Skip to main content

tv   Tech Check  CNBC  April 21, 2022 11:00am-12:00pm EDT

11:00 am
level employees. our portfolio companies are talking about the scarcity of labor, the cost of labor and my concern is that as companies respond to that, as they raise wages, of course, they'll then start to raise prices. so the idea that this inflationary pressure will go away quickly, that seems tough to us. >> that will it for us right here on "squawk on the street. "techcheck" starts now ♪ good thursday morning, welcome to "techcheck. i'm deirdre bosa with carl quintanilla. jon has the day off. today, tesla shares they are rocketing higher, up double digits the bold bear debate on that stock. speaking of tesla, elon musk details the financing he has for twitter bid. pressure on the board to respond now. more on that. plus, the netflix hangover akman flees. should you carl we're going to start with tesla up sharply, of course,
11:01 am
beating on the top and bottom line for q1. record delivers margins. take a listen to elon. >> vehicle production in q2 will be similar to q1, maybe slightly lower. but it's also possible we may pull a rabbit out of the hat and be slightly higher, but it is roughly on par but, then q3 and q4 will be substantially higher so, you know, it seems likely that we'll be able to produce over 1.5 million cars this year. >> musk adding that he thinks tesla has, quote, a reasonable shot at 60% growth in vehicle production year on year in 2022 and for more on tesla this morning, let's bring in tony saganoci to talk about the quarter, the metrics the call. tony, most importantly, the
11:02 am
automotive margins, right, x credit >> yeah. good morning, carl it was a terrific showing by tesla. i think people were worried that ultimately margins would be pressured because of all the supply chain issues and inflation. and tesla was able to increase margins by about 1% or 100 basis points on a sequential basis, so that was very reassuring you know, tesla has been able to do it through several ways they've been effectively raising price. because they don't have dealers, they're capturing those price increases not a distribution partner. and you know, they've done a very good job in terms of ramping capacity in their china facility where margins are higher so most of the growth has been coming out of china. margins there are better and so the combination of those things led to very strong margin performance in the quarter >> so, i don't -- i doubt that gm and ford, for example, are in
11:03 am
your coverage universe but if they were, would you expect them to try to adopt some of these efficiencies that are almost unique to tesla or do you think they can try to close that gap given their own legacy models? >> well, i think you know that's really the challenge in any industry when you have a disruptive force everything is purpose built and everything is new. and there's no structural legacy disadvantage so, you know, in many ways the dealership for traditional automakers has been an advantage historically right now arguably it's a disadvantage because it creates inventory, it allows for less pricing flexibility and it eats into profits there is a cost of distribution. and much like dell did 20 years ago by selling pcs direct, tesla and other new ev startups have started that so that's the challenge. tesla has all new factories.
11:04 am
tesla doesn't have a legacy dealer network and those are disadvantages for the large auto incumbents today now, their scale brings some advantages, but you know, that's the balancing act is to try to leverage scale and customer relationships while being able to overcome the fact that their factories are not purpose built for evs and they have a dealer network which at times can be cost ineffective. >> tone, you continue to be impressed with the company's performance but its valuation where you get stuck and have underrating on the company i wonder what kind of forward pe multiple would be good for tesla? what kind of growth are you factoring in over the next few years? >> sure. so, you're right tesla is executing very well and kudos to them for their performance. we do struggle with valuation. tesla produces about 2% of last
11:05 am
year produced 1% of the world's cars and had 50% of the total value of all car companies so all other legacy car companies make 98% of cars and yet they have the same value of tesla who produces 1% of cars. >> so toni -- go ahead >> it's about the sustained -- the ability to sustain the 50% growth rate. particularly since tesla really only has two cars right now and doesn't have anything that's high vol that's planned. they have cyber truck, but that will be expensive and lower volume and they have what they talk about a robo taxi last night but we're skeptical about tesla's ability to deliver by 2024 or even 2025. >> what do you think the appropriate growth rate is do you not think a few years from now tesla cannot double or triple its market share? >> well, i think tesla's market share is likely to go down of the ev market the fortune news is the ev
11:06 am
market is growing very quickly so, tesla believes, and i think bullish shareholders believe, that tesla can do, you know, up to 20 million units going forward. we think that will be very difficult. we think, you know, tesla might be able to do you know, 7 to 12 million units over time. we think that even may be aggressive and to do so, it will have to enter lower price, lower margin segments so the profit profile that we're seeing today may not be able to be sustained >> finally, toni, when you think about future sources of competition, we talked a bit about legacy oems and what they might put together or what apple might do or what power is behind amazon rivian or google. are you surprised we haven't heard more of an aggressive push at least qualitatively from those players? and if -- among them, who do you think will be the most vocal in the quarters to come >> yeah. you know, apple has always been
11:07 am
very guarded about talking about anything and the time frame for their entry is probably several years from now so we don't expect apple to comment at all i think amazon is ultimately thinking about and experimenting with electric vehicles as a transportation vehicle it's unclear if they will ultimately participate directly. but, you know, there are other technology companies that have expressed interest obviously google with wamo who i think will be much more vocal over time and is starting to build partnerships with vendors. you have some of the chinese vendors who also making investments. so we'll see more. but i think your point, carl, is this -- the automotive market is becoming increasingly competitive space. you have a bunch of new ev entrants you have a lot of technology stall warts showing interest in
11:08 am
the space. that generally doesn't lend itself to margins going up and that's implicit in tesla's valuation going forward. >> so many cross currents it's fascinating to watch really good noting and reaction to the earnings last night, toni, thanks good to see you. >> thank you. we're going to stick with the musk universe call clarity on his bid for twitter this morning while the board has yet to respond to musk's offer a lot of outside commentary has been around how real this bid actually is and musk trying to put that to bed this morning with a new filing saying that he has received commitment letters for $46.5 billion in funding to finance that takeover offer. so, how do you get to 46.5 well, musk says that he has committed about 21 billion in funding through equity financing, so that's his cash, 13 billion in debt financing from banks, and then about 12.5 billion on margin loans using his own tesla shares and own enormous personal wealth to finance this purchase. so, all those jokes about musk
11:09 am
paying for this with the spare change he finds in his couch cushions, not not accurate interesting the filing also says that given he has yet to hear back from the board, musk is exploring a tender offer to acquire shares of twitter directly from shareholders, going around the board but of course that poison pill in place. it's basically impossible right now, julia great to have you on set by the way at one market. >> so great to be here. >> it's been a few years. >> yes >> okay. so we have not heard back from the board yet. >> actually just a couple of minutes ago we did hear back from twitter twitter sending us a statement saying we are in receipt of the updated nonbinding proposal from elon musk to provide additional information regarding the original proposal and new information on potential financing what you just laid out. and the board says here in the company says in previous announced and communicated to mr. musk directly they are committed to determined to determine the course of action it believes is in the best interest of the company and all twitter stockholders
11:10 am
so, really interesting to see that they are not changing their stance here. they're continuing to move forward with this review i want to point out that twitter earnings are a week from today, next thursday morning. and there's this question of whether we'll hear something more conclusive from twitter before then. >> right great point. it's happening so quickly. you never know what's going to come out next. i want to ask you about netflix. i know you were here covering that so closely yesterday a new tidbit of news last night. some people thought bill akman might see more value here given the selloff. not the case at all, he's out. >> bill ackman is out. what will we hear from all the other streamers? hbo and hbo max added 3 million subscribers this in this past quarter. maybe netflix has its own issues and hit saturation and there is hope now and some potential that we'll see these other streamers perform better than netflix did instead of shrinking they could continue to grow as hbo and hbo max did. >> there's this question of is
11:11 am
netflix prestige tv or not when is the last time they had a prestige tv hit. it will be interesting to see how that shakes out. lastly, i know you're covering snap tonight. >> yes. >> sort of a bell weather, right? set the tone for metta. >> remember, last quarter facebook reported first. facebook reported before snap and they warned about all of these different negative impacts they were having from the ad targeting head winds from apple changing its operating system. facebook reported these negative numbers. snap plummeted but snap said we're outperforming and beat on all the different metrics. this quarter, snap is expected to continue to grow revenue, continue to grow its user base, expected to add 11 million daily active users added 13 million last quarter, but if snap outperforms, the question really is what kind of head winds are they seeing broadly because that could be applicable to these other platforms as well, whether it's the impact of the war on european ad spending or more ad
11:12 am
targeting head winds or impact of inflation and supply chain constraints on advertisers so i think those broader questions are going to be incredibly valuable for the rest of the -- >> certainly some of them -- all of them very relevant to the other media companies, social media companies. >> yes. >> julia, thank you for that. netflix, that stock continues to fall. our next guest notes that it's still trading much higher multiple versus pure play media peers. joining us now dan niles bill ackman doesn't see value at these levels neither do you. >> i think it should be valued like a peer play media company all we have really done if you think about it, deirdre, is we changed from a cable bundle to now a streaming bundle so, you know, i had -- i was watching netflix and amazon before the pandemic. now i have hbo max i've got peacock i've got some international ones because i like to watch some of those programs
11:13 am
so, i've got multiple different streaming stuff. and so that's all you've done. if you remember, you still got the same problems with streaming that you had with media, which is increasingly people are spending a lot more time on social media or playing online video games. tiktok, the average user spending about an hour and a half on that platform. so these are all the same problems as before, you just changed it from cable to online streaming and that's why netflix, i think, should be valued like the pure play media company. >> dan, like you, my family, too, has been adding on service after service. it is feeling just like this separate even more expensive bundling so when you look at netflix versus some of the others just spoke to julia about hbo max, where is it positioned i mean there is chatter and that churn that we saw the past quarter. is that reason for concern maybe tell you that if consumers are going to cut, it might be a netflix? >> well, here is the thing that people forget, go back to the
11:14 am
june quarter of 2019 they had negative subs in the u.s. back in 2019 in the june quarter for the first time since they split their dvd mail-in business from their streaming business they were already at saturation. then the pandemic came along and everybody stuck at home and all we can do is stream. so, that bailed them out and now we're right back to where we were before the pandemic so, this has been going on for a while, just the pandemic has thrown off a lot of trends and now we're seeing some normalization in those trends. and on top of this, you've got apple in this game, you've got disney in it, you've got comcast in it, amazon has already been there, but massive companies with huge cash flow streams from other businesses that they can use to subsidize streaming and netflix has one thing, streaming. they don't have amusement parks, they don't have movies, they don't have merchandising and they don't have an ad-supported
11:15 am
service. so, they've got a problem relative to these other guys. >> they don't have those things yet, but on the ad-supported model yet, they laid out very clearly that is their intention. so is that an exciting and new revenue stream you think could add a lot of value to the company? what did you make of the announcement as well and the idea they would maybe outsource it does that make sense to you? >> yeah. i mean, for us we covered our short. the stock is down a lot. and so we are pretty disciplined when a stock is technically oversold we get out of it. but as i responded on twitter yesterday to a question, i said, look f you look at facebook, the stock got hit for 26% the day they reported. the stock has then gone down i think from 150 -- sorry, closed 126 afterwards and continued to fall from there as the valuations compress to about 14, 15 times or so and so i think with netflix you have the same issue where it may
11:16 am
be not be short but i don't want to long it because you look at where the other pure play streamers are trading at 10 to 15 times, netflix is still around 20 times earnings so you could see a lot more room to go down before you say, well, maybe this is fairly valued. the ad stuff will certainly help, but they're doing it from a position of weakness, not strength if they had done this a year or two ago when they first had these problems with saturation >> dan, i want to get to tesla, but really quick sort of on this topic, i know you're a big believer in the wallet shift of the consumer to services, big believer in travel you think the airline rally makes sense. but there's been no worse dow stock over the past year than disney can that all be because of fears that the north america saturated when it comes to streaming >> well, you know, disney has a very high, but that one is a tricky one because you got streaming on the one hand but don't forget they had
11:17 am
disappointing streams numbers, but their consent is a lot more narrow they don't have the breadth that some of the other ones do. and so, you know, that one is in a different bucket i look at what united airline ceo said last night, he said this is the best demand environment in 30 years. and then you look at what netflix had to say and they've lost total global streaming subs for the first time in over a decade and that i think tells you what you need to know about the switch from spending on services like netflix to travel and leisure like united. we own southwest, we own high yet, we own uber, all the stuff that is sort of in that ecosystem, casinos so that's the space that we are looking to outperform. when you have the best demand environment in 30 years, that's pretty good. >> dan, while we have you here, i want to get your thoughts on tesla. we just had a conversation with toni is underweight about its valuation. what do you think is the right valuation is
11:18 am
and considering the company just made, what, $3.3 billion, you're seeing some compression here now, aren't you? >> yeah. i mean, look, i'm all about risk to reward. there's some fund managers that will buy risk at any price they don't care. that's not the way we function and some strategies are right in some environments when you have 10 trillion in stimulus go for as much risk as you can take when you're in an environment where the fed has to be incredibly aggressive to deal with inflation and you have multiple compression and i think a very good chance, which is our base case for recession in late 2023, you want to be careful about valuationsand don't forget, you know, tesla is trading at about 12 times to sales. ford, gm, they traded .3 to .5, even the ev manufacturers in china growing at about 90% revenues year over year versus tesla at 60, those guys in china are trading about 2.5 times ev
11:19 am
to sales china is the biggest market in the world for evs. so tesla, elon musk is a thomas edison of generation, one of the greatest ceos of and in multiple industries, spacex, boring company for transportation, solar, ev. but the valuation you're paying a lot for in facebook, and netflix should be sort of warning signs of what can happen if things turn so, i'm not going to unfortunately be there we've owned it in the past when it seemed like -- we can't own it here with our strategy, at least. >> well, we didn't get to the -- i get that he may be soon in another industry, social media next time, i suppose, dan. thanks so much, dan niles. >> thank you still to come this hour, the fang names that wall street says you can still own and plus more on a union at apple. "techcheck" is just getting started. ♪
11:20 am
it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board. excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position. you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪♪
11:21 am
as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig.
11:22 am
all on the most reliable 5g network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™ ♪
11:23 am
time for a gut check netflix in the red after its nose dive yesterday, but wall street still likes some other faang names. credit swiss says metta and alphabet are still a buy as well adamson, bernstein still has them at outperform, citi adds amazon to their focus anticipated continued growth of the tech giant apple, microsoft and google in the green today and meta and amazon lower the acronym keeps getting truncated. >> the name has changed the stocks are the same. it's unclear to me if the persistent sell side bullishness on names like amazon and alphabet are a net positive because maybe they have to catch down or have some reckoning in terms of sentiment approach. what you see over the last six months is amazon and alphabet
11:24 am
sideways, almost exactly in tune with the nasdaq 100. they're not really distinguishing themselves although the alphabet pattern a lot of people are pointing out looks top pi and maybe has to catch down anything related to bumps up against media, streaming, digital ads obviously not working. now clearly facebook and netflix, two quarters in row, they're being punished for it. can the gap persist? massive moneymakers but the average stock in the market is doing so much better than these and the market prefers apple right here apple only 6% off its highs. hanging in there microsoft had a much stronger 2021 so interestingly the pre-faang leaders are holding things together here. >> i wonder what you make, streaming, i'm not sure what we can do much about that. >> right. >> but there was this underlying current that corporate i.t., hybrid work would work for certain tech names in software, does that not apply to faang at
11:25 am
all? >> it doesn't seem to be leverage able directly in terms of faang we're starting from a point where these stocks were trading up towards 40 times earnings things could be good there could be demand right there. there could have persistent advantages in the world but the market figured it out and now we're just com pressing valuations. >> we haven't touched on the impact of minor moves in yields, right? hence these guys directly. >> yes it does. although i would argue with them down so much from their highs, we're not talking about little small moves in yields. in fact, the nasdaq was up 7% from mid march when the ten year was at 215 up at 285 and much higher on the index. i think at this level once you had this correction it's less about the discounting effect of yields. >> some might not mind if maybe the weighting shrinks so we rely less -- >> i think a lot of people prefer that at this point. really the non-faang valuation of the market is not nearly extreme to the upside. >> great stuff, mike
11:26 am
mike santoli, dee? coming up, why our next guest says tesla will be up ten times by 2030. apple store employees looking to unionize. that story iright after the break. ♪
11:27 am
11:28 am
11:29 am
welcome back to "techcheck" i'm carl quintanilla with deirdre bosa we continue to watch tesla today for those of you wondering, stock's best day ever, that was may 9th of 2013, when it rose 24%. we're going to get more on the quarter of course in just a moment first a news update with morgan brennan. >> hey, carl here is what's happening at this hour american and alaska the latest airlines to post strong quarterly results. watch their stocks surge american says it had record
11:30 am
sales in march, surging demand will help report profit in the current quarter. alaska air says march was the first month when revenues topped pre-pandemic levels. insurance broker marsh mclennon jumping 4%. the firm getting a boost from improving premium costs an higher organic growth across its business units free port-mcmoran. cut copper production outlook for this year and next and jobless claims are down slightly in the latest week to 184,000. they remain near five-decade lows the total number of people getting employment benefits fell to just over 1.4 million and that is the lowest level since february of 1970 deirdre, back to you. >> morgan, thank you. >> we're going to turn back to tesla. shares that continue to climb. our next guest thinks this is actually just the beginning. he expects the stock to be up ten times by 2030 and what he is calling the tesla decade
11:31 am
joining us now tesla bull and warm capital director of research eric markowicz. we spoke a bear underweight all about this idea of valuation i'm assuming that you're projection takes into all the exciting things we heard on the call last night, like that annual growth of more than 50% robo taxis, energy, et cetera. >> yeah, first of all, thank you for having me on and you know, the more bears the better i think we like positions that are complex. and tricky to figure out from a valuation perspective. so everything that we heard last night in the call really confirms a lot of the analysis that went into that 91-page report which obviously i can't get into all 91 pages today. but just the highlight reel, which is we expect 50% compounded growth over the next several years. we expect expanding margins and think this is very early on in the tesla story, really only the first or second. >> i'm curious, eric what do you
11:32 am
think of the disconnect between your traditional wall street analyst have been behind this trade for many years and yourself and the arks of the world looking to the future. why do you think that wall street isn't, you know, counting the idea of robo taxis which elon musk said last night is going to be cheaper per mile than a subsidized bus ticket is there just a disbelief that he can actually do it? >> yeah. so i think in general what i would say is we consider ourselves outsiders which really i think gives us an advantage. what we have seen historically is on wall street relatively superficial level of research. i think wall street tends to go wide and our advantage comes on going deep and so when we own a position and we want to own positions really for the long term, we need to go super deep into the analysis to find a variant perspective that ultimately is differentiating from wall street's perspective we love to find these scenarios. we love to find scenarios where there is a really wide
11:33 am
dispersion between our belief of the future and the growth and consensus expectations and the wider that dispersion the more arbitrage exists to exploit as long-term investors. >> eric, i wonder if you're surprised at i would argue maybe the lack of musk copy cats people stealing pages from his play book, either from a production standpoint or a capital rate standpoint or marketing, troll even, twitter troll, standpoint. and if there are some, who would you look to first? >> yeah. i think that what i find shocking, so, a colleague and i went down a couple weeks ago to austin, texas, look at the new factory, which is a pretty incredible facility. one of the more shocking elements to me was not just the scale and some of the core engineering and innovation that's happening there, is that they simply opened it up for everyone to see. i thought that was such a move of confidence to show some of the most profound ground breaking, cutting edge,
11:34 am
manufacturing techniques and tesla just invited the public in to see it. i think that speaks to the confidence and the maturity of this business. and ultimately, that factory combined with berlin, shanghai and freemont were very early in the growth curve from our perspective. >> right i also think it's interesting he gets knocked around a bit for past projections or forecasts that maybe were late, right? obviously his robo taxi prediction is still late, but i wonder if you think at least the street is coming around to the idea that, all right, maybe the date that he gives on a certain target is questionable, but he's going to get it done eventually. >> yeah. so be clear, from our research, we do believe that tesla will achieve autonomous robo taxi network. one of the core mistakes that many investors seem to make from my perspective is they disbelief elon this individual has cultivated a
11:35 am
culture of innovation that exists in all of his firms not just tesla but at spacex as well and so, frankly when we just go back to our evaluation, again this is all our analysis, our opinion, not financial advice, our ten x by 20-30 valuation assumptions do not include robo taxi or other real world a.i. products. >> wow eric, even some of the tesla bears will admit that he's one of the greatest ceos in a generation the thomas edison of our time. i wonder what you think of this bid at twitter, this run at twitter, and there wasn't a single question on the call last night, but don't you think that's relevant especially if he's going to sell some of his tesla shares or be the ceo, is it possible that this could be a bridge too far, even for elon musk and amount to a distraction? >> you know, there's never a dull day we have owned the position for more than four years it's been our largest position by far for those four years and longer and what i would say is don't
11:36 am
get in the way of elon if he wants something. and when i hear this idea that it's a distraction, i just have to laugh this is a guy who is literally running some of the most ground breaking ideas across multiple verticals and this is maybe a big deal for you or i, but i think in our world this would be akin to buying a new car or house where this is -- >> or a yacht. >> yeah. he wants to compete with bezos's yacht. >> this is really just in my opinion a footnote on his cv >> that's fair and he certainly has a large pool of talent to pull from if he wants to find some people to run that company eric, it's great to have you on. thank you. >> thanks for having me. as we go to break, a programming note here, don't miss sara eisen down in d.c. this afternoon, big interviews including a conversation with fed chair jerome powell, beginning at 1:00 p.m. eastern time "techcheck" in the meantime is back in a moment
11:37 am
11:38 am
11:39 am
♪ apple store employees in the atlanta first to file for union election steve kovach here in san francisco. we were talking about this earlier because we can in person and i was making the analogy to amazon, asking you how this was different and in a way i know
11:40 am
it's factory workers versus retail workers these are well paid relatively but the pandemic changed everything. >> yeah. that's exactly right, dee. so i was talking to cwa rep, a union whose is backing these employees, and i was like, why is this happening? apple -- first of all it's a small number of apple employees. they're well above pay for most retail, 20 bucks an hour starting, get stock grants, parental leave, all this stuff you typically don't think of retail why? it's the pandemic resetting expectations of what people expect to get from work. and it's not just retail it's not just front line workers. we're seeing as people are returning to the office, everyone has a new idea of what their job should look like and in the retail space, not just apple but starbucks and amazon, they're fighting back and saying, hey, we kind of learned a lot about what we can get out of our labor and what it's worth and what we think we're worth and in apple's case, they're saying, look, richest company in the world, most valuable company in the world, they can afford to do.
11:41 am
let's see what happens. >> amid a labor shortage more options and what looked really good the benefits and the pay that apple is offering, other companies are offering this because they have to, right? >> verizon this week upped their pay to 20 bucks an hour minimum as well but what we're seeing from the apple side is at least there's the grand central store in new york, they're asking for 30 bucks an hour and talk at this atlanta store they haven't had any specific demands yets i've been asking, they still don't know but what they are pointing to is if they want a good cost of living experience in atlanta, it needs to be 27, 28 an hour. >> so with all of these unionization efforts at the big tech companies, starbucks, the key question is the domino effect we saw a second one come really quickly. are you hearing anything about other employees at other stores? >> yeah. i've been asking that. it's so weird with these -- it's so dispart and disorganized to be honest about how this is happening. >> at first they are. >> each store chooses which union they want to work with two we heard about are working with two different unions.
11:42 am
they like to keep it quiet until they're ready to go public and have the cards signed, until they're ready to file they don't want to show their cards too soon to apple because -- or whatever employer anyone is organizing against because that's when the activities from the employer come in and say here is why you shouldn't unionize. >> what's apple saying amazon fought this really hard i assume apple is going to and we heard some commentary. >> apple's official statement to us and same one they gave us mon, look, they point to all the benefits they give, paid parental leave, stock grants, they point to all this and say, look, we have great benefits and compensation program for retail employees above average, so you know bottom line. >> yeah. none of the tech companies want this to gain momentum. >> 100%. we'll see what happens. >> thank you so much for doing this on set. dee, we're keeping our eye on bitcoin today trading two-week high. "techcheck" is back in just a moment ♪
11:43 am
(vo) some bonds last a lifetime. some bonds inspire confidence, and some you grow to rely on. these are the bonds worth investing in. for over 50 years, pimco has reinvented fixed income to create opportunities for investors in every market environment. so, no matter what happens you can build the bonds that mean the most to you. pimco, a global leader in active fixed income.
11:44 am
bonnie boon i'm calling you out.
11:45 am
everybody be cool, alright? with ringcentral we can pull bonnie up on phone, message, or video, all in the same app. oh... hey bonnie, i didn't see you there. ♪ ringcentral ♪ ♪ got some breaking news out of warner brothers discovery and cnn plus julia boorstin has that for us hi, julia. >> that's right, carl. cnbc confirmed with a close to
11:46 am
the situation source warner brothers discovery is planning to shut down cnn plus. it has not been in operation very long but of course this comes after cnn plus launched just before the closure of that merger and now that the merger has gone through, it appears that this combined company wants to really focus on building hbo max as a unified service and to bundle together all of the different streaming operations so, this really indicates that they're not happy with the direction that cnn plus was going in there were a number of reports that it was not drawing a lot of subscribers, but we did not have any official subscriber numbers and now we get that company's earnings we expect to hear from about how he plans to handle all of those streaming services together no official comment from the company yet, but we do expect to hear an official announcement on the shuttering of cnn plus in the next hour or so. guys, back over to you. julia, stunning reversal with the big management change
11:47 am
i guess will be -- already comments on twitter today comparing the shelf life of cnn plus to what was qibbi the question is this a one-off because of the change or management or going to feed the argument that there's true saturation in streaming overall in north america, at least >> well, look, i think the cnn plus and the netflix audience are very different one thing that was interesting about cnn plus, it was very much a subscription service we have seen other players such as nbc's news now at our sister company focus on being ad-supported and free. cnn plus going in a very different direction. and i think there is this question of how many services are consumers willing to pay for. and i also think that zazov probably sees cnn plus and all of these other assets as an opportunity to build up the bundle and make sure that what he's selling, the streaming service he's selling can compete at the level of a netflix and disney plus because there aren't going to be that many players that end up surviving here so the question is what are the three streamers that people are
11:48 am
going to want to subscribe to and can cnn plus help bolster that. >> now, when you say it wasn't in operation for very long, what was it two or three weeks? >> just about three weeks now. i'll have to go back. >> qibbi was around longer again, i would say a different situation. qibbi would say its failure because it was about quick bite consent designed to consumed on the go and did not adapt to the pandemic. >> there is crossover. what's that going to do to moral. they make a gamble to continue to stay relevant and gets shut down after a few weeks. >> one of the issues was they already were pulling back. with this merger looming, we're not getting the financial resources they expected. so they had this big plan. they had this expectation. going to get $1 billion to launch it but never got all of those resources. so people were really being stretched thin according to people i talked to at the company, people were being asked to do multiple jobs.
11:49 am
they weren't able to hire all the additional people they needed to to manage two different shows for two different platforms and with the recent news they had stopped all the marketing for the cnn plus the writing was on the wall. >> makes sense >> wbd down 6% the news it was axios yesterday, julia, said cnn plus was doomed. but i'm not sure we expected the news like this quite so soon appreciate that, julia boorstin. turning now to software. it is no secret the sector taken a hit this year. where might you find some opportunity? our next guest likes z scaler and mongodb because they pass the rule of 40 test, growth rate and profit margin above 40%. joining us to talk about the sector, elliott robinson pretty fascinating framework, elliott. i know you think valuation is still part of that equation, right? >> that's right. i mean, if we take a step back and we look at the best merger cloud index, this represents the 78 best cloud software companies in the public market those are down about 28% year to
11:50 am
date but the top are garnering 11 x of four revenue multiple down from 23 times in q4 of last year so as you have been talking about all day, interest rates go up, cost of capital goes up, companies that have a widening bridge towards that pathway to profitability and free of profil be penalized even more harshly by the street. as we enter the summer months and look at the software, we're analyzing companies to make sure the top line growth rate and the profit margin are healthy as they think about the quarters ahead. >> elliott, it's great to have you. it's deirdre i know you think that can re-open in the third quarter what leads to that especially as we start to see valuations in private markets follow their public counterparts. do you think that some of your portfolio companies and some of the bigger unicorns are going to have to readjust, rerate themselves and that's how the ipo market opens >> yeah. what we will see is a stabilization of valuation as we go into the second half of the
11:51 am
year in q3 and q4, but there are a couple of companies that follow their predecessors in 2020 and 20 one. one is service titan going after field service workers and plumbers, and electricians and people that do gardening and landscaping. it's a predominant player in the space. they have a great software solution and at massive scale they're able to add new attach rates and new revenue skus so they can compound growth regardless of whether valuations are up, down in the quarter. they have a long bridge ahead of them in terms of ago company i like in the data infrastructure and data bricks and they surpassed ar and compounding growth and great net dollar retention above 40% and these are two companies that despite interest rates changing and global macro uncertainty that we'll still face in the second half of the year, these are great, stable companies that follow their
11:52 am
predecessors from the 2021 cohort. >> we spent the last couple of days talking about average valuation multiples in cybersecurity. do you think at this point those are overextended >> no. you know what's funny, a citibank report came out recently that said 78% of ctos and i.t. security special firsts are finding it harder and harder to secure their networks as their employees are working from home or remote locations so what you're seeing is efficiency scored well north of 40% and the cybersecurity average and the m cloud right now is 63% so again, that's really strong top line growth because the problem is unfortunately only getting bigger for enterprises and also these companies are able to generate free cash flows. so vis-a-vis, the general, artificial intelligence and the rpa space and the cybersecurity category is outperforming and all indications in the macro economy show they have a long runway ahead of them >> this is good actionable idea,
11:53 am
elliott. we appreciate it very much i look forward to next time. elliott joining us from bessemer >> lam research falling after results. we are watching shares of warwarner brothers that it will be shutting down cnn+ and the fallout post-netflix and an interesting merger story as david makes his mark on the company. stay with us wer we're back in just two (camera shutters) or the places we didn't go. ♪ ♪
11:54 am
as a business owner, your bottom line or is always top of mind.o.
11:55 am
so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts... saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities.™ ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
11:56 am
a quick gut check on lam research shares are in the red after the company reported a miss on the top and bottom lines the ceo attributing it to a difficult supply chain environment adding they're focused on adding those issues to support strong demand lam research is up over 20% over the past year, 30% year to date underperforming the broader semi a bk ghafr is wereacrit teththe mark [ cellphone vibrates ] you'll get proactive alerts for market events before they happen... and insights on every buy and sell decision. with zero-commission online u.s. stock and etf trades. for smarter trading decisions, get decision tech from fidelity.
11:57 am
(vo) this is more than glass and steel... for smarter trading decisions, and stone. it's awe. beauty. the measure of progress. it's where people meet people. where cultures and bonds are made between us. where we create things together. open each other's minds. raise each other's ambitions. and do together, what we can't do apart. this is space for dreams. loopnet. the most popular place to find a space. ♪ ♪ bonnie boon i'm calling you out. everybody be cool, alright? we've got bonnie right here on a video call. we don't take kindly to video calls. oh, in that case just tap to send a message. we don't take kindly to messages neither. in that case how 'bout a ringcentral phone call. we don't take kindly to no... would you can it eugene! let's just hear her out. ha ha ha, i've been needing a new horse. we've got ourselves a deal. ♪ ♪ ♪ ringcentral ♪ this is not the stallion i was imagining.
11:58 am
- in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply. we have hired across all departments, engineering, marketing, hardware, field techs. you can basically tell ziprecruiter who you need, when you need it, and they deliver. - [narrator] ziprecruiter. rated the number one hiring site. try it for free at try it for free at
11:59 am
the bad guys is the winner of try it for free at the truly moving picture award. oh, stop! you making me blush. it's an action packed animated adventure. show the world that you're more than just a scary stereotype. everyone will love. is this wagging? - good right? take a look at some of the streaming names this morning the conversation around subscription-based streaming is going to continue on multiple reports now that warner brothers' discovery will in fact shutter cnn+ in the days to come, 30-some-odd days after launching. "variety" broke the story and additional reporting said it was the decision to go forward with the launch just weeks before discovery took over that wrangled david zaslav. >> action is interesting, carl shares of warner brothers
12:00 pm
discovery down nearly 8% now, but you would think cost savings have come in here and maybe they have plans for some of the content, some of the programming broader hbomax app or whatever they're going to call it >> meantime, powell, of course, 1:00 and we'll watch as he invoked volcker in his initial speech today and snap. let's get to the judge. >> carl, thanks so much. welcome to the "halftime report." netflix bailing and buying, why our josh brown and jon najarian are buying and what sorry selling on the once-loved names and high multiple growth stocks. we'll discuss that with the investment commit. joining me for the hour, brenda vingiello, josh brown, jim lebenthal and jon najarian co-founder of marketr the ten-year note yield headed toward 3% and 29


info Stream Only

Uploaded by TV Archive on