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IPOs To Watch, WBD Rejects Paramount & Betting on Prediction Markets 12/17/25
00:43:36
As Medlife opens at $6/share above its IPO price, we break down the big offerings to watch in 2026. The Warner Bros. Discovery Board unanimously votes to reject Paramount's hostile bid in favor of Netflix's offer. Plus, the fintech company that's expanding its prediction market offerings.
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Thank you, Scott the Two Kevins and now a Christopher the biggest IPO in years is popping on its open and is there anywhere or any time you can't place a bet anymore? Welcome to the Exchange. I'm Kelly Evans and we're seeing pressure across the markets on the NASDAQ in particular today, down more than 1%. The S& P and Dow are on pace for their fourth straight down session as well. Oracle has a lot to do with this amid reports that there are questions about a key backer of its data centers. Those shares are down four and a half percent right now and down six months going back to its stronger earnings performance, still down about 13%. Elsewhere, though, silver continues to shine. It's up another 5%, another all time high above 65, above 67. Now for the first time, Golden Oil also seeing a nice bump. Crude coming off its lowest close since 2021. But we begin with the continued battle for the Fed chair position. It's no longer about the two Kevins. Now. Chris Waller is back in the running. Reportedly in fact, he could be meeting with the President right now or at least sometime this afternoon. Steve Liesman spoke with Waller this morning and joins us now with more. Steve, what can you say?
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C
Yeah, well, before Fed Governor Chris Waller sits down with the President this afternoon he appeared at the Yale CEO Summit where I got a chance to hear what he might tell the President about the economy and the outlook for rates and independence. And it is a dovish forecast from the Fed governor. Actual job growth he says, is closer to zero when you make adjustment for potential revisions. He sees inflation coming down not coming from tariffs and he estimates the neutral rate is below 3%. Said he's one of the low people on the Fed on that issue. So he can see an additional 50 to 100 basis points of rate cuts over time. Here there's no. Here's what he said.
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There's no forces that are suggesting that.
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Inflation is going to take off again in 26. If anything the tariff effects, whatever they.
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May be, those will start coming off as a one time price effect. So we're not going to see persistent inflation from it.
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C
Now the odds are the prediction markets for Koshi have Hassett. Kevin has the NSC director still at 50% pretty much where it was as of yesterday afternoon. Waller at 25. He was 15 though before he spoke this morning. Worse was at 32. Now he's down a little bit in this back and forth, back and forth. I asked Waller if he would emphasize the importance of Fed independence when he sat down with the President he said quote absolutely but added the Fed also needs to be accountable and transpar to maintain that independence. He said he fully expects the President to express his views on monetary policy as he often does, but suggested it wouldn't generally be appropriate to do so in one on one meetings between the Fed Chair and the President.
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B
Kelly, you know I think the market views him more favorably. Some were even saying the rally yesterday kind of intraday move was in part owed to the fact that his odds were ascendant.
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C
I don't like to speak to that Kelly, I leave that to others. But I do know I've heard a lot of favorable comments of people in the market about Chris Welch Waller. He's made a lot of very good calls. Remember he had advocated and dissented for a 50 basis point cut in July before the Fed started cutting. And over the years you could remember times when Chris Waller, not really a diet in the wool hawk or died in the wool dove, he's changed back and forth. So I've heard positive things plus his knowledge of the markets. He knows a lot about the payment system. He's the Fed governor in charge of the payment system. So he's been very sort of forward thinking about things like stablecoins and payments and blockchain and those sorts of things. So a lot of commentary or positive commentary about Waller in the markets Kelly.
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And it was top pick among their economists they surveyed to in the Journal. Do you know his point of view Steve, on the balance sheet as we've had a lot of back and forth and a lot of people on the show Emphasizing that they expect financial and bank deregulation to be, you know, where they look to kind of shrink or keep from the balance sheet from growing too much over time. Is he the kind of person who would be pushing hard in that direction, pushing hard on bank deregulation, for instance, or have we heard a strong point of view from him on that?
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C
I'm pretty sure while he did talk about that today, he does seem in favor of the bank deregulation that is happening. In fact, I asked him about that. I asked him a kind of cynical question. I said, you know what? I remember this story when we cut back regulations at good times and then we forget about the crisis that happened. And he said, you know what, if we cut down capital from 12% to 10%, that's not that bad. We were 4% before the financial crisis. So he said, we're quite a bit above that and expects it to remain quite a bit above that. He also did point out this notion, which you're alluding to, Kelly, a very sophisticated notion, actually, that if you bring down regulatory capital, you can bring down reserves and bring down the balance sheet. Chris Waller seems to be in favor of that as well, but did not talk against this idea of an ample reserve regime. But you're right in the sense that there are people out there that say you bring down the amount. Amount of capital banks have to hold and the Fed can reduce its balance sheet.
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B
Right. And I know it's kind of getting into the weeds here, but a glimpse maybe of. Of what we might hear or what the case he might be making to the President, and we'll see if we get any whispers, right, about how that meeting goes.
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C
Yeah. Well, Kelly, I have to say I miss getting into the weeds, which you have been gone for quite a while. We have not had an opportunity to do that. And so that is, there is a lot of stuff happening right now led by Mickey Bowman in terms of deregulation of the banking sector. There are people who are speaking out against it. Michael Barr, who was the former head of supervision, he's written some very strong speeches. Mickey Bowman has written some very strong speeches as well in favor of this. As I have said, oftentimes those who wrote Dodd Frank kind of act like it was handed by God to Moses on the top of Mount Sinai, and so it could not be changed. I think that's not the case. But at the same time, you want to be careful. One more thing, Kelly, very interesting. I asked Waller about whether or not AI is a bubble, that he's worried about he said the Fed is looking into this is they're monitoring it as well as saying that the private sector is free to lose money and as far as he can tell it's mostly equity in front of these deals. But he is the Fed is concerned and looking at the idea of the extent to which there are connections between the financing of AI into the banking system. That's where he would be worried. Didn't say it was a concern right now.
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B
Perfect setup for the rest of this hour. Steve, thanks so much. Really appreciate it. Steve Liesman so who do the markets want in the Fed chair position? What's really at stake in that race and how much risk is there in the trade right now? Let's bring in Peter Bocva. He's the chief investment officer at one point BFG and a CNBC contributor. And Matthew McLennan is co head of the global value team at First Eagle. By the way lead manager five star rated morning far fund global First Eagle global fund up 19% this year, outperforming the S and P. So you get a little pat on the back and you can go first, Matt. I mean who would you like to see in the Fed chair position? And are you worried about an AI bubble?
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We don't have a strong preference on who occupies the chair. I think one of the broader discussions here though is the Fed independence is almost a second order reality when you have an outsized fiscal situation. And so what we're quite focused on here is the long term fiscal credibility of the United States because I think that is the condition precedent for having an independ Fed and for having a rational chair. The other thing I'll say is that the path of rates over the last year has really largely tracked wage inflation moderating. And so really what's going to matter going forward is a function of whether job openings which have inflected higher recently, whether they follow corporate earnings higher.
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B
I like what you're saying there. What do you think is going on with the behavior of silver, Gold, the weaker dollar? Is that all part of the fiscal story or no?
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E
I think what we're seeing in terms of the fiscal challenges in the United States are being mirrored elsewhere in the world. It's not just the United States. We have outsized fiscal deficits in the UK, in Europe, increasingly Japan, China, etc. And so what I think has happened here is that with these large primary deficits globally, the monetary value of gold has arguably reemerged and the value of gold as a monetary potential hedge has reemerged and so even though gold has had a big run here, it's pretty close to its 50 year averages versus the level of the S&P 500 and its 50 year average relative to the level of US government debt outstanding. So the gold went from being depressed relative to the nominal assets that you would want to use it as a potential hedge against to more rationally valued. And I think the other precious metals complexes followed it higher with some leverage.
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Gold's up 65% this year, Peter. Silver is up. What was that? 127%. These are wild moves. Do you think that these gains should be pocketed now it's kind of turn or are they going to continue and what's driving them?
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F
I think it does continue and there's no doubt that a lot of the gains that have taken place have pulled forward, some of the future gains. But I think that the bull market is still intact. I mean, I think the noteworthy thing this week was what we heard over the weekend when the EU officially indefinitely froze 210 billion euros of Russian central bank assets. When they first started doing that along with the US post 2022's invasion, the vote had to come up every six months on re sort of initiating the freeze now on at least a portion of it's indefinite. So it's just another message to all these central banks around the world that owning gold on your own territory that can't be confiscated is a really attractive choice. Particularly when your other reserves are in sovereign bonds that are domiciled in places around the world. It's just highlights the importance of owning gold.
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Sure.
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That you can domicile yourself.
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I think that's an excellent point. So what about silver though? And what about copper? It's almost like each one of them could have their own explanation. But sometimes you stand back and go no, they're all moving together and they're breaking out to the upside.
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F
Well, silver's playing a tremendous catch up here. Silver is very unique in that half the demand is industrial with the rest being monetary and jewelry and so forth. But when you look at silver getting close to $70 an ounce here. Well, it was $50 an ounce in the parabolic spike in 1980. It was $50 an ounce in 2011. If you inflation adjust the 1980 high to today, it would be $200 today. So I think that it just became, According to the U.S. geological Survey, a critical mineral. There has been supply demand deficits for the last couple of years. That continues and we are also seeing that in platinum as well. And I think that that's helping to drive the price. So we as a firm are long, we're staying long, don't want to overstay our welcome. But we still think that the fundamentals are in place for a continuation of this trade into 2026.
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And now they're teasing me. They're putting platinum on the screen. It's up 112% year to date, I mean, everywhere you turn. So Matt McLennan, what's your playbook for next year? Do you stick with the metals? Do you stick with associated stocks? Do you think that we're in an AI bubble?
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E
So when we look at our portfolio construction, the role that gold has played is the same role you would think of it playing in a, in a central bank. It's a potential hedge for us and as such we're mindful of it. Not our portfolio is not becoming a directional bet on gold. And so as gold has reached these new highs episodically, we've taken a little off the table so that our aggregate position in gold in gold miners has stayed roughly constant at a mid teens percentage. So we're not, we're not looking to super scale our exposure here, but we're looking to maintain a reasonable exposure going forward. And in terms of the AI, I think the narrative that the market's going to have to digest as we move into 2026 is that the rate of capex growth going from 26 into 27 is likely to decelerate. The hyperscales have gone from spending the minority of their operating cash flow to the majority of their operating cash flow on GPUs and data centers. And so it's going to be difficult to sustain torrent growth rates that we've seen over the last year or two. So we'd expect markets to have to digest that deceleration, but the more mature segments of the US economy could improve given what's happening with interest rates.
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B
All right, so it sounds like we're showing some of your holdings that you do have Oracle. By the way, what's your view on that one?
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E
So Oracle, I think it's obviously been in the focus of the market given their aggressive plans to build out data centers. But I'd say people take a step back. You have to realize that Oracle's origins are as a dominant player in the relational database business. And the initial AI models have really been scraping the Internet for their training. As we move forward, more of the training and ultimately inference is going to be done on private data. And Oracle is the company that has really high market share, relational databases, all the middleware around that. So they're very well positioned to take share of cloud compute over the medium term.
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B
So you think their capex is sensible here even if their debt load is at eye watering levels?
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Their debt has picked up, you know and I think as as prudent investors we're keeping a wary eye on that. But I think you also have to look at what the projected EBITDA and cash flow is of Oracle over the next couple of years. Their debt levels, while higher, are still not exceptional relative to the underlying EBITDA generating capacity of the business. And this capital they put in place will generate a new level of earnings power that we haven't seen in Oracle.
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B
Historically a bull case that we haven't heard here in a little while as these concerns swirl. Gentlemen, have to leave it there. Hope to continue it again soon. Thanks for your time. Matthew McLennan and Peter Boock Farm Want to hit the IPO of the Year, the biggest one popping on its open last hours just a few minutes ago. Really after some middling performance in the IPO market generally, is it a sign of pent up demand into mega offerings like Space X next year? A sigh of relief for the private equity space to Leslie Picker has more over at the Nasdaq. Leslie Hey Kelly. Yes, the largest IPO of the year, Medline, opening for trading about 15 minutes ago at $35 per share. That's up more than 20% from its IPO price of $29 per share. The company, which makes supplies products, supplies and products used in labs and surgeries, sold more shares than initially planned in an upsized deal, more than $6 billion worth. Medline has been private for 58 years, with most of its tenure family owned until its buyout by a consortium of private equity firms in 2021. The IPO market cap is about $20 billion higher than the price Blackstone, Carlyle and others paid for the company about four years ago. The company issued all the stock in today's offering, meaning the PE firms didn't sell sell into the ipo. Medline plans to use the proceeds to pay down its debt. The company has about $17 billion worth of debt. Medline, though, is perceived to have this kind of sticky, resilient business. It's grown net sales each year since its inception and a CAGR of 18%, according to the prospectus. It's also profitable and today's performance, with shares currently up about 27%, certainly bode well for the 2026 IPO market and for the potential for other private equity owned companies to find their way to the markets. As we have discussed, Kelly, that has been a big challenge over the past few years leading to quite the backlog indeed and in that sense a very big deal here. Leslie, thank you. Let's also turn to Dan Primack, he's the business editor at Axios, who brought our attention to the boring IPO boom last week. Dan, does it become much more buzzy next year?
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I think so. And I think, as Leslie said, I think you're going to see more of these deals. I mean, it's worth noting Medline was kind of exceptional in private equity terms anyway, right? This was a deal that was done in 2021. It was a return of so called club deal. I believe it's the largest health care leverage buyout ever. So it was a very large deal. And back then it was a really complicated deal for the private equity firms to do because you were still coming off and almost in the middle of the pandemic and they had to figure out how much of the company's revenue, how much of its earnings were pandemic related and how much would be sustainable. And what they've done since is really grow it internationally.
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Now that this has gone out successfully, what's it going to mean for the rest of the kind of private equity space and those pipelines?
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I mean, private equity firms should be calling their bankers, right? This was a really big one. This was a hard one to digest. There was never really a strategic acquirer that would make sense for Medline. It was just too big given what it does. So look, private equity firms should be ramping up for Q1. The only caveat I give to that is I think probably if you go into the CNBC archives, you and I probably had a conversation last November, last December about how firms should be doing the same thing and they didn't know.
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B
And then we come out of the gates and sometimes the market has a tough time finding its footing in Q1 and then we have to kind of wait all over again. You also noted that Wealthfront, which was a little while ago, what is it? Earlier this week, last week, Last week, thank you. Had Nowhere near the $500 million in annual revenue that you've heard VCs argue is the new IPO threshold as these deals kind of get bigger and bigger. So maybe it could also be the return of the small deal and everyone just wants their hands on a piece of AI. They're sick of all this stuff.
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They are wealthfront is again as important. It's an old company, right. For, for it's still viewed as a startup but I think it's 17 years old at this point. It didn't have the top line numbers or the growth metrics that these companies supp need to have to go public. It hasn't traded well in the aftermarket. It's been mostly flat, a little bit down. But it got out. And the argument has been we can't find public market investors for these companies. Wealthfront was able to do it and.
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B
That'S a good thing. You know, we were talking about this last night and Brian Sullivan has raised these concerns as well. He said you want the S&P 500 to have the best companies. You know, I want databricks to some extent in there. I want all of them to go public and be in there. Right?
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A
Yeah. Look in databricks for what's worth. And we reported this in Axios Pro Rata this morning. Databricks. The CEO, I asked him yesterday if we were having a conversation in one year from now, will it be public? He said, he basically said it's entirely possible.
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B
Well, you know I've heard that with it's like Waiting for Godot. I'm waiting for data breaks. This Leslie said a Series L financing round yesterday. She has even covered one that high. Dan, appreciate it. Thank you very much, dan. Primac Vac CEOs still to come, the war over Warner Brothers. It continues as WBD board unanimously asks shareholders to reject Paramount's offer. They say the Netflix deal remains superior. The chairman telling CNBC it was not a hard choice. We'll have the details. And what's next for Paramount as their shares are down three and a half percent. Plus Robinhood rolling out NFL parlay and player prop bets on its prediction markets platform. The details and why CEO Vlad Tennant thinks we're still in the early stages of a prediction market super cycle. Back with more after this. This is the exchange on cnbc. The heaviest metal credit card of all time.
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It had all and they responded to.
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The to the operating issues that we were concerned about. Peace guy had every opportunity to deal with that broad range of issues and they chose not to. And ultimately the equity staff is always important here and to be very direct. Nowhere in any of these proposals did Larry Ellison guarantee appreciate that he got quite clear about that. David Faber also spoke with Netflix co CEO Greg Peters who said on top of the stronger offer Netflix, Netflix's better balance sheet also allows WBD more flexibility to do what it wants to do here now to break it all down. Tell us what might be next is media and sports reporter Alex Sherman. Appreciate you being here always. So I guess the key question is what does Paramount do next? I mean they seem to know as as analysts have told us that it's more existential for them to get these assets so why not make an offer that's more compelling.
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D
So Paramount came out around 10 o' clock this morning Eastern time with a statement saying look we, we heard what you had to say. Warner Brothers Discovery. We're going to continue on with our hostile tender offer which is $30 a share. The bid that Warner Brothers Discovery has now really rejected twice. It rejected it once as the final bid during the sales process that Paramount put forward and now it's rejecting to its shareholders again, recommending, look, don't do this same price. I think what we're all waiting for is does Paramount increase its bid from $30 a share? And now I think there's a new wrinkle after the detail that we've gotten today, which is, does the Ellison family increase its share of the bid? Because what we found out today is that, and we've sort of known it in the background, but it was officially clarified today, is that there's a lot of uncertainty on Warner Brothers Discovery's end in terms of the total package of financing here. They're looking at $20 billion plus from Middle east sovereign wealth funds that were a part of the early December bid, only $12 billion from the Ellison family. This idea of the trust backstopping the money, it has a lot of questions.
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B
About and what happened to the Jared Kushner piece of this as well.
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D
So we also now know that Jared Kushner, which was only his private equity fund, was only kicking in about $250 million. That's a low amount of money. They're out now. Jared Kushner said, we're not even going to be a part of financing moving forward.
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B
Forward.
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D
But I think there's two things we're looking for, which is, does Paramount up its bid? Does it feel like it needs to up its bid? What is the reception from actual Warner Brothers Discovery shareholders on the $30 tender offer? And are those shareholders perhaps voting? Look, we're interested, but we're only interested if you up the bid another dollar or two.
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B
Right.
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D
Which David Ellison, the CEO of Paramount, has now said repeatedly, or at least suggested repeatedly, candidly, that the $30 offer is not a best and final offer. To me, that reads as a signal to the market that they're willing to go higher. So if you're a WBD shareholder, you're probably interested to know what is how much higher are you willing to go here. But maybe you need to tender your offer in order to figure that out or at least signal to Warner Brothers Discovery to say, we don't want you to close with Netflix. We want to find out what Paramount, Paramount's actual best and final offer is.
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B
It seems to be a bit of mixed messaging on Paramount's part where it's is the point we want this asset will do. The Ellison family will chip in whatever it needs to chip in to get it done. If you don't like the other partners involved, if you don't like what we're bringing to the table, we can Bring a different financial backer to the table. You know, I think it seems like part of it is Warner Brothers Discovery saying, well, you know, is that an. Is that option available that might be more interesting to them?
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D
Yeah, I mean, it's complex because. Because Warner Brothers Discovery's board is not necessarily the same decision as the bulk of the Warner Brothers shareholders. Now, usually in these situations, the shareholder base will respond to what the board wants, but not always. And so that's in fact why Paramount has gone over the top here. And it says, okay, we heard you. We. Nothing that was said today is surprising. It would have been surprising the other way had something happened where the Warner Brothers Discovery board decided, you know, we thought about it for a week and actually, your $30 an offer, we messed up.
- [26:23]
F
We.
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D
That's a better offer. So all we learned today was a crystallization of why Warner Brothers Discovery said, this is why we went with Netflix. We went with Netflix because they are more assured in our minds of financing this deal. They are a $400 billion market cap company. They're not using outside financing from Middle east sources and other sources. They can easily do it on their balance sheet. And I think Paramount's argument is that, that not only is our $30 a share offer better than your 2775 offer for just the studio and the streaming assets, but also we feel like our path toward regulatory approval is a lot stronger than Netflix. As Warner Brothers Discovery said, we don't believe that, but maybe the shareholders have a different opinion.
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B
The shares are trading a dollar or so above that Netflix price, which is interesting. Final quick question on this. Should they just wait to see if regulators block the Netflix?
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D
Well, I think that's sort of the option C here. In other words, if this tent, if they feel like it's going to be too expensive, we don't want to get into a bidding war. We don't want to put up more money. They can always just wait and say, fine, take your offer. Let's see what happens. And by the way, if Netflix fails in its offer, maybe that $30 per share offer doesn't even stick around. Now Netflix is out of the picture. Maybe that offer comes down a little bit. So that I think is the wild card here. And it's also perhaps the reason and why Warner Brothers Discovery shareholders may want to say, wait a second. We want to know what your real best and final offer here is before we decide that, that we're not going to go over the top and just take the Netflix off.
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B
It just seems poignant that the whole thing is playing out like a streaming drama.
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D
Oh yeah. I mean this is like it's an HBO drama, right? It's the succession was on HBO and now this is a real life story about the future of HBO is their own content war.
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B
Alex, thanks for now. We appreciate it. Alex Sherman still to come, Oracle shares are sinking again after losing a financial backer for one of its data center projects. The details and the real estate threat to the industry next. And as we head to break, check out some of the names hitting all time highs. Tesla is on that list, although it's since turned lower after hitting 495 this morning. Now it's down 3%. Hilton Marriott, TKO Group, Capital One. We're back in a moment. 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.
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Welcome back to the Exchange. And we're watching shares of Oracle, which are lower today on these reports that Blue Owl Capital will not finance their $10 billion data center project in Michigan. Financial Times report it comes as investors have been raising all these different red flags about the AI data center building out. Oracle shares are down four and a half percent. But there's a real estate angle here as well. Diana Olek has that story for this week's. Property play. DIANA well, Kelly, investors are increasingly concerned about hyperscalers who are turning to private equity markets. Rather than funding the buildings themselves, they're entering into lease agreements, which could prove risky if the technology changes as it becomes more efficient and no longer requires these huge spaces. I sat down with billionaire developer Fernando de Leon, who predicts hyperscalers will be trying to get out of their leases earlier than expected. I look at a Data center that's $10 billion, right? First of all, there haven't been any exits above 4 or 5 billion dollars.
- [30:50]
A
You haven't seen comp so that worries.
- [30:52]
B
Me quite a bit. Then I see large technology companies, the largest companies on the planet with $4 trillion market cap, saying, I don't want to own this asset. I don't want to have this on my balance sheet. So I ask why? Why doesn't the largest company in the world want to own its own asset? That is very, very important to them, right? This is the AI business is everything for them today for the large hyperscalers. And so they're saying, no, you you build it, you finance it. De Leon's concern is that if big private equity is left holding the bag, it's not their money, it's the investors in their funds funds. And a lot of that is pension funds. For much more on this story, go to the property play newsletter, cnbc.com forward/property play or use that QR code. KELLY it's true some of the retirees who are probably shaking their heads at this whole thing are the very ones whose pension money is kind of at stake because it's being invested in some of these projects. Absolutely. I mean, there's risk ahead because you talk about AI making everything more efficient. Well, guess what? It's going to make itself more efficient. So the question becomes five years, even eight or 10 years down the road, does it need this huge amount of space? No. Absolutely. And what was Sully saying the other day that there was like an old racetrack being turned into a data center. So what are we going to turn the old data centers into? What next, office buildings, apartments? Diana thanks very much. Diana Olek, let's get to Seema Modi now for the CNBC News update.
- [32:15]
G
Seema KELLY, Nick Reiner, who was charged with murdering his parents, Rob and Michelle Reiner, made a his first appearance in court this morning but did not enter a plea. His lawyer, Alan Jackson, told the court that for several issues it was too early to enter a plea and that he he and the prosecution agreed to delay the arrangement until January 7th. That's the arraignment. FBI Deputy Director Don Dan Bongino is quietly telling those close to him that he will leave his job early in the new year. Mississippi now reports that Bongino told his team and senior officials that he tentatively planned plans to announce his departure in Friday and that the former Secret Service agent and pro Trump blogger has already cleared out his personal items from his office. And starting in 2029, the Academy Awards will stream exclusively on YouTube for free globally and on YouTube TV in the US the Alphabet owned YouTube signed a multi year deal. ABC has held the rights to the Oscar telecast for decades. Terms of the deal were not disclosed, but clearly a sign of the Telegram Times.
- [33:12]
B
Kelly, the new platforms are just like the old platforms. Seema, thanks very much. Coming up, Robinhood CEO Vlad Tenev telling CNBC we're in the early innings of what he calls a prediction market supercycle. And if that's true, what's the best way to play the trend? Is it Hood? We've got details behind their new deal with the NFL and how they're reshaping the fintech landscape. As we head to break, here's another look at Medline. The largest IPO of the year opened at 35, price last night at 29 and it's trading around 37 and change. We'll be right back. Welcome back. Robinhood is unveiling a new addition to its prediction market, NFL parlays and prop bets. So obviously that puts them in direct competition with the traditional sports books like DraftKings, though their shares are green today. Flutter, which owns FanDuel. Right. My next guest says the prediction market business presents a lot of upside for the fintech space as Robinhood and Coinbase users are nine times more likely to participate than non users. Let's bring in Mizzou host Dan Dahlia. Welcome to you.
- [34:11]
H
Thank you.
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B
It's been a dizzying moment here. So can we back up and talk about the series of events? What has led to, you know, a Robinhood app now allowing me to make NFL parlay bets in competition? Like is this been a regulatory shift or what's going on here?
- [34:26]
H
Well, obviously with the new administration, everything is easier when it comes to crypto and gambling and betting. But I think what changed is that the realization it's the same people. Like the survey that we did shows you that we did a comprehensive survey of users and it shows you that it's exactly the same people. They're betting on sports here and they're buying equities and Crypto here. So why not just give them a one stop shop?
- [34:49]
B
Well because they're two different things. And look, I love the prediction markets. There's so much fun but sports betting is, is different from that. So it seems a little bit like does it matter from a. I love, I'm asking you now like the, the public choice point of view, like do we want all of these things lumped together? It's like echo, you know, do zero day options on this and then do a prediction market on that and then do place a sports bet over here. Like it's almost like we're equalizing all of them. That offends me as someone who takes the, you know, the art of investing more seriously.
- [35:19]
H
Welcome to Gen Z. They do everything together. I think it's a great. You're making the best point right, which is is are we circling too close to the sun here and eventually will we regret it? I mean so far no. But I agree with you. Like Gen Z, they do things differently so they view buying crypto as investing. So why not bet on sports as investing? So I think it's just catering to.
- [35:42]
B
Demand or maybe I might say then I promise we'll get into the picks here that putting all of these things together makes them seem like they're similar choices, differences when one of them if done properly builds wealth over time and the others have the potential to destroy it. And you know, prediction markets is just fun, that's fine. Sports betting is different. You're in the gambling world now. It comes with a lot of risks. Look at what we've seen from the data from this rollout now. So it's just that where things like if there's not going to be any guardrails and is it going to be a risk if regulators change their mind in a few more years and say you know what, actually these things should be separated out.
- [36:12]
H
No, I agree with you. I mean there's, that's the point, right? Like is this going to be going to be too much fun? Is there going to be too much of it sports betting. But right now it's the same people and I think what Vlad is doing and even Coinbase, what they're doing is really smart because they're, they're saying hey all these people are betting here on sports and they're betting here on crypto and equities. Let me just give them everything and that's the power. We actually took up our numbers for Robinhood by 6,7% for next year because it's massively accretive on the launch of.
- [36:40]
B
All people just call it sports betting on the platform. So talk through the more of the stock implications across the Fintech space now as you see them in just in.
- [36:46]
H
General for, for Coinbase. Coinbase is doing that too. So the interesting thing that came out of the survey and this is an important nuance, they have their event today. So I'm going to be tuning into that 37% of the, you know, of the average user, basically 30 is 37% likely, just as likely, let's call it to sell crypto than putting in fresh money. So there could be an interesting kind of like exchange here between I'm going to do sports betting, they're self cannibalizing, self cannibalizing and then we have to worry about the take rates because the take rates on Coinbase on crypto are very high. Are the take rates on those betting or prediction markets are going to be as dilutive to the revenue. So we're a little bit more cautious about Coinbase's entrance into this world. For Hood it's like pure upside.
- [37:34]
B
So in summary, you think this is a lot of upside for Robinhood? Time will tell on Coinbase, maybe present some risks to what it does at the core. Are there any other implications for competitors in the space?
- [37:44]
H
I mean everyone is getting into it, I think, you know, we also cover Gemini and they're getting into it. So it'll be good to see everyone else doing that because I feel like it's sort of the table stakes at this point. It's the currency to sit at the table. You have to have that offering as.
- [37:57]
B
A fintech and I'm surprised the DraftKings and Flutter are shrugging it off the way they are. But maybe they've already had so much customer acquisition from their previous marketing efforts over the years that it doesn't matter. It just seems like a big risk for them.
- [38:07]
H
I remember, I mean I don't cover them but I remember when Vlad first said at their analyst day that they're going to get into prediction markets, I think it was DraftKings, it felt like 10% on within a minute. So it's definitely a risk to incumbents, especially if no matter who they are, if you know Robinhood is going to get a lot more people doing a lot more stuff on there. Like a one stop shop thing.
- [38:29]
B
Indeed. Kind of like Amazon for financial.
- [38:32]
H
That's a good one. The Amazon of.
- [38:33]
B
I'm sure that's what they're going for, you know.
- [38:35]
H
Exactly.
- [38:36]
B
Dan, thanks so much. We appreciate it. Dan Dalive from Zuho Speaking of Amazon, they're the worst performing MAG7 stock this year as Alphabet and Microsoft have left them in the dust. But that could soon change. CNBC confirming they're in talks now with Open Air. We'll bring you all those details next. Amazon now in talks to invest $10 billion or more into open AI. As part of the agreement, OpenAI would use Amazon's in house AI chips for its models. What's going on here? Let's bring in Mackenzie Segalos with all the details for today's tech check. Mac, what can you tell us?
- [39:15]
G
Hey, Kelly. So this is a win win for both Amazon and OpenAI. Now for Amazon, it is about redemption. Anthrop been its marquee AI partner running its cloud models on Amazon's in house AI chips. But lately the startup has been signing new compute deals with Microsoft and Google and that's been a reputational hit for Amazon and especially for its Trainium chips which still are viewed are still, which are still not viewed as best in class on performance. Now as for what OpenAI gets out of this, it's all about cost. The company is staring at a $1.4 trillion compute bill over the next several years. And a lot of that that was modeled on in video pricing. But Amazon's training chips can undercut Blackwell's on cost by up to 40% and that is real money. So if this comes together, it's chips for equity. Amazon gets a flagship customer and a bigger seat in the race while Open Air diversify suppliers and brings down its run rate. And you can see that narrative playing out in the stock. Amazon has been the Mag 7 laggard this year, but shares are higher today. And leading that group so far this session off the back of that OpenAI deal talk. And just an hour ago, Kelly CEO Andy Jassy announcing a major shakeup for its AI team. Rohit Prasad, who ran Amazon's AI efforts, is departing and infrastructure head Peter Desantis is stepping in. He'll oversee a new team that groups its AGI chips and quantum teams all under one roof.
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B
Kelly, I'm asking ChatGPT, how good are Amazon's AI chips? Chips? Because that's the part of the story, Mackenzie, that I get stuck and I go, okay, Amazon, which has big anthropic investment, now it's investing in Open Air. Okay, fine, maybe doesn't feel great if you're anthropic, but it's the fact that they're going to use Amazon's chips. I don't feel like I hear a lot about those.
- [40:58]
G
And out here in the Valley they don't have the best reputation on performance. What they do have a name for is being the competitive, being competitive on pricing. That's something that Andy Jassy has really pushed published during earnings calls talking about the fact that they undercut Nvidia there. But it's really Google's TPU's, their in house, you know, their in house AI chips that have been the popular choice here. And up to this point OpenAI has exclusively worked with Nvidia's GPUs, whether they're using Google Cloud or they have their arrangements with Microsoft and Amazon. So this will be a real pressure test of the training chips to see how they do with running and training OpenAI models. And it comes at a time that OpenAI really needs to save on cost because when you look at these buildouts that they've committed to, every gigawatt of compute costs roughly $50 billion. And according to in video pricing, roughly $35 billion of that is on chips. As if they can save on cost there that ripples across everything.
- [41:54]
B
According to chat cbt, they say Amazon's AI chips are good, especially if you're all in on us and care about costs, but they're not a universal drop in replacement for Nvidia GPU. You so there we have it. 33 seconds by the way, to give me that answer. Mackenzie, thanks for now. We appreciate it. Mackenzie Segalos. Coming up, it's time for a mystery chart. We're overdue this hour and shares of this name are up about 16% over the past two months. And Surat said, he says there's more room to run. Message me on X and we'll reveal it on the other side of this break. Big moves across the commodity space today and really all year long silver prices as we mentioned earlier now at a record they hit 67 an ounce earlier on gold around 4300, up 65% this year. My next guest likes one name in particular in the metal space. Let's bring in Sarat Sethi. He's the managing partner at DCLA and a CNBC contributor. Sarat, it's great to see you. And one of your favorites is a name that I those of us who lived through these cycles for like 20 years now know they can be extremely volatile and not always the best stewards of capital over time. That said, hats off to those who called the likes of Freeport as great plays. Do you think there's juice left in.
- [43:09]
I
Them I do for numerous reasons. I mean, if you think about just the dollar and commodities are sold in dollar and if the view is, hey, dollar is going to get weaker commodities, a great place to place the other thing about Freeport. It's copper.
- [43:24]
B
Copper.
- [43:24]
I
And copper is in everything that is now in industrial demand, whether it's transportation, data centers. So globally we are just short the supply of copper. We haven't built a copper mine in 10 years. And Freeport is great shepherds of capital, as you mentioned. And it's a great way to play the big copper demand that's coming up over the next decade.
- [43:44]
B
Is that kind of your, you know, I know we were talking stock specific, but I like to know what your kind of macro viewpoint is surround on the world. Do you, do you think the dollar keeps weakening? I mean, what do you make of the fact that palladium is, and gold and silver and copper and all these metals are soaring?
- [43:58]
I
So I think a combination of, yes, a weaker dollar as we cut interest rates going into next year, but also inflation. I think the market's telling you that if you want an inflation hedge, you've got to be in commodities. And so you're seeing it in silver, you're seeing it in all the other commodities also. And they're all kind of rising at the same time. So I think investors are looking at this as a hedge in their portfolio to say, you know, what if we get some inflation back and the dollar gets weaker? Commodities are a great place to play.
- [44:25]
B
All right. We also have Micron, which is going to report after the bell today and it's up, I don't have to tell you, 180% this year. Again, this kind of like the commodities, these are traditionally cyclical names that traded at lower valuations, but now it's got this secular tailwind from the rise of AI. You need what their, some of their memory stuff, as I understand it, to go in conjunction with the chips in these data centers, down three and a half percent today. Would you buy it here?
- [44:48]
I
I wouldn't. I'd wait for the earnings. You know, I think expectations are really high if you look at kind of where the stock has gone. Also if you get any type of commentary about, hey, listen, you know, the data center is being pushed or our demand is not where it is. But even if you get that and just look at the companies that have said it, I think right now you're not getting the benefit out until you actually see them being sold. Even if the orders are there given 180% run and it's a semi stock, so it's in the semi ETFs. Pretty much all the other semis are being sold off. So I would wait. I think you're going to get a better opportunity to get back into this name.
- [45:24]
B
All right. Finally, the other kind of curious one on our minds is a lot of what's going on with the consumer and holiday shopping. For instance, Gap got three upgrades this week from Wells, Telse and Baird. It's up 17, 16% year to date. What do you do with the retail space here? Do you like this one? Do you like others? We have names like Abercrombie that are up like 60% in a month.
- [45:44]
I
Yeah, I think it's like the case shaped economy we've talked about. Kelly, if you have value and that's where Gap is really playing, that's what they're going to do really well. We are playing the luxury group with Richmond high end Cartier Van Cleef. So I think you have to go specifically pick the stock here because just owning retail is going to be very hard to do. You need to have a thesis and you know, Gap is the value thesis, luxury, like a Richmond. So. So be careful as you go into here too, because management's here really have to not only focus on kind of the demand, but also what are the tariffs going to do it with, the input costs going to do going forward?
- [46:18]
B
Yeah. Are you kind of bailing on the trade, broadly speaking here, just to kind of circle back to that as we kind of wrap things up? Or do you think it's just a reset? Even a name like Oracle, right. You have to have a point of view.
- [46:30]
I
You really have to have a point of view. And I think valuation matters. And this is where, look, we do like the Amazon's and Google's of the world, but in size, not the size that, you know, the S and P is 6,7%. You can own these companies, but I think you have to be diversified around them. So when we just think of the barbell approach of, hey, you've got Google and you've got Amazon, but then you got a freeport in there and a couple other value plays. Yeah, that can kind of protect you on the downside.
- [46:54]
B
Final five seconds here. What's your favorite name or play for next year so far?
- [46:59]
I
I think areas, defensive areas like health care, I think are going to do really well because they've got earnings, power and valuation.
- [47:08]
B
All right. You know, it's been its moment. Look, look at Medline today. Right. Sarah, thanks so much. For joining us. Good to see you.
- [47:15]
F
Thank you.
- [47:17]
B
And that's it for us. With stocks near session lows, we'll pick up coverage on Power Lunch. Brian Sullivan right after this break.
- [47:24]
A
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