Netflix Reports Earnings… And Crypto’s Next Move As Bills Pass Through Congress 7/17/25

0:02Live from the Nasdaq market, in the heart of New York City's Times Square. This is Fast Money. Here's what's on tap tonight. Netflix gets chilled. The streamer beating top and bottom line estimates, giving better than expected guidance. But shares down just about a percent after hours. Why investors were not impressed and where the stock goes from here. And not one, not two, but three closely watch crypto bills passing their house votes this afternoon. What it means for regulation in the industry and for Bitcoin's record run. Plus, GE Aerospace pulls back after hitting a 25 year high. Elevance gets unelevated on the guidance cut.

0:35and why one of our traders thinks the Fed shakeup could mean a rally in treasuries. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Karen Feynman, Dan Nathan, Guy Adami, and Carter Braxton Wirth. We start off with Netflix's earnings beat. The streaming giant also posting better-than-expected user numbers and raising its full-year guidance. Despite that, the stock is trading off by just about 9 tenths of a percent. The earnings call underway. CNBC's Julia Borson's got the very latest. Julia. Hey, Melissa. Netflix kicking off the call that CFO is saying that they are seeing momentum in ad sales on pace to double ad revenue year over year.

1:09Also saying that content expenses will increase in the third and fourth quarter of this year and that the back half will have one of the biggest slates of movies they've ever had. Co-CEO Ted Sarandos just ran through a very long list of shows. But despite those higher production and marketing costs, they say they will still be growing margins this year. Co-CEO Greg Peters said when asked about the health of the consumer that they believe demand will remain strong. And while the company no longer discloses subscriber numbers, they did say that their member growth was ahead of forecast. And Peters disclosed that total viewing hours did grow in the first half of the year, despite the fact that their new releases are weighted to be released in the second half of the year.

1:52And just worth noting here, the company did raise its revenue for accounts, which a number of analysts were hoping for, saying that the majority of the increase reflects the recent depreciation of the U.S. dollar with a balance attributable to continued business momentum driven by solid member growth and ad sales. And, of course, Melissa, we're listening for any more specific details about the ad revenue beyond just the doubling year over year. Specifically, I'd like to know how many members are choosing the ad supported plan. But I'm going to jump back on the call, which is happening right now.

2:20All right, Julia, thank you, Julia. of Boorstin. It is interesting what they note about the boost in revenue, mostly due to the weakness in the U.S. dollar. So you look through currency swings, maybe that revenue would not have changed in terms of guidance. Right. And so the bigger revenue beat was in the United States, right? But, you know, the expectations were so high, so high. So this is, they delivered, right? If you had just told them last quarter, this is what they're going to put in the next scored and this was the number, that would be very good. So I think it's just the burden of expectations being really, really high.

2:54We know it's a very high multiple. Clearly, they are the best in class there. So I'm pleased with this. I always want to wait to hear the conference call. There's so much nuance there potentially. You know, we want to hear about live sports. We want to hear, will the content sound like Julia was getting to that and ads, of course. But so far, I'm pleased. Given the run-up that it's had, I think this was very good and certainly good enough. They also say that they're noting nothing significant in terms of metrics, like if there was any kind of swing because of consumer sentiment. They're watching that very closely.

3:27They did see an uptick at the end of the second quarter, which is good news. But the stock is off an all time high just at the end of June. So to Karen's point in terms of here it is, they delivered and the stock's just off a percent. That's not bad. Shouldn't be surprising. Yeah, I don't think it's bad at all. I actually think it's pretty good. And, you know, high bar, I think they sort of got over a high bar. Margin improvement is staggering, in my opinion. I think it's up 600 basis points year over year. And the operating revenue, revenue growth is, I think, up 16 % year over year. And this is coming off some probably, you know, difficult comps in the first place.

3:58So valuation is obviously a concern. It's always been a concern. I mean, there's no other company out there. So I don't think you run too far from Netflix here. Again, the conference call, we'll see what happens. But I think this was a fine quarter. Yeah, you know, a lot of folks were saying into this year, okay, so they're not going to give us those subscriber numbers. That's something that obviously has caused a lot of volatility in the stock over the last, I mean, as long as we've been talking about it, you know, in the streaming world and that they've been in over the last decade or so. You know, I think about the advertising and I know that's something that we talked about with Amazon over the last call it five years or so.

4:29We talk about this is just kind of pure margin. If you think about it, it's something that is not particularly intrusive. And that's been good for them. It's only 7 percent, though, of their total revenue. So if you think about where the direction that could go, that could be very additive to those margins. And especially when you're trying to offset maybe some of those increased content costs, we don't know what they're going to do with live sports. But that's also going to add another layer of that advertising. And I'll just say, you know, the last thing, we're going to see lots of digital models that are going to be contending with generative AI or these chatbots.

4:59And it's really going to come at a lot of these kind of search advertising sort of models. And that's one of the real issues, I guess, with Google. It's not one that has been evident so far, and Google has been telling us that it's not evident. That's one of the reasons why I think a lot of folks are anticipating, you know, something on that front when they report in a week and a half or so. But this is something that should benefit Netflix. It should not be that controversial for them. So for AI, I mean, a few things. We're going to talk about how they know what you like this, so you might like that and how amazingly good they are.

5:28And then knowing what you like and then creating content that fits that. And so that is something that they're way ahead. But also, I think that the cost of content creation, right, we're early into that, given how much content they create. I think that's potential for additional margin. And then on the flip side, the live program is expensive. I mean, you know, there's a land grab now for sports. But putting it all together, I mean, what an extraordinary job they've done. Yeah. Carter, what do you see in the charts here for Netflix? You mentioned the all-time high was just June 30, so not too long ago.

6:04Right. So as Karen implied, I mean, obviously a lot was baked in and it's a non-event. If you look at the last 40 quarters, going back 10 years, the average move is about 9.5 percent. And here we are moving 1 percent. So having bounced some 55 percent off its April low versus the Qs up 39.40, a lot was priced in. and it turns out to be a non-event, which is to say Netflix belongs right around here. All right. Right around here. So fully priced, Karen. How does that make you feel in terms of valuation, which has always been a concern for a long time for you on this one? Right. It makes me feel a little bit good.

6:44I did put on some collars today. I got a little lucky covering my calls at an okay price and putting on some collars. But, I mean, it's expensive and it's worth it. Right. I think that's right. No, go ahead. No, I was going to point out international programming, which is interesting in terms of content, which is typically cheaper to acquire, right, as opposed to and to make, right, in other countries, that its content is resonating with all users. One-third of all Netflix viewing in the first half of the year was international programming. So even users here are finding what they like from international.

7:17Which, I mean, think about this story five years ago. I mean, we were not having that conversation. So they're iterating. That's a word that Dan uses, and they're doing it really well. And they're doing it more efficiently as well in terms of the more. It's just a great run company. I mean, if there is a knock, it's what Karen just said. It's a valuation that's really hard to get your arms around. But, you know, that's been true for quite some time. And there have been downtrodden in Netflix. There have been some missteps without question. But outside of two or three things over the last six or seven years, they've done everything exactly right.

7:46I mean, do you guys remember 2022? I mean, the stock sold up 70 % from its 21 highs. And I just think that's something we could broaden out a little bit to the rest of the NASDAQ here. I think people have very short memories. If you don't remember that Tesla, Nvidia, Netflix and Meta, they all sold off 70 percent. I'm not saying there's anything out there right now. Clearly, in the macro, everything's kind of gotten a bit complacent here. And there's nothing that would lead you to believe that anything in this business model is going to cause some sort of. Back then, they had a lot of. I mean, there was a lot of volatility around.

8:14There was concern. Subscriber growth had peaked. Right. They had a lot of debt. I mean, yes. And that story is gone now. That subscriber growth since has been enormous in the balance sheet. Yeah, but I think investors might start looking at names like Spotify. They might look at growth rates and they might say to themselves, OK, this is a different bucket of media and there's different costs associated with it. And here's something where, you know, there's ads on podcast. You have a podcast, you know, like, you know how that works. Everybody here has a podcast except me. Well, you've been on all of our podcasts.

8:44You were one of our first guests. You were my very first. Yeah, well, there you go. Maybe we'll ask you back at some point if you're nice to us. People go on together. Well, that would be amazing. We were thinking about doing that. It would be like a Fast Money podcast, which exists already. Yeah, Tim. Anyway. I do have one. Anywho, why do you mention this 70 % solve in 2022 in the context of our Netflix conversation if you're saying that it may not happen here? Like, what was the part of that? All right, so you want to hear? Yes, please. Well, be nice or you're not going to come back on the podcast.

9:08I just want to be really clear about this. Well, I think that in 2021, I think things felt really good for this company. Things felt really good for a lot of companies, right? And so none of it was kind of anticipating the potential for a recession or a bear market or anything like that. And so, you know, I just think that this is a time where you want to start thinking about what could go wrong, not what could go right. Right. And so Spotify is one that's interesting to me. They've diversified, I think, away from that core business model that they had. They're going to benefit from advertising.

9:37They're going to benefit from generative AI. You're going to start seeing companies like this reduce their headcount. And that's something that it used to be back in 2022. too. Like, oh, that business is so crap, they've got to cut people. Hasn't Netflix done the same? Diversified? Advertising channel? Yeah. But what I'm saying is Spotify's growing 2x that of Netflix. Are you self would you rather? Yeah, a little bit. Nice job. I just want to cut to the chase here. Sorry about that. Spot over Netflix. I was going to say, quickly, I mean, if there's an existential risk, it comes in the form of some downturn, a significant downturn here in the United States because the only, and they've talked about this.

10:12The competition that Netflix has is sleep, which is, you know, that's it. Yeah. I mean, think about that for a second. I do get less sleep because of Netflix. Yes, although YouTube would say the competition is, in fact, YouTube, which is more, right, is in front of Netflix. I do think you're right that a very significant economic downturn is bad for Netflix, but it is better for Netflix relative to a lot of the other players. Yes, It is much more of a utility. That's the last thing you want to cut. It took us 10 minutes to actually mention YouTube in this conversation, and that's really important.

10:48So all of these kind of bear cases about search revenue as it relates to Google, everybody comes back to YouTube. It's absolutely destroying it. It's become a real competitor over the last five years to Netflix. And so I think that's something really important because that's something they're going to continue to hear them lean on because some of the pressure on their ad models as it relates to search will not be the same thing as it relates to YouTube. Right. Much more Netflix later on in the show. In the meantime, Nasdaq and S &P both hitting records today, even as tensions over the Fed continuing to rise.

11:15Former Governor Kevin Warsh, seen as one of the president's top picks to replace Jerome Powell, calling for sweeping changes to the central bank's relationship with the U.S. Treasury. Here's what he told Squawk Box this morning. So if we have a new accord, then the Fed chair and the Treasury secretary can describe to markets plainly and with deliberation, this is our objective for the size of the Fed's balance sheet. The Treasury can say this is our issuing calendar. And by the end of, let's say, this administration, we'll be at an equilibrium rate on the balance sheet so that markets will know what is coming.

11:50None of this should be rushed. OK, so what would a Fed chair mean for the markets? Conventional wisdom right now is that there would be a lot of hand-wringing over the independence of the Fed, the fact that that is threatened because President Trump has effectively forced out Jay Powell, putting in his own pick to lower rates and that that would cause a sell-off in treasuries, Karen. And so I'm just wondering, like, how you start to think about this. We played this clip specifically because he mentions this accord that happened in 1951, a Fed-treasury accord where they coordinated their actions in order to manage the treasury market or their treasury holdings.

12:29Well, yesterday you weren't on. Yes. We missed you a lot. You know, we like the babysitters, but yeah. But so Andy Kahnstein was on and had what I thought was a very unusual, interesting take, which is that a lot of things everyone else, you know, you would have inflation and you would have the dollar going down and markets could go up or Bitcoin up. But that the long end of the yield curve would actually be OK because they would decrease substantially the amount of long end curve supply. And so, therefore, it'd be more treasuries, right, more bills, and that that would keep rates lower and actually keep the able to pay off the deficit quicker.

13:08I don't know how long that can stay in homeostasis. Maybe a long time. I'm not sure. But that was interesting to me that, I mean, that is exactly what you're talking about, right? Yeah. That working hand in hand. Right. If they were able to do that. For a different purpose, though, right? The Fed's mandate now is a dual mandate of price stability and employment. Right. This would be somewhat of a different mandate, which is a part of what he's saying, right? The Fed has to evolve as an entity. So cut rates, lower on the short end, and then manage the long end. Oh, it's perfect. Well, I mean, Japan tried to do similar stuff.

13:44And, you know, this is one of those things that works until it doesn't. And I'm not trying to be cute. I mean, that's just factually true. I mean, Janet Yellen, if you think about it, during her tenure at Treasury was funding with bills. I mean, you know, you can play that game as long as the market lets you. But if the back end starts to get away from you at some point, you've got to pay the piper. So I do think, by the way, I think Kevin is right. The Treasury and the Fed probably should be more aligned with one another. I just don't know if that's sustainable to try to do at the short end in perpetuity.

14:13Yeah, and I think more aligned works in different administrations, which is tough, right? We see what's going on with Powell right now. You know, the president said, well, you know, Biden, who appointed him, you know, I wouldn't have kept him around. Well, actually, we know he appointed him. Right. And so, you know, views about different economies, different situations, different debt loads, different deficit spending, different competitive or comparative rates and growth rates and all that sort of stuff. That's going to change year to year. And you want somebody. I mean, Powell's done a really nice job.

14:36If you think about what he came into in 2018 and where he is right now and what happened in the middle with COVID. And we're doing OK here, man, like the economy is still doing OK. The stock market's at all time highs. Yeah, you can say deficits and debts and all that sort of stuff. But everybody we have come on here, other than Ray Dalio, you know what I mean, is telling us that's OK. Just keep kicking the can down the road. So I listen to Warsh and I say to myself, here's a steady hand. I think this is a guy between his experience on the Fed, his experience in the White House and the aughts and that sort of thing.

15:05I think he'd be a good choice. Kevin Hassett, on the other hand, he seems very political and he seems like the exact wrong person you would want, especially if you want an independent Fed. Now, that doesn't mean you can't have some coordination, but it can't be outright political pressure. That would be the thing that I think would keep, I think, a lot of market participants, at least macro ones, on the edge of their chairs worried about what happens in the next crisis that we have. Right. Well, you know, it is worth noting that the 10-year Treasury yield has been very tame and within a very steady range, even with all of this sort of concern about Fed independence and President Trump ousting Jay Powell, etc.

15:41And the dollar has been strengthening, which is worth noting as well. In fact, the dollar index moved higher today, hitting its best level since mid-June. This is on track to be the best month for the U.S. dollar in 2025. Carter, just on Monday, you had a note out saying the greenback is going to break out. Where are we on that forecast now? It's really panning out. A little bit of good timing. We might have some charts here. and we can try to figure it out together. But yes, a bit of a bounce this week. And my hunch is there's more to go in terms of what you said, one of the biggest moves of the year, but it's had such a massive sell-off.

16:23So several charts. Here's the first with no lines or drawings, no judgments. Let's look at the next same timeframe. And what we know is this is going back some 10, 15 years. We're down to a well-defined multi-year uptrend line. How precise? Next chart depicts it. We've come down to the penny and we bounced. So that is the first circumstance. But if we look at it, the here and now, next chart will show you how the levels matter. We've gone from 110 to 96, that level where we bounced, 96. If we can remember those two numbers and then look at the more here and now chart, and you'll see that this is what's happened, that 110 to 96, we've moved above that downtrend line.

17:12So that's a very important development. It would be considered developmental price action. Now the question is how high? I have no idea. But I do think that one can, from time to time, play for an oversold bounce. We are getting that bounce. And I think for now, continue with the trade. It's likely to go higher. Yeah. I mean, Carter, again, prescient is the word I will use. He will say luck. There is no luck in his work. And he's right. I mean, you're getting a bounce here and maybe justifiably so. Maybe there's some relief rally going on. I will tell you that we have seen bounces in the dollar over the last six months.

17:45They've all been rather short lived. And if you want to cue as if it's sustainable, I think it'll come in the form of the gold market if gold starts to give it up, which it has not. Gold's hanging in there. So I think the gold market is telling you this is just an oversold bounce in the dollar. All right. Coming up, we've got much more on Netflix ahead, but also an earnings jump for GE Aerospace. The stock hitting its highest level in 25 years before retreating as investors poured over the numbers of details from the quarter next. And a rough prognosis for Elevance Health. Shares hitting more than four-year lows after its earnings report.

18:15Why one of our traders is closing the books on this one. Ahead, do not go anywhere. Fast Money is back in two.

18:28Welcome back to Fast Money. A rollercoaster day for GE Aerospace. Shares hitting a 25-year high in early trade after beating earnings estimates and boosting full-year guidance before the bell. But ending the day down more than 2 percent. Phil Abbeau spoke with CEO Larry Culp this morning and has all the numbers. Hey, Phil. Hey, Melissa. When you look at the second quarter for GE Aerospace, you couldn't ask for anything more if you were an investor. We're not going to go through all the numbers, but we're going to let you know that, yeah, they beat the street on the top of the bottom line by a wide margin.

18:57On the top line, or on the bottom line, I should say, beat by 23 cents. But this says it all right here. Commercial engines. Orders up 28 % year over year. Revenue up 30%. Look at deliveries. Up 45%. Look, 45 % is amazing anytime you have that. But remember, this was not like they had a bad quarter last year. It was a strong second quarter. This speaks to the success that they're having in terms of driving greater efficiency, driving greater production. In terms of free cash flow, they did raise their guidance both for this year and then they put a target out there for 28. For this year, they're going up to$6.5 to$6.9 billion from$6.3 to$6.8.

19:37And the target for 2028 is$8.5 billion in free cash flow. Here's Larry Kulp talking with us on Squawk Box about why they believe they can get to$8.5 billion. With respect to 28, we think we're going to be able to grow at a double-digit rate now. We're targeting$11.5 billion of operating profit. That should allow us to drive earnings at a mid-teens level. And that should drive$8.5 billion of free cash flow. I love this chart, and hopefully we have this here. This is GE Aerospace against the S &P 500 over the last three years. No comparison at all between the last three years for the S &P versus GE Aerospace.

20:24One other note, Melissa, they did raise their guidance for all of 25 in terms of earnings per share, 560 to 580 from 510 to 545. Bottom line, it was essentially a blowout quarter. Doubled free cash flow, doubled it in the quarter compared to last year. Strong performance by GE Aerospace. Amazing numbers here, Phil. I'm wondering, is this all in spite of the tariff situation, partly because of the tariff situation and pull forward of orders? Not pull forward of orders. I think this is more driving greater efficiency, greater production. That's been a big part of what GE Aerospace and Larry Culp have been working on over the last three years, putting some of their leadership out with some of their key suppliers, critical suppliers, to drive greater efficiency, part of what they call their flight deck plan.

21:17So I think that's part of where the numbers, the metrics for the second quarter come. In terms of tariffs, we talked about that this morning. They are optimistic, like many in the aerospace industry, that the 1979 agreement, the international agreement where you do not have tariffs across borders because of the nature of the industry, that that will ultimately hold with the Trump administration. Now, I should point out, Melissa, nobody is going to say, yeah, that's exactly what the Trump administration is going to do, because nobody's quite sure within the aerospace industry. But that is their hope at this point.

21:50All right, Phil, thank you. Phil LeBeau. Carter, it's some chart there that Phil showed. Where does it go from here? Yeah, it is some chart. And those are incredible. Here's an equally incredible. The stock peaked in August of 2000. And we're not back to that peak. So that comparative chart that is very incredible on a three-year basis is actually the following. GE is down on a 25-year basis versus the S &P, which is up multiples. And so the question is, what's the story? Is this going to falter at its all-time high? So again, going back to 2000, the S &P is up about three and a half, 4x, and GE is down.