Fast Money 9/25/25

0:01Live in the NASDAQ market site in the heart of New York City's Times Square this is Fast Money Here's what's on tap tonight. The TikTok on TikTok, the latest developments on the deal for the social media company. Who's buying in? What's it mean for legacy players? And CarMax concerns. Shares of the used vehicle retail are hitting levels not seen since the depths of the pandemic. What the latest earnings say about the strength of the most strapped consumer. But big box earnings. We'll dig into the latest results from Costco. Starbucks slims down its workforce. And what's next for small caps? The Chartmaster is here to lay out what is next for the recently rallying Russell.

0:34I'm Melissa Leak, home to you live from the studio via the NASDAQ. On the desk tonight, Tim Seymour, Carter Worth, Dan Nathan, and Steve Brasso. We start off with the not-quite-done deal for TikTok. President Trump signing an executive order this afternoon, paving the way for a group largely made up of American investors and some of Trump's biggest supporters to buy TikTok's U.S. assets from China's ByteDance. Our Eamon Javers is at the White House with the very latest Eamon. Melissa, that's right. The president is still speaking in the Oval Office, But just a short time ago, he did sign that order in the Oval Office, excuse me, which we are told certifies that this deal does satisfy the national security concerns that are in the law about TikTok and its Chinese ownership.

1:17So that does lead us to the point where we might be able to see a finalized deal here. The president and the vice president offering a couple of new details here on this deal, including, all importantly, the valuation of the deal. Here's what the vice president had to say. The company will be valued around$14 billion. We actually think this is a good deal for investors, but ultimately the investors are going to make the determination about what they want to invest in and what they think is a proper value. the most important thing is that it does protect Americans' data security. It ensures TikTok is still accessible.

1:51And on this question of the algorithm, which we've heard this a lot, what this deal ensures is that the American entity and the American investors will actually control the algorithm. The president was also asked whether or not the United States would take a percentage of the revenue here or any kind of fee from TikTok U.S. And he kind of danced around that question, Melissa. He said, we're going to be announcing some things and we'll get to that. But he was also asked this question about whether or not he wants the new owners of TikTok, who will be, once this deal concludes, a lot of his political allies, Ellison, Murdoch, and other familiar names on the conservative side of the media sphere and technology sphere, will be the owners of this new entity.

2:34And the president was asked if he wants them to boost the MAGAfication of the TikTok algorithm and push more MAGA content to TikTok users. He said ultimately he didn't necessarily need that. He said it's going to be fair for everybody. As you look here at David Faber's reporting from earlier today of who the main investors are expected to be, who will hold a combined 45 percent of the company, Oracle, Silver Lake, Silver Lake and MGX, which is an Abu Dhabi based entity. So the president emphasizing that this removes this platform from Chinese control. Americans will have the ability to secure this algorithm and make it safe for American users.

3:12Let's be clear, though, Eamon, this is not a done deal. I mean, it seems strange to think about a deal. And we're talking about the terms of deal. Who will own this new company? And yet the quote unquote seller is nowhere here in the picture. Yeah, the seller is not in the room. Neither, by the way, were the buyers in the room. We had a lot of political figures in the room here. So this was not the deal signing. This was just the signing of an EO that certifies that the deal is kosher under the law. What we're waiting for is an actual transaction of the underlying asset. Not clear when we're going to get that.

3:42We still don't know all the investors here, despite David's great reporting from earlier in the day. We now know a little bit more. We know about this Abu Dhabi entity, but we don't know all of the investors who are getting in on this deal. So, you know, I think that's a key piece of this. The other key piece of this is how did they come to this$14 billion valuation for TikTok U.S.? We'll have to see the rationale for that. But there are going to be skeptics here who will look at this and say, wait a second, are these political allies of President Trump being given a sweetheart deal with a very low valuation at$14 billion for a media organization, an internet organization that is so influential in American life and is going to have exclusive, really, access to the American market.

4:26A lot of questions around all that still to be answered. All right. Eamon, thank you. Eamon Javers from the White House. By the way, ByteDance, which is the parent company of TikTok, its most recent valuation exceeds$300 billion. This is a$14 billion deal for the U.S. division of TikTok. What do you think? It's pretty shocking. I mean, if you just want to kind of take a look, five years ago, the president signed an executive order to ban TikTok. And so here we are five years later, and you would think that this is a company that would be worth a whole heck of a lot more. They probably have four or five times the revenue that Snap does.

5:01That's here in the United States. Snap has a$15 billion enterprise value. I mean, just think of that. So there's no shortage of folks that would outbid 14. There's probably a$40 billion bid out there for this thing. So I'd be really shocked if it gets done like this, because if you just think about the Chinese and ByteDance, I mean, they have no obligation to sell this thing. They can get banned. But I mean, there is a bid much higher than 14 billion dollars for this thing. That's fair. And I would just argue we don't really know who still then owns the algorithm. And we know that there's rules around how the algorithm is handled, how essentially Oracle is going to manage a firewall and all that stuff.

5:38But one could make an argument that the real value of this company is in the algorithm. And so if you don't own the algorithm. But take it back to the players involved. There's no question that Oracle is, to me, in the catbird seat. And there's a reason why this deal makes sense for Oracle, not just because they seem to be part of the inner circle. But if you remember, TikTok was really their first major customer in terms of their cloud services. I mean, they were the dominant, nascent, early customer, very lucrative, a lot of services attached to it. And this is a big, big deal for Oracle, even independent of, you know, call it the relationship that Larry Ellison has with the White House.

6:17So I think right now this is very Oracle friendly. But as we all have said, this satisfies U.S. deals and dynamics. It does not necessarily indicate that the Chinese or that ByteDance is here. Right. Or the Chinese has blessed this deal. A lot of things are sort of unknown, and I think the point on the algorithm is a very good one, because supposedly ByteDance will lease U.S. TikTok the algorithm. It will then recreate it, retrain it. But who knows what that is going to be worth, if it's going to be as effective as the old algorithm. And so, therefore, maybe there should be a degraded valuation for this asset.

6:54Yeah, and then when you look at it, what do you do with Snap and what do you do with Meta? I think you buy Snap off of this. You buy, to Tim's point, Oracle off of this. I'm not sure if the negativity that if you look at Snap is down 23 % for year to date. They're used like kids use these for two different things. TikTok is scrolling. Snap is snapping. So there's you're literally sending messages to you're literally sending messages to someone. Snapping. Yeah. So you're snapping to somebody. But I think there's two different use cases. And it's been slammed by eyeballs viewing. But I think there's enough eyeballs for Snap to where the stock is, even though it's off the lows recently, to actually rally further from here.

7:40I mean, in terms of the value, is there anything written today? It's just not what I do about what this prospectively is worth if$14 billion is light. I mean, just to put it in context, I mean, Ralph Lauren is$18 billion. They sell socks. And William Sonoma is$24 billion. And they sell blenders and egg beaters and mixing bowls. Surely the$14 billion is a big number. I don't think we've ever talked about egg beaters. Someone's got to do it first. But you guys study this stuff, right? And there must be sell-siders who have put out, what is TikTok worth? If it's not worth$14, it's got to be worth a lot more, no?

8:08I mean, one would think so. One would think. One would think so in terms of the reach that it has, the influence in the public sphere, all the millionaires that TikTok has spawned in terms of influencers. So then was there anything about where the$14 came from, or is that just an arbitrary thing? Twitter, I think. It came from J.D. Vance. I think Elon raised money in Twitter at like$80 billion or something like that. And if you think of the revenue base, you know, they have, again, a much lower revenue base based on advertising. You know, TikTok is obviously the thing. There's no shortage of there's advertising revenue.

8:41There's e-commerce revenue. You know, they have this is the platform where creators want to go. And I'll just say one thing. As a parent of kids who probably spend way too much time on TikTok, I would love for that algo to be degraded, for the kids not to enjoy this thing anymore. because if you think of the attention that is commanded by this platform right now, and it is not Snap. Your point about snapping, you know what the kids do today? They do take a Snap and they send it. There's no way to monetize that. I mean, literally. And Snap as a company, on a gap basis, they've never made any money.

9:09And if you think about social platforms, how few have been able to get over 100 or 200 million monthly actives? It's a handful of them. So TikTok, to me, is an amazing asset for anyone to get it under$100 billion. I mean, assuming that the algo is in place and they are literally set to grow in a manner that is not subject to any government oversight. I mean, there will be a government oversight. That was the valuation over 100. It was the value of the U.S. entity is 14 billion. The valuation is 106 billion for someone for TikTok, for their brand. So so I think they just found out they just divided it and came up with something, an arbitrary number of a slice of 106.

9:48And just, you know, the conversation around other places, but the conversation around Snap is that right now the street doesn't believe Snap can meaningfully accelerate revenue. As Dan's saying, I mean, it doesn't matter where they sit here. Where they sit in the funnel is an inability really to monetize from an ad basis. For more on the TikTok deal and the broader impact on big tech, let's bring in Jeffries, Managing Director and Senior Technology Analyst Brent Thill. Brent, great to have you with us. We just got a number in terms of valuation,$14 billion for U.S. TikTok. What's your take? That's massively undervalued.

10:20I think Carter said it well, like, how do you buy a blender for a higher market cap? This is crazy. I mean, the number's got to be wrong. It doesn't make any sense. The market cap of Snap is 14. The market cap of Meta, you know, is close to$2 trillion. I mean, this doesn't make any sense. And so the only way you could read into that is, are they getting themselves a good deal and they're going to mark it up and it's going to be a huge windfall? But that it makes zero sense from what I can see. And I don't have access to all the numbers, but it doesn't make any sense. Just to play devil's advocate, Brett, I mean, there is, you know, the possibility that it's not worth as much because they do have to recreate the algorithm.

10:58They have to retrain the algorithm. There might be a period where users have to actually download the app again and they could lose users. I mean, even factoring all of that in, 14 makes no sense. No sense. Zero. I mean, no sense. So, you know, this is a great deal. It's a great deal for Oracle. They're on a hot streak now. We think ultimately the drama's over. This is good. They should be able to attract more advertisers to the platform because the drama's over. As we've seen in social, there's only one play. I have teenagers. They look at Snap. They've never been influenced by anything that Snap has sent, so they can't monetize.

11:37And I see that through my own teenager's behavior. It's all valued and monetized on Instagram. And Zuck just said that they crossed 3 billion monthly active users. Everyone's sticking on Instagram. There is room for TikTok. But again, I think that the question is, is there going to be market share taken from advertisers, whether it's TV or whether it's from other social platforms back to TikTok? And I think the answer was is yes. I just can't tell you where it's going to come from yet. But there's no question these are you know, there's three platforms really that the that most are using meta, TikTok and Snap.

12:15And I think ultimately we've seen this. I think there is room for TikTok and monetization. Snap just hasn't been able to do it. And it's been it's been a broken record for a while. So, Brent, Tim, agree with you on the teenagers. Same with Dan. So shining a bright light on Instagram and trying to kind of talk about valuation and some of the pieces. But again, Instagram relative to other pieces of meta overall. Can you help us understand just how you put a premium on that Instagram? And we're at a place here where on valuation. This has certainly been a story where people have been able to say, well, meta has certainly come a long way in the valuation in the last 18 months.

12:53But as you point out, it's Instagram and almost everybody else. So help us understand just how you attach that value. Yeah, I mean, we don't get we don't disaggregate just at a high level. You know, this company is going to do thirty dollars of earnings power. You put a thirty dollar thirty multiple on it's nine hundred dollars. So we still believe, you know, there's a lot of upside in in meta just overall in terms of Instagram. Clearly, it's it's the it's the driving force. That's where the huge engagement we don't necessarily break it apart. But I don't think that there's any chance of a spin or a divestiture.

13:31We think that this is going to be part of the franchise. And then you look at all the other assets that they're generating beyond just this platform. We think, again, advertisers keep telling us that they're staying with Meta. And we've actually heard market share gains against Google because the engagement is so high. The users are engaged. The advertisers stay there. And we've heard this for now multiple quarters in a row that the advertisers keep spending more on meta, less on other platforms. You can see it in how the other stocks are acting. And again, it's not all taken away from Google.

14:09But at the margin, Google has necessarily, from the advertisers we talked to, has been as excited about what they're seeing. So as long as the advertisers are saying we love the meta ROI, you know, we're staying positive on it because, again, usage is there. Zuck talked about this. If you've got three billion monthly active users, you're going to get the advertisers to come to the platform. Hey, Brent, help us think about Oracle for a second here. You know, obviously, TikTok is one of their early customers. We know that, you know, they have low single digits, maybe mid single digits market share as it relates to cloud.

14:43So they have this huge open AI contract. They have a meta contract. I'm sure there's others that are coming this way. They just raised$15 billion to help this build out. But man, they need$100 billion. Right. And so you have free cash flow that's negative here. How do they do this? How do they satisfy this infrastructure build that's going to be basically commensurate with all these contracts? It just seems like a very curious situation that the market is willing to reward them for that revenue that they've guided to when it's going to take their competitors. have spent hundreds of billions of dollars on the build out.

15:16Yeah, I mean, Oracle, we've never seen 317 billion sequential improvement in backlog. That's six, seven times their annual revenue. The Oracle story is really about the backlog. It's not even about the revenue. Remember, the company is guiding from single-digit growth to double-digit growth. So this has not showed up in revenue. And the real question investors have on Oracle is, is all this backlog phantom, Can Clay, who was walking with Sam Altman in Texas the other day, get this infrastructure in the ground and get it up? And can he do it profitably? Because we know infrastructure is way lower margin than software.

15:52So those are the questions we keep getting. We just came off the heels of 45 companies at Jefferies AI Week. And everyone believes the ROI is coming. The economic value that's going to have for all of us, whether you're a doctor or a lawyer, you're in Wall Street, is going to be there. But these are huge investments. It's hard for investors to digest the magnitude that's going in. I think the other concern right now really is just around just the scope of the transactions and how few there are. Right. There are very few companies that are going to hand over 300 billion dollar checks. OpenAI. There's only a few that you could count on like, again, there's like two or three on the planet that could deliver a contract that big.

16:35So I think there's concern about concentration risk. There's concern about can Oracle deliver. Here's the reality for the stock. It's not going to matter for the next two years because it's not going to come off their backlog and their backlog is going to stay high. And if they keep signing up Meta and Middle East data centers and other contracts, they've now got TikTok. They sign up more infrastructure. That backlog number is going to keep going higher. And again, it's going to matter at some point, but it's not going to matter in the interim because they can't take it to revenue. So the backlog number is just going to stay high.

17:08And 100 % of Oracle stock move is on backlog. It's not in revenue. It's not a margin. It will flip at some point. So I'm just saying in the near term, it's not going to matter as long as they keep signing these deals. We had Core Weave on today, and they see an incredible demand for AI. They can't keep up. Every data center operator we're talking to can't keep up. There's not enough power. It's hard to believe, and I'm not trying to hype this. It's just incredible. the demand that we're seeing right now. So Oracle trades only on backlog. What is your rating on Oracle then? We have a buy on Oracle.

17:43We continue to believe that that backlog is going to remain high. And again, the risk is, can they convert? They're basically saying, we can build you 100 condos in Miami, but we haven't built them yet. And trust us, we'll get them up in two to three years. And the analogy is simple, but that's what they're doing for data center infrastructure. They're accepting these contracts way ahead of infrastructure being built. The question is, can they pull it off? And again, it's interesting that Safra steps down and Clay steps up and Clay is architected OCI. And he's done a great job. But then the question now is, can they execute on these incredible contracts?

18:21Because none of the stuff's in the ground. None of it's up. It's again, it's lower margin infrastructure. And then their hope is they layer more software on top to bring it up. Again, the backlog number is going to stay high, in our opinion, for a while, because it's going to take years for them to do this. And the focus really has been on that number. So, you know, again, only one number to watch at Oracle. It makes my job easy. Focus on backlog. That's it. I guess so. I don't know if you sleep well at night, though. It sounds like a risky business. Brent, thank you. Always good to get your take on things.

18:55Brent Thill of Jeffries. Speaking of Oracle, the stock, as we showed you, down another 5.5 % today. It's now lost nearly 16 percent from a record high hit just two weeks ago. Analysts at Rothschild Redburn initiating stock with a sell rating, a$175 price target. That would be a 40 percent drop from today's close. A firm warning the market is overestimating Oracle's contracted cloud revenues. Even with this week's losses, Oracle is still up 27 percent this month. What do you make of this run in the pullback? Well, so is the pull, what's the primary data point? What's the secondary? Just like footnotes in a research paper.

19:29The primary data point is the news-related, fundamentals-based gap up, right? Oh, I heard that. And then the secondary data point is the reaction to that day. So perfectly normal to pull back, right, to dip, to give back a huge move like that. The question is, is the give back over or are we going to go all the way back and fill the gap? I don't think the gap gets filled anytime soon. I think the stock's been re-rated and it's likely to back and fill here. I would bet against volatility. It's interesting to think about a stock trading purely on backlog and not the realization of actual revenue or even the close to realizing the revenue that they're announcing or saying that they will have.

20:07Well, by the way, I think Brent's always very balanced, very measured, and we love him here. But I didn't hear a buy. I mean, I heard it. I heard someone pointing out that he was saying that it's all about the backlog that we can't monetize right now. It's interesting that the note from Rothschild points to the backlog as well. But they are questioning the size of the backlog as well. So not just can they deliver on it, not just growing demand in a number that kind of goes out here. So, look, we've sat on this desk for a long time that there's a revenue growth story that may be something. But if you've owned Oracle for the last three or four years or five years, you've owned it because it's almost behaved like a bond.

20:45This is something that I hear from a lot of investors that continue to add this to clients. And this is something that's now a very different story. And obviously, you start coming to the capital market, start worrying about a debt profile. It changes the profile of a company, even though, let's be clear, this has been, you wish you owned Oracle this year. And it's been one of the most exciting stories in tech. Oracle moved, to Carter's point, from$220 to$330. That 50 % retracement is$275. If it breaks that price, that's your exit. If not, just shoot against that and be long. Yeah, I just find it interesting that investors forget that this stock sold off 40 percent from its highs early in this year to its lows in April.

21:23And just think about this. If you were going to fill in that gap, which I actually think it will fill in the gap for the very reason, for the fundamental reason that if this thing is only trading on one number that we don't really have a lot of visibility on, I think at some point you see this thing come in to fill that gap and then have a ball at 250. Coming up, cutting the caffeine. Starbucks, slashing jobs and closing stores, how the coffee chain's turnaround plans are unfolding. and what it means for the stock's next move. But first, Costco results are out. The details and numbers in the latest quarter next.

21:53Don't go anywhere. Fast Money is back in two.

22:04Welcome back to Fast Money and earnings alert on Costco. The warehouse club reporting sales and profits atop estimates. Costco's conference call is underway. CNBC's Melissa Repko has got the latest. Melissa. Hey, so I just got off the call and they are still talking, but some of the highlights for growth in the quarter was that membership income grew by about 14 percent year over year. And that's a closely watched area since so much of their business comes down to members. The other thing that they spoke about is CFO Gary Millerchip mentioned that they're trying to offset tariffs by sourcing differently than they were before.

22:36They're introducing things from the Kirkland brand that are alternatives to tariff affected items. And he also mentioned that they are choosing their assortment differently, in some cases dropping items or ordering bigger from manufacturers that are less heavily affected. All right, Melissa, thank you. Melissa Repko, we should note because they did increase their membership fees. So you might wonder, is the increase in fees because of that increase in membership? And they were saying that just under half of that increase in overall membership fees are because of that increase to what you pay. Stocks aren't moving much here.

23:11No, and I think that the price increase is in the price. And we don't need to repeat what's obvious about Costco, which I'll quickly repeat that it's 47 times trailing, 40 times forward. But I'll say there's a reason why they are getting this multiple different than even Walmart, who I think deserves a much better multiple. And they have it, of course, and they've had historically because of the smaller amount of SKUs and the buying power they have. The merchandise margins for Costco are better than anybody's. So they're focusing on fewer items. They have the ability to push price even that much more.