CNBC's "Fast Money" Podcast Summary
Episode: Eli Lilly’s Sales Slash… And How To Position Ahead Of Bank Results
Release Date: January 14, 2025

Introduction: Navigating Market Volatility

In this episode of CNBC’s “Fast Money,” host Melissa Lee, alongside a panel of top traders—Steve Rosso, Dan Nathan, Guy Adami, and Julie Beal—dives deep into the turbulent movements of key stocks and sectors. The episode centers on Eli Lilly’s significant sales decline, the impending bank earnings season, and the volatile landscape of quantum computing stocks. Additionally, the show addresses the potential TikTok shutdown in the U.S. and its ripple effects on social media stocks.

Eli Lilly’s Stock Plunge and Market Implications

a. Disappointing Q4 Revenue Outlook

Eli Lilly experienced its worst stock performance since March 2021, dropping 6.5% and shedding approximately $50 billion in market capitalization. The decline follows a disappointing Q4 revenue forecast, with growth in blockbuster drugs Zepbound and Manjaro falling short of expectations. This downturn also negatively impacted rival Novo Nordisk, which fell 4%, and Viking Therapeutics, which plunged nearly 13%.

b. Insights from JPMorgan’s Angelica Peebles (00:39-03:20)

Angelica Peebles, reporting from the JPMorgan Health Care conference, highlighted concerns over slowing demand for obesity drugs. Despite CEO Dave Ricks asserting that supply chain issues were the primary problem, the broader market sentiment remains cautious.

“Lilly's fourth quarter coming up short of expectations and that is renewing fears that demand for obesity drugs might already be slowing.”
– Angelica Peebles [00:39]

c. Mizuho’s Jared Holz on Valuation and Demand (03:20-08:25)

Jared Holz from Mizuho expressed cautious optimism, acknowledging the complexity of supply and demand metrics in the pharma market. He emphasized the robust investment by both Lilly and Novo Nordisk in manufacturing, asserting that the demand for obesity drugs remains strong despite current setbacks.

“I think the demand is there. I think the one thing that gives me a little bit of pause is how long patients are going to be on the drug for.”
– Jared Holz [04:53]

d. Technical Analysis and Risk Assessment (08:39-10:32)

Guy Adami and Dan Nathan provided a technical outlook, noting support levels around $725 and discussing the stock’s risk-reward profile. They suggested that despite valuation concerns, the current dip presents a favorable buying opportunity for long-term investors.

“The average analyst price after today is still just north of $1,000. What's the case, though, Jared, if there is one with this thing can break down in a meaningful way.”
– Guy Adami [06:10]

e. Trader Perspectives on Future Prospects (10:32-16:07)

The panel debated Eli Lilly’s future, discussing potential diversification away from obesity drugs and the impact of upcoming oral pill readouts. Julie Beal cautioned about uncertainties in long-term drug efficacy and patient adherence, while Dan Nathan highlighted technical support levels as key indicators.

“If you have a very long term orientation, I think this could be a compelling opportunity. But you're going to have risks of further steps downs for sure.”
– Julie Beal [09:22]

Social Media Sector Under Pressure Amid TikTok Uncertainty

a. Potential TikTok Ban and Its Fallout

The show addressed the looming threat of TikTok being banned in the U.S., a move requiring the platform to divest from its Chinese parent, ByteDance, by January 19. The uncertainty has led to declining shares for social media giants like Snap and Pinterest.

b. Insights from Julia Boorstin on Social Stocks (35:29-37:23)

Julia Boorstin discussed the negative impact on social media stocks, attributing declines to rumors of Elon Musk potentially acquiring TikTok’s U.S. operations. She noted that despite TikTok’s denial, market sentiment remains jittery, affecting competitors negatively.

“Snap shares were down nearly 7% and Pinterest shares were off about 2%. Now these stocks seem to be responding to rumors that Elon Musk could buy TikTok's U.S. operations.”
– Julia Boorstin [35:56]

c. Panel Discussion on User Migration and Market Dynamics

Julie Beal observed that TikTok users are increasingly migrating to alternative platforms like Xiao Hongshu (RedNote), rather than established competitors such as Meta’s Instagram Reels. The panel speculated on the long-term viability of these migrations and the challenges faced by competing platforms in retaining TikTok’s user base.

“People are calling themselves TikTok refugees and moving over to RedNote... I don't think they're going to get nearly as much benefit as they expect.”
– Julie Beal [35:56]

Quantum Computing Stocks: A Volatile Rebound

a. Surge in Quantum Computing Stocks

Quantum computing stocks like Rigetti Computing and D-Wave saw substantial gains, rebounding after a previous sell-off. Rigetti’s shares surged nearly 50%, while D-Wave advanced by almost 24%.

b. Expert Opinions on Quantum Volatility (21:27-23:35)

The panel debated whether the resurgence in quantum computing stocks signifies a stable footing or is merely speculative. Julie Beal dismissed investments in quantum as too speculative, highlighting the dependency on Department of Defense (DoD) funding and the lack of earnings.

“Everything that's kind of in the quantum space is way too speculative for us. And it's not just that they don't have earnings... they are also especially Regretti is very dependent on DoD funding.”
– Julie Beal [23:14]

Dan Nathan compared the quantum sector to AI trades, suggesting that while there may be short-term trading opportunities, the long-term prospects remain uncertain.

“Quantum, you're going to have to wait a lot longer... it's really difficult to model any of this data.”
– Dan Nathan [22:52]

Earnings Season and Big Banks Outlook

a. Anticipation Before Major Bank Reports

With JPMorgan, Goldman Sachs, Citi, and Wells Fargo set to report earnings, the panel discussed the potential impacts on the banking sector. Gerard Cassidy from RBC highlighted the steep yield curve as a positive driver, potentially expanding net interest margins.

“Net interest margins expanded... that is the story that is going to be the surprise to the upside in 2025 assuming the yield curve remains positively sloped.”
– Gerard Cassidy [27:02]

b. Regulatory Environment and Bank Valuations

Cassidy also touched upon regulatory changes, noting that the incoming administration’s approach could lead to a more supportive environment for banks, reducing capital requirements and enabling aggressive share repurchases.

“We're going to have an industry that is really heavily capitalized, which will enable them to be more aggressive in the share repurchase programs.”
– Gerard Cassidy [28:39]

The panel expressed optimism but also cautioned about high valuations, particularly for giants like JPMorgan, which trades at over 2.5 times its tangible book value.

“The real growth for the stock prices should come from the better than expected earnings growth potentially in 2025.”
– Gerard Cassidy [30:22]

Trader Acronym Reveals: 'Plop' and 'Mocha'

a. Carter Braxton Wirth’s 'Plop' Acronym (38:05-42:44)

Carter Braxton Wirth introduced his acronym "Plop," representing stocks he anticipates will underperform in 2025:

• Palantir
• Linde
• Owens Corning
• Paccar

He emphasized technical bearish indicators and market conditions that could drive these stocks lower.

b. Julie Beal’s 'Mocha' Acronym (40:45-43:05)

Julie Beal unveiled her acronym "Mocha," highlighting stocks she believes will perform well in 2025:

• Mollus (boutique investment bank)
• Ollie's (discount retailer)
• Clearwater Analytics (portfolio accounting software)
• Hermes (luxury brand)
• Aon (liquid cooling for data centers)

Beal cited factors like value investment opportunities, consumer demand for discount retail, and growth potential in data center technologies.

“I think we continue to see good growth there [in discount retail].”
– Julie Beal [41:08]

Conclusion: Strategic Positioning Amid Uncertainty

As the episode wrapped up, the panel underscored the importance of strategic positioning in volatile markets. With Eli Lilly’s sales challenges, potential regulatory shifts affecting banks, and speculative movements in quantum computing and social media stocks, investors are urged to remain vigilant and informed.

Melissa Lee concluded by reminding listeners to stay tuned for upcoming earnings analyses and further market insights, ensuring they are well-equipped to navigate the complexities of the investment landscape.

Key Takeaways:

• Eli Lilly’s Sales Drop: Triggered by slower-than-expected growth in key drugs, leading to significant stock declines and affecting competitors.
• Banking Sector Optimism: Steep yield curves and potential regulatory easing bode well for major banks, despite high valuations.
• Quantum Computing Volatility: While some stocks show strong rebounds, the sector remains highly speculative with uncertain long-term prospects.
• Social Media Shifts: Potential TikTok ban is unsettling for competitors, with user migration to alternative platforms like RedNote posing challenges.
• Trader Insights: Acronym reveals by Carter and Julie provide actionable insights into stocks poised for underperformance and growth in 2025.

Stay informed and strategically positioned with CNBC’s “Fast Money” for the most actionable investment insights.