus Mike Tyson fight. CNBC's Julie Borson's got the details and we are expecting the numbers any minute now. Right, Julia?
- [33:22]
Dan Ives
Any minute now, Melissa. I was just checking to see if they'd come in. Nielsen is going to be reporting how Many people watched NFL's the Netflix NFL games. But early indications just from what we've heard so far from Netflix are positive. Netflix reporting that nearly 200 countries turn tuned in to the pre game show. And Netflix reported that during the Chiefs vs Steelers game, nearly a third of all of its concurrent viewers all around the world were watching, with more concurrent viewers than any Christmas in the past four years and viewership only behind the Mike Tyson Jake Paul fight. Now, this comes after the NBA's Christmas Day games. We have those numbers. They average 5.25 million viewers per game in the U.S. that was the league's most watched Christmas Day in five years, with the Lakers warriors matchup averaging nearly 8 million viewers. Those numbers are notable because it's bouncing back from a roughly 20% decline in NBA ratings up until this past week. Now, Netflix is bringing in an estimated $150 million in ads for yesterday's games. That's the same amount that it reportedly paid to license the games. But of course, it paid more to create and produce and pay Beyonce for her halftime show. But analysts do expect a payoff here in subscriber addition and subscriber retention. And those two factors, plus additional ad revenue is why Netflix is increasingly investing in sports, just licensing the next two women's FIFA World Cups. And then in January, Netflix kicks off its big partnership with WWE with a live show on Monday night. So certainly a growth area for the streamer.
- [35:00]
Courtney Garcia
Melissa, how should we think about Netflix paying big bucks, Julia, for these live events like NFL games versus creating its sort of own sports programming like a Tyson Jake Paul fight?
- [35:14]
Dan Ives
Well, I think these are two different categories here, and it'll be interesting to see how the numbers play out. Not just the numbers that we get on viewership, but what we see in terms of subscriber addition in this crucial fourth quarter. One thing that I have to point out here is that Netflix is going to stop reporting subscriber numbers as of the first quarter. So the sub numbers we get for Q4 will be the last time we see how these investments and things like the Mike Taste and Jake Paul fight or like the NFL pay off. One thing I've heard a lot about is that something like the fight was actually great for Subscriber Edition. A firm called Antenna estimates that Netflix, Netflix gained about one and a half million subs just from that fight. But for the NFL here in the US there's an assumption that probably most people who watch the NFL are already Netflix subscribers because there's such high penetration of Netflix in the US in particular. So maybe in the US Netflix is using the NFL more for retention. So these, each of these different types of events will play a different role, whether it's subscriber retention or subscriber addition or really driving ad ad results, which is key as they try to build out their ad business.
- [36:22]
Courtney Garcia
You mentioned, though, internationally, there were all these concurrent viewers all around the world. So could that be a lever in terms of increasing the subs overseas and maintaining the core audience here in the U.S. yeah, absolutely.
- [36:37]
Dan Ives
I think that's, that's likely how this would play out. The NFL would be good for subscriber retention here in the US but could be more. More of a subscriber addition driver globally. And for the NFL, this is really a fantastic way for them to expand their reach. The NFL had five international games this year. Next year they're going to have eight international games, which is a record. The commissioner has said they're considering increasing to as many as 16 international games. If you think about who might be a natural partner to distribute those international games, certainly Netflix is well positioned and you could really imagine how, especially if these numbers look good, Netflix and the NFL will work a lot more together.
- [37:15]
Courtney Garcia
All right, keep us posted on those numbers. Julia, thank you. Julia Borstin on this major Netflix event. Julie, how do you feel about Netflix here?
- [37:24]
Melissa Lee
I think it's kind of an interesting place. It's not cheap, but I think that these NFL events are really critical because this is actually an audience that's very comfortable with ads. They expect ads. They often have to watch ads because they want to see the content live. And so being able to crack this market really, and execute on it really, really well and drive growth here is critical to the ad tier that they are trying to build out. And I think it is also kind of a competitive positioning thing where if they take more away from tv, they get advertisers more and more confident in their own ad market that they're trying to build. So I think it's important for both the consumer side and also the ad base building.
- [38:05]
David Wu
Yeah.
- [38:05]
Julie Beal
And I think what's really going to be interesting here is they, they're getting much more into the live space, but they've had so many glitches and so many issues. And I think this one is probably the one that went off the best. And they really need to obviously get that technology under control here. But I think that's something you have to look at. It's, it's a lot more expensive actually for them to air in an NFL game than it is to actually produce some of their content. But it is something that's constantly going to be updated and renewed for them that people are going to go and want to watch where you constantly have to have the new big thing and the new content. And that's, I think the biggest risk with the Netflix is are they always going to have the new media, the new content to bring the subscribers there. So this is a company that has really been the front and center as you cut cable and you go to streaming. They have been the beneficiary. But as you continue to see more concentration, more saturation in the space, I think the question is are they going to continue to justify how expensive they are trading at 40 times earnings? So I would actually put this in the same category as Apple. We talked earlier. It's not, it's a stock I like. It's just not a stock I'm adding.
- [39:01]
Courtney Garcia
New money to coming up. They say money doesn't grow on trees, but this stock hopes to prove the legend wrong. By the Chartmasters eyeing Dollar Tree for some big bucks. That's next. Plus, will 2025 be the year of the small cap? Our resident Russell expert Julie Beal is laying out the names on her radar and how she sees small caps faring in the new year. Her picks when fast Money return. Welcome back to Fast Money. Dollar tree popping almost 4% today, but still down 46% this year. The chartmaster Carter Braxton worth out with a note this morning saying the discount store could bounce bounced back in the new year. Let's bring him in now for all the details. Carter, what do you see here? Yeah, what a dud. Imagine being down 46% after today's pop. But and this is before we look at the charts is the kind of thing, I mean they don't do anything different. They sell batteries and you get toothbrushes in there and you can probably get a blender and so forth, so on. It doesn't need to exist perhaps as a retailer, but as it goes, the stock is where it was 10 years ago. We think you could play it for a bounce. Let's look at a handful of charts, levels. The first three are identical and they're all ten year charts. So the hope here is to depict.
- [40:12]
Dan Ives
Clearly how well defined those lows are.
- [40:16]
Courtney Garcia
We were here in 2015. We were exactly here in Covid. We were here about six months ago and we bounced just in the past two, three weeks off this key 60 level. This next chart, that downtrend line might look arbitrary in the arrow drawn, but we're going to get to that on the short term. Final chart of the long term. You could also depict this as a triple bottom. It's a popular designation anyway, the here and now chart. So that downtrend line, this will be the, the chart that really matters. We've just started to move above this downtrend line, in effect since 150. So 150 to essentially 50. And there are two key gaps. Final chart, the stock really plunging in late August and early September. And to fill those gaps, that's the price objective. From my seat, the first gap comes into play at around 80 to 83. And then the uppermost gap around 92, 93. So for a trade, a beaten down dud of a stock just catching it and trying to play it accordingly. All right, Carter, thank you. Carter Braxton. Worth of worth charting. Maiko. This is a company that's really, you know, has, has a lot on its plate in terms of the low income consumer not spending, having a real difficult time coping with inflation. But then also the potential onslaught of tariffs that could really put pressure on already very thin margins, razor thin margins.
- [41:39]
Carter Braxton Worth
That's really the company's problem, isn't it? And you know, you have a consumer that doesn't have a lot of financial flexibility and then you're getting pressured on the cost side. It's kind of a tough recipe. But you know, what is interesting is that if they can expand those margins even incrementally, you know, this is a company that'll do better than $30 billion in sales probably for the full year. That's up 50% from where it was at the end of 2019. The enterprise value is about the same. There is a bit more debt on the balance sheet, but they have $700 million in cash and still some free cash flow if one wanted to play it for a bounce. The options aren't cheap. I think they're justifiably expensive. But you could Go out and try to capture the next couple of earnings cycles and maybe buy some longer dated calls and sell some shorter dated premium against it. That would probably be the way I'd be inclined to play for a bounce.
- [42:24]
Courtney Garcia
I have a feeling Carter has never been in a dollar tree. Maybe I'm wrong. Certainly no blunders there because you can't get that for a dollar or $1.25. Vaughn, would you play this for a trade?
- [42:35]
Mike Coe
For a trade? Yes. I think some of the fundamentals, particularly the tepid revenue growth and shrinking EPS growth make it a bit tougher. Need to be some changes probably margin expansion for you to want to hold this longer term. But I do like the counter trend.
- [42:49]
Julie Beal
Yeah, I think the fact that this has sold off so much, I think it's a short term trade. Everything Carter laid out I would absolutely agree with. I do think longer term firm there is some hesitation there and they're actually getting a lot of share taken from some of your larger retailers like a Wal Mart. People are choosing to go there instead of a dollar tree and kind of getting all things in one place and there is a concern they're going to have to increase a lot more money to open and renovate a lot of their new stores. So I think that's probably going to affect their margins we go forward. But short term is a trade. It might be worth a look here.
- [43:18]
Courtney Garcia
Coming up, a Russell Redemption. Small caps underperforming the broader market this year. But can 2020, 2025 turn that around? Where Julie Beal is seeing the biggest opportunity. More Fast Money into welcome back to fast money. As 2024 comes to an end, we are looking for the next place to invest in 2025. CNBC's annual Delivering Alpha Investor survey asked investors which asset class they favored heading into 2025. Small cap cap stocks top the list with almost a third of the vote. Big Cap tech S&P 500 and the equal weighted S and P were all tied for second place with 14% of the vote. Small cap Russell 2000 did outperform the broader market today but it's still lagging the S and P. But if they're ready to catch up we wanted to ask our resident expert Julie which names could lead the way. So Julie, which ones are your favorites?
- [44:11]
Melissa Lee
So I have a few that I think are interesting within small cap. The real thing is to find the business businesses that have the ability to compound their earnings over time. You do want to be very careful about the non earning types of businesses. Those are the ones that are going to be more economically sensitive and more in trouble. The first I would talk about would be Lemaitre lmat. This is a company that focuses on niche healthcare. They, they operate in businesses where that they have a lot of market share. It doesn't raise the ire of regulation but the thing that's great about them is the markets are too small for the larger medical device companies to really enter and try to attack and so they quietly benefit from being able to stay small and make acquisitions. Another one I really like is Ollie's Bargain Outlets. This is a company that I think is going to really benefit from the big lots bankruptcies that we've seen. This is a company that has done really well in providing a lot of value to customers. They operate in the closeout markets and that's a place where people are really starting to flock to. Right. They've been able to actually take share from the dollar tree and family dollar businesses because they just have better value and they're not hamstrung by this super ultra low price. They can have a lot more interesting merchandise. The other one I like is, you know, I have generally been very disinterested in banks. I just don't find that to be a place where there's a lot of differentiation. But they make up a large part of the smaller cap indexes. But I like companies that serve banks. So Encino is a good example of this. This is a software business that helps smaller banks, regional banks modernize their front end. This is a company that I think will really benefit longer term and they're using AI as well. And Mullis is the last one. I think we see less regulation and that's going to benefit their M and a boutique business really well.
- [45:58]
Courtney Garcia
All right, thanks for that Julie. Up next, final trades. It is time for the final trade. Let's go around the horn. Julie Beal.
- [46:12]
Melissa Lee
As mentioned in Cino, I think we see software in AI next year.
- [46:17]
Courtney Garcia
Miteco.
- [46:18]
Carter Braxton Worth
Yeah, I like Meta. I like the multiple, I like the free cash flow and I like the growth.
- [46:23]
Julie Beal
Courtney, as we are ending the year here, I think you want to make sure that you are broadening out your portfolio. I think small caps are something you want to add some more money to. So I would play the IWM here.
- [46:32]
Courtney Garcia
Oh, nice. It's like a tag team from Julie and Courtney who's fonds me Von Oish.
- [46:37]
Mike Coe
So we spent a lot of time debating dollar strength and whether or not that will continue. I'm not one to try to pick a top but I think with the trend continuing the way it is, you really want to have concerns about dollar denominated debt in some of these emerging countries. So for that reason I'm a better seller of ee.
- [46:52]
Courtney Garcia
Alright, thank you so much for watching Fast. Hope you all had a nice Christmas. I'll see you tomorrow on Squawk Box. Meantime, don't go anywhere Mad Money with Jim Cramer starts All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions.
- [47:09]
Julie Beal
Of CNBC, NBCUniversal, their parent company or.
- [47:12]
Courtney Garcia
Affiliates, and may have been previously disseminated.
- [47:14]
Julie Beal
By them on television, radio, Internet or another medium.
- [47:17]
Courtney Garcia
You should not treat any opinion expressed.
- [47:19]
Melissa Lee
On this podcast as a specific inducement.
- [47:21]
Julie Beal
To make a particular investment or follow.
- [47:24]
Courtney Garcia
A particular strategy, but only as an.
- [47:26]
Julie Beal
Expression of an opinion.
- [47:27]
Melissa Lee
Such opinions are based upon information the Fast Money participants consider reliable, but neither.
- [47:32]
Courtney Garcia
CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it.
- [47:36]
Julie Beal
Should not be relied upon as such.
- [47:38]
Melissa Lee
To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer. Gifting is hard, but here's a Give.
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Courtney Garcia
The gift of connection from US Cellular.
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Melissa Lee
Not sure what that means?
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Courtney Garcia
Here's a slightly more specific hint.
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Melissa Lee
You can choose four free phones and.
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Courtney Garcia
Get four lines for $90 a month from US Cellular. Your family wants new phones? How do we know? They told us. The good news is that compared to.
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Melissa Lee
Wrapping presents, you're great at getting hints.
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Courtney Garcia
So take the hint and get them.
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Melissa Lee
Four free phones and four lines for $90 a month.
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Julie Beal
US Cellular built for us.