GameStop surges. shorting Nvidia: Market Domination

It was a quieter day on Wall Street, with the major indexes (^DJI,^GSPC, ^IXIC) little changed ahead of the May jobs report.

One of the biggest movers of the day was GameStop (GME). The meme stock surged more than 40% and was halted several times for volatility after the "Roaring Kitty" YouTube account posted about a livestream airing on Friday.

Nvidia (NVDA) is set for a 10-to-1 stock split after the market close on Friday. S3 Partners Managing Director Ihor Dusaniwsky explains why so many investors are shorting the stock ahead of the split.

Also on Thursday's edition of Market Domination, Loop Capital Markets Managing Director Anthony Chukumba explains why investors may want to give discount retailers a look.

For more expert insight and the latest market action, click here

This post was written by Stephanie Mikulich.

Video transcript

Hello and welcome to market domination.

I'm Julie.

That's J in for Josh Lift in today live from our New York City headquarters.

We're giving you the ultimate investing playbook to help you out the noise and make the right moves for your money.

And here's your headline B list getting you up to speed one hour before the closing bell rings on Wall Street.

The question really is number one, can A I companies, companies that are building these models like Google, like open A I with their partnership with Microsoft, can they eventually generate revenue that makes this investment justified?

I think they will.

The second question to your point is, can NVIDIA maintain its dominant position, providing the brains to these artificial intelligence models?

And I think they can you get a lot more leverage with NVIDIA because really uh any interest rate announcement really affects NVIDIA uh with such a high pe as we heard from the earliest earlier guest, uh you know, the earnings are so far out that any change in expected interest rates really affect the the the price.

So you could get some very large moves.

We need to see a run of weaker data on inflation and the labor market for the fed to be confident enough to cut rates in September.

And we don't want to over exaggerate this point.

But of course, making a decision to cut rates ahead of the presidential election probably means that they need to be very, very convinced, they need to have very clear evidence that the economy requires those cuts.

So if there is any kind of doubt any hotter than expected inflation data, then unfortunately, that does probably push out that likely date through to the end of the year.

If not 2025 we've got one hour to go until the market close.

So let's take a look here first, at the major averages here.

We've got a mixed picture today really.

Um We are focusing more, it seems like traders are focusing more on tomorrow's jobs report versus anything that happened today.

We did get weekly jobless claims coming in this morning, not too far off from what uh economists were estimating.

But you see right now, the dow up about 79 points about 1/5 of 1% but the S and P 500 very slow down and the NASDAQ composite down about 1/10 of 1% as well.

Let's check on over with bond yields as well, which we continue to see pulling back 4.28% now.

But again, we're not seeing that consistent lift to stocks from bond yields kind of hovering at these relatively low levels.

So let's check on some other things that we've been watching in this market that have been getting attention first up, we got to talk about what's going on with NVIDIA.

Now, yesterday, of course, the stock hit that $3 trillion market cap milestone and a record.

But today because it is not still at those levels because it's lower on the day, it is back below $3 trillion in terms of market cap.

And that also means it is now smaller than Apple at this point.

The other thing we want to check on is, oh, we thought the meme trade was going away again.

Nope, not going away again because guess what?

We've got a game stop back in our sites today.

We're gonna talk about it later.

But it once again has to do with a post, not even a post, but an impending post from uh Warren Kitty A K A Keith Gill.

So we're gonna talk about that in just a few, the shares up 56% over two days, but on the single session up 32%.

And you see where his post about a post appeared on the stock chart.

Jared, thank you, Julie investors on edge with the major averages.

Little change in today's session ahead of Friday's monthly jobs report.

Also playing into the weakness.

The euphoria over Nvidia's $3 trillion market cap fading a little bit.

The stock down to about about 2% with an hour left in the trading day.

Joining us now is Jeremy Swartz Wisdom Tree, Global Chief Investment Officer, Jeremy.

Thank you for joining us here.

We've got a lot of news to dissect, including an ECB decision and the big labor report tomorrow.

But investors want to know about A I and we got this big invidious stock split tomorrow.

Let's just tackle that first.

What are your thoughts here?

You know, we're very much believers in the A I story.

We think the technology is really gonna help the economy.

I think we're so early in the phases of that transfusing through the economy.

So you got to see, I mean, it's gonna have big impacts on interest rates and productivity, what that's gonna mean?

Um So we're believers.

Now, the question is, is the video can be the only winner is the real question.

You know, they've been for sure, the best winner is all these big companies make investments in the chips and they are for sure critical today as you keep talking about.

Uh but we do think there'll be broader participation, we think more companies will benefit.

And so as you look ahead, you could say, we think there would be a broadening of the rally.

But you know, we're believers in the technology and we don't think that tech is in a bubble like 2000.

You hear a lot of people worrying about valuations.

Uh and we, we don't think they're at 2000 levels.

We actually think tech as a whole is only half the multiple of what it was in 2000 and, and much more reasonably priced than it was back then.

Um, so why ex expand a little bit upon why you don't think it is in a bubble?

Well, back then you had, uh, nine stocks, triple digit pe some of the largest stocks, sp 500 had hundreds of pe ratios, Cisco in the hundreds of pe S NVIDIA is expensive, but it's still around 40 times next year earnings.

So it would be considerably higher at that sort of cisco in 2000 type levels.

Now, you know, so the S and P as a whole, the S and P tech sector was well in the sixties today, you're 60 times forward earnings today, you're 30 times forward earnings.

So yes, it's more expensive than say the non tech call it.

The non tech might be at 1718 times earnings and tech is at 30 but they're growing their earnings twice as fast.

You know, the projected earnings even are growing twice as fast.

So, you know, when you look at the long term next called 3 to 5 years earnings growth for the tech leaders over twice the growth rate expected than the non tech.

So that multiple premium is warranted.

If they can deliver those earnings, if they really have a slowdown in earnings, then obviously there'll be, be some correction there.

All right, wanna switch gears here.

Go over to the ECB uh a lot of eyes on this decision because it comes a week ahead of the big fed decision that we have next week and Europeans as they, for, as investors thought this was no surprise.

They cut and they cut first.

Uh but it's about the Ford Guidance and I'm just wondering what you parsed out uh in the uh I guess in some of the commentary surrounding this, I mean, it's interesting you, it's one of the first times the ECB is cut before the fed.

I mean, so that's a big new statement as well, even if it was expected, you know, often people think of the FED leading the ECB following.

Uh I think it's some elements of, well, maybe some of the global inflation pressures are coming down, you know, they're, they're not pre committing to any further cuts.

Uh But they're not to see the data as it comes in.

They're all talking data dependence, of course.

Um But it, it actually comes back to this whole role.

You know, we think what the implications do you have interest rates or implications, but currencies are implications.

I wonder about the Euro.

Uh It adds to a lot of volatility investing in Europe.

I say you should think twice about that.

You should think more about the stocks being cheap, not necessarily when you go along the euro and the sort of cutting of, I think is another part of that sort of fed, saying tighter than the ECB in some ways is supportive for that.

But just why bet on the euro, you know, the stocks are cheap.

What's the, what's the expected return from the Euro?

I'm not sure I'd be chasing it with the ECB cutting here.

Speaking of chasing though, are there any implications with the ECB going first for the Fed?

Well, it's just a sign that rates uh that inflationary pressures are coming down.

You heard the Bank of Canada also cut rates and you know, and some of the commentary just that we don't need to be as restrictive as we had to be in the past.

And actually, that's true for the Fed too, that inflation is coming down.

They don't need to be as restrictive.

Now, the question is, can they say the data is coming enough that they have confidence that inflation is well on its way down?

You know, we have some alternative measures of inflation that look at what's happening in the real time housing markets that would tell you they're right on track for 2% inflation.

Uh And so if they could just take that broader view, you would say, hey, they don't need to be restrictive either.

Um But it comes down to what is the data they're watching?

And do they have that confidence?

It's been a really interesting week in terms of international developments and it also election results.

We got two surprise election results over in India, we had a much closer race than anticipated in Mexico.

We had um uh some uh I guess surrounding the end of the decision there in India, we have modi remaining in power, but he has a reform agenda.

And I guess the consideration the discussion is, is he going to be able to enact more reforms given the fact that he doesn't have the lead that he did before.

How do you, how are you viewing Indian equities now?

And then could you place this in relation to the gross story?

That was China several decades ago to, to me, India is still one of my favorite long term growth stories over the co not just coming years but coming decades.

It's got one of the best demographic profiles.

They have the expansionary goals modi still wants to do to become a developed country by 2047 their 100 year anniversary and they've got potential to do that now.

They've got through tailwinds of the young population.

Uh There was some volatility this week as people try to react or is he gonna actually get what he needs to do?

But you gotta remember his reforms are still in place.

These people are not coming and overturn his reforms.

A lot of what he accomplishes.

His first two terms are in place.

They're not going backwards.

They've got a good tail end behind it and he still has a coalition there.

That's that's gonna help him get even further reforms done.

So there was volatility but we still love India.

We think the growth outlook is there.

Uh And I think there's still a strategic repositioning away from China.

Uh people been trying to time the bottom of the Chinese.

You could call it despair as from their economic doldrums.

And then the markets have really been under pressure the last 33 years.

But I think people are moving away from China.

Strategically, India has been a beneficiary.

Japan is another beneficiary that we like a lot from a valuation perspective.

I don't see any of that changing.

Um and Jeremy to close this out.

Let's take it back here to the U SI.

Mean, you talked at the top a little bit about the A I trade and growth stocks generally.

But how are you sort of thinking about us equities right now?

And, and how much more upside they might have given the economic backdrop and the backdrop for the fed, you know, the S and P 500 draw 21 times earnings, that's a 5% earnings yield.

You could add 2 to 3% inflation on top of that to get 7 to 8% as your outlook over the longer term.

I mean, there's certainly pockets that are well below that 21 times.

You could look at small caps at like 12 to 30 times when you look at them the way we do with profits or dividends as part of the screen, but they've been really needing the rate cuts, you know, until you really see rates coming down.

It's been tough for small caps who are more reliant on bank lending and so that they're paying the higher cost of the fed.

Um So I think there's some opportunity I say, look beyond just NVIDIA is the only beneficiary.

We think that broader participation would include things like the small caps.

But you know, the overall is at a reasonable price.

You know, the the long term bonds, the tips yields are only 2%.

So you still get a nice equity premium for stocks versus bonds.

Uh But you can say, hey, look for some of these other opportunities when the fed starts cutting Jeremy.

Good to see you.

Thanks a lot for joining us.

Thank you so much.

We want to check on shares of gamestop here that are soaring today as we talked about earlier, some 40%.

Uh trading got halted several times in the last hour and a half or so because of volatility.

And what was the catalyst?

Well, guess what?

It was?

Keith Gilligan, also known as Roaring Kitty.

He posted on youtube, he didn't really post, I mean, it's sort of a post, it's gonna be a live stream and at noon tomorrow, right?

Basically all this post says it's sort of a um, a very Mimi placeholder screen here that says there's a live stream he's going to be doing um, that he hasn't done what in three years time.

Now, starting at noon tomorrow again, noon on June 7th and the commentary, you know, there's, of course, the comments box on you has not stopped.

There's nothing to look at yet.

I'm looking at it right now in your, it hasn't stopped.

It's just scrolling constantly.

People commenting before he's even said a word.

Yes.

And I mean, he has the capacity to do that.

If we go to the Wi Fi Interactive, I'll point out a couple of interesting things here.

This is a $15 billion company and check out the pe ratio.

We're talking about eye watering levels from the.com era 2232.

That's, that's, it's really high.

Uh But let me, let me show you what happened in the chart.

This is year to date and what stands out is, are these big spikes here?

And uh here's another one.

And this kind of reminds me of what happened in 2021 because uh this is much more compressed, but there is some space.

We'd have an episode, then we'd have a few weeks for us and, and you know, maybe it's tied to the option schedule, maybe it's tied to something else.

Um And there was all kinds of speculation how much had, had the traditional Wall Street like hedge funds infiltrated Reddit.

Uh, but Keith Gill has been conspicuously silent.

He's posted some things, but he's been silent and now he gets to speak.

So I, I'll be watching it and I wonder if he's spoken to a lawyer before he is speaking to us because of course, as we know, the securities and exchange commission is reportedly looking into, um, his recent activity.

Remember he spoke in the market.

Yeah, I mean, he posted a screenshot that says he owns about 100 and $16 million worth of games to stop shares, which would make him one of the largest holders.

We'll see what he's going to say about all of this.

Yeah.

And I mean, just to be clear, it's not against the law to talk your book, but you can't lie about it.

So he'll be in the crosshairs but maybe we hear a little bit of uh looking forward tomorrow and so is everyone else?

Apparently, we're just getting started here on market domination coming up.

It's the latest edition of our series.

Goodbye or goodbye.

We'll take a deep dive into two stocks to help you make the best choices for your portfolio and our own.

Josh Lipton sat down with Palantir Technology Ceo Alex Carp to discuss the company's A I platform defense spending and more.

We'll have part of that conversation coming up at 4:45 p.m. Eastern.

Now for a look at some trending tickers first up JM Smucker, the company reporting earnings that came in way above analysts expectations, the shares up by some 4%.

The news of these earnings has sparked a very large discussion and debate in the newsroom today about peanut butter, about jelly and the key about almond butter.

Oh, please tell me Uncrustables.

People are very passionate about this, about this food stuff.

And um, so I got a crash course in it, although I did, I'd heard about it tangentially over the years.

Have you ever had a, you've never had a question I have, but I prefer not to.

It's how I feel about a love hate is kind of the reason, but a lot of people like them.

That's one of the reasons that the company did well last quarter, apparently that was one of the things fueling the sales.

Yes.

And I got a couple of notes here, here's one from steel rates, a stock of buy fiscal year 25 guidance, likely better than feared.

So kind of a bar including a step up in investment behind Uncrustables.

There you go.

Furthermore, indication that fiscal year 26 2026 should be above Algo and should support stock out performance amid low investor expectations into the quarter.

And the Algo they're referring to is their internal growth uh algorithm that they used to.

Uh you know, everybody models growth.

If you're a company, uh the sell side, does it too?

Not exactly the same way, but there you have that and then D A Davidson rates the stock and the stock in neutral saying fourth quarter results were, here's another one better than feared benefiting from stronger than forecast gross margin, offsetting the sales mess still quote, given where sentiment and valuation stood ahead in the low.

The stock should be up this morning and just taking a quick look at the Wi Fi Interactive, uh, been kind of a rough year for staples overall.

And here you see the stock Smucker trailing the market by 9%.

And I do like to give the entire pandemic view and you can see trended up until the beginning of 2023 and then kind of last, uh, it kind of got knocked down during the bull market as other stocks rose.

Well, they did a bunch of stuff, right.

They, um, they bought some stuff, they got rid of stuff, they bought hostess brands, but they divested some other businesses, um, and sales overall were down, but it seems like hostess is something that performed relatively well for them.

So we'll keep watching that.

All right, we are also watching shares of Rivian, the company unveiling its updated R one pickup truck and SUV for Superman is here with the details.

So what's behind this uh latest uh model?

Yeah.

So, you know, the R one truck's been out for a while and due for a mid cycle refresh.

So, uh some actually some pretty big things under the hood here, new motors, they're building their own in-house motors for their quad motor and, and new tri motor vehicles.

That's pretty exciting from over 1000 horsepower here.

Um, redesigned battery modules or more efficient, simpler to make.

And this is all part of the big, the kind, a big pusher to make these cars cheaper but not sort of ruin the experience or make the cars lesser than what they were before.

So this is the kind of the big trick can they actually, you know, do that right?

Make these cars actually profitable and they need to bridge that kind of road to 2026 when the R two comes out of the new vehicle.

Can they make, can they become, I think it's variable profit, gross, gross profit by then and be in a good spot, good spot for where they can kind of ramp up with the R two vehicles.

Well, it looks like there's a little bit of optimism around, at least where the shares are, are how they're reacting today.

Um Let's talk about another training t that you're watching in your space and that is Neo, which came out with results that investors did not like.

Yeah, you know, stock down a bit here.

Um Miss on both the top and bottom line for their Q one guidance wasn't so bad, but just really quickly here.

Uh Neo loss converting to dollars here.

33 cents a share wider than expected on revenue of 1.372 billion, down 5% compared to a year ago on around deliveries of 30,000 year, which is down a lot compared to Q four sequentially and 1000 years or so down from last year.

But for Q two, seeing 54 1000 to 56,000 deliveries.

That's nice.

That's, I see that and revenues of 2.3 to $2.37 billion better than the 2.1 billion estimated.

So 22 looking better.

But I guess there is some concern here.

The Qan numbers weren't that great, weren't that great compared to Q four sequentially.

So maybe that's why we're seeing that stock not doing too well here.

Yeah, and there's a lot of competition in that market.

Indeed.

Thanks pross, appreciate it.

All right, NVIDIA hitting three trillion in market cap for the first time yesterday becoming the second largest US public company behind Microsoft.

Although we are seeing a pull back just a small one today and with Nvidia's 10 to 1 stock play coming up tomorrow, we may see another surge in short selling and options trading for more.

We are bringing in Ihor Duzan managing director at S3 partners.

So let's talk about the uh the short interest that we're seeing here.

The main story.

Uh What's your big picture view?

Well, NVIDIA has got a is, is the largest short in the US market with $34 billion of short interest.

Uh It's climbed to the top over Apple and Tesla.

People are shorting it based on being a momentum stock and also a hedge to the market and a hedge to the tech side of uh of the uh of the street.

So, uh we're seeing a lot of activity.

Uh and uh you know, there's something to be said about people shorting ahead of the stock split.

And, and what does that say?

What does it say that they're shorting ahead of the stock split?

I mean, you know, iii I have seen some research that indicates that say in the 12 months on average following a split, that stocks tend to perform relatively well.

But it obviously, if people are shorting it, that would imply they don't believe that in the short term, at least.

Sure, over the last 30 days, we've seen around 1.6 million shares short, it's around $2 billion.

So it's not a light figure.

Uh This includes, you know, option trading because you've got the hedges to the people that are writing options.

You know, they take the hedges out in the short stock in order to protect themselves against their open option positions.

But really, this is ends up being, you know, kind of like playing a roulette wheel red or black.

We think that the run up in NVIDIA has kind of taken up all the, all the sale its wins temporarily for the stock split and we're expecting a pullback afterwards or is it just basically the start of a bigger move after the stock split?

So, you know, you gotta see who's, who's on each week, uh, each side of the market and we're seeing a lot of shorts betting, the, uh, betting for downturn.

I want to ask you about gamestop here, another ticker that's in the news.

We were talking about roaring kitty Keith Gill.

Uh, finally, uh, talking to the market, talking to the public tomorrow.

What kind of short interest are you seeing in Gamestop ahead of this event?

Well, it's, uh, you know what things just keep coming around in the market.

We've got $2 billion worth of shorts, uh, interest in Gamestop.

It's one of the largest, uh, shorts in the computer and, uh, and, uh, retail sector, um, there hasn't been that much short selling recently.

Uh, there's been around, uh, uh, 1.3 million shares shorted for the year, around 2 million shares bought to cover over the last 30 days.

There's been a short squeeze in the name.

So we're seeing some pullback in stock.

I mean, you gotta look at the, the, the price moves and say that, that the shorts are getting wall up today.

I think they're down around $640 million just on today's stock price move that brings your day losses to around 1.4 billion So, uh, so this has been a painful trade on the short side and we're seeing a lot of shorts get out of the market.

Well, and that, that's what's interesting to me as well because I've seen some chatter recently that it's not just shorts that are getting out of the market with something like that, that generally in the market there is lower short interest.

Now, are you seeing that in your data also?

You know, not really, we're, we're seeing that the short interest has actually gone up over the last 30 days.

Uh Overall, we're seeing around $1.15 trillion of short interest, it's up around $25 billion over the past uh you know, 30 days.

And that includes the mark to market interest, uh increase of the price of the stocks being shorted already, but all, so it's another $11 billion of short selling.

So there is discriminate short selling in the market, certain sectors are seeing a lot of activity, others not so much.

Uh You know, we're seeing increased shorting in the uh in the tech sector.

Uh We're seeing short covering in energy.

Uh So, you know, the the people are rotating in and out of sectors uh but generally short interest is still up.

I'm wondering if you have some kind of market timing model that's based on your own analytics and maybe based on uh uh maybe it's a contrary indicator.

But do you aggregate the short positions and then try to divine.

All right, is the market going, is it reaching a peak?

Is it reaching a valley?

Uh anything along those lines?

Yeah, that's uh not something we do to protect the, you know, the pricing in the market.

What we are we are looking at is what the street is doing.

And you know, when you look at it, you know, a lot of the short selling or most of the short selling is done by the big institutions, hedge funds and such.

So you're kind of looking to say, ok, what's the quote unquote smart money doing in the market?

Um You'll be looking at stocks that they're looking to short for, you know, profits for an alpha trade.

And you're also looking at shorts that are used as hedges.

So, you know, 12% of the entire short book in the US is, is in mag seven stocks.

So you cut stocks that are looking uh shorts that are looking at at those stocks to go down and also they're using it as a hedge to the entire portfolio.

But uh right now we're seeing shorts increasing their, their positions.

And finally, there's one more stock I wanted to ask you about Ihor that caught my eye on your list and that is micro strategy because most of the other stocks that are on this list are, are mega caps uh micro strategy, not really in that category.

It also stands out because 21% of its uh uh float is shorted, which is a quite a high number and one that again sticks out from the list.

So what have we seen for the numbers there?

Is that a, is that a recent development or has that been pretty consistent?

Yeah.

Well, just kind of to give a perspective.

The average short of pension float is 4.8 for the US market.

So we're talking about four or five times the size of the normal average short in the market.

Uh Micro strategy is kind of a twofold bet.

You really, it's, it's a Bitcoin bet.

So you want to uh you want a short Bitcoin short micro strategy, it's, it's a much more liquid stock.

You can get in and out of the position as opposed to, you know, going in and out of Bitcoin itself uh or paying a premium in the ETF.

So, you know what a lot of, a lot of short, yeah, I'm going to uh micro strategy instead of uh uh a, you know, a Cryptocurrency bet in the market proxy trade, love it.

Um And thanks for all of this uh very elucidating information here, Ivan, Ivany.

All right, coming up, it is the latest edition of our series.

Goodbye or goodbye.

We're going to take a deep dive into two stocks to help you make the best choices for your portfolio.

Stay tuned, more market domination after this it's a big noisy universe of stocks out there.

Welcome to, goodbye or goodbye.

Our goal to help cut through that noise to navigate the best moves for your portfolio today.

We're taking a look at two stocks with very different performances over the past month, but don't be fooled by short term gains or losses.

We're taking a look at the longer term trends that will move these names over the next long term.

I'm here with Vance, how CEO and Portfolio manager at Howard Capital Management.

Good to see you.

Thanks for being here.

So let's start with the stock that you like your goodbye.

And that is sales force now, sales force actually has risen over the past year or so.

But then as we can see here, it has had that dip over the past month.

So why do you like it or you think it's actually oversold because of that?

Were you looking at a technical thing and look at a stock stock that stock that drops 20% in one day?

That wasn't your retail sellers and in all probability, it wasn't your money manager that was quantitatively driven for that much selling to happen that quick off, that little piece of news sales force is a wonderful company wonderfully managed.

It had just a slight hiccup in earnings and revenue which is uh it can be overcome.

But if you look at the long term effects of what sales force is doing as far as what A I is going on with it.

Yeah.

The fact that you're buying down here on a dip as far as being an intermediate to long term investment for investors.

This is a great stock.

Get to talk to me a little bit more about that growth with A I because it seems like one of the disappointments around the earnings for some investors was that it's not yet, I don't know, squeezing the juice out of that one yet, so to speak.

Well, you gotta remember with a, I, let's put it like on an 18 hole golf course with A I, we're on hole number one.

So there's a long way for everybody to go including sales force.

But if they can bring sales force in over the next 1224 months, 36 months and all of a sudden you reduce overhead by 1015 20% your earnings are dramatically gonna go up.

So if you're looking at a great long term buy, I think sales force is the play and I love recurring revenue.

Let's get to, let's get to that.

I mean, that's really the holy grail for most of these software companies, they wanna have that subscription revenue and they think it's working for, I think it, I think it's worth and great and you know, sales force is not an easy tool to learn.

So most people have, we have it in our office, by the way, it's not an easy tool to learn.

So once you've educated somebody on how to use sales force, you're usually gonna use it from here forward.

It's an incredibly robust tool.

We use about 20% of what they've actually built into the software.

There's a ton, we don't even use that.

We haven't learned about.

It's that robust and that healthy of a piece of software.

So as we start to grow, as the economy starts to come back and grow, inflation starts to drop, I think so, force at these levels are way oversold and I think it's a great buy.

Got you.

Ok.

So what do you think could go wrong for sales force here?

I think what could go wrong is the economy, something that we can't see happen out there that nobody can really project or, or, or, or gauge or, or gain.

I think that could hurt the stock a little bit.

Other than that, I, I think it's already washed itself out.

I think that it's clean to go.

I think you've hit, it may come down to retest that low a little bit around what, 216?

And that's ok too.

Um But right down here at these levels, I think it's a really good, strong buy.

Ok. Well, let's get to the one that you do not think is a good, strong buy.

And that is spirit Airlines on this stock has already tumbled a lot over the last year.

It's down something like 75% but it did have a, I mean, off a low base but it had a little bit of a bump um, in, in the last month here.

So, why don't you like it?

Well, I mean, they had a big piece of news with the merger falling through this thing's falling apart.

The debt level is unsustainable, losing, losing revenue in 2025 they're gonna have 70 jets on the sideline for whatever reason, being repaired or just out of service 70.

That's gonna be a remarkable amount of air air flights that aren't taking off with, with Spirit.

Um It's just a, it's a bad bet right now in all probability, when you look at Spirit Airlines, it wouldn't surprise me in the next 6 to 12 months are in bankruptcy and that's not uncommon for airlines.

It is, although it has become less common, right?

It used to be a lot more common.

Is there another merger possibility out there for them?

They're gonna let them die and buy them cheap at this point because when jetblue backed away, that was the tail, they're just gonna let them die and come in if somebody wants to get the parts maybe.

Ok. And you mentioned the growing debt load as well.

Just exploding.

Yeah.

Is that, is that also, you know, when you, when you're shelving planes and not flying them, you still gotta pay, you gotta pay to park them for they're expensive and to maintain them, you've got inspections that have to take place.

You've got pilots who are on the payroll, you've got all these different factors that are driving up the debt that's unsustainable.

Plus you got revenues dropping and earn and incomes dropping.

And if you're, if you're losing a couple of 100 million bucks, it gets pretty unsustainable quick.

So, I mean, not surprising.

You think it's a high risk buy?

I think it's a void at all cost.

Got you.

All right.

So what could go right here?

Maybe they could raise some capital, maybe I think, I think that's it.

That is the one thing that they need to look at is they have some, some savior come in and pick them up.

All right.

So, and just quickly here before you leave you, before we leave you, you own sales force.

I'm guessing from what you're saying, you use, you use, you use sales force at your office and you own sales force.

Um Are you short spirited in any way or you just don't own that?

Ok. Avoid it.

All right.

F thanks so much.

Appreciate it.

Thanks for coming in for goodbye or goodbye and thank you for watching.

Goodbye or goodbye.

We'll be bringing you new episodes three times a week at 3:30 p.m. Eastern and on Tuesday, crowd strike holdings delivered first quarter earnings that beat Wall Street's expectations despite a pullback and spending that has challenged many of the cyber security rivals joining us.

Now to discuss further is Michael Santon crowd strike, President and Michael.

Thank you for joining us here today.

Um Just give us your big picture overview of your results, please.

Yeah, we had a great quarter ending A RR uh finished at 3.65 billion which grew 33% year on year.

Net New A RR in Q one was 212 million and free cash flow was 322 million.

It was 35% growth year on year.

So all in all very strong, especially when you look at free cash flow rule of 68.

Um Let me ask you about Charlotte A I.

This is fascinating to me because uh I mean, the, the story of the day is probably NVIDIA and so everything is A I centric now.

But how do you, how do you bring conversational A I um into the cyber security realm?

Well, we know in cyber, there's a massive uh skill shortage.

We know that it's a complex uh area and Attackers are getting smarter every day.

So we've spent a lot of time really different to a lot of people in the industry, in our sec sector.

We're thinking about how do we use A I to accelerate the time it takes uh and, and like a, a defender to defend against the latest threats and techniques from adversaries.

We know the adversaries are getting faster.

So we need to use A I to help uh the defenders get better and make it easier.

We need to make cybersecurity something that the average user, the average, you know, level one analyst can, can get their hands around and give them a chance to protect themselves.

And that's what we're doing with Charlotte.

Um and Michael it, it's Julie here.

So, um when you look at these numbers, is it a factor of you all taking market share from competitors?

Is it a factor of you getting more business from existing customers?

What is helping you, what helped you grow last quarter?

And what's gonna help boost the numbers going forward?

Well, I believe we're doing both and if you look at the uh the deals that we have with greater than eight modules that grew 95%.

And what that's telling us is that the Falcon platform, the Crowdstrike Falcon platform has become the platform of, of, of record in the cybersecurity industry.

Customers are telling us that they want to do more with crowd strike.

They are buying more modules, they are deploying more of our capabilities and they're turning off uh other uh workloads, other products from other vendors and we're seeing that happen more and more.

And Mike, you mentioned Falcon, I saw a lot of talk about Falcon and Falcon Flex in the uh in the call.

What, what can you explain to us what that means when you talk about that platform and how is that different from what you all had in the past?

Well, we have 28 modules today so that the platform has grown tremendously over the last few years.

Customers are telling us, as I said, they want to do more, they wanna buy more modules.

They're also saying, look, we know the quality of technology that you bring out.

We know that you're gonna come out with more modules.

We know you're probably gonna do some acquisitions, help us uh buy more from you and make it easier.

So that when you do come out with a new module, we don't have to keep going back to procurement.

We don't have to keep going through uh complex uh procurement cycles.

So flex gives our customers uh access to all of the products.

It gives them the best possible price because they're committing to do more with us for longer periods of time and we're just making it easier for them to, to get the best product in the industry that's so easy to roll out and they can do more with crowdstrike.

What do you think about in terms of acquisitions?

Um just not only the specific fields where you might wanna go, but just your general strategy, how you're thinking about them.

Well, for us, it's, it's important to make sure that we, we stay close to who we've always been and that's to stop breaches and give customers uh access to technology.

That is the easiest to use.

Like I said, at the start, it's a very complex area and there's so many products out there that are just too hard to use and that uh chaos that I an organization has to deal with because they're working with 1015, 20 different vendors.

It's too hard.

Crowds track is easy to roll out.

You can get the product rolled out in a few seconds.

So when we think about M and A, it's important to us that whatever we do, it has to be part of our technology stack.

It has to be part of the Falcon platform.

There are so many vendors that talk about all of their different platforms, but they forget one thing and that is how to help the customer.

They do 1015 20 acquisitions and effectively they make the customer into a systems integrator who's trying to make poorly acquired and poorly integrated technology work.

So for us, if there's technology, that's interesting if there's a good business out there, but importantly, we can integrate it and it's part of our stack, it's probably a good fit for crowdstrike and Michael overall.

Can you give us sort of a temperature check on enterprise spending here because it feels like at least in terms of what we've been hearing from companies this earnings season, it's kind of been all over the map.

So what are you hearing?

Are you hearing that even your clients are still still spending with you that they're trying to sort of retrench or, or save money.

Well, the market's certainly, uh, tough.

Uh, we, we haven't seen any change whether it's, uh, positive or negative.

The market has been the same for quite a few quarters now.

Uh, but like I said, uh, our customers are wanting to do more with us and the reality is you only have to just look at the news to see all of the different attacks that keep happening.

Uh It's a pretty challenging uh landscape out there.

And organizations are really worried about uh whether they're gonna be compromised, whether they are gonna lose intellectual property, whether they are going to have business downtime.

So that's why we're seeing more and more conversations, but certainly the market conditions uh haven't improved in the first quarter.

You had annual recurring revenue of $3.65 billion.

What are your plans to maintain your growth, uh trajectory for annual recurring revenue or even exceed the current growth rate?

Well, for us, it, it, it comes down to making sure that we continue to, to meet the the need of our customers and that's to stop breaches.

It means that we have to continue to innovate and come out with uh technology that is uh best in class.

We've released a lot of technology you talked about Shark Island earlier, but we're solving it challenges with Falcon Fry T we introduced data protection, a new module to help with data loss and data loss prevention.

Uh We continue to innovate with technology like Nextgen Seam, there's a massive opportunity to solve the Nextgen Seam problem that organizations have struggled, struggled.

I should really say the data problem and the seam problem uh with, with more modern technology like what we have with Falcon Nextgen Seam.

So we continue to innovate.

Last year was a was a big year of innovation.

Uh We continue to focus on bringing out the right technology to help solve those problems and staying true to, to meeting the needs of our customers, Michael Antonis of crowdstrike.

Thanks for joining us.

Thank you.

Before we go to break, they take a look another look at shares of Game Stop accelerating gains.

Heading into the close.

The shares at one point were up in almost 50%.

They're still off about 43% right now.

This all coming after keep G known as Roaring Kitty online posted on youtube, he'll be doing a live stream at 12 p.m. Eastern tomorrow.

So we'll see what he has to say.

First time we have heard from him directly and not just through memes and posts more market domination straight ahead as shoppers feel the pants from inflation pressures, discount stores battle it out to entice consumers wallets, customers looking for budget friendly prices has been a tailwind for some retailers while others like five below feel the weight of a challenging macro environment.

We're looking at how to navigate the big picture with the Yahoo finance playbook, Anthony Cumba Loop Capital Markets managing director is joining us now for more Anthony.

It's always great to see you.

Thanks for being here.

So thanks for having me.

So let's let's talk about the big picture for sort of the core consumer for discounters.

First of all, because typically we're talking about lower income consumers, although sometimes other folks trade down there.

So kind of how would you characterize that consumer right now?

And how is that playing out with some of these discounters?

The low income consumer is in sort of a tough place right now.

On the one hand, they are working, right.

Unemployment is still very low and we're still seeing a very good wage growth, but they're stretched, they are awfully stretched.

Right.

They're paying more for rent, they're paying more for groceries, they're paying more for gas.

And so, you know, look, they're still spending, but they're being more selective in terms of what they're, they are buying, they're looking more for value and they're concentrating their purchases much more on must haves.

Right.

Think consumable products, think food, uh, cleaning supplies, uh, health and beauty care items and much less on, you know, nice to haves.

In other words, discretionary items.

And unfortunately for retailers, they much, they make much higher profit margins on those discretionary items than they do on consumable items.

And Anthony, how does this translate into your view on any companies within the sector who do you like?

Because I'm looking at our Wi Fi interactive heat map of discount retailers here, Ali Arlys lie bargain basement up 11% on the year.

Everything else in the red.

Some of it.

By quite a bit.

We got dollar tree down 20% big lots down 63.

And although it matters more than the p the share price, so what do you like in some of these companies?

So we have, uh, buy ratings on two of these companies right now.

Uh, specifically Ali's, which as you said is a year to date.

Um, Outperformer, uh, and also Dollar Tree, which is more challenged, but it's a kind of a special situation.

So with Ali's, I mean, they are clearly benefiting from higher income consumers trading down to their stores and their stores.

It's, it's very much a treasure hunt environment.

Um, you know, just significant discounts relative to other national retailers, even if you're talking about Walmart.

Um, they've got this Ali's Army where, you know, basically they have a very, very large, uh customer loyalty program.

You know, those folks account for 80% of their sales.

They do a lot of great direct marketing marketing to them.

Um, so they're really hitting on all cylinders right now.

Dollar Tree is a little bit of a different situation.

They've continued to have problems with family dollar, uh, which is a chain that they acquired back in 2014, probably never should have acquired them quite frankly.

And that's where the difficulty is in their business.

But the reason I'm optimistic about Dollar Tree is they just announced yesterday, um, that they are, um, you know, considering strategic alternatives for family dollar ie they're looking to sell family dollar and quite frankly, they could sell family dollar, a bag of magic beans.

It would be wonderful for their business.

I, I estimate that, I mean, literally they can get almost nothing for, for family dollar, but just getting rid of, you know, that albatross and also getting rid of those leases.

You're probably talking about 100 and 70 100 and $80 stock.

A classic, be careful what you wish for situation.

I, well, remember when they were battling with Dollar General over that asset and they, they won it, I guess Anthony put that in air quotes.

Um So one of the things that you point out in your research that I thought was really interesting is that most of these so called discounters actually price at a little bit of a premium in terms of the products in their stores, to the likes of a Walmart, right?

But maybe there's the convenience factor that works in their favor.

But right now is Walmart gonna take significant market share from them?

So, you know, our, our latest um deep discounters pricing study, I believe the title was something to the, uh, to the effect of, you know, deep discounters have 99 problems, but Walmart's pricing is not one.

Right.

In other words, they don't have to be at price parity with Walmart, um, largely because they're just much more convenient, uh, you know, relative to Walmart.

Right.

In other words, the dollar general, it's going to be in your name, neighborhood.

Uh, you can park right in the front of the store.

It's an 17,000 square foot store.

You can get in and out pretty quickly.

And most of those shopping trips are kind of a midweek shopping trip where you're looking to spend like 10 $15.

Contrast that with Walmart.

Are you gonna save a little bit of money by going to Walmart?

Absolutely in terms of the products, but you're going to drive like, you know, 20 minutes a half an hour, you're gonna park way, you know, a couple of 100 yards from the, from the front entrance.

If you're lucky, you're gonna navigate a 200,000 square foot store.

Now, all that's worth it.

If you're making your weekly or biweekly shopping trip where you're spending $100 200 dollars, not worth it if you're only going to spend like 10 $15.

So I do not believe on the list of issues that the dollar stores are having right now.

I don't think Walmart makes the top five.

I'm not even sure if they make the top 10 Anthony.

I wanna switch gears a little bit.

Uh And we're gonna stick with retail retail here.

I understand that you have some opinions about gamestop and just some of the incredible volatility we've been talking about here today.

More halts, more increases in share price.

We got Rory Kitty speaking tomorrow.

What do you think about all of this?

You know, and, and the infamous words of uh of I believe it's Al Pacino and Godfather three every time I get out, they drag me back in.

So, so here we are like we went back in the time machine.

It's whatever.

2020 2021.

I mean, you know, look, I'm gonna keep this very simple.

Ok?

Um, Keith Gill is a fraud and he needs to be investigated.

The fact that this individual bought short dated call options on gamestop and then tweeted for the first time in forever knowing full well that, you know, these Reddit, um, you know, Wall Street bet folks would then drive the stock price up.

I, I mean, it's, I, you know, look, I'm not a lawyer, I don't play one on TV, but it is shady.

A f as the kids say.

Um, and you know, and, and at the, the day, like all that's happened in the time since, you know, since 2020 2021 is Gamestop's business is getting, gotten worse and worse and worse, right?

I mean, you know, look, at, look at the most recent news, right.

Microsoft will be coming out with Call of Duty on Game Pass Day and date when they first come out with that, you know, with that title.

Right.

In other words, you, you don't have to go and buy the actual game.

You can now play it on game pass.

I mean, that is, that is ruinous for game stops business.

Anthony isn't all of that kind of beside the point though.

I mean, you know, I, I, and maybe it wasn't originally, right, because Keith Gill originally did make a fundamental case for the star, which now all he's doing is posting memes.

But, you know, for the people who follow him, is it because they really think that gamestop is such a great comedy because it's kind of fun to do the whole thing.

I, I don't know Julie, what, what are we talking about here?

We're talking about memes.

Ok.

I, I didn't go to Harvard Business School to try to interpret memes.

It's just not a thing, right?

I mean, you know, look, I, I, I'll come back to what I've been saying for years.

First off, it's wonderful that younger people, uh, are getting involved, the stock market.

It's a way to build wealth over time.

That is wonderful.

I applaud that, but there's investing and then there's this, I, I would call it gambling.

I'm not, I think that's at this point, an insult to gambling.

And, and it really makes me very uneasy when individuals like Keith Gill have figured out how to game the system, no pun intended and take advantage of these individuals.

That to me, that's what it comes down to.

I mean, we can have a debate about what is gamestop worth.

This is gamestop Worth, that is gamestop worth this other thing.

But when individuals are, you know, doing things like this, it just makes me really, really uncomfortable and quite frankly, I feel sorry for these individual investors who are just being taken to the cleaners.

Is there?

What I mean?

What is it?

I don't even know what to say.

Anthony.

I mean, like, you know, there, there is this excitement, there is this sort of cult of personality obviously around Keith Gill.

But like, I, I don't know, are we taking it too seriously?

I, I guess I, I mean, people are, I'm sure people lost money, you know, the, the last time this happened, I'm sure they're gonna lose money this time.

But, you know, is it, it's kind, as you say, it's kind of on them.

I don't feel sorry for them.

They should, they know what they're getting into.

No, I mean, you know, I mean, that's a bigger philosophical discussion right now.

It's fun until it's not fun.

Right?

It's fun until, you know, basically you, you, you buy a bunch of stock on margin and now you can't make your mortgage payment you can't make your rent payment, you can't make your car payment.

Right.

And, and, and we always talk about, you know, the folks that, you know, make a lot of money from this, like Keith Gill, like we don't talk about that individual, you know, who loses a bunch of money and suddenly they can't put food on the table.

Right.

And, and at the end of the day, like, yeah, I guess buyer beware, but it just makes me uncomfortable that there are, you know, there are the Haves and the have nots.

And it's gotten to a point where the HS Keith Gill Ryan Cohen are taking advantage of the have nots and I know I'm gonna, we gotta go, we gotta go Anthony, I can keep, I mean, the haves or haves nots.

I mean, isn't that the story of Wall Street writ large?

And this is just some guy I, I don't know, we had to leave all to be continued to be continued.

I was gonna say we'll, we'll say that for dumb money too.

OK?

We'll put that in production.

Anthony.

Appreciate all of your insights and all your commentary here.

Thank you.

We are only moments away from the closing bell.

Stay tuned for more market domination over time.