← CNBC's "Fast Money"
CNBC's "Fast Money"
Nike, Fedex Report Results… And Insmed Drops On Disappointing Results 12/18/25
00:46:16
Nike and Fedex on the move after reporting results. The details from those quarters, and why today’s delayed CPI data isn’t calming one market forecaster's inflation worries. Plus Shares of Insmed taking a dive as the company discontinues development of a key drug after disappointing trial results. What it means for Insmed’s future, and what one health care analyst sees in store for the broader sector. Fast Money Disclaimer
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Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella. Edu 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, A big night of earnings from some big consumer facing names. Nike, FedEx, KB Home, they're all on the move tonight. We're digging in on the numbers bringing you the trades. And in a biotech breakdown, shares of Insmet sinking after its sinus infection drug failed a key clinical trial. Can the company rebound or is this the end of this biotech rally? Plus, high hopes, pot stocks dropping today even as the president signs an order to reclassify marijuana as a less dangerous drug. What it means for the industry and the ability to invest in these names. I'm Melissa Lee comes to you live from Studio B at the nasdaq. On the desk tonight, Tim Seymour, Karen Feiderman, Dan Nathan and Steve Grasso. We start off with a pair of major earnings movers. Delivery giant FedEx trucking higher on a top and bottom beat. But first, Nike trading lower despite its better than expected report. The athletic wear maker seeing a 17% drop in China sales. Conference call kicked off at the top of the hour. Let's get straight to Sarah Eisen who's got all the latest. Hey, Sarah. Hi, Melissa. The market is just not convinced of the turnaround yet here at Nike, but there are definitely signs of improvement building on last quarter. I'll Highlight North America growing 9% better growth rate than the previous quarter and that drove the overall beat on sales and and on earnings. Wholesale is a big part of the story. Revenue is up 8% and I can tell you that growth is half of the existing relationships like Dick's Sporting Goods and also half of the new ones that CEO Elliot Hill has established like Amazon. It is a sign that a lot of the new product innovation under Hill and his New team is resonating the Vomero running shoe, for instance. That whole line did well. I've heard that the Skims launch was very successful despite what you may read in the tabloids. And, and the Jordan 11 Gamma release just a few days ago actually had people lining up on New York City streets. Kind of signs of old school Nike brand heat. You see that in the results. It explains the 1% overall revenue growth and particularly the beat in the U.S. but here's the problem. China sales fell 17%. Also, margins are still declining. That's because of tariffs and it's because of discounting on existing inventory. Let's see what they say here on the call about how far into that whole cleaning out the inventory, clearing inventory process that they are. It's part of the turnaround, right? Discounting some of the older styles to make room for some of the new ones. Also, Hill saying here in the release that Nike is in the middle innings of our comeback. There's still no real sense of when the actual inflection comes from. We've seen stale stabilize. They grew 1% this quarter. Quarter same with last quarter. But we're not back to the growth days, you know, the mid single digit or high single digit growth days. It is something that I asked Hill about a few weeks ago when I had the chance to visit him at Nike HQ and he would not commit to a time frame on this process. He's making moves still though. Just a week ago he made some management changes, appointing a new CEO and also having all the heads of the geographies, the geographic regions like China, report directly to him. It also included some key exits of some of the previous team bosses under the previous CEO John Donaho's team. Look, the call is continuing here. We're going to be listening for quarterly guidance. Remember, Nike has not been giving annual guidance since Elliot Hill has started this turnaround process. Also, Melissa, we're really eager to hear what he says about the plan for China, which is clearly the weak spot in this report. It's a miss. It's declining and the questions are going to be around how and when do we turn around that market. Sarah, can you give us a sense of, of the cadence of inventory Clear? It seems like a long time to clear. Inventory has been there for a year or so and to hear that there's still inventory that needs to be cleared is a little bit surprising. Right? So this, this explains some of the, some of the margin decline and inventories were down 3% in the quarter as they continue to work through that process. Look, Nike is a big, it's a big company and so there's a lot that they have to get through. I do think it'll be a question on the call about where they are in that price, in that process. Last quarter they hinted that they were coming toward the end of that process where, you know, some of the new styles were out. They've been able to clear inventory, but they still, you know, have a positive spread there between the sales growth and the inventory declines. But I do think that is one of the questions of when they're going to be done with that overall process and any sense of how sportswear is doing, I mean in this sort of competition with Lulu and Vori and all those. So the, the best part for Nike right now are the areas where Hill has focused on new innovation and has focused his strategy. And I would point to running on that. Running has been really strong and they've seen double digit growth. They continue to see double digit growth in that category. Thanks to some of the newer styles I mentioned though, the va marrows overall. I mean, sportswear has been a competitive business, you see, you've seen the news lately on Lululemon. They've got competitors out there like Aloe and Vori. And I would point to almost everybody else as well. Not just the sportswear specific, but for Nike the key is really turning around some of these. Not, not necessarily sportswear, but the, the shoe, the sneakers, Basketball for instance. What will they tell us about basketball? That's the core. That's where they had like 90% market share, you know, during the heyday. And that's where they need to see the brand heat and the mom building again. So those are some of the questions I think that you have to see those turns first and why running is so important, they say as a proof point. But clearly, Melissa, the market wants maybe, is maybe impatient and wants more proof that this is happening and maybe more clarity on China as well because the stock has underperformed even since the last quarter when they started to show these green shoots here. It's Karen, thanks for being on quarter. Didn't look bad to me. Actually I had a question about where you think they are in the evolution of working again to have those wholesale relationships be stronger. We saw DTC down a little, wholesale up, which you would think is that all makes sense. How far along are they getting to where they want to be and what that mix should be? I think that has been a key focus for Elliot Hill. He state, I mean he talked a lot about that during our interview a few weeks ago, which is, he came in and diagnosed the problem right away, which is the wholesale relationships with their partners have not been prioritized. Instead of what was prioritized under prior management was direct to consumer. So he has gone in and repaired a lot of those relationships. And that's why they're pointing to the 8% growth that we saw in wholesale wholesale in North America, even stronger than that and also expanding into new, new partnerships. I mentioned Amazon, so I think that they feel pretty good about that, particularly because it was such a key focus area and they are seeing improvement. Obviously there, there's more to go. They need to turn around all the categories to get the kind of strong, strong growth. They need to turn around the direct to consumer and digital business as well. But there's clear signs that what he's been doing so far is working and that has been an area he spent a lot of time on. Sarah, thanks so much. Thank you. Sarah Eisen from the New York Stock Exchange on Nike tonight. Tim, are we in the middle of the turnaround here? Do you see enough proof?
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I think we are. I think if you're building a position in Nike, this is a place to add. There was nothing I heard today that made me concerned about some of the legacy problems. The positives are two consecutive quarters of revenue growth. North America up 8.8%. It's actually a second derivative margin improvement. They're still down, but they're improving. And I think this is part of the story. I think working through the wholesale, excuse me, working through the inventory problems are important. The biggest issue with Nike right now is it's not cheap. It's 25 times with peers that are probably 15 to 18 times. And at a time when I think people are a little bit concerned about their segment. So if you're building a long term Nike position, you're buying this weakness. These numbers were fine. Yeah, I mean you got to look at that margin compression though, down 300 basis points. I mean, that's not anything. Right. And if you think about one of the reasons or two of the reasons, it's obviously tariffs and it's also discounting and you know, just take a flash of what's going on right now. I mean, that's not a great place to be. Especially if you're not concerned, if you are concerned about a consumer and you're not sure about how long this tariff pressure and then direct to consumer, I mean, down 9%, that's not great. I mean it's a company that actually has had a bunch of iterations where they've tried to do this. You know, I know wholesale was up, but the direct to consumer I'm looking at is down 9% percent year over year. I think the win now doesn't really have a real strategy now. I think they need the Lulu moment where they have another new CEO. The CEO has been there forever. How long is.
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How long is he here?
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Elliot? Yeah, no, he's been here forever. But how long has he been with Nike?
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Oh, at Nike prime, four years ago. Okay.
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Yeah. So. So you had Donahoe, who was there for 10 years or so, maybe, maybe a little bit less. Then you have Elliot Hill, who they dragged sort of back in. I think you need new blood. I think you need to have that moment where we need an epiphany. We need something that's going to happen that changes the whole speed. You're not getting it with a legacy person inside Nike. And you have HOKA taking share. You have on taking share. They're not taking share in the NFL. They're not taking share in pro sports, but they're taking share walking around the streets. Too many private competitors. I think you could have an event where it can rally off the bottom. China is still slipping. North America may be stabilizing, but not out of the woods yet.
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It is a very large company and if you want to get anything new, you don't just 3D print it and put it on the market. I mean, there is a pipeline process and we are seeing some green shoots. Sarah mentioned the Vomero 18, which is very shown. Well, and that is part of the innovation that Nike that Elliot Hill has promised. There's also the Pegasus line that apparently is doing well too. So, I mean, there are signs that there is innovation, which is what Nike really needed. Right. So I'm not concerned. To Dan's point, I disagree a little. Generally, I disagree with Dan on a lot. But just right here, on the minor point of dtc, this is a concerted effort. Change the mix of DTC to wholesale. However, though Nike, the call just started at 5. They have had calls that are eventful, so it is absolutely worth listening. They've dropped some bombs and some good things. So we kind of got to wait to see what they say on China, though I wonder how much of it is China itself. So things outside of their control and how much of it is what Nike can actually do to improve the China business.
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Well, yes, but I guess, you know, the things we're all talking about aren't China you know, they're not the epicenter of the problem. If we're talking about margins, we're talking about innovation. China's not your issue. So I understand historically China was a big growth market for them. But we're all acknowledging Nike needs to get back into its core markets. I still just think it is such a dominant market share, it's such a dominant player that I understand people are taking share, although I'm not sure for how long.
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All right, so Nike shares down about 5%. The conference call, 10 minutes and we'll keep you posted on what goes on there. Meantime, let's get to FedEx, the transport name higher after its beat that call kicking off in about 20 minutes. Let's get to Frank calling with all the details.
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Frank, I'm Melissa. Well, the strength of the US business really the story of this quarter, ground home Delivery volumes up 8%. Pricing and express that includes ground and air delivery up more than 5%. A well known analytics firm ShipMatrix forecast that FedEx will win market share this holiday season. And we appear to be seeing that play out at least for the early part of the holiday peak that's covered in this quarter. Obviously a few more weeks still to go. In the release, CEO Rash Romanian flagged the drag from the grounding of MD11 planes and the anadaminimas that were seen as headwinds. But the margin it beat estimates the sign of efficiency in the network. I spoke with FedEx. They said they were using AI to forecast the volumes and where they would see them and how much volume they would see in different locations. If you're looking for one weak spot in this report, it's the margin for FedEx freight that's going to spin off in June that fell more than 1,000 basis points year over year. The company attributes that to lower volumes and also hiring of sales staff and a more than $150 million charge related to the spinoff. Melissa, back over to you.
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Frank. Thank you. Frank Holland again, conference call in 20 minutes. What'd you make of the quarter?
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I thought the numbers were great. I thought the US business is even better. And I think the international headwinds, especially just around trade and affects are things that I don't worry about. I mean I know people talk affects neutral and this and that. I care a lot more about the execution on their US business. Frank just talked about the pricing power. I think that stabilized. I think this is a stock you're staying long. Yeah, the chart looks good on it. When you compare automatically you compare these to UPS. And when you look at UPS, UPS is down 19% against FedEx being up 2%. There's reasons why you have headwinds with FedEx. You have tariffs, you have Amazon competition. But when you look at the chart, the chart looks like it can go higher to me with a lot of, a lot less risk than UPS going into that.
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I mean, it's up a lot since the last quarter. So the bar was pretty high and yet it still cleared the bar here. Yeah, I mean, it was a nice meet. That beats that margin. That's impressive. It's not crazy expensive. It's a little bit expensive to its own history. Remember, there was a long time where it traded at a significant discount to ups. That has changed a lot. I don't own it. I know that Tim and Guy have liked it. It's not crazy expensive. Here, here the call. Are we through the whole turnaround process? Most of it.
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It feels like it. And that's actually why though I think UPS is interesting because I think they're getting through also some really choppy just dynamics in their core US business and freight and pricing. And if FedEx has this pricing, I think UPS does too. So I'm long UPS. I've got a small position in FedEx. I like the chart. As I said, it keeps going. But UPS is very interesting to me.
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All right, meantime, micron snapping a five day losing streak with a 10% bounce today. That's its biggest gain since April. This after handily beating top and bottom line estimates for its latest quarter and helping reinvigorate the AI trade. Take a look at Matter, Alphabet, Nvidia, Broadcom, all seeing outsized gains in this session, helping the NASDAQ rise a percent and a half. And you know, the morning after people are saying was that Micron's in video moment. When all of a sudden a stock gets rerated because of the massive revenue guide above consensus. This is exactly what happened with Nvidia way back when, when it was off to the races. What do you think?
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Well, you got to track Nvidia sales and they're depreciating. So what is the Micron, the high bandwidth memory, it goes right next to a gpu, right? And so if you're seeing Nvidia less demand there, I mean, they're obviously one of their biggest customers. I mean, I think this is a situation where the company, you know, look at the stock, by the way. I mean it's telling the story a little bit. It was late to the party because investors are looking to broaden out from this trade. Those are great numbers to have. Earnings per share in the current quarter up 75%, sales up 35% and then margin improvement. You know, it's interesting to see what wasn't up today. And it was Dell. Right. Some of their biggest customers. So they have pricing power right now. So it really comes down to like, what are the cycles going to be here? Maybe there's a bit of double ordering. I don't mean to throw any like. Well, I guess I am. You know, I mean, like, you know, who knows here, that sort of guidance. I'm shocked that the stock actually didn't trade better. It closed up 10%. You would think it'd be making a new order all time high. And the other thing I'll just say is like the fact that this company that has a $250 billion market cap could cause this sort of rally after yesterday. I think it's really interesting. And then go back a week after Oracle's results, you know, that really overshadowed a lot of the talk about the Fed. We had the Fed presser that day. So if you don't think that the trade is still driving the train. I mean, it really is. There's no doubt about it. Are we saying that Micron drove today's rally in tech? Because I'm not sure that it did. I think the rally in tech is what's been an on again, off again. We have. We've had a lot of volatility. I think we're going to have it till the end of the year. We were on this desk last night. Those same great numbers. Didn't have Broadcom up in the after hours. We were looking at Oracle. We were talking. So I don't know. I don't think Micron. Maybe it's an Nvidia moment. That's a different thing. I don't think Micron's leading the market. Did 100%. I think if Micron didn't come out, I think you would have seen the. What was going on last night. I mean, we didn't see the market rallying.
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I thought there was some rhetoric around that that was a little cooler on the whole financing thing. That a little bit of a walk back on. There was some talk about what the Oracle structure was and that they couldn't get financing. And I think there was some walk back there. Just a little bit cooler today. I don't think that was on the heels of Micron, but that's how for me the sadness of today was Dell. Yeah. And which you mentioned. So Dell is a very big customer of Micron, though I have to think they are more shielded than this reflected. Right. This also would reflect demand. Right, Right. So Nvidia is the biggest customer, but. So I was sort of somewhat surprised.
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At how poorly this traded on the.
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Heels of that Micron.
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I think the fact that Micron didn't have a bad print probably gives them credit for the other stocks in the group to rally today. So I agree, you know, I see both lights on both sides of the argument, but I think it definitely had to do with CPI debt to do a lower rates. Definitely had to do with. If this. If this had a bad print, the rest of the space would have been down today. So I think, for that matter. But when you look at the chart, this is what Micron does. It trades down aggressively like it did in November, and then it trades up. I think micron could move 10% higher from here. So I think there's still a little bit left.
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We got a news alert here on a new funding round for Open Air. Leslie Picker's got the details here. Leslie. Hey, Melia. This fits right into what you were just talking about with regard to the AI train and how fast it's moving. Well, the Wall Street Journal reporting now that OpenAI is in the early stages of a fundraising round that could raise as much as $100 billion. At least that's their target at this point in time. And in this fundraising round, which is at its early stages, they say it could value the company at as much as $830 billion. This is according to people familiar with the matter and the information also, early earlier reported some details of OpenAI's latest funding efforts. But of course, this would be a key test as to how much capital is still out there to fund this AI buildout and at what price if it ultimately comes to pass. But OpenAI seeking a new fundraising round that could value it as high as $830 billion. Melissa. Okay, seeking is the key word here, then. I'm not seeking you. Right. I'd love to seek $100 billion for an 830 billion valuation also, but. May not happen. Leslie. Thank you. Leslie Picker, was it. Was it 750 yesterday? I thought it was. I thought I had read 750. I literally. I thought that. I read that yesterday. Yeah, it's interesting. I mean, they need cash. That's not surprising. Right? But it's interesting with that. It's such a black box from the outside. Right. Nobody knows what's going on in OpenAI. And yet there are so many players that are a party to some sort of agreement with them. I would think there would be more clarity, more transparency or a leak or something about the underlying financials there than there seems to be. Unless. Well, there's no incentive for them to leak anything.
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Well, when you're raising the money, you're.
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Tied to the success of the company. I mean, if the implication is that a leak would disclose, we don't know it could. Things that may not be as great as everybody thinks.
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Yeah, I mean.
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Right. There would be some concern about that. And yet they still are able to. I don't know. There's.
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There's.
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I can't imagine how busy Sarah Fryer is. This is an extraordinary job as cfo.
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When was the Code Red announcement? Two weeks ago. Was that only isn't when you hear Code Red like it doesn't go up in value. How did we go from 500 billion to 800 billion since the last time? The first raise this year was 150 billion. Then there was 300 billion. There was 500 billion. Just as the last month. 5 was the last one. That was when. How do you feel like if you're an insider, your employee and you sold six and a half billion dollars at 500 now, what's that?
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Well, it depends on what you're not.
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If you just sold your stock, insider sold stock at $500 billion, I understand, a month ago.
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What is your.
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They should be pretty happy, right?
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I'd be pretty happy.
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I think.
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We'Re a publicly traded company. Would it continue on a steady drumbeat higher amidst all of the skepticism about the open, about the public markets.
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It's already told you what the view is on AI in the last month.
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Right.
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It's so in a world where there's no liquidity, the mark to market is very different in private. And that, by the way, it saves a lot of people for themselves in private equity. It's one of the reasons why it is an asset allocation that makes a lot of sense for people. But I think we're all saying the same thing. I mean, this is hard to believe. Two weeks after Code Red. Compare the two. Right. So we have Space X, we have open air, and there's. There's not an infinite amount of money to be raised here. So if you look at, I find it interesting, you look at the valuation on both of them, they're both chasing the same dollars and they both have to have that latest headline that's out to sort of gain the market's attention because the market only pays attention to the last headline that they say well if they don't raise the money it could be lights out for a while. Here they have $1.4 trillion in basically contracts out there, you know, $100 billion. That's not going to be easy to do, you know, up from again $50 billion a year ago to $800 billion. And I'll just say this, you know the information I store yesterday that Amazon is considering a $10 billion investment in Open AI and then they're going to get a $38 billion contract for us and then they're going to start OpenAI is going to start using their training trainium chips. Sounds like they only 90 billion more. What I'm saying is is like this is another circular trade and you know who's a big investor in OpenAI? It' so in video. I mean it's insane. And so like you know, again same we're all rooting for you here because if this doesn't work out it's going to be a really difficult 2026.
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Coming up, reaction to this morning's delayed CPI report why the softer than expected number wasn't enough to quell our next guests inflation concerns. More on that next. Plus more after hours action. Shares at KB Home on the move after reporting the details and numbers from the quarter ahead. Don't go anywhere. Fast money's back into.
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The heaviest metal credit card of all time. Rumored to be one of only 18 in existence. Plated with the very same tungsten that forged the international space station and wielded at business dinners like a samurai sword. It's a classic corporate power move. But the real power move having end to end visibility on your most critical shipments. FedEx.
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The new power move Is it time to reimagine your future. The right business skills may make a difference in your career. At Capella University we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning and effective communication. And you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at capella.edu Whenever I need to send roses that are guaranteed to make someone's day, the only place I trust is 1-800-flowers.com with 1,800flowers. My friends and family always receive stunning, high quality bouquets that they absolutely love. Right now, when you buy a dozen multicolored roses, 1, 800 flowers will double your bouquet to two dozen roses. To claim this special double roses offer, go to 1-800-flowers.com sxm that's 1-800-flowers. Com sxm welcome back to Fast Money. The bank of Japan expected to hike rates Friday to their highest level since 1995. The country's benchmark 10 year JGB trading close to 20 year highs. This is us investors continue to watch the yields on the JGBs, by the way, continue to watch for signs of what the Fed will do next year. Today, softer than expected. Expected CPI print raising probabilities for a March cut to 60%. For the potential market impact here at home, let's bring in market forecaster Jim Bianco, Bianco Research. Jim, great to have you with us. There's a lot to discuss. But in terms of the CPI print, this has not in your mind put to bed the concerns about inflation going higher?
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Yeah, this number was a statistical mess. They assumed that rents in the United States were effectively zero for the month of October. They surveyed the second half of the month because the government was shut down. So when you see things like apparel falling and airline tickets going down, that's because they picked up Black Friday sales. They didn't pick up any of the pricing before Black Friday. And so there's a lot of questions that have to be answered because of the unique circumstance of it being the first number after a shutdown. And so you saw this in the market that the 10 year yield, which should have looked at this number as being very bullish, was down one basis point after this number was released.
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So you have this, so you have maybe the underlying belief that the Fed will have to keep rates higher than maybe what the markets are anticipating at this point pricing in. And then you have the impact of the BOJ and their rates high. So basically lifting globally rates. I mean, how do you see this playing out into 2026?
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Well, two things. First of all, you're right, the bank of Japan is giving a meeting for us in the United States overnight. There's a 95% chance they're going to raise rates the highest level in 30 years. Their 10 year note is on the verge of going above 2% for the highest for the first time in also 30 years too. What's driving this? They've got the highest inflation. They have more inflation than the United States for the first time since the 1970s. And you're seeing this with all of the central banks. And around the developed world, the only central banks that are expected to cut rates in 26 are the US and the UK, the ECB, the bank of Japan, the Swiss national bank, even the bank of China are all expected to either hold or raise rates next year. Why? Because inflation is elevated everywhere in the developed world, except maybe a little bit in China. But then they've got some their, their own special circumstances, but inflation is still a problem. So James Tim, I agree and I know folks are actually happy to see some inflation in Japan for the first time in three decades. You know, be careful what you wish for. I'm just curious really your view on the technical side of this, because I do think also there are a lot of Japanese investors. It's not that they're going to stop buying US Treasuries and it's not that there's obviously still not a differential that that would be favoring on the US 10 years, but there's no question that Japanese insurance funds have been major buyers of Treasuries and their markets. A lot more interesting right now. Does this impact the long end of our curve? It can. The Japanese are the largest foreign buyer in the world. China is number two. Actually China's number three now the UK is number two. And so you're talking about the largest buyer now looking at their home market and saying, you know what, we don't have zero rates anymore like they did for 20 years. We've got a competitive rate. You're right. The US still has 4% 10 year notes, they have just under 2. So we have a bet a higher yield. But that spread is narrowing and will probably continue to narrow because the bank of Japan, when they raise rates tonight, are going to signal they're going to keep doing it in 2026. So that narrowing will continue to drive Japanese money back home and that will be a loss of a big buyer over time, gradually for the United States.
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Jim, we got to leave it there. It's great to see you. Thank you so much for your time. Jim Bianco, Bianco Research so let's piece this all together then. Are the US Markets pricing in too much Fed next year?
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Well, I would take it another direction if we see an unwind of the carry trade because of this differential they're raising, we're lowering. And you take that, you know, like the money that flew, you know, into, into tech, into Bitcoin. I mean, Bitcoin's telling you something. And not that it's like, you know, as big as one of the Mag 7 or anything like that, but I think that's the thing that we should be really cognizant of because that was fueling, you know, a lot of this mag 7 gains.
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We got some breaking news here on a potential Tick Tock sale. Julia Borson's got all the details here. Julia? Yes, Melissa, We've confirmed with sources close the situation that Tick Tock has signed the agreements with its investors regarding a new Tick Tock US Joint venture. We've obtained a memo sent from show to the CEO of Tick Tock to employees with an Update in the US business in which he confirms the closing date of January 22, 2026. This is the date from that Trump had set as the final deadline. He notes that they have signed the agreement and he notes that the US joint venture will be half held, 50% held by a consortium of new investors including Oracle, Silver Lake and MGX with 15% each, 30.1% held by affiliates of certain existing investors of ByteDance and 19.9% retained by ByteDance. So in this they go on to talk about how the US Joint venture will oversee data protection, algorithm security, content moderation and also software assurance. Again, these comments written by Cho Chu in a letter to his employees which CNBC has obtained. We're going to send it back to you. Melissa I'm sorry Julia, if you had outlined this, but the 50% that is owned outside Oracle is the is the largest holder of that 50%. And who are the remainder remain? Silver Lake and MGX along with oracle will hold 15% each and then 30.1% will be held by certain existing investors. And then what's really essential here, Melissa, because this is what's been holding up this deal is that 19.9% will be retained by ByteDance and that's the essential piece here is pushing the US ownership over 50% and ByteDance's ownership down to that under 20% level. Okay, Julia, thank you very much. Julia Boorstin I don't know what to how to interpret this and I mean there's a lot of different ways the impact on the media sector but also maybe US China relations.
- [30:48]
A
Yeah, well again the presumption has to be that everybody knows that this deal and is comfortable with this deal on both sides and that this deal satisfies securities concerns. Again, we don't know the technical details details yet. I mean I can't entirely tell. It's also kind of interesting just to bring it back to Oracle in a world where they are connected to another big deal in the media space. I know TikTok is not really a media company, but aren't they and where is it going and again, what's going on with YouTube. And so it's fascinating times. You know, when you look at it, maybe it's a reason to distract yourself from Oracle's worries. Maybe, maybe you buy that stock, I don't think it really moves the needle much for them. But when you look at the stock that does move the needle for Snap usually trades down with positive news on TikTok. So does matter. Snap is usually 2 to 3% on average. Historically that stock cannot get off the mats though when you look at the long term.
- [31:38]
B
Yeah, we are seeing a reaction. Oracle shares right now up one and a quarter percent. So we'll continue mean to own a piece of the hot, one of the hottest media, you know, online properties out there.
- [31:48]
A
It's in the family. Well, But Microsoft owns 27% of OpenAI. It's not rallying right now as they like literally double the value. I'm just saying I don't think it really changes the media landscape. And I think really the most important point you just mentioned, what does it mean for US China relations? This comes on a day where there's reports that we're selling $11 billion of, you know, arms to Taiwan. It comes a week after, you know, the Chinese are saying to their local buyers of GPUs, don't buy them. So I think that whatever detent we have with China on the trade front, it probably doesn't look or it is not as strong as let's say both parties will have you think.
- [32:22]
B
Coming up, we are watching shares of KB Home after the company's latest earnings. The details in the numbers in the quarter straight ahead. You're watching Fast Money live for the NASDAQ markets it in Times Square back right after this. At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella. Edu. What made you confident that you could do something that hadn't been done before? I have no fear of failure. Trailblazing women, changing the game. One of my favorite pieces of advice, think about what your boss's boss needs. Leadership can look in many, many different forms. It really does come down to just trusting yourself. Life is short and you just got to think big to accomplish big things. Julia Boorstin hosts CNBC Changemakers and power players. New episodes every Tuesday, wherever you get your podcasts. Shares of Nike sinking to aftermarket lows down nine And a half percent. We got some guidance from the conference call. The company expects Q3 revenues to be down low single digits. Gross margins to be down approximately 175 to 225. Basis. Basis points. If not for tariffs, they say that would be positive. They're also giving some guidance about other business lines like Converse, expecting to be about the same which was down considerably. Down 30%. Small, but yeah. Yeah. What do I think? Yes. Thank God they didn't give annual guidance because at this rate, I mean just one quarter is plenty here. That's bad. There's no question.
- [34:05]
A
That margin number isn't that margin number though. Less bad.
- [34:10]
B
Less bad than we thought. It's more bad than I thought.
- [34:13]
A
Less bad than it was. Right. In other words, the rate of the rate fall in the gross margin. In other words, whether you see. Down 175 to 225. Okay. 175 to 20 down from a gross margin falling 300. What we just heard. You know, in other words the second derivative rate of change being less. I mean, you know, silver lining, I hope but I mean that, that's, that's bad. We know the margins have been falling and they're falling less significantly.
- [34:43]
B
It convert. I don't know actually why they still have it. Just sell it. It was, I don't know, half a million dollars. Not a huge. I don't know. I don't know. All right. Well we'll continue to monitor this again. Nike shares down almost 10% right now. Coming up, a black eye in biotech. Shares of Insman taking a big hit today. The trial data weighing on that naked and what Wall street sees in store for the stock when fast money returns. Welcome back to fast money. Insmed dropping 16% for its worst day since May of 2021. The company discontinuing development of its drug to treat a type of chronic sinusitis after it failed to meet primary and secondary endpoints in trial. That drug had been cleared by the FDA to treat a serious chronic lung disease in August of this year. Even with today's move inside shares are up 141% year to date. It's still among the most valuable biotech stocks with a market cap of more than $35 billion. For more, Mizuho health care strategist Jared Holz joins us here on set. Jared, great to have you with us.
- [35:41]
A
Thank you.
- [35:42]
B
I'm assuming that models until today had had the drug Brent so in for this sinusitis. When you take that out, how much is that out of the Model for sales?
- [35:55]
A
Yeah, I think roughly 3 to 5 billion was where the street was. I think Mizuho's research team had five. They were probably towards the high end. They just did a call with a doctor recently that was more positive. So I think that gave them a little bit more optimism. Obviously it didn't come to fruition, but 5 billion for a sinusitis drug seems very big. I think we can all kind of move on here and assess the company for what it is. And if Brenzo is still a $10 billion drug, like everyone thinks, maybe the stock isn't that overvalued here at 40 billion, four times sales. Not crazy.
- [36:29]
B
So what is in this model in terms of peak sales for Brentzo? It is for the current indication, which it is approved for.
- [36:36]
A
Right.
- [36:36]
B
There are also other indications that they are studying the pipeline. Does that include any of that as well? How much is that and where is the bar? Is the bar higher or lower now after this disappointment?
- [36:46]
A
It's lower. The next indication is this sort of rare skin disease called hs. Ucb, a European pharma company, has dominated. They have a blockbuster drug that's been incredibly successful. Moonlake Therapeutics failed in this indication earlier this year, or at least wasn't as good. The probability of success is fairly low, I think below 30%. So maybe about a billion in models right now, which is not a huge amount. Again, the company has been very adamant that even without these indications, Brenza will do close to 10 billion. And I think that's where the street is. So, you know, maybe the data, if it's a slight disappointment, the stock goes down a little bit, but not nearly what it did today.
- [37:26]
B
How about this acquisition of the antibody? Is that a surprise? Is that. I mean, bolstering the pipeline, I would think is always a good thing. But how is it viewed in terms of the success to announce it the day that they're discontinuing a trial? I don't know. Puts a question on it.
- [37:44]
A
Yeah, I don't think anyone's really done any work around it. It was. It was not part of the narrative at all until yesterday. You know, I don't think there's a consensus around it. No one's built a model around it. It's new. I think anytime you see that, like, you're. There's clear. They're clearly trying to take a little bit of the pressure away from the data and have you focus on a new toy that they've acquired. But I don't think the street's done Enough. Work on it.
- [38:10]
B
Okay. So all this said, is this an opportunity to get into a hot stock? What has been a hot stock?
- [38:15]
A
I think so. I mean, the numbers actually now, now that it's pulled back to 165, are not, they're not egregious. You can make the model work. They do have other assets in the pipeline. And there's a possibility, I think the street has really walked away from M and A, from this stock because it's gotten so big. But it is possible that you could see a $50 billion deal at some point. I mean, pharma, obviously, we've all talked about how they need assets. So I think it's probably a trade. I'm not sure. It's clearly not going to have a year like it had this year. Next year, 140%. I think you're playing for maybe 20 to 30% at this point. So maybe a trade, but I'm not sure. It's going to have a monster year.
- [38:53]
B
We are so out of time. But I have to ask you about Lilly and or for so going to 2026, is it hands down? I mean, it sounds like it could come to market next year.
- [39:03]
A
Oh, it's certainly going to come early. I think in the first quarter it'll hit. Yeah, obviously very bullish. I mean, first line therapy, maintenance, like we've talked about. I think it's going to be an incredible maintenance drug. Get off the injection, start taking the pill if you're suitable for it. Yeah. We're going to start talking about this really early next year.
- [39:22]
B
Okay, Jared, great to see you. Thank you. Jared Holtz.
- [39:24]
A
Thanks.
- [39:24]
B
All right, so how are you feeling about Novo vs Lilly? Karen, given the data today, not great. I mean, I still think Novo is, you know, really cheap. Yeah. Clearly there are structural disadvantage. Can I bring back? I can't bring him back. Ok. He's not here.
- [39:41]
A
Even though he is. Happy holidays, Jared.
- [39:43]
B
Even though he is all right about structure therapeutics, something like that. Yeah. I mean, Nova's got a problem. They may or may not have a solution. All right, coming up, the president officially rescheduling marijuana as a less dangerous drug. We'll get more on the impact for the cannabis industry. Trulieve CEO Kim Rivers will join us when Fast Money returns. Welcome back to Fast money. President Trump signing an executive order today to reclassify marijuana as a Schedule 3 drug under the Controlled Substances Act. The change lowers restrictions in conducting medical research in the US and removes a tax burden on cannabis operators. For more on the impact, let's bring in Kim Rivers, CEO of Trulieve. She was at the signing this afternoon. Kim, great to have you with us. Thanks so much for having me. How much does this actually help your company and how much of it is symbolic? Well, I mean, first of all, the fact that President Trump had the first meaningful cannabis policy reform action since cannabis was scheduled back in the 70s, I would say it's a pretty, it's a pretty monumental day. Like you said in the intro, it does two things. First of all, it does not legalize cannabis, but it does open the doors for medical research. And it also brings to a halt the punitive tax burden that my company and other companies in the industry have been under. What else needs to happen? Because there's a whole other piece. In terms of access to capital, in terms of listing, in terms of institutional investors, how far do you feel you are now today to that versus, you know, prior to this executive order? Well, everything starts with a single step and today was that very important first step. We know that Congress and feedback from members of Congress have signaled that they really were looking forward to the President signaling that policy change is here so that they can move forward on safer banking. I think that's the next incremental step here, which would again bring down banking barriers and potentially lead to NASDAQ and NYSE getting comfortable with listing cannabis on US Exchanges.
- [41:44]
A
Hey, Camp Tim, congrats. It's been a lot of hard work and I know the industry's worked together on this. I guess my question is we're the traders. So it doesn't, you know, markets sold off 20% today after 150% move in five days. That's stuff for us to do, something I do by day. But my question to you is I think there is some reaction from a market that saw a lot of headlines around CBD and a lot of, you know, potential conflict for an industry where you've built a very asset heavy business, clearly there has been some struggle between call it the cannabis world and the hemp, essentially the derived seed, the intoxicating hemp, whatever market we're calling this. Can you just weigh in on this because I'm just curious your view on its incredible news on schedule three. Are you concerned about the CBD side of this?
- [42:35]
B
Yeah, thanks, Tim. No, I'm not. I believe that again, if you read the eo, there were some specific language in there about calling out the fact that there needs to be a regulated marketplace. And I think that's consistent throughout this EO and that's consistent Language from the White House. They want to see safe, regulated, tested products. Millions of Americans are using medical cannabis. Forty states have very intricate, very specific programs that we operate under. And the President is very clear that he wants folks to be able to have access to safe, regulated, researched products in controlled environments. And I think the language in the EO is very consistent on all of those points. And I think we're going to continue to see moves towards again a very strictly regulated but also available marketplace in the medical marijuana space. Kim, great to speak with you. Thanks. Thanks. Kim Rivers of Trulieve mentioned the stocks. I don't want say collapse. They took a dive today. I mean saw that run up steadily on, on first the sniff of it and then the day before.
- [43:36]
A
So now just be clear, as great as this news is, and I think this brings in more institutional capital and I don't think you need legislative action and I don't think you need another administrative action to necessarily get follow through on exchanges. But leaving that aside, this doesn't bring in institutional investors today, it doesn't bring them in necessarily tomorrow. But I bet it does bring them in starts to, to bring them in the next day. I think the research process here on the plant is extraordinary. I do think today's reaction is very technical. It's overly technical in a market where there's not a lot of institutional capital and this market had rallied 150% into it. I do think the CBD headlines, there's some concern that there is a battle seemingly between the dedicated cannabis world and broad spectrum CBD and where intoxicating CBD has taken market share. Today's headlines had more attention on CBD than pure cannabis investors expected, I think, and it's what Tim said. I think regulation around the plant, in CBD land and in cannabis is great for the industry and I think there's room for everything. Kim also said this is, this was a tax relief, not a safe bank relief. So you need both of those things. But the thing that you need the most of is enforcement. Right? So you have states all over the country that are not enforcing. So the illicit market is still stealing 60 to 80% of the revenues that should go to the legal public players.
- [44:53]
B
The prediction market is booming and gaming companies and exchanges all vying for a slice of potential trillion dollars in annual trading volume coming for the space. Contessa brewers here with all the details. Contessa, it's an eye popping prediction here. $1 trillion in annual trading volume before the end of the decade. That comes from Eilers And Krijic, which is a gaming research firm. And they say EBITDA margins could be between 25% and 45%. Look, that's notably higher than sportsbooks, in part because the sportsbooks pay high state taxes on gambling revenue. Guess who doesn't? Prediction markets. Sports is though, fueling the growth of those markets and forecast to remain the anchor category, making up 44% of volume when they hit that trillion dollar point. But sports is also the most at risk for regulatory or legal crackdowns. So you've got DraftKings, FanDuel and Fanatics all launching predictions of their own. And then you have ice, cboe, Coinbase, CME diving in. Citizens this week estimated that prediction markets revenue is now at $2 billion and expects it to be five times that by 2030. Remember, CNBC and Kalshee now have a business relationship. I think really what this illustrates is there's a convergence between trading hashtag investing and trading hashtag gambling. And the way that these are crossing over, it'll be interesting to see the way these platforms try to cross sell their customers into their core business. Yes. How do you view it? Is it additive? Does it cannibalize the other parts of the business?
- [46:28]
A
I don't think so. I think, I think there's a huge opportunity here and I do think prediction markets are, have, have become part of the investing world and it's another tool that traders have or investors have. Yeah, I just think it's like to your point, it's like this massive new market that didn't exist. You think about the numbers and you think about a company like CME Group that has this highly regulated exchange and they're able to kind of jump into this product. We saw this with a lot of crypto stuff when it got listed. So again, I think it's kind of exciting. I like your hashtags though, because I think they make sense.
- [47:00]
B
I don't know. I'm a little uncomfortable to be honest, to have these investing platforms supposedly. But also now you can have prediction betting basically. Right. See how some of the funds that would be in investing and longer term planning and whatnot will end up there. It's so easy to do. Right? Right. Will be seamless. Right. Do you have endless amounts of money to invest, slash, predict? I don't know. The same guardrails in place that that ping like the sports books. If someone is overdoing it. One other interesting play here. Remember, I cover insurance too. Imagine with premiums soaring, you have people in Florida who say, I'm not going to pay for the premiums anymore. Instead I'm going to put in the predictions markets category five to hit my home and that is how you hedge your bet for your home. We'll see. Contessa thank you. Contessa Brewer final trades up next check on Nike down 10% on disappointing guidance for the current quarter 10% after our recession lows levels not last seen since May. Time for the final trade.
- [48:03]
A
Tim Happy Birthday Guy Adami Go listen to Mandy by Barry Manilow ups Karen.
- [48:09]
B
Yes sold my Dell puts that expire tomorrow. I have to say Happy Birthday to Bill plot not tonight but tomorrow. Happy Birthday to you Bill and Happy Birthday to Guy again.
- [48:17]
A
Dan I'm going with Bill Platt Happy Birthday Buying weakness and Snap C All stocks do not have to be sexy. Boeing and Happy Birthday to the sexy.
- [48:27]
B
Guy, the og a very good friend the anchor of this show. Thank you Guy Dami Happy Birthday. Thanks for watching. Fast Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of cnbc, NBC Universal, 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@ Capella University, Learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the courseroom to the workplace. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.