Netflix Bucks The Trend… And Trump Takes Aim At Health Care Prices 4/15/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast Bank bounce back. City and Bank of America higher on the back of results today, showing the consumer has still been spending ahead of the tariff turmoil. How long will it last? We'll go inside the numbers. And later, the latest on Meta's battle with the FTC, checking in on UAL after its latest results. And will Tim's MIGA trade, M-I-G-A, MIGA trade, continue to outperform? We will ask. I'm Melissa Lee coming to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Dan Nathan, and Guy Adami.

0:47We start off with two counter trades on an otherwise lackluster day for the markets. While major U.S. indices finished the day mostly flat, international stocks saw outsized strength today. We'll get more on the MIGA trade in a moment. But first, Netflix surging nearly 5 % today, posting its highest close since late last month. Its stock has so far outperformed the broader market in its streaming peers so far this year. The latest move coming after the Wall Street Journal reported the company aims to double revenue by 2030 and targets a market cap of$1 trillion. That would mean an almost 140 % rise in shares.

1:21All this, of course, as investors looked at Netflix's KeyOne earnings report after the bell on Thursday. This will be the first quarter the company does not break out paid subscriber numbers. It reported just over$300 million at the end of last year. But will those results help boost the stock further? Is it, in fact, Teflon to tariffs? Guy, what do you think? I hate a 5 % move in earnings. Decent volume day, but I think you've got to stay the course. Valuation will be a concern for a lot of people, but it's been a concern for a long time. And outside of maybe two, maybe three times over the last decade, they really haven't taken any missteps.

1:54So when they tell you're going to be a trillion dollar company in the next five years, to a certain extent, you've got to believe them because they've done everything, almost everything right over that period of time. Yeah, I agree with Guy. I mean, it's a lofty goal, right? Yeah. But when you consider, you know, the history of this company, the transformation from the red envelope to then doing their to streaming, to then doing their own content, to having that really work, to then switching gears and going to the ads, the ad tiers. I mean, they have done everything right. And I think that, you know, today I thought, all right, stocks can be up a lot.

2:24That was obviously a very bullish article. And so I'm going to look to sell some upside calls. And then I thought, well, I would I'm guessing that this big one trillion dollar goal didn't start with, well, this quarter is going to be really bad. But going forward. So I feel like they probably feel like they have some momentum. Whether that's priced in, I don't know. I am long. It is expensive. It is hard for me as a value person to keep this. But they've just continued to dominate. And I don't I don't I'm trying to think, is there an industry maybe Tesla early on in the in the EV evolution? That was that was it.

3:00There was no one else. I feel like they are so far ahead of everyone else here. You know, a lot of folks say, oops, sorry. A lot of people say it's like recession proof. But if you go back to 2022, you know, there was an earnings recession. There was an economic recession. I think consumers pulled back a little bit. Stocks will have 70 percent from its all time highs, you know. And so I just do think that's interesting. The less clarity. I know you don't like guidance, but, you know, the idea that this company is not breaking out a very important metric that really did guide the stock. And I don't think it was one of those things that if they, for the last five years, had not been breaking out subs, that the stock would have acted too differently when it was down in 22 or when it's been up, you know, seven back or whatever.

3:38Since then, I will tell you this, though. I've never really, other than Elon, heard a company guiding to a market cap level. I just have you guys heard. I've never heard that. It just seems very odd to me, you know, like suggesting that. How do you get there? You know what I mean? Well, that's right. But I would think it's guiding to a revenue level and a profitability level. But they didn't give us that. They did. Really? I mean, the revenue they did. Double revenue. Yeah, but what are the margins? Is advertising, you know, the ad tier, is that growing? What does the advertising situation look like, X that?

4:13I just think it's just a very odd thing because there's a lot of, like, things that go in to make the sausage, and we just don't know what that stuff is. Well, to be clear, this is an annual business. It wasn't for analysts. It wasn't for investors. It was sort of an internal bar that they were setting. But, Tim, in terms of, you know, this notion of being recession-proof, I mean, the analysts in the street who've all come out pretty bullish in the past couple, just couple of days even, into earnings, will say that if you look at past recessions, people spend less money on going out to eat and things like that, trips, but they will spend on Netflix still.

4:46So it is in that respect, it could be more recession proof. Well, I mean, it's certainly market volatility proof. I mean, it's outperformed the S &P by 10 % since April Fool's Day when a lot of bad stuff started happening. Disney's underperformed the S &P by 10%. So in terms of performance and how the stock behaves, no question. The analyst community is extremely excited about Avenue revenue as a percentage of overall revenue. and there's a view on anywhere from 10 % to 20 % somewhere out in the next few years. If you think that that's part of how they get to a trillion-dollar market cap, then this is something that certainly has an enormous amount of cyclicality to it.

5:25I just think that their ability to grow on multiple fronts and the numbers for the first quarter, they really just need to show that there's not a whole lot of churn after a last quarter where the net ads were amazing and they also had a price raise. So I think the content slate remains great. I know Guy's a big fan of Adolescence, which is one of its top shows and one of the top shows of five shows of all times. So, I mean, I don't see why you're getting too far away from this one. And I think you pay more for it. I enjoyed season one a great deal of adolescence. Bill likes Adolescence. I thought it was an amazing limited series.

6:01So there is only one season of that show. Silly me. Real quick, though, Tim's point. I mean, look at what it's done in this period of time of market uncertainty. I mean, this is a stock that's with that market cap. I mean, it's one of the mega cap stocks that is basically flirting with its prior all time high made a couple months ago. It's hanging in there, I guess, like a champ in the wake of a lot of stocks not performing well at all. Bank of America, it's a defensive choice for investors. Evercore added it to the tactical outperform list saying the$7.99 a month is the best value for your entertainment dollar out there.

6:35Oppenheimer says no tariff exposure, limited consumer risk. there's a lot to like. A lot of volition is going into their praise. Right. And we saw them. They were advertising capacity restricted. Right. And so as they address that, there's a lot to like here. Let's bring in media trailblazer and CNBC contributor Tom Rogers. Tom served as NBC cable president and now executive chairman of Orbit Media and Entertainment. Tom, it is always great to see you. Welcome. Always great to be here, especially to talk about Netflix. I know you've loved it for a very long time. You've always said that it's Netflix's world and everybody else lives in it.

7:13Are we getting too bulled up, though, ahead of the print? I mean, is at least short term a concern? Well, I don't think this quarter is a concern. A guy likes to throw around the word stud for some reason, S-T-U-D, that applies to Netflix, staying tough under a downturn. And I think it can stay tougher under a downturn than just about any other media stock for good reason, which is that it's only got about 4 percent of its revenues that relate to advertising. And advertising, of course, is what will get most hit in a recession. And when you look around, even if you're talking about guys with great growth rates like Facebook, who probably get 98 percent of their revenue from advertising, they're all going to get hit.

8:02With Netflix near term, that doesn't mean much to their top line. Obviously, over the next five and a half years and getting to a trillion dollar market cap, advertising has to perform very well. But because they are more defensive, they're not going to be digging out of a hole if the downturn comes relative to what kind of hole I think most other media stocks will probably find themselves in. Tom came up with his own acronym. I like that. You've had 24 hours to think about this trillion dollar market cap. I mean, if you were in the seat, how do you get there? Because I'm sure you have some thoughts about that.

8:37Well, I don't really think it's that hard to get there. You probably have to get to about 400 million subs, which is 100 million more than they currently announce, which is 20 million a year. Remember, last quarter, in the quarter, they did just about 20 million. This year, though, they're looking on a trajectory as if they'll get pretty close to 30 percent margins, EBITDA margins. and getting to 40 percent EBITDA margins in four and a half years is probably eminently doable. I would say their advertising business is going to have to take off. It's going to have to scale. But Netflix is a scale player and scale begets scale.

9:22And they're already getting upwards of 45 to 50 percent of their new subs coming in on advertising, getting to 25 percent of their subs by 2030 or 100 million subs, which will give them plenty of advertising scale, gives them the ability to really drive high margin revenue coming off of what is a new revenue stream for them. So you put those variables together and they're probably tripling their bottom line and doubling their top line. And at the kind of multiples that don't have to look quite as extended as their current multiples, you get to a trillion dollars. It's basically doubling what their February high was in terms of their market valuation.

10:10The market as a whole over that period of time, if historical trends hold, probably up 70 percent for Netflix to be up 100 percent from its high is probably not a huge reach. Oppenheimer had a note out, Tom, saying that in the past recession, 2008, 2009, nine people actually increase TV time at home and that bodes well for Netflix. Assuming that is correct, that people will increase TV time should there be a recession this time around, does that enable other players to gain any share if the pie is just bigger? Yes, it does. I'd say the one caveat to the analysis I just laid out is that Netflix engagement has to stay strong.

10:54Engagement is what drives pricing power. Engagement is what will drive their advertising revenue. And relative to January, when Netflix was about 8.5 % of all viewing time, they dropped below 8 % in the March numbers. And the real beneficiary of that was YouTube and the free streaming services, the so-called fast channels. So, you know, free is going to do very well in any kind of downturn. Netflix has to hold its engagement. That was a little troubling. And if there's one area of trouble that I expect them to address on the earnings call on Thursday, it would be that. In a recession scenario, Tom, do any of the streamers get mortally wounded?

11:40Well, I don't think these streaming services per se get mortally wounded. But if you're a Disney, between your advertising revenue and your park revenue, you know, you're approaching high 40 percent of your total revenue. Both of those revenue streams are going to get hit very hard. And that, you know, Disney is above other streamers, below Netflix. It's shown some real growth prospects there. It gets harder to manage streaming growth if the rest of your company is under that kind of duress. And I would expect a player like that to really have to think about how it cuts back in an environment where almost 50 % of its revenue streams get hit.

12:27Tom, it's always great to see you. Always great to get your analysis. Thank you. Thanks for having me. Tom Rogers. Interestingly enough, UBS just late Monday cut the price record on Disney for those very reasons, the high exposure in terms of parks, as well as advertisement and how they are vulnerable to recession here. Oh, for Disney. For Disney, yeah. Right. I wonder, so in the content race, do any of the ones you talk about being sort of behind and potentially wounded, I don't know if that opens up the idea of content being cheaper for the king of the hill. Ah, interesting. Tim, what do you think about Disney?

13:07I think at$85, it's a pretty interesting area to buy the stock. I think it's not terribly cheap, and I acknowledge the exposure it has to recession dynamics. But I think the profitability in the streaming business is something that's really extraordinary, at least relative to where it's coming from. So it's been a big underperformer. It's not Netflix. But that stock here, you know, this is 85 is a level. It's a three-year low. It's a five-year low. And it's held at this level, more or less. Yeah, Tim brings up exactly right. I mean, the technical levels, this 83 to 85 level has been supported a couple of times.

13:42I thought incorrectly, as usual, that this is going to be one of the outperformers of 2025. And it's been, in a word, abysmal for the last couple of months for a few different reasons. But, you know, you just got to take a flyer here, I think, at these levels, just on a technical level, looking for a bounce back to the recent levels we saw, 105 or so. Meanwhile, another strong day for the international trade. The European indices closing well in the green with the stock 600, FTSE and DAX, each popping more than a percent. Asian equities also moving modestly higher. Japan's Nikkei gaining nearly a percent, while the Hang Seng and Shanghai composite indices saw fractional gains.

14:18This is, of course, known as the mega trade, which Tim coined. Tim, what do you think of this outperformance today? Well, first of all, I appreciate the footnote because there's a lot of stuff that doesn't always get footnoted around this desk. And I'll take it. But I think if we're making international great again, we're making great companies that were already great recognized. That's what this is. It's it's not only was there this crowding out and oxygen burned in the room from the Mag seven. But but if you look at it was a great day for banks, we're going to talk about banks at some point here.

14:52But but European banks were up, you know, four, four and a half percent. And they have earnings out right now, too, that are very impressive for their money center banks with, I think, valuations that are significantly cheaper and higher dividend yields and maybe a better deregulation tailwind. So if you look at Germany, Germany is making new relative highs to the S &P. And, you know, the EWG is what you buy here in ETF land if you want. And obviously the currency is imputed into that. That's pretty impressive. And again, in a world where if you think what the last two weeks have been about, it's been one of the largest export, the second largest export economy in the world, which is Germany, should be maybe underperforming in this environment.

15:31But it's not. And I think both the currency dynamics, but more importantly, I think fundamentals with great companies that you're not searching far and wide for, even if you're going overseas. In other words, you know Siemens, you know, SAP, you know, Daimler. I mean, these aren't you know, these are world class companies that people just kind of forgot about over here. And by the way, foreign investors are going to be a bigger dynamic in moving back more into their markets. And that's also part of the currency move. So, Tim, congrats on the MIGA, you know, assignments. It's no fateful eight, which Dan keeps saying I made up, which I didn't.

16:05But anyway, the question is this. You're a baseball guy. What inning are we in? I know you've been talking about this for a while. Where do you think we are? Well, you know, much like a Met fan who sees this team in first place, no one's won anything right now. And I think it's a long season. So I think if you look at 15 years of relative underperformance of the DAX to the S &P, I think you're in the early innings. And I love the sports analogy, Karen. And, you know, it's a shame that you really can't use that same one with the Yankees right now. But I think it's a case where the deregulation tailwinds, the fiscal changes that were historic in Germany six weeks ago, the dynamics in terms of where we really are seeing the rest of the world figure out where they're going to bilaterally have a lot of different deals.

16:50I think this is a trade that's early and people are underway. I'd just like to footnote on April 15th, 2025. I've seen Tim's hair look much better than today. He must be using different Pomod or something. Tim, maybe you can sort of speak to that because I'm just, it's not working for me today. Sure, sure. Guy, I think there's more important things to be focused on right now than what kind of product I'm using in my hair. But I appreciate the focus and I'm going to check into it. Hey, Tim, as our chief MIGA correspondent here, I'm curious, you just mentioned something about the - I thought you were Ray of Sunshine.

17:25Well, no, I mean, but there's a silver lining thing coming out here. You know, the dollar weakness, how much of the bank index in Europe has to do with that? You know, at one point they were, the SX7E was up like 35 % on the year. So I'm just curious, like, is that, does it, kind of outshine some of the fundamentals there, or does it make you less concerned if we, you know, continue to have this dollar weakness? So are you saying that the dollar's weakness is benefiting European banks? Yeah, to some degree. Or at least the performance. I mean, I think, right. Look, I think there's something to be said also about investments repatriating.

18:04But I think the European bank's performance is really a function of some things that have changed also more on a relative basis for European banks than they have in the U.S. in terms of deregulation. And forget, you may not love what's going on in the sovereign balance sheets across Europe, but these money center banks, their balance sheets are as pristine as those in the U.S. All right. Coming up, earnings season in full swing. And we were watching United Airlines on the move after their latest report. The details and the numbers in the quarter next. Plus, meta-antitrust trial begins how Mark Zuckerberg found himself a target of regulators and what it all means for Instagram, WhatsApp, and future tech M &A.

18:39Don't go anywhere. Fast Money is back in two.

18:44This is Fast Money with Melissa Lee right here on CNBC.

18:59Welcome back to Fast Money. United Airlines on the move after reporting mixed quarterly results and giving some very interesting guidance. Our Phil LeBeau is live now with the very latest. Phil. And Melissa, the reason the stock is moving higher is because United is saying that it will be cutting back its capacity starting in the third quarter. That is welcome news for Wall Street. They definitely wanted to see that. Let's start first off by talking about Q1 results better than expected, earning 91 cents a share. The street was expecting 76 cents with revenue coming in at 13.21 billion, just a smidge below where the street was expecting revenue to be for the quarter.

19:34You can call it a miss, but it's really very, very close. And then there's the revenue that they got in the first quarter. Negative 3.9 % for domestic, but the international up 5.2, premium up 9.2, 7.6 % growth for basic economy. As you take a look at shares of United, keep in mind that their Q2 EPS guidance is 325 to 425. I think the street's at 397 heading into the print today. they're going to be cutting capacity by 4 % from their original plan. I followed up with United and I said, what was the original plan? And they said, we're not releasing that at this point. So hard to know if they're going back to where they were last year, exactly how much lower that 4 % brings them.

20:18And again, that starts in the third quarter. And then there's the guidance. A little bit of something in here for everybody. If you believe that the economy, even with the troubles that it's had in the last three or four weeks, is basically going to stay stable. What we see now is what we'll see for the rest of the year. United is sticking with its original guidance of$11.50 to$13.50 a share. But the company does say if the U.S. enters into a recession, and by the way, those are United's words. If they enter into a recession, it's$7 to$9 a share. Wide range, Melissa, but no doubt the reason that it's moving higher is because of the capacity cut.

20:53Lots to discuss with Scott Kirby, United CEO, tomorrow morning, first on CNBC. We'll be talking with him during Squawk Box, not only about the Q2 guidance, but more importantly, what he sees further out and what he hears back from other CEOs. I think that was the most interesting thing when we talked with Ed Bastian about the uncertainty he hears from other CEOs. Love to get Scott's take as well, because these guys, this is a big part of their business, the corporate bookings and what they're seeing. I'd love to hear also, Phil, and I don't know if there's any mention in the release so far, in terms of if there's less demand for flights to the United States from various parts of the world, if there's any sort of, you know, quote unquote, buyer strike when it comes to travel to the U.S.?

21:34Well, if there is, Melissa, if there is, that's not reflected in the capacity plans. The capacity cut of 4 percent, all domestic, all domestic starting in the third quarter. There's no cutbacks coming on international routes. Right. Unless the original plan was a cut. We don't know the original plan. Well, there you go. Phil, I'm sure you get the answers tomorrow. Phil LeBeau, thank you. All right, Tim Seymour, got to go to you on the airlines. Well, it's an enormous opportunity to be a long-term investor in airlines here after having these stocks. I mean, United was 110. I think it went down to 53, something like that.

22:14Delta was more or less cut in half. Question is, are you a trader or an investor here? I think it's too early to really think it's safe to get back in with airlines for the long term. I think there's probably still a trade here in a world where vol continues to fall slightly. You own airlines. But I thought that that guidance was fascinating in that we've got stable environment guidance, which means that if things change at all, you know, that that guidance is out the window. And I think the cyclicality of that business is something to be concerned about. I think they also, though, said that they expect to have resilient EPS, resilient performance in a difficult market environment.

22:53So I like the capacity cutback. I like the efficiency dynamics. I think Delta and United, as has been noted, are the best plays. I think you can probably trade them both here, but I think you're going to have another chance to buy them lower. So I just think the guidance, the bifurcated guidance, is fascinating. I think we'll probably see more of it. It's really interesting. I think we're also going to see no guidance. And companies will get away with it, which I think is fair. Right. Yeah. I mean, if you're a company, if I were a company, I'd do that. Well, you see that you can drive a stable environment, as Tim said, recessionary environment.

23:30That's a huge disparity. But real quick, I mean, we had this conversation last week in terms of the entire round trip United did from last fall when everybody got geeked up and we traded right back down to that 53 level, as Tim just stated. I do think there's some room on the upside here. I think the better play is Delta, but I think United still has some upside from these levels. Coming up, banks starting earnings season with a bang. How the group is making money even as deal-making slows, and if it can continue past the first quarter. That is next. You're watching Fast Money live from the Nasdaq MarketSite in Times Square.

23:59Back right after this.