← CNBC's "Fast Money"
CNBC's "Fast Money"
Meta’s Record Run… And Treading Lightly in Europe 20/14/25
00:42:25
Meta’s record run continues, as the tech giant hits its 20th day of gains. But not all of the Mag7 are following in Meta’s footsteps. What the underperformance means for the broader market. Plus Investing overseas? Tread lightly. Why Rebecca Patterson is using caution across the pond, and how you can navigate any volatility across the pond. Fast Money Disclaimer
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- [00:00]
MultiCare Representative
Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org 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 live from the.
- [01:00]
Tyler Matheson
NASDAQ market site in the heart of New York City's Times Square. This is fast money for a Valentine's Day. And here's what's on tap tonight. Wall Street's love and Meta, the stock now riding a 20 day win streak. How long can that rally last? And will the rest of the Magnificent Seven join the party? Well, we'll debate that. Plus, on a roll, casino stocks are rocking. MGM DraftKings win surging this week. Should you roll the dice on this rally? Stick around to find out. And later, Roku's rebound. Why one of our likes it more than Netflix. European stocks are having a weak time to trade. Having a weak time to trade it or fade it. And rocketing higher. We will break down the soaring valuations in the NBA ahead of All Star Weekend. Nice to be back with you. I'm Tyler Matheson in for Melissa Lee tonight here in Studio B at the nasdaq. On the desk tonight, Steve Grasso, Mike Coe, not actually here on the desk. Julie Beal, remote as well and former Bridgewater chief strategist Rebecca Patterson, also a senior fellow at the Council on Foreigners in Relations. We start with that magnificent run in Meta shares, adding another 1% today, extending their win streak now to an astonishing 20 straight days. This is a Joe DiMaggio like streak. The tech giant has added nearly $320 billion in market cap in that time, bringing its total value within a stone's throw of $2 trillion. And even as broad markets close back in on records, Meta has thus far outperformed the major indexes during its run. It has also been head and shoulders above the rest of the so called Mag7 as you see there, seeing gains almost triple those of its closest rival, that would be Apple. So what can we make of Meta's recent rally and can it continue to lead the market higher? Steve, let's start with you. What do you think of Meta and what more broadly do you think of the Mag 7 right now?
- [02:57]
Steve Grasso
So in your terms, 56 game winning streak, right? We're going for that. Is that what you're going for, Jody? Because most people watch the show do not know that's right about Joe D's winning hitting streak.
- [03:08]
Tyler Matheson
If I don't know who Joe D.
- [03:09]
Julie Beal
That's a fair point.
- [03:10]
Steve Grasso
That's a fair point. Mr. Coffee.
- [03:11]
Tyler Matheson
Mr. Coffee.
- [03:12]
Steve Grasso
So, so when you look at Metta, not over 95% or. Right, right. Thereabouts is what the, what revenue, percentage of revenue is derived from ad sales. So if there's a hiccup in the economy, this one's going to feel it the most. But when you look at everything that they've done, right, they are the, the 2,000 pound gorilla in the room, Google, Metta. And when you see the two horses, Google is actually less dependent on search than Met is dependent on, on ad sales. But now you saw that, you saw the headline today that they're having a huge investor putting a huge investment into humanoid robots. So it's fine. I think they're doing a lot of they kissed the ring the same way that Musk did with Trump and now they're developing robots the same way that Musk did with Optimus. They're going a bunch of different angles. All of them seem to be a chance to monetize something else. But make no mistake about it, this is an advertising company and if the economy pulls back in a little bit, stumbles and people pull back on their ad sales, they are going to feel it the most.
- [04:19]
Tyler Matheson
Julie, let me turn to you and bring you into the conversation. Metta is going to spend something like $56 billion in capital spending this year. They are not, correct me if I'm wrong here, one of the leading players in AI, not to say that they're not involved in and benefiting from AI, but what are they going to spend all that, all that $56 billion on and, and how soon should they expect or investors expect it to pay off for them?
- [04:46]
Rebecca Patterson
Well, I think that that's, that that's the subtlety is that it actually is paying off for them. Right. Their investments in AI are enabling them to be much, much more targeted in their advertising and they've been able to offset all of the headwinds that they had from the initial security issues with Apple, they've really been able to push right past through that and set themselves up as having large language models that are as good as the others, open source, which makes it kind of a different wrinkle for them. But I think that what' interesting about this company is that they really eat their own cooking when it comes to AI. They're really able to integrate that into their tools and sell more ads. I agree completely with Steve that there's much more sensitivity to ad spend. But I think that they've now demonstrated that using AI to make the ads reach people better is actually going to make them the last resort for advertisers.
- [05:39]
Tyler Matheson
All right, so Mike, 25% higher so far this year. We're barely six weeks into the new year. If I am not a meta holder now, have I missed the ride? Is it, is there still time? Is this a long term investment that I should feel safe buying today?
- [05:57]
Mike Coe
Yeah, I mean that's a great question and it's interesting because as a matter enthusiast, I was sort of asking myself that very question. If I wasn't already bullish on the name and enjoyed some of this ride, would I be entering it here? I would have to say that on, on a short term basis it feels a little bit stretched to me. I mean just its relative strength and everything else. It just seems like it's a little bit difficult to chase it here. But if you own it, I wouldn't, I wouldn't sell it. And that, I realize that's a little bit of a waffle. But you know, this is a name that's probably going to, between 2025 and 2026, generate something in the neighborhood of 20% free cash flow growth. You know, we're looking at two and a half, 2.6% free cash flow yield on the name, which is obviously very good. The other thing I would say, just about management and people's concerns about their capex, don't forget that, you know, this was a company that was really making huge investments in the metaverse. That was very badly observed, I would say, by the street. And they pivoted. Right. So they sort of acknowledged that, you know, maybe that investment wasn't going to pay off. And they, you know, basically turned things around and turned on the cash flow spigot. I have a feeling that the same thing is true here. I think they're being pretty cautious about their, their spend. So if they think a $50 billion investment is the right idea, I think we should actually give them the benefit of the Doubt at this stage.
- [07:18]
Tyler Matheson
All right, so Rebecca, Steve makes the very interesting point that Meta is in part economically dependent. In other words, if the economy slows or stumbles, its advertising is likely to come down. So I know that individual stocks aren't your thing, but broad macro trends are. Do you see the US Economy in any sign, in any way sort of slowing down and what might, for example, tariffs or other headwinds mean for a company like Meta?
- [07:52]
Gene Munster
Yeah, I think the thing I would worry about most right now is that the tsunami of policy announcements and uncertainty around them. You have a tariff, when do you have a tariff? Will it be negotiated away or not? All of this frankly noise can create uncertainty, both for consumers, but especially for businesses. If there's enough uncertainty that they start pulling back so consumers spend a little bit less, businesses hire a few, few less people or make fewer investments, that can start creating a negative feedback loop. And that could quickly go into things like ad spending because at the end of the day, ad spending is discretionary. It's going to be the thing cut off first. So I would worry a little bit about uncertainty and for that keep an eye on the sentiment indices, things like pmi, ism, University of Michigan. Those are going to give you pretty good early signs if that uncertainty is.
- [08:41]
Tyler Matheson
Getting what the consumer is feeling like, right? Yeah. All right, let's take a pause and talk a little bit more about the underperformance of the other MAG7 stocks apart from Metta. Let's do that. Let's bring in Gene Munster, managing partner at Deepwater Asset Management. I'm prone to say that the mag7 has become the lag7 except for meta. Gene?
- [09:06]
Julie Beal
Indeed, Tyler. The meta is up 23% over last month. The rest of the mag7 down one. If you pull Tesla out, that's been a big drag on that. It would be up too. So compare that to the NASDAQ over the last month, which is up almost 5%. This is definitely a different message that we've seen from this leadership group over the past couple years. And I want to just quickly frame in why. I think what is going on here beyond Meta. I think what is going on is that this is almost becoming a self fulfilling prophecy with investors. Just looking back and looking at these trillion dollar plus market caps and just mathematically trying to understand what percentage performance they can get relative to some other smaller names. And I think you have this dynamic playing out in fairness to the Mag 7. I do want to quickly recap the scorecard from the December quarter. Four of those six Companies reported their. Of the six companies, the six of the Mag seven that reported four had positive results, a couple had a little bit of hair on them, but all six were, I would say, doubling down and uber optimistic about how this year is going to play out, how next year is going to play out. And so I think the context of this is that the fundamentals continue to be strong. One last piece is despite my optimism around the Mag 7, I do think you're going to see more outperformance from smaller companies. I think just at Deepwater in terms of how we're investing, we're focusing still on the same themes, but companies that are kind of that sub 500 billion market cap in this frontier tech realm so still own some of the Mag 7, but we've shifted some of our focus to some of these smaller companies.
- [10:47]
Tyler Matheson
So that's what you're, what you're pinpointing there. And I'll get Steve to jump in here in just a second. What you're pinpointing here is a kind of rotation that a lot of people have been talking about and expecting for the past year or so. And now maybe, maybe those days are upon us. Is that a fair characterization of what you're thinking, Gene?
- [11:07]
Julie Beal
Exactly. And I mean, I'd say that again, I think we own many of the Mag 7. I think they're going to do great reward investors. But I think this outperformance piece is going to shift to some of these smaller companies and ultimately they are participating along with the Mag 7. They just haven't been this flight to quality. The key is this, as long as the broader market holds together, I think you're going to see better outperformance from these smaller companies.
- [11:34]
Steve Grasso
So, so I'm going to pick right up where you, where you left off. So when you look at the broader market, the broader market is 40% dependent on Mag 7 pretty much. So without Mag 7, the broader market sort of fades. And we saw Metta Tyler brought it up 65 billion capex. We saw Microsoft 85 billion capex. We saw Amazon 104 billion capex. If Deep Seek through the grenade into that pile, what are they going to pivot and spend all this money on? If even if Deep Seek is a scam, there's, there's got to be some efficiencies that's out there that they don't need to spend what they're spending now, what do they pivot to spending on?
- [12:17]
Julie Beal
I think for the mega caps, it's still going to be, I think it's still going to be that same story that we've had. I still believe we're very early in this and I still believe we're going to have a great two year bull market that's going to end in a spectacular bursting of the bubble. One piece to Steve really quick. You talked about that 40% of the market and if the Mag 7 doesn't work, how can the rest of the market work? And I do believe that the Mag 7 will continue to work. I think that as long as they're moving higher, I think these other stocks will continue to do well. I mean from our perspective, one thing we have an ETF and its ticker is L O U P that that focuses on these smaller companies and it's been up 9% this year. As I mentioned, the NASDAQ up 5. It's that kind of dynamic that we're seeing and so we're closely watching this dynamic play out.
- [13:09]
Tyler Matheson
I was about to let you go, but I'm going to come back to something you just said. But I also want to get a couple of names in that sub 500 sub sub $20 billion market cap that have caught your attention. So give me a couple of names and then I want to follow up with one quick question.
- [13:26]
Julie Beal
So one of them is Celestica, a name that many don't know. This is a, it's basically a switch company competes with Cisco, gaining share, it's needed for the development. Another one is Reddit, many know, but still I think underappreciated what they're doing with their data related to training AI.
- [13:41]
Tyler Matheson
Talk about throwing the grenade. I heard you say, if I heard you right, that we have two more years of a good bull market and then a spectacular bursting of the bubble.
- [13:50]
Julie Beal
It's going to be great.
- [13:52]
Tyler Matheson
Going to be great, right? Let out of here.
- [13:56]
MultiCare Representative
I love it.
- [13:57]
Tyler Matheson
So, so explain why and what, what, what does that mean a spectacular, a bursting of the bubble of technology shares broadly or of the Mag 7 or what?
- [14:07]
Julie Beal
We're not at euphoria right now. If you look at the valuations, the Mag 7 still excluding Tesla, trading at 25 times earnings, we're not even close to euphoria. Euphoria was 100 times earnings back in 2000. We're not going to get to 100. I think we can get to a much higher number. Much. I don't want to put a specific number out there, but I think it can be much higher. And this spectacular bursting of the bubble, I think it's important that that is a Cautionary tale, if I'm correct. The market is going to get euphoric, like beyond what we're experiencing today when it's across the market. Naturally there has to be some sort of a correction. The great part is this, after euphoria comes long term compounding and that means those companies that have that drop, 30, 40% drop can start to build after that.
- [14:55]
Tyler Matheson
All right, Gene, thanks very much for that analysis. We appreciate it. Let's move on now to you, Rebecca, because you've got some concerns about crypto's correlation with the Magnificent Seven. I was asked a couple of weeks ago what do I think of crypto. And I don't know whether you remember an old song that was by a guy named Edwin Starr, it was war. What is it good for? Insert crypto here. Absolutely nothing. Insert crypto here. I don't know what it's good for other than to be a speculative investment.
- [15:28]
Gene Munster
Well, as we all know, there's a lot under the umbrella term of crypto and some of them have very tangible uses and some are more speculative NFTs.
- [15:37]
Tyler Matheson
And dollar back coins and so forth.
- [15:40]
Gene Munster
I published a piece in John Ellis's Substack news items earlier this week about our crypto presidency because I think under all the tariff talk and deregulation talk and doge, he, he published an executive order in January saying we are going to be the crypto capital of the world and we're going to do that with clear regulatory guidelines. We're going to do that with explicit government support. And so I'm not surprised that between the election and January we had a huge run in crypto, including bitcoin. The caution I have gets back to something Gene was just talking about, which is the possibility of a correction in mag7 and tech generally. At the end of the day, crypto is fintech. It's, it's financial technology. Right? That's all it is. And it tends to trade like leverage, small cap, fintech. So when technology stocks go up, often, not always, but often crypto goes up. And what I found is that if you go back a decade, every time the NASDAQ fell more than 5% in a month, Bitcoin fell more often than not the majority of the time by 5% on the month or more. Gold, just for context, was up.
- [16:48]
Tyler Matheson
So don't go into crypto thinking it is a non correlated asset to technology shares or to, or to risk assets.
- [16:56]
Gene Munster
Not yet. That could change in the future. But at least until this point it has not provided you diversification, it has provided you amazing returns if you bought and hold. If you bought in 2013 and still have it today. Wish I had risk adjusted. Even with volatility, you're better than the S&P 500 or NASDAQ. The problem is that most people haven't bought and hold. There is a great study, most people.
- [17:20]
Tyler Matheson
Made or lost money.
- [17:21]
Gene Munster
So, so this is the big point. And you think, well, how do I even answer that question? The bank for International Settlements, which is sort of the central bank for central banks in Switzerland, did a big global study and they looked at how many people made and lost money and what they estimate and it's an estimate, but it is a good deep study. Globally, not just the U.S. between roughly 73 and 81% of people who bought crypto over that decade lost.
- [17:49]
Tyler Matheson
So is that because they're trend followers? In other words, they buy when the thing is going up and then the big money gets out.
- [17:55]
Gene Munster
That's exactly right. So what they also found is that the vast majority of people trading in crypto today, again, this could change, have been young white men, usually under the age of 35. And they tend to trend follow. And so they're buying after bitcoin goes up and then the big whales, the huge owners, sell and they get caught in the wash. Steve?
- [18:18]
Tyler Matheson
Yes.
- [18:18]
Steve Grasso
So when you look at these, I agree with you on meme coins, but when you look at Bitcoin, only 21 million will ever be mined. Before the election, it was 62,000 traded up to 109,000 in the last five years. It's up 880%. Gold's up 84%. Nvidia is up 1800%. There is the Hodl, the Hodlers. Right. You have to, you have to buy and you have to hold. Do you think crypto, do you think bitcoin specifically is going to be at 10 million, 13 million like Michael Seller says, 250,000 or a million. We have a, now an administration where Rebecca started, that is going to regulate. It is going to, it's not going to be an enforcement strategy. It's a regulatory strategy strategy with a growth strategy. Banks are going to start getting into a corporate balance sheet, is going to start getting into a central bank, is going to start to own it. 21 million maximum mind, I think the, you can, it can be volatile, be careful, but the upward momentum is there.
- [19:17]
Tyler Matheson
All righty, we're going to take a quick break. Coming up, place your bets. Casino and sports betting stocks hitting the jackpot today. What's fueling that trade should you keep rolling the dice on these names plus shares of Roku surging the results that had investors streaming in and how the stock stacks up against the competition. Don't go anywhere fast. We'll be back in two.
- [19:40]
MultiCare Representative
For 140 years, MultiCare has been in Washington prioritizing long term solutions, partnering with local communities and expanding access to care. Together, we're building a healthier future. Learn more@mycare.org 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 check out the all new CNBC Sport Podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport Podcast. Listen on your favorite platform.
- [20:40]
Tyler Matheson
Welcome back to Fast Money everybody. We've got a news alert on some 13F filings. Leslie Picker has the details. Hi Leslie.
- [20:48]
Leslie Picker
Hey Tyler. Yeah, there was a lot to unpack in this Berkshire Hathaway report, notably holding onto its Apple position during the fourth quarter, which stood at $75 billion as of the end of 2024. Now this is noteworthy because Berkshire had slashed its stake by about two thirds over the course of the first nine months of the year. So perhaps we've seen at least the Apple bulls would hope we've seen at least a temporary pause in those sales. Warren Buffett's firm continuing, though to sell down bank of America after going below that 10% threshold during Q4. That's the level, if you recall, by which Berkshire no longer needed to continue disclosing each sale. So we're learning more now about where that stake stood as of the end of Q4. During the fourth quarter, Warren Buffett's firm also pared back 15%, or it pared back 15% of the B of A stake to hold roughly 29. $9 billion. The firm also sold down 74% of its stake in Citigroup to hold about $1 billion worth of that name, and it sold 18% of Capital One to hold about $1.3 billion of that name at year end. You can see those shares down a little bit in after hours trading, but they did make a move on this filing revelation in terms of other positions, other holdings. During the quarter, Berkshire took a new stake in Constellation Brands that was worth more than $1 billion. And it bumped up its exposure to Domino's by 87%. Both of those consumer names getting a boost in after hours trading after Berkshire showed some love to each of those, notably Constellation, up about 7% in after hours on that new stake there.
- [22:26]
Tyler Matheson
Tyler, take your money out of the bank and go to Domino's. All right, thanks, Leslie. Appreciate it. Meanwhile, he could buy a lot of pizza, by the way. Meanwhile, casino stocks hitting the jackpot this week. DraftKings leading the pack, soaring more than 26% since Monday. MGM up 15%. Caesars Wynn also getting in on the action. And also in on the action. Contessa Brewer. What's driving the gains?
- [22:49]
Contessa Brewer
I mean, it was a lot of fun to watch all of this. DraftKings stock, as you said, up 15% on the day, 26% this week. On the earnings call this morning, CEO Jason Robbins painted a really pretty picture of 2025, which kicks off with some astonishing numbers from the Super Bowl Sunday. $436 million wagered that set a record for new daily sportsbook handle. The amount wagered and it led to the highest gross gaming revenue in company history. And that did not factor into the company's guidance, which it raised. When Resorts is on fire, it's up 10% fueled by promising business in Macau for the Chinese New Year and performance in Las Vegas against some tough comps stocks and a notable increase in slot play, which by the way, we heard from MGM as well in its earnings this week. They announced record slot play and wins. That Stock went up 15% this week on what was a decent report. But the most promising bit of news was that December was by far the best month ever for booking group big business. And that pushes forward and helped lift Caesars too, which was up 11% this week. But really, these earnings reports were rather meh, you know. On valuation terms, though, here's where investors may be paying attention. The Macao casinos look like a good deal. Las Vegas Sands comes in at 16.8, meaning on a forward price to earnings basis, you get the most bang for your buck investing here. MGM 17, Wynne and Melco 19. The other stocks are higher. Flutter, Caesars, DraftKings, they've all seen runs up recently and so, you know, maybe are not the best value in terms of being on sales.
- [24:31]
Tyler Matheson
Flutter is FanDuel.
- [24:32]
Contessa Brewer
That's right, FanDuel. And FanDuel is the market share leader in the United States and fueling most of Flutter's growth. But Flutter's still seeing growth internationally and they have that international.
- [24:43]
Tyler Matheson
Ultimately. Is it going to be the sports betting that. That fuels these stocks? Or is it.
- [24:47]
Rebecca Patterson
No.
- [24:47]
Tyler Matheson
Or is it going to be casino gaming?
- [24:50]
Contessa Brewer
I'm glad you asked. On your handheld, guess what? The I gaming is estimated to be seven times bigger than sports betting. And on the DraftKings call today, Jason Robbins said it's all but inevitable that legalization will expand because states are looking for more.
- [25:06]
Tyler Matheson
They want tax revenue, of course, and.
- [25:08]
Contessa Brewer
And illegal gambling is popping up and they're not getting any tax revenue from that.
- [25:12]
Tyler Matheson
Right. Who do you have in the game, Eagles or Chiefs?
- [25:15]
Contessa Brewer
You know what? I was a fair.
- [25:17]
Steve Grasso
She didn't watch it yet. She recorded it. Do not spoil it.
- [25:21]
Contessa Brewer
I didn't gamble on it. I didn't gamble on it because I usually lose my sports bets and I hate losing.
- [25:26]
Tyler Matheson
Yeah. Thanks very much, Contessa. Julie, let's turn to you and get your thoughts on any of these stocks. But why don't we start with DraftKings, if you got an opinion.
- [25:35]
Rebecca Patterson
Yeah, I think it's a really fascinating quarter. You know, they reiterated their guidance for $850 million of free cash flow. It's really hard to argue with that. The company is finally finding its way to real gap profitability, and I think that makes a difference to certain investors. Having this turn into more of an oligopoly kind of market. And it's. It's going to make this much more stable and I think a more investable class for, you know, people like me who have been a little bit concerned. I agree, though, that the regulatory landscape is actually pretty critical to the story. As more and more states recognize that this is an opportunity for tax revenue, they're going to want to coalesce around a few players. They're not going to want to issue widespread licenses. And I think that only benefits the larger players like DraftKing.
- [26:21]
Tyler Matheson
Mike, you had Eagles -32. What are you seeing in Wynn?
- [26:26]
Mike Coe
Well, Wynn saw more than 10 times its average daily call volume today. And, you know, the top line has been a little bit stagnant. But if they can at least get back to 3, 4% top line and some of the other stuff that we've been hearing remains intact, then, you know, a 10% pop. You know, basically you're only incorporating the good news that you've heard this week. And with respect to DraftKings, I mean, if you take a look at what people are now figuring they're going to do for full year 2026. It's about 25 times that number. You can't really look at what has happened in the past because they weren't profitable. But when you think about the total size of the potential market and then you think, okay, in two years time, we could be trading at about 25 times that number. With explosive growth, it's easy to understand why that one also saw explosive options volume. We saw five times the average daily call volume there, over 200,000 contracts, 20 million shares worth.
- [27:16]
Tyler Matheson
All right, Mike, thanks very much. There's a lot more fast to come. And here is what's coming up next.
- [27:23]
MultiCare Representative
A streaming surge. Shares of Roku heading higher as results and guidance have investors tuning in. It's even outperforming one of its biggest rivals this year. How the streaming wars are stacking up in 2025. Plus treading lightly overseas. Why Rebecca Patterson is urging caution when it comes to investing in Europe and how those markets Compare to the U.S. you're watching fast MONEY live from the NASDAQ market site in Times Square. We're back right after this. 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. Check out the all new CNBC Sport podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sports Sport podcast. Listen on your favorite platform.
- [28:37]
Tyler Matheson
Welcome back to Fast Money, everybody. Roku topping the tape, surging 14% following last night's earnings report. The stock best day since November of 2023. After giving stronger than expected results and adding 4 million streaming households in the quarter, Roku now up 33% so far this year compared with a 19% gain for Netflix. Those six weeks, those are pretty good years for a company.
- [29:04]
Steve Grasso
Yeah. Everything is always we're the microwave society. It's like the microwave market where you used to get used to take you a month to get a certain amount of return. You get it in an hour.
- [29:13]
Tyler Matheson
Yeah.
- [29:14]
MultiCare Representative
Right.
- [29:14]
Steve Grasso
You could have a great day. Bad day.
- [29:15]
Tyler Matheson
Yeah. Right.
- [29:16]
Steve Grasso
Horrendous close.
- [29:16]
Tyler Matheson
Right.
- [29:17]
Steve Grasso
So when you look at Roku, it's a platform. Right so they don't have that. That content spend that Netflix has. If you look at it on a year basis, Netflix still blew them out of the water. But when you look at it on a year to date, Roku is 2x what Netflix is. I think people definitely slept on the name on Roku. I think it's probably got a lot more potential going forward.
- [29:37]
Tyler Matheson
Yeah, well, it's certainly hot this week. Mike, thoughts here?
- [29:41]
Mike Coe
Yeah, I mean, I'm kind of more of a fan of Netflix. I think they own the space. I've often referred to the company as basically an unregulated utility that everybody's got to have. I mean, they've got the content side, which Steve was just sort of alluding to that, you know, that's what Netflix.
- [29:56]
Tyler Matheson
Got to spend on that content a lot.
- [30:00]
Mike Coe
They do. And take. And take a look at what's been happening as a result. That was always the big knock on Netflix. Right. So everyone always said, oh, every single nickel that they, they take in, they spend it out on content. But that's not true anymore. I mean, we're looking at, you know, probably, you know, $1.3 billion in free cash flow growth between last year and this one and growing at least as fast through next year. They're generating free cash flow now. They're generating income. The big knock on Netflix is just that it's had such a stretch. It also looks like it's kind of, you know, had too far, too fast, as far as I'm concerned. But operationally, that's the one I prefer.
- [30:34]
Tyler Matheson
All right, Mike, thanks again. Let's take a quick break here. Coming up, investing overseas, you may want to tread lightly in certain parts of the world.
- [30:41]
Contessa Brewer
Why?
- [30:41]
Tyler Matheson
Rebecca is urging caution when it comes to markets across the pond in Europe. Her thoughts when fast returns. Welcome back to Fast Money. President Trump this afternoon reiterating plans to impose tariffs on imported automobiles starting in early April. That caps a week full of tough talk on trade, but not a lot of concrete action. Despite those threats, European markets having a strong start to the year. Germany's dax, in fact, trading at record highs. But, Rebecca, you're saying to tread lightly here in Europe, in part, I guess, because of tariff fears and what would have to go right for Europe to get more of your money?
- [31:20]
Gene Munster
Yeah, I mean, I think the rally we've seen in Europe and the outperformance, a big chunk of that is that we had extremely low valuations. No one owned it anymore. So it was ripe for a recovery. But you needed a catalyst to get people More confident about growth. The fact that President Trump hasn't launched immediately onto Europe with tariffs, just threatened a few things, but no clear date on a lot of it, I think that was a relief. And that relief said, ok, maybe we're going to have better growth.
- [31:46]
Tyler Matheson
So far bark worse than bite, but so far.
- [31:49]
Gene Munster
And that's why I'm a little cautious because I think we are going to see more tariffs coming. I mean, you're hearing officials in the U.S. cabinet talk about Europe's VAT, its, its value added tax, which is 22% being unfair. You're hearing about the exchange rate. You're hearing.
- [32:04]
Tyler Matheson
But that's not just applied to American products. No, I know. That's applied to products that are made in the eu.
- [32:09]
Gene Munster
Doesn't matter. They're attacking all of it. And so I think there's going to be negotiation, but at the end of the day, you will get tariffs on Europe. The other things that could help them. China has a big policy meeting in March. And if we happen to get more stimulus, especially focused on the consumer in China, that could be something that helps Europe because of the trade ties. And then finally resolution in Ukraine, I think there's a lot of hope that we could have a peace dividend that you don't have as much spending that has to go to the war. I'm questioning that. I mean, even if there's a resolution, Europe is going to be building its military. They're very afraid of Russia and what Russia could do next. And the other hope is that you get cheaper energy on the back of this as it can flow out of Russia. Again, I think that's also a question. How much, how quickly, at what price? It's a global market.
- [32:54]
Tyler Matheson
So, Julie, do you have any thoughts here, reactions to what Rebecca is arguing here?
- [33:00]
Rebecca Patterson
Yeah, I agree. I largely agree. I think part of it is really priced into those markets. It's so much more cheap. A lot of these very good quality stocks in Europe are a lot cheaper. And it's just a reflection that the growth engines behind them are weaker. But I do think that there are interesting geopolitical dynamics that are still at play. Right. Who's going to be not that happy if the Ukraine war goes away? It's China. Right. Because they've been a big beneficiary from an oil standpoint. And so I think there's a lot of complexity here that makes me want to say I'm going to pay more attention to the US Market. It's more dynamic and I think there's more opportunity Steve?
- [33:38]
Steve Grasso
Yeah, I think the conversation on tariffs have, has switched to Canada, Mexico, to more of a reciprocal tax or tariff. And when you look at EU putting 10% on our cars and we're putting two and a half on their cars, the average person and the sophisticated business person says that doesn't make any sense. So I think when you change the conversation to reciprocal tax, that's more easily digested for the market. And no one thinks that's outlandish. But to Julie's point was much chaos is going on in the States. This seems to be the market that most people want to trade in and understand. We can't understand the EU's marketplace right now.
- [34:22]
Tyler Matheson
Mike, final thoughts here.
- [34:24]
Mike Coe
Yeah, I mean, take a look at the MSCI German Germany Index. This thing has had no earnings growth for the last three years. That's a big part of the problem. They have demographic issues. Electricity is three times as expensive in Germany as it is here. That actually puts a bite into manufacturing. And they are Europe's manufacturing engine. So the struggles for Germany affect anything out there. So I wouldn't be a buyer. Even though it is trading, you know, five, six turns cheaper than the S. The S and P is all right.
- [34:53]
Tyler Matheson
Coming up, earnings season rolls on with a number of big names on deck to report next week. How options traders are setting up ahead of those results when Fast Money returns in two minutes time. Welcome back to Fast Money, everybody. We've got some big names reporting their results next week. Baidu, Oxy, Carvana and Walmart set to deliver quarterly updates. Mike Koh has got his eye on the implied moves in some of the biggest names and a trade on one stock with a new ticker. Mike, walk us through it.
- [35:26]
Mike Coe
Yeah, so Carvana, obviously this is one that has been really whipsawed over the last several years. That one's implying a big move about 14%. Baba is implying a move of about 10%, which seems big. But then consider the stocks up about 50% in the last month or so. Toll Brothers implying a move of about 6%. Wal Mart implying 5%, which is actually pretty big for a company that doesn't usually move that much on earnings. Oxy is implying a move of about 4%. And the new ticker is XYZ. That's block, which used to be ticker sq. XYZ was always our favorite sort of generic ticker when we were saying buy XYZ stock, but you can't do that anymore because now you're talking about Block, I think you could actually get long this one. It Looks a little bit weak technically, but the fundamentals, I kind of like it. I think you can make sort of a hedged upside bet by buying the June 87.5 calls and sell the March 98s against it. You're going to spend about six bucks a contract. That's the equivalent of $6 a share to make your bullish bet. You're going to try to capitalize on the fact that the nearer dated volatility is going to come in after they report earnings. We call that a volume crush and that sort of acts as a tailwind to buy that longer dated upside.
- [36:34]
Tyler Matheson
How long do I stay in this trade? How long before I know what to do?
- [36:40]
Mike Coe
Well, so it's interesting of course, because right after earnings you're going to get that volume crush effect. So those near dated March options are going to have some significant decay. You could probably ride those until they have about 20 days till expiration or so and make your adjustments at that point.
- [36:55]
Tyler Matheson
Steve, thoughts on this or on the earnings that we're going to see next week from these other companies?
- [37:01]
Steve Grasso
Mike did a masterful job mapping it out. Walmart, when you look at that chart, that looks like the stairway to heaven when you look at something like that, when you look at Toll Brothers, I'm fascinated. You were actually the first one who brought this up. The term that people own a mortgage, they don't own a home. 73% of U.S. households or U.S. mortgages have a mortgage rate under 5%.
- [37:23]
Gene Munster
Right.
- [37:24]
Steve Grasso
90% of us over 90% have a 30 year fixed rate. So if you start to think about that bigger number when you look at Toll Brothers, if people aren't moving or people are staying in their house until the mortgage rates drop, that could be a little hairy for all of these homebuilders. So it'll be interesting to see what comments Toll has to say.
- [37:41]
Tyler Matheson
Julia, let's get you into the conversation. What are you thinking about?
- [37:44]
Rebecca Patterson
Yeah, I'm interested too in the homebuilders. Part of it is, you know, owning a company that serves them. But I think what's important to note is that if interest rates continue to stay where they are, people are staying put and inventory remains very tight. So I think the homebuilders will continue to be beneficiaries of that. They have figured out how to do buy downs, interest rate buy downs. And I think that benefits them longer term. You know, the other company that I'm really paying attention to is obviously walmart. Not necessarily as an investor, but I really, really like a better sense of how is the US Consumer doing? Where are they shopping, the store and Walmart's ideal because their level of execution is so much higher right now than any of their peers.
- [38:23]
Tyler Matheson
All right, coming up folks. Thanks, Julie. Coming up, CNBC Sport is out with its inaugural rankings of the NBA's most valuable franchises. And some of your favorite teams are topping the list. The details on the slam dunk valuations, how much they gone up in just the past few years when Fast Money returns. Welcome back everybody to Fast Money. NBA All Star weekend tips off in San Francisco today. And as the big event gets underway, CNBC Sport is out with its inaugural rankings of the NBA's most valuable franchises. At number one, San Francisco's Golden State warriors worth an eye popping 9.4 billion. That's nearly 2 billion more than the franchise was sold for when its current owners Joe Lacob and Peter Gruber paid $450 million for that company for that team back in 2010. Nearly $2 billion more than the New York Knicks who come in second place. The Lakers are third as you see there at 7 billion. The Bulls are fourth. And maybe surprisingly, maybe we shouldn't be surprised. The Houston Rockets have come back. They've got a pretty good team now at $5.7 billion. Tillman Fertitta doing nicely there. CNBC sports reporter Mike Ozanian is the man behind the rankings and he joins us now. I was surprised that the Golden State warriors out value the Knicks and the Lakers.
- [39:46]
J
Well, you have to look at their arena, Tyler. It's really about arena economics. They have a new building. They put the new building together in the middle of that championship run. Steph Curry, they do about twice as much sponsorship revenue than the next closest team in the NBA. Their overall revenue is $200 million more than the next closest NBA team.
- [40:10]
Tyler Matheson
And are they unusual in being the owners of the arena? Don't other teams own their arena?
- [40:17]
J
Some do. But if you control the arena's economics, that's key. You mentioned the Houston Rockets, great example. They don't own the building, but they control the economics. So they get all the revenue from non NBA events to things like concerts, college sports. Look at it this way. Your median EBITDA in the NBA is somewhere between 30 and 40 million dollars for basketball. Only when you add in those other events, it gets closer to 50 million, $60 million. If you control the economics, on the other hand, the Pistons, excuse me, they do not control the economics. They're a renter. The hockey team controls the economics. The Pistons are near the bottom of our list in value.
- [40:59]
Tyler Matheson
So let's talk about how important the new TV deal is to these valuations. It is a massive, massive deal for a sport that is not right. Now, if I'm not correct, correct me is not drawing the kind of ratings that it did a few years ago.
- [41:15]
J
No, you're absolutely correct on that. Look at it this way. This new deal starting next season is going to average $6.9 billion a year, versus 2.7 billion for the current.
- [41:26]
Tyler Matheson
Per team.
- [41:27]
J
Per league. But that's for the entire league, for the 30 teams. But it gets divided equally among every team. So it doesn't matter if you go into the finals or you're losing every game. So even the Memphis Grizzlies, they're the least most valuable team on our list. If you go back and look what Para paid for it and 2012, 377 million. Now, based on our current valuation, a little over 3 billion. That's a 19% annualized gain.
- [41:57]
Tyler Matheson
Who'd like to jump in here? Yes.
- [41:59]
Steve Grasso
So when we talk about Netflix, it's always about live sports, it's about live events. And where do you think it goes from here? Because as Tyler said, this is probably where you have the highest ceiling for a lot of these media deals. And with more and more streaming venues and more outlets where people can watch, it seems like there's a new, new group. I know, you know, you think about the MLB gets clunky when you watch that on Prime. But when you look at just the NBA, where. Where's the ceiling on some of this?
- [42:31]
J
Well, we mentioned the national new media deal. Amazon prime is huge all over that. To your point about streaming. And that's where it is going. It's going towards streaming. I'm old school. I generally like to watch, you know, on the big screen on, you know, my cable tv, the younger folks, which the NBA wants to make sure it keeps capturing. That's why they're moving towards streaming. I think you're going to see more games put on streaming as it goes forward, just like the NFL has. You know, they had their package, they did it at Amazon prime, but slowly but surely, they've added a few more games.
- [43:04]
Tyler Matheson
Just a quick thought here. There's some news about the New York Giants perhaps selling hiving off a portion to a private equity company.
- [43:13]
J
Yeah, it makes perfect sense because what you have with the Giants, just like the Chicago Bears too, you have these teams that have been in the family for generations. You probably have a lot of family members that you may want to start buying.
- [43:25]
Tyler Matheson
Not very good by the way, for the last generation.
- [43:27]
J
Yes, well Listen again, the NFL shares equally about 65% of its revenue. So it doesn't really matter if you're good or not, you're going to earn a lot more money.
- [43:37]
Tyler Matheson
One of the maras there as we look at the New York Giants. All right, Mike, thanks very much. All right, for more on CNBC Sports, NBA valuations, go to cnbc.com/sport. Up next, your final trades. We'll be right back for the final trade. Let's go around the horn quickly. Julie, what's your pick?
- [43:56]
Rebecca Patterson
West had a tough quarter but I think this could be a good entry point on a quality name.
- [44:01]
Tyler Matheson
West Pharma. How about you Mike? What do you got?
- [44:03]
Mike Coe
Yeah, not for a trade with a long term hold. Bitcoin.
- [44:07]
Tyler Matheson
Bitcoin, wow. How about you, Rebecca?
- [44:09]
Gene Munster
I'm going to take the other side of that. I like GLD Gold for diversifier and Happy Valentine's Day to my mom, Betty.
- [44:15]
Tyler Matheson
All right, Steve, your thoughts?
- [44:17]
Steve Grasso
So nice. Tyler, thank you so much for being here.
- [44:20]
Tyler Matheson
Be with you.
- [44:20]
Steve Grasso
Altimune. It's a trade that hasn't gone so well, but I'm still in it.
- [44:23]
Tyler Matheson
Ultimune all right folks, thanks so much for watching Fast Money.
- [44:27]
MultiCare Representative
All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC, NBCUniversal, their parent company or affiliates, and may have been previously disseminated by them on television, radio, Internet or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy and it should not be relied upon as such. To view the full Fast Money disclaimer, please visit cnbc.com fastmoneydisclaimer Check out the all new CNBC Sport Podcast where sports business and investing collide from media deals to team valuations, private equity moves and more. Catch the biggest business stories on the CNBC Sport Podcast. Listen on your favorite platform.