Halftime Report: Meta - The Magnificent “One” (February 7, 2025)

Overview

In the February 7, 2025 episode of CNBC's Halftime Report, host Scott Wapner delves deep into the stellar performance of Meta, affectionately dubbed the "Magnificent One," amidst a turbulent market. Joined by top investors Josh Brown, Bryn Talkington, Jenny Harrington, and Steve Weiss, the panel dissects Meta's unprecedented 15-day streak of gains, compares it with other major players like Amazon, and explores broader market influences such as inflation expectations and impending tariffs. The discussion also touches upon significant moves in the cybersecurity sector, Uber's strategic positioning, and updates on key market headlines.

1. Meta's Unstoppable Rise

Scott Wapner opens the discussion by highlighting Meta's remarkable performance:

“Meta is trying for its 15th straight day of gains. It's the only one that went up after its earnings. Just remarkable.”
[00:00]

Josh Brown attributes this success to a combination of efficient spending and robust earnings growth:

“Earnings are growing, they continue to grow. Valuation still remains reasonably reasonable. And the thing we worried about most, that he wouldn't keep a tight eye on spending and efficiency is not there.”
[02:30]

Scott further emphasizes Meta's strategic capital expenditure (CapEx):

“They increased their CapEx markedly, yet the market's forgiving. They're executing their growth plan, which contrasts with other MAG7 companies facing slowing growth.”
[03:19]

Bryn Talkington reflects on personal investment decisions, admitting initial hesitation:

“I have just been totally wrong in not having excess exposure to Meta because... it's still the cheapest name in the group at 25 forward.”
[05:32]

Josh Brown praises Meta's pivot from metaverse investments to open-source initiatives, enhancing its ad revenue capabilities:

“Meta is spending on open source, which is an affront to open AI. Their ability to monetize through Instagram, WhatsApp, and Facebook strengthens their position.”
[08:36]

Bryn summarizes the enduring strength of Meta amidst the MAG7 rotation:

“The story of the MAG7 is the intra MAG7 rotation. Meta holding up the whole tent, while others fluctuate, showcases its indomitable position.”
[07:54]

2. Amazon's Mixed Fortunes

While Meta shines, Amazon faces challenges despite substantial CapEx:

“Amazon is down 4%, but look at what the stock's done. It's going to recover in March higher.”
[03:19]

Bryn counters negativity by highlighting Amazon's leadership in AI:

“Amazon is going to be one of the biggest beneficiaries of AI and the biggest cloud provider. Their early monetization and extensive investment position them well.”
[11:02]

Conversely, Josh Brown raises concerns about Amazon's gross margins compared to Meta:

“Meta's gross margins are like 80%, Amazon's are only about 50%. With Meta trading at 25 times and Amazon at 37 times, why wouldn't money rotate out of Amazon?”
[13:22]

Bryn clarifies the distinct business models:

“Amazon and Meta are not the same company or business. Amazon's advertising business, though growing, doesn't overlap significantly with Meta’s core operations.”
[14:18]

3. Uber's Strategic Positioning

A significant focus shifts to Uber, with Bill Ackman's substantial investment drawing attention:

“We believe Uber is one of the best-managed and highest quality businesses in the world. It can still be purchased at a massive discount to its intrinsic value.”
[17:02]

Bryn is bullish on Uber, citing its critical role in the autonomous vehicle ecosystem:

“Dara understands autonomous driving and fleet management, making Uber indispensable. It’s a hub for autonomous players, ensuring long-term dominance.”
[18:26]

Josh Brown reinforces this by highlighting Uber's free cash flow and potential growth:

“They could be well on their way to $10 billion in cash flow by 2027. The turnaround and shrinkage of the float make it a compelling investment.”
[22:25]

4. Tariffs and Trade Dynamics

The panel discusses the impact of potential tariffs on the market:

“President Trump has just put a pause on undoing de minimis rules for small packages from China, alleviating some immediate pressures on the USPS and postal services.”
[16:10]

Phil LeBeau highlights European considerations:

“The EU is contemplating changes to vehicle tariffs from the US, which could significantly impact European automakers exporting to the US.”
[28:05]

Josh Brown adds:

“President Trump plans to announce reciprocal tariffs next week, affecting countries that impose tariffs on American exports.”
[37:46]

5. Cybersecurity Sector Highlights

The cybersecurity sector sees notable movements, with CrowdStrike leading a comeback:

“CrowdStrike is now the fifth best performing stock year-to-date in the S&P 500, up 44% after last summer's drawdown.”
[25:55]

Bryn emphasizes the sector's importance and growth:

“Cybersecurity has secular growth driven by global threats. Investing in ETFs like BUG Cyber, which is at a record high, captures this trend effectively.”
[23:46]

6. Additional Market Movers

• Skyworks experiences volatility, with a significant drop attributed to reduced chip orders for the next-gen iPhone:

  “Skyworks is down nearly 25% due to a 20-25% reduction in chip orders, but we believe the reaction is overdone and expect a recovery.”
  [28:37]

• Moody's (MCO) is highlighted as a breakout stock under Bryn's spotlight:

  “Moody's is poised for a breakout, currently at $499. It's a critical data provider for AI on Wall Street, making it an intriguing investment.”
  [34:26]

• Cloudflare shows impressive growth:

  “Cloudflare reported 27% revenue growth and 29% profit growth this quarter, positioning it alongside top data companies like Snowflake.”
  [35:56]

7. Market Sentiments and Influences

Mike Santoli remarks on inflation and tariff-related sentiments:

“The market is unsettled by inflation expectations and upcoming tariff announcements, keeping indices flat despite underlying strengths.”
[40:42]

Bryn and Josh discuss investor behavior and market reactions to policy changes:

“Investors recognize that tariff-induced inflation is high noise and not necessarily self-sustaining, allowing the bull market to continue its course.”
[40:44]

8. Upcoming Earnings and Future Outlook

The team anticipates key earnings reports and their potential impact:

• Carrier Global and Marriott expected to report, with focus on tariff management and consumer health sectors.
• Robinhood poised for explosive revenue and earnings growth.

“Robinhood is looking for 100% revenue growth and 300% earnings growth. The stock is up 35% year-to-date and positioned for continued gains.”
[43:12]

Bryn also mentions Dell's strong infrastructure solutions group:

“Dell's infrastructure group is thriving, making it a favorable stock ahead of earnings.”
[44:14]

Conclusion

The episode underscores Meta's dominant position in the market, juxtaposed with the challenges and opportunities facing other MAG7 companies like Amazon and Uber. Trade policies and tariffs remain significant influencers, while sectors like cybersecurity and data services continue to exhibit robust growth. As the market navigates these dynamics, investors are advised to stay informed and strategically positioned to capitalize on emerging trends.

Notable Quotes:

• “Meta is trying for its 15th straight day of gains. It’s the only one that went up after its earnings. Just remarkable.” — Scott Wapner [00:00]
• “Earnings are growing, they continue to grow. Valuation still remains reasonably reasonable.” — Josh Brown [02:30]
• “Amazon is going to be one of the biggest beneficiaries longer term of AI.” — Bryn Talkington [11:02]
• “Uber is a hub for autonomous players, ensuring long-term dominance.” — Bryn Talkington [18:26]

This comprehensive analysis offers listeners insight into the prevailing market sentiments, strategic moves by industry giants, and the interplay of economic policies shaping the investment landscape.