Meta’s Record Run… And Treading Lightly in Europe 20/14/25

0:00Live from the NASDAQ market site in the heart of New York City's Times Square. This is fast money for a Valentine's Day. And here's what's on tap tonight. Wall Street's love and meta. The stock now riding a 20-day win streak. How long can that rally last? And will the rest of the Magnificent Seven join the party? Well, we'll debate that. Plus, on a roll, casino stocks are rocking. MGM, DraftKings win surging this week. Should you roll the dice on this rally? Stick around to find out. And later, Roku's rebound. Why one of our traders likes it more than Netflix. European stocks are having a weak time to trade it or fade it and rocketing higher.

0:40We will break down the soaring valuations in the NBA ahead of All-Star Weekend. Nice to be back with you. I'm Tyler Matheson. In for Melissa Lee tonight here in Studio B at the NASDAQ. On the desk tonight, Steve Grasso. Mike Coe, not actually here on the desk. Julie Beal, remote as well. and former Bridgewater Chief Strategist Rebecca Patterson, also a senior fellow at the Council on Foreign Relations. We start with that magnificent run in meta shares, adding another 1 % today, extending their win streak now to an astonishing 20 straight days. This is a Joe DiMaggio-like streak. The tech giant has added nearly$320 billion in market cap in that time, bringing its total value within a stone's throw of$2 trillion.

1:26And even as broad markets close back in on records, Meta has thus far outperformed the major indexes during its run. It has also been head and shoulders above the rest of the so-called Mag 7, as you see there, seeing gains almost triple those of its closest rival. That would be Apple. So what can we make of Meta's recent rally? And can it continue to lead the market higher? Steve, let's start with you. What do you think of Meta, and what more broadly do you think of the MAG-7 right here? So in your terms, 56-game winning streak, right? We're going for that. Is that what you're going for with the Jody?

2:03Because most people watching the show do not know about Jody's hitting streak on that. They probably don't know who Jody is. That's a fair point. That's a fair point. Mr. Coffey. Mr. Coffey. So when you look at Meta, over 95 % or right thereabouts is what revenue, percentage of revenue is derived from ad sales. So if there's a hiccup in the economy, this one's going to feel it the most. But when you look at everything that they've done right, they are the 2 ,000-pound gorilla in the room. Google, Meta. And when you see the two horses, Google's actually less dependent on search than Meta's dependent on ad sales.

2:42But now you saw the headline today that they're putting a huge investment into humanoid robots. So I think they're doing a lot of they kiss the ring the same way that Musk did with Trump. And now they're developing robots the same way that Musk did with Optimus. They're going a bunch of different angles. All of them seem to be a chance to monetize something else. But make no mistake about it. This is an advertising company. And if the economy pulls back in a little bit, stumbles, and people pull back on their ad sales, they are going to feel it the most. Julie, let me turn to you and bring you into the conversation.

3:23Meta is going to spend something like$56 billion in capital spending this year. They are not, correct me if I'm wrong here, one of the leading players in AI. Not to say that they're not involved in and benefiting from AI, but what are they going to spend all that$56 billion on? And how soon should they expect or investors expect it to pay off for them? Well, I think that that's the subtlety is that it actually is paying off for them, right? Their investments in AI are enabling them to be much, much more targeted in their advertising. and they've been able to offset all of the headwinds that they had from the initial security issues with Apple.

4:03They've really been able to push right past through that and set themselves up as having large language models that are as good as the others. Open source, which makes it kind of a different wrinkle for them. But I think that what's interesting about this company is that they really eat their own cooking when it comes to AI. They're really able to integrate that into their tools and sell more ads. I agree completely with Steve that there's much more sensitivity to ad spend. But I think that they've now demonstrated that using AI to make the ads reach people better is actually going to make them the last resort for advertisers.

4:39All right. So, Mike, 25 percent higher so far this year. We're barely six weeks into the new year. If I am not a meta holder now, have I missed the ride? Is it is there still time? Is this a long-term investment that I should feel safe buying today? Yeah, I mean, that's a great question. And it's interesting because as a meta enthusiast, I was sort of asking myself that very question. If I wasn't already bullish on the name and enjoyed some of this ride, would I be entering it here? I would have to say that on a short-term basis, it feels a little bit stretched to me. I mean, just its relative strength and everything else, it just seems like it's a little bit difficult to chase it here.

5:22But if you own it, I wouldn't sell it. And I realize that's a little bit of a waffle. But this is a name that's probably going to, between 2025 and 2026, generate something in the neighborhood of 20 % free cash flow growth. We're looking at 2.5%, 2.6 % free cash flow yield on the name, which is obviously very good. The other thing I would say just about management and people's concerns about their capex, don't forget that this was a company that was really making huge investments in the metaverse that was very badly observed, I would say, by the street. And they pivoted, right? So they sort of acknowledged that maybe that investment wasn't going to pay off.

6:03And they basically turned things around and turned on the cash flow spigot. I have a feeling that the same thing is true here. I think they're being pretty cautious about their spend. So if they think a$50 billion investment is the right idea, I think we should actually give them the benefit of the doubt at this stage. All right. So, Rebecca, Steve makes the very interesting point that meta is in part economically dependent. In other words, if the economy slows or stumbles, its advertising is likely to come down. So I know that individual stocks aren't your thing, but broad macro trends are. Do you see the U.S.

6:41economy in any way sort of slowing down? And what might, for example, tariffs or other headwinds mean for a company like Meta? Yeah, I think the thing I would worry about most right now is that the tsunami of policy announcements and uncertainty around them. You have a tariff. When do you have a tariff? Will it be negotiated away or not? But all of this, frankly, noise can create uncertainty, both for consumers, but especially for businesses. If there's enough uncertainty that they start pulling back, so consumers spend a little bit less, businesses hire a few less people or make fewer investments, that can start creating a negative feedback loop.

7:22And that could quickly go into things like ad spending, because at the end of the day, ad spending is discretionary. It's going to be the thing you cut off first. So I would worry a little bit about uncertainty. And for that, keep an eye on the sentiment indices, things like PMI, ISM, University of Michigan. Those are going to give you pretty good early signs if that uncertainty is getting to a problem. Of what the consumer is feeling like. Right. Yeah. All right. Let's take a pause and talk a little bit more about the underperformance of the other MAG7 stocks apart from Meta. Let's do that. Let's bring in Gene Munster, managing partner at Deepwater Asset Management.

7:57And I'm prone to say that the MAG-7 has become the lag-7, except for META. Gene? Indeed, Tyler. The META is up 23 percent over the last month. The rest of the MAG-7 down one. If you pull Tesla out, it's been a big drag on that. It would be up two. So compare that to the NASDAQ over the last month, which is up almost 5 percent. This is definitely a different message that we've seen from this leadership group over the past couple of years. And I want to just quickly frame in why I think what is going on here. Beyond meta, I think what is going on is that this is almost becoming a self-fulfilling prophecy with investors just looking back and looking at these trillion-dollar-plus market caps and just mathematically trying to understand what percentage performance they can get relative to some other smaller names.

8:48And I think you have this dynamic playing out. But in fairness to the Mag-7, I do want to quickly recap the scorecard from the December quarter. Four of those six companies reported their, of the six companies, the six of the Mag-7 that reported, four had positive results. A couple had some, a little bit of hair on them. But all six were, I would say, doubling down and uber optimistic about how this year is going to play out, how next year is going to play out. So I think the context of this is that the fundamentals continue to be strong. One last piece is despite my optimism around the MAG-7, I do think you're going to see more outperformance from smaller companies.

9:32I think just at Deepwater in terms of how we're investing, we're focusing still on the same themes, but companies that are kind of that sub 500 billion market cap in this frontier tech realm. realm. So still on some of the Mag 7, but we've shifted some of our focus to some of these smaller companies. So that's what you're pinpointing there, and I'll get Steve to jump in here in just a second. What you're pinpointing here is a kind of rotation that a lot of people have been talking about and expecting for the past year or so. And now maybe, maybe those days are upon us. Is that a fair characterization of what you're thinking, Gene?

10:08Exactly. And I mean, I'd say that, again, And I think we own many of the MAG-7. I think they're going to do great reward investors. But I think this outperformance piece is going to shift to some of these smaller companies. And ultimately, they are participating along with the MAG-7. They just haven't been this flight to quality. The key is this. As long as the broader market holds together, I think you're going to see better outperformance from these smaller companies. So, Gene, I'm going to pick right up where you left off. So when you look at the broader market, the broader market is 40 percent dependent on MAG7 pretty much.

10:44So without MAG7, the broader market sort of fades. And we saw Meta, Tyler brought it up, 65 billion CapEx. We saw Microsoft, 85 billion CapEx. We saw Amazon, 104 billion CapEx. If DeepSeq threw the grenade into that pile, what are they going to pivot and spend all this money on? Even if DeepSeek is a scam, there's got to be some efficiencies that's out there that they don't need to spend what they're spending now. What do they pivot to spending on? I think from the mega caps, it's still going to be AI. I think it's still going to be that same story that we've had. I still believe we're very early in this, and I still believe we're going to have a great two-year bull market that's going to end in a spectacular bursting of the bubble.

11:33One piece to Steve really quick, you talked about that 40 % of the market and can if the MAG7 doesn't work how can the rest of the market work and I do believe that the MAG7 will continue to work. I think that as long as they're moving higher I think these other stocks will continue to do well. I mean from our perspective one thing we have an ETF and its tickers LOUP that focuses on these smaller companies. And it's been up 9 % this year. As I mentioned, the NASDAQ up 5%. It's that kind of dynamic that we're seeing. And so we're closely watching this dynamic play out. I was about to let you go, but I'm going to come back to something you just said.

12:14But I also want to get a couple of names in that sub -$200 billion market cap that have caught your attention. So give me a couple of names there quickly, and then I want to follow up with one quick question. So one of them is Celestica, A name that many don't know. This is basically a switch company. It competes with Cisco. Gaining cheer. It's needed for the development. Another one is Reddit. Many know, but still, I think, underappreciated what they're doing with their data related to training AI. Talk about throwing the grenade. I heard you say, if I heard you right, that we have two more years of a good bull market and then a spectacular bursting of the bubble.

12:51It's going to be great. It's going to be great. Right. Get me out of here. I love it. So explain why and what does that mean, a bursting of the bubble of technology shares broadly or of the MAG-7 or what? We're not at euphoria right now. If you look at the valuations, the MAG-7 still, excluding Tesla, trading at 25 times earnings. We're not even close to euphoria. Euphoria was 100 times earnings back in 2000. We're not going to get to 100. I think we can get to a much higher number. I don't want to put a specific number out there, but I think it can be much higher. And this spectacular bursting into the bubble, I think it's important that that is a cautionary tale.

13:34If I'm correct, the market is going to get euphoric, like beyond what we're experiencing today, when it's across the market, naturally there has to be some sort of a correction. The great part is this. After euphoria comes long-term compounding. And that means those companies that have that drop, 30%, 40 % drop, can start to build after that. All right, Gene, thanks very much for that analysis. We appreciate it. Let's move on now to you, Rebecca, because you've got some concerns about crypto's correlation with the Magnificent Seven. I was asked a couple of weeks ago, what do I think of crypto?

14:12And I don't know whether you remember an old song that was by a guy named Edwin Starr. It was War. What is it good for? Insert crypto here. Absolutely nothing. Insert crypto here. I don't know what it's good for other than to be a speculative investment. Well, as we all know, there's a lot under the umbrella term of crypto. And some of them have very tangible uses and some are more speculative assets. NFTs and dollar-backed coins and so forth. I published a piece in John Ellis' Substack News items earlier this week about our crypto presidency. Because I think under all the tariff talk and deregulation talk and Doge, he published an executive order in January saying we are going to be the crypto capital of the world.

14:57And we're going to do that with clear regulatory guidelines. We're going to do that with explicit government support. And so I'm not surprised that between the election and January, we had a huge run in crypto, including Bitcoin. The caution I have gets back to something Gene was just talking about, which is the possibility of a correction in MAG7 and tech generally. At the end of the day, crypto is fintech. It's financial technology, right? That's all it is. And it tends to trade like leverage small cap fintech. So when technology stocks go up, often, not always, but often crypto goes up. And what I found is that if you go back a decade, every time the Nasdaq fell more than 5 % in a month, Bitcoin fell more often than not, the majority of the time, by 5 % on the month or more.

15:47Gold, just for context, was up. So don't go into crypto thinking it is a non-correlated asset to technology shares or to risk assets. Not yet. That could change in the future. But at least until this point, it has not provided you diversification. It has provided you amazing returns if you bought and hold. If you bought in 2013 and still have it today. Wish I had. Risk adjusted, even with the volatility, you're better than the S &P 500 or NASDAQ. The problem is that most people haven't bought and hold. There is a great study. Have most people made or lost money? So this is the big point. And you think, well, how do I even answer that question?

16:26The Bank for International Settlements, which is sort of the central bank for central banks in Switzerland, did a big global study, and they looked at how many people made and lost money. And what they estimate, and it's an estimate, but it is a good, deep study globally, not just the U.S., between roughly 73 % and 81 % of people who bought crypto over that decade lost. Is that because they're trend followers? In other words, they buy when the thing is going up, and then the big money gets out? That's exactly right. And they're deep-panced. So what they also found is that the vast majority of people trading in crypto today, again, this could change, have been young white men, usually under the age of 35, and they tend to trend follow.

17:10And so they're buying after Bitcoin goes up. And then the big whales, the huge owners, sell and they get caught in the wash. Steve, the counterpoint. Yeah. So when you look at these, I agree with you on meme coins. But when you look at Bitcoin, only 21 million will ever be mined. Before the election, it was 62 ,000, traded up to 109 ,000. In the last five years, it's up 880%. Gold's up 84%. NVIDIA is up 1 ,800%. There is the hodl, the hodlers, right? You have to buy and you have to hold. Do you think crypto, do you think Bitcoin specifically is going to be at 10 million, 13 million, like Michael Saylor says, 250 ,000 or a million?

17:50We have now an administration where Rebecca started that is going to regulate it. It's not going to be an enforcement strategy. It's a regulatory strategy. It's a growth strategy. With a growth strategy, banks are going to start getting into a corporate balance sheet. It's going to start getting into a central bank. It's going to start to own it. $21 million maximum mind. I think it can be volatile. Be careful. But the upward momentum is there. All righty. We're going to take a quick break. Coming up, place your bets, casino and sports betting stocks hitting the jackpot today. What's fueling that trade?

18:25Should you keep rolling the dice on these names? Plus, shares of Roku surging, the results that had investors streaming in, and how the stock stacks up against the competition. Don't go anywhere fast. We'll be back in two. Welcome back to Fast Money, everybody. We've got a news alert on some 13F filings. Leslie Picker has the details. Hi, Leslie. Hey, Tyler. Yeah, there was a lot to unpack in this Berkshire Hathaway report, notably holding on to its Apple position during the fourth quarter, which stood at$75 billion as of the end of 2024. Now, this is noteworthy because Berkshire had slashed its stake by about two thirds over the course of the first nine months of the year.

19:09So perhaps we've seen at least the Apple bulls would hope we've seen at least a temporary pause in those sales. Warren Buffett's firm continuing, though, to sell down Bank of America after going below that 10 % threshold during Q4. That's the level, if you recall, by which Berkshire no longer needed to continue disclosing each sale. So we're learning more now about where that stake stood as of the end of Q4. During the fourth quarter, Warren Buffett's firm also pared back 15 % of the B of A stake to hold roughly$29.9 billion. and the firm also sold down 74 % of its stake in Citigroup to hold about$1 billion worth of that name and it sold 18 % of Capital One to hold about$1.3 billion of that name at year end.

19:55You can see those shares down a little bit in after-hours trading, but they did make a move on this filing revelation. In terms of other positions, other holdings during the quarter, Berkshire took a new stake in Constellation Brands that was worth more than a billion dollars, and it bumped up its exposure to Domino's by 87 percent. Both of those consumer names getting a boost in after-hours trading after Berkshire showed some love to each of those, notably Constellation about 7 percent in after-hours on that new stake there, Tyler. Take your money out of the bank and go to Domino's. All right.

20:31Thanks, Leslie. Appreciate it. Meanwhile, he could buy a lot of pizza, by the way. Meanwhile, casino stocks hitting the jackpot this week. DraftKings leading the pack, soaring more than 26 percent since Monday. MGM up 15 percent. Caesars win also getting in on the action and also in on the action. Contessa Brewer, what's driving the game? I mean, it was a lot of fun to watch all of this. DraftKings stock, as you said, up 15 percent on the day, 26 percent this week. On the earnings call this morning, CEO Jason Robbins painted a really pretty picture of 2025, which kicks off with some astonishing numbers from the Super Bowl Sunday.

21:07$436 million wagered. That set a record for new daily sportsbook handle, the amount wagered, and it led to the highest gross gaming revenue in company history. And that did not factor into the company's guidance, which it raised. When resorts is on fire, it's up 10 percent, fueled by promising business in Macau for the Chinese New Year and performance in Las Vegas against some tough comps and a notable increase in slot play, which, by the way, we heard from MGM as well in its earnings this week. They announced record slot play and wins. That stock went up 15 percent this week on what was a decent report.

21:45But the most promising bit of news was that December was by far the best month ever for booking group big business. And that pushes forward and helped lift Caesars, too, which was up 11 % this week. But really, these earnings reports were rather meh. You know, on valuation terms, though, here's where investors may be paying attention. The Macau casinos look like a good deal. Las Vegas Sands comes in at 16.8, meaning on a forward price to earnings basis, you get the most bang for your buck investing here. MGM 17, Wynn and Melco, 19. The other stocks are higher. Flutter, Caesars, DraftKings, they've all seen runs up recently.

22:27And so, you know, maybe are not the best value in terms of being on sales. Flutter is FanDuel. That's right. FanDuel. And FanDuel is the market share leader in the United States and fueling most of Flutter's growth. But Flutter's still seeing growth internationally, and they have that international. Ultimately, is it going to be the sports betting that fuels these stocks, or is it going to be casino gaming on your handheld? Guess what? The iGaming is estimated to be seven times bigger than sports betting. And on the DraftKings call today, Jason Robbins said it's all but inevitable that legalization will expand because states are looking for more tax revenue.

23:09And illegal gambling is popping up, and they're not getting any tax revenue from that. All right. Who'd you have in the game? Eagles or Chiefs? You know what? I was a fair friend. She didn't watch it yet. She recorded it. Do not spoil it for her. I didn't gamble on it. I didn't gamble on it because I usually lose my sports bets and I hate losing. Yeah. Thanks very much, Contessa. Julie, let's turn to you and get your thoughts on any of these stocks. But why don't we start with DraftKings if you've got an opinion? Yeah, I think it's a really fascinating quarter. You know, they reiterated their guidance for$850 million of free cash flow.

23:43it's really hard to argue with that. The company is finally finding its way to real gap profitability. And I think that makes a difference to certain investors. Having this turn into more of an oligopoly kind of market, it's going to make this much more stable and I think a more investable class for people like me who have been a little bit concerned. I agree, though, that the regulatory landscape is actually pretty critical to the story. as more and more states recognize that this is an opportunity for tax revenue, they're going to want to coalesce around a few players. They're not going to want to issue widespread licenses.

24:19And I think that only benefits the larger players like DraftKings. Mike, you had Eagles minus 32. What are you seeing in Wynn? Well, Wynn saw more than 10 times its average daily call volume today. And, you know, the top line has been a little bit stagnant. But if they can at least get back to 3%, 4 % top line and some of the other stuff that we've been hearing remains intact, then a 10 % pop, basically, you're only incorporating the good news that you've heard this week. And with respect to DraftKings, I mean, if you take a look at what people are now figuring they're going to do for full year 2026, it's about 25 times that number.

24:55You can't really look at what has happened in the past because they weren't profitable. But when you think about the total size of the potential market, and then you think, OK, in two years' time, we could be trading at about 25 times that number with explosive growth. It's easy to understand why that one also saw explosive options volume. We saw five times the average daily call volume there, over 200 ,000 contracts, 20 million shares worth. All right, Mike, thanks very much. There's a lot more fast to come, and here is what's coming up next.

25:362025, plus treading lightly overseas. Why Rebecca Patterson is urging caution when it comes to investing in Europe and how those markets compare to the U.S. You're watching Fast Money live from the Nasdaq market side in Times Square. We're back right after this. Welcome back to Fast Money, everybody. Roku topping the tape, surging 14 percent following last night's earnings report. The stock, best day since November of 2023 after giving stronger than expected results and adding 4 million streaming households in the quarter. Roku now up 33 percent so far this year compared with a 19 percent gain for Netflix.

26:18Those six weeks, those are pretty good years for a company. Yeah, everything is always we're the microwave society. It's like the microwave market where you used to get used to take you a month to get a certain amount of return. and you get it in an hour. Yeah. Right? You could have a great day, bad day. Yeah. Right? Horrendous close. Right. So when you look at Roku, it's a platform, right? So they don't have that content spend that Netflix has. If you look at it on a year basis, Netflix still blew them out of the water. But when you look at it on a year to date, Roku is 2X what Netflix is. I think people definitely slept on the name on Roku.