Netflix Reports Earnings… And More Pain For Apple 1/21/25

0:03Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast Money. Here's what's on top tonight. Netflix and Thrill. Shares of the stream are soaring on a huge subscriber beat. The stock currently trading at record highs. But can the gains keep coming? And how does the company keep growing? We are dialed into the call to bring you some answers. Plus, Rotten Apple. Shares of the iPhone maker touching levels not seen since last September. The stock down nearly 15 % from its Christmas highs. Is there still reason to buy the stock? We'll get some answers from one big bull.

0:32And later, Williams-Sonoma hits all-time highs. Will names like Home Depot and Lowe's get a boost? What is driving this housing trade, and will it stay on a solid foundation? We'll debate that. We're also awaiting President Trump expected to speak after meeting with Oracle Executive Chair Larry Ellison. SoftBank's Masayoshi Shotsan and OpenAI's Sam Altman will bring you his comments as soon as they begin. 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. And we start off with Netflix's monstrous Q4. The streaming giant shares surging after revenue jumped to over $10 billion.

1:06The company also adding a record 19 million subscribers, 10 million more than expected, bringing its total to over 300 million. The call kicking off about 15 minutes ago. CNBC's Julia Boorstin has been listening in. It's got the very latest. Hey, Julia. Yeah, Melissa, some questions about that huge beat in subscribers and what was behind it. It was driven in part by Netflix's lower price ad supported plans. Co-CEOs Ted Sarandos and Greg Peters saying that the subscriber boost was not solely because of a huge influx of new subscribers that came for the Jake Paul Mike Tyson fight or the NFL Christmas Day games but were rather based on the success of a broad array of Netflix content around the world and they're making that content more accessible saying that the ad supported plan accounted for over 55 percent of signups in the fourth quarter in countries where it's available and that membership on his ads plan grew nearly 30 percent quarter over quarter.

2:02Now, with this demand that Netflix saw in the quarter, it feels comfortable raising prices. Price hikes announced for the U.S., Canada, Portugal, and Argentina. Netflix is raising prices on the ad plan from$7 to$8, the standard plan by$2.50 to$18, and the premium plan by$2 to$25. Now, adding an extra member increasing just by$1. Now, the lowest price option remains adding an extra member to the ads plan that costs seven dollars. And that is a new option. So that's notable because the company said that a top priority for 2025 is to improve its offering for advertisers so they can substantially grow ad revenue.

2:43And, Melissa, that's all about getting more eyeballs so they have the inventory for advertisers. Melissa? Julia, I mean, I think that the skepticism will be surrounding that big beat on the subscriber number. And you mentioned they were ready to say that it's not because of the fight at the end of December. Do you think they'll give us any sort of ideas to keep the cadence of those subscriber ads throughout the quarter? Because if it was because of a broad array of content, then it should be sort of even. Well, what they said is there were subscriber additions throughout the quarter and around the world.

3:17And they also said that, yes, they saw some people sign up for the fight, but they didn't cancel right away. The fight was in November. They stuck around to watch the premiere of Squid Games in December. And what they say they're seeing here is this really broad array of content that's very popular all around the world. They have this plethora of options of local language content that really is paying off. And it's just fascinating to see the addition of 10 million more subscribers than expected. And, Melissa, this is the last quarter that Netflix is going to be reporting subscribers. Going forward, they want to shift focus away from the sub number towards profitability.

3:54Because if you have dual revenue streams, it's not about just how many people are paying the monthly fee. It's how much people are engaging every day and watching ads, because that's going to be the driver of that key second revenue stream. Now, in the past, they said that advertising was not going to be a key revenue stream for 2025, pointing to 2026 when there will be an inflection point there. But with these numbers, you've got to wonder if we're going to see ads really kick in as a profitability driver sooner. All right, Julia, thank you. Julia Boorstin, nice to go out on a high note on a metric you're no longer going to report, Guy.

4:29Hard not to like the quarter. I mean, OK, say that you're right. Maybe it was a one off in terms of it's a record number of subscribers for a quarter. Even if you want to back out the fight and say maybe that was sort of inflated, it's still extraordinary. Margins a lot better than 22 percent. Their ad tier now goes to$7.99 from$6.99. They're going to jack up prices. Remember, it was about seven or eight years ago they did that. The stock market didn't like it. But now they're in a much different place. So I don't think you chase it here. I think we were pretty consistent the last couple of weeks.

5:00the sell-off into earnings. I thought the setup was good. But here's levels where you should be, I think, reaping some harvest and looking for a better entry point. And that's not an indictment of the quarters, just the way the stock is. Not at all. That was your call, guy, into the print. I just think of this as like the opposite of what happened in 2022. Remember when they were losing subscribers faster than expected? They did not have the ability to kind of raise prices, and the stock kept on gapping lower at 75 % of its value. Now, if you look at a quarter like this and you say to yourself, okay, they just guided up revenue, maybe like four and a half, 5 % or so.

5:30You say to yourself, okay, like the price increases, it's just margin. It's great. The advertising business doubling year over year, it's great. It's just margin. You know, the fact of the matter is, though, when you have this ad supported tier on the low end, you have to ask yourself, how much can this kind of continue? At some point, they have 300 million global subscribers. 30 % of those are here in the U.S. At some point, if inflation becomes an issue again, I think it's probably going to be hard to continue to raise prices at this level. But, you know, again, there's nothing not to like. I just don't know how you chase it here.

6:00I actually think if inflation becomes an issue, they can raise prices more easily. But I think there's so many things that to like here. I mean, you talk about a lot of them, you know, obviously subscriber growth is great, but there's just so many levers between ad supported between you just talked about the margin when you have a price increase that's nearly entirely margin. I mean, they just so won the streaming wars. And one of the things that I thought was interesting in the letter, we believe we count for less than 10 % of TV viewing in every country we operate. So they just view that as 90 % that they don't yet have.

6:33Right? That they don't yet have. And at one point, that would have seemed ridiculous that they would think not anymore. So when you talked about that terrible, terrible quarter and they lost subscribers, they had just terrible content, misses after miss. But now, they have such broad content and live sports. I mean, there's so much to like here. And yes, it's expensive, but I think it's worth it. I think this quarter was something that the market was pricing in before the quarter. But at the same time, I think this quarter was so extraordinary that I think you're going to see the street continue to upgrade.

7:01In other words, I think no one's surprised by the operational leverage in their business and that this is a company that, as Dan said, is dropping everything to the bottom line at this point. And that's what's really exciting about it. So I actually think that although it's been an incredible run for Netflix, and Dan referenced that low point back in May of 22, the stock's up almost 500 % from May of 22. And there's a lot of different reasons for it. But, you know, it's also about what they're also saying in the after hours. Their ad revenue is going to double again next year. So we started at about 40 million.

7:33This number tells you about 80 million. And now we're seeing that that number is going to double again. But also talking about how they're not chasing big sports. I forget what they're calling, big team sports or big boy sports guy. I'm not familiar with big boy sports. But that they are chasing one off and they are chasing live events. So it's going to come back to what's the multiple you're paying for this company? And if the consensus on the street was somewhere around$14 billion for 25 EBITDA, it's probably going to$15 or$16 EBITDA, which means this stock's trading at about 26, 27 times, no more, with price hikes still on the way, more dominance in terms of a global market.

8:10Like, the worst thing we're going to hear probably is about FX dynamics, you know, and who cares? They actually talked about the dollar, I think, in terms of the strength of the dollar. But, you know, everything everybody said is spot on. The question is, I think, at 509, do you chase it here? The prior all-time high, I think, was 942. So, you know, I think good practice suggests we'll visit that at some point. So if you've missed the run, I think that's your entry point. But it's a remarkable quarter on just about every metric. Does Netflix, though, deserve to be re-rated at this point? I mean, to your point about inflation, haven't we proven that Netflix story is sort of Teflon in the face of inflation?

8:45Yeah, it's a lower inflation. I mean, listen, I go back to it. It's funny that they're not chasing the big sports. If you look at what they did in the NFL, I think they had 25 million viewers of each of those two games. They have 90 million subscribers here. It's pretty astounding. You can go after that Tyson fight. We all watched. It was brutal. It was a long four hours, you know what I mean, getting to that fight. And it was not a good fight. But what did they have? Like 60 million people, you know, like 20-some percent. I mean, listen, it's amazing. I think if they get in a battle for sports rights, that's a battle that they're probably going to have a hard time keeping some longevity to.

9:20Because look at some of the deals that folks are doing for NBA rights. What was an$80 billion deal? I mean, I don't think they want any part of that. Yeah, and that's even better for the Netflix story, right? It's like you all out there, you go fight over it, spend a lot of money. We're going to stick right here, and we're going to create our own events. Well, and who knows better than Netflix? Because, again, this at one point was a company that was paying to have reruns of, you know, it might have been the Brady Bunch, although I would have actually said probably. I wouldn't say that. But the point is they were paying so much for content.

9:47All we do is talk about their content slate, how much it was going to cost. If anyone has an ability to discern where we want to spend on content and where we can actually make it by ourselves really cheap, I think this is the company you want to listen to. If they're not chasing big sports, I think, boy, I'd be a little worried if I was NBC or even CBS or ABC, all these people that are chasing big sports. All right. Meantime, we are awaiting President Trump set to announce an artificial intelligence infrastructure deal with some major tech players. CNBC's Eamon Javers has more on what we can expect.

10:18Eamon. Well, Melissa, we can expect this event to start at any moment now. Now we're 10 minutes into the two minute warning. So your guess is as good as mine. As you look at those live pictures of the Roosevelt Room, we do expect an announcement here of a massive multibillion dollar joint venture in terms of AI infrastructure between some of the biggest players in the AI and technology industries. So Oracle will be in the room. OpenAI will be in the room. SoftBank will be in the room. And the question is exactly how big is the total dollar amount that we're talking about here in terms of this investment?

10:55Where will this money all go? And then one sort of political question is Masayoshi-san was with Donald Trump down in Mar-a-Lago a month ago, promised$100 billion in investment in the United States. Does this count toward that or is this a separate bucket of investment money? In any case, the Trump administration sees this as a big win and a way to start off the administration by showing the American voters that Trump can deliver on what he said he was going to do, which is create jobs, juice the economy and get things going, particularly on AI, which is one of the hottest and most important industries for the future, Melissa.

11:32Eamon, I think it's interesting, though, that, you know, the backdrop of this is that a U.S. steel-Nippon steel deal had been blocked because of national security concerns, and yet he is opening the gates to foreign investment in another area that can be argued is much more of concern when it comes to national security, AI and data centers. And it's not just Matsuyoshi-san from SoftBank. It's also the Middle East money that we're getting for data centers,$20 billion, I think it was. Yeah, that's exactly right. And so one of the questions here is, what is the Trump administration's red line in terms of foreign direct investment in the United States?

12:11Is it just that the U.S. deal involved an iconic American name? And is it just hands off the big iconic American names? Or is there some other nuance to this policy that hasn't been articulated yet? And we'll wait to see what the White House says about that. But clearly, Trump is going to be standing here welcoming this direct investment with open arms. You know, it's Japan in both cases, Melissa. You talk about SoftBank or Nippon Steel. You know, it's a major U.S. ally, a major part of sort of the Western world. Does that represent a national security threat? But, you know, clearly Trump will say no in this case.

12:53But you're right. Where do you draw the line? Who do you who do you include sort of in the tent and who's out of the tent? All of that still TBD. Yep. Amen. Thank you. Amen. Javers in a very cold Washington, D.C., we should note. But I mean, that's an interesting thing will be what is the ownership structure of all of these investments? Does U.S. have ultimate control over everything that is built? Do we actually own it? Because one would argue that these are investors and they are shareholders in whatever project this becomes, whether it's it's right now it's being it's reported that it's going to be called Stargate.

13:29We saw a lot of these stocks rise towards the end of the session on the back of the anticipation of this announcement. A joint venture where the U.S. has interest, money flows into the Treasury. You heard that yesterday. Your question to Eamon was spot on and his response, I think, was exactly right. I think if U.S. steel was called Lehigh Valley steel, we wouldn't be. And I'm not even kidding around. I think there was a name that really caused some consternation, not only for the Trump administration, but for the Biden administration, too. I think a name, any other name, this probably goes through.

13:59But you're spot on. Where do you draw the line? And clearly there is a line. I just don't know what it is. But it's great for the trade. I mean, think all this money needing to be deployed on chips and servers. Dell, your Dell should be. My Dell. should be a beneficiary. Your NVIDIA should be a beneficiary. Yes. Yeah, I mean, I think that's great. I don't know what has to happen for this to happen. I don't know. We shall see. But I'm so stuck on that first point that you raised about how is it that that U.S. deal is a problem and this isn't. My first reaction is that deal is going to go through.

14:34I mean, at some point, you're going to work through the politics of what was political season. I mean, the height of it when we decided to shoot this thing down for no reason. And yet, again, great point, Melissa. I think also this is if you're chasing or if you're investing behind these kinds of themes, it's going to be a different theme in 25 than it was in 24. It's not necessarily going to be about some of the chip names. Although if you think about underperforming chip names, I would. But if you're thinking about even the Constellation Energies or the Arista Networks or these types of this, this is the stuff that moved today.

15:07And in fact, if you looked at markets today, it was a bit of a barbell. You had really high-end, ultra-high growth stuff rallying, and then you had small caps and some of the equal-weighted stuff rallying. But it was clearly about AI today. All right. Call me skeptical. I mean, I think this is going to be there's no there there. I think all three of these companies are going to announce something and there's nothing spent. Well, I think all three of these companies were already committed to spending tens of billions, if not hundreds of billions of dollars over the next few years. And I think we're probably going to see that this is over the life of the term of Donald J.

15:37Trump, right? And so you think about OpenAI being at the table. OK, that's really smart for Sam Altman because everyone kind of hates them other than Microsoft. Oracle would love to get more market share as it relates to, you know, the public cloud. Right. Who's the other one that they have? Masa Sun. I mean, he's so far up. Trump's you know what? I mean, like, give it give me a break. He's committed a hundred billion. How many times? It's funny, too, because Trump said, how about 200 billion? Right. In the same setting. He went for 50 to 100. And then Trump's like, I'll take 200. I guess my point is, is like we could walk away.

16:06It's got a nice name. It feels like infrastructure every week for four years, that sort of thing. And so why did NVIDIA not rally 10 percent today? Why did Dell not rally? You know what I mean? Like, I just don't think investors who are paying attention to this trade think this is a particularly. Although Oracle did rally 10 percent. Yeah, because you know what? Look at how Oracle traded over the last two months or so. I mean, they started missing on their growth targets for their cloud infrastructure. And so what does that tell you about the folks that are at the table right now? All right. Again, we are waiting for President Trump to speak as soon as that begins.

16:35And so we'll bring that to you live. Meantime, coming up, earning season officially in full force. Shares of United Airlines on the move after its results. The details and numbers out of the quarter next. Plus, gapping higher, shares of the retailer jumping as the CEO waves in on strategy and growth. The turnaround plan he laid out that had investors giving the stock a try-on. Don't go anywhere. Fast Money's back in two. This is Fast Money with Melissa Lee right here on CNBC.

17:11Welcome back to Fast Money. We've got an earnings alert on United Airlines. The stock taking off after the company beat top and bottom line estimates. That conference call will come tomorrow morning. Let's get to our fill of bow right now with the very latest. Actually, you know what? President Trump has begun speaking from the White House. Let's go to him live. It's an honor to be here today. We have first full day as president. We're back. and we had a great first term, but we're going to have an even better second term. And I think we're going to do things that people would be shocked at. We're starting off with tremendous investment coming into our country at levels that nobody's really ever seen before.

17:52And they're very happy with the fact that I won the race and that they feel confident in their investments. And it's big money and high quality people. So my first day back from having a nice life, it's my honor to welcome three of the world's leading technology CEOs. And in the case of Larry, Larry Ellison, it's well beyond technology, sort of CEO of everything. He's an amazing man, an amazing business person. but to announce the largest AI infrastructure project by far in history. And it's all taking place right here in America. As you know, there's great competition for AI and other things, and they're coming in at the highest level.

18:45We're joined by Oracle Executive Chairman Larry Ellison, SoftBank CEO, my friend Masa, Masa Yoshisan, CEO of OpenAI, and I would say by far the leading expert based on everything I read, Sam Altman. That's great that you're coming in together. That's a massive group of talent and money. Together, these world-leading technology giants are announcing the formation of Stargate. Put that name down in your books because I think you're going to hear a lot about it in the future, a new American company that will invest$500 billion at least in AI infrastructure in the United States and very, very quickly moving very rapidly, creating over 100 ,000 American jobs almost immediately.

19:41This monumental undertaking is a resounding declaration of confidence in America's potential under a new president. Let me be a new president. I didn't say it, they did. So I appreciate that, fellas. But it'll ensure the future of technology. What we want to do is we want to keep it in this country. China is a competitor and others are competitors. We want it to be in this country and we're making it available. I'm going to help a lot through emergency declarations because we have an emergency. We have to get this stuff built. so they have to produce a lot of electricity and we'll make it possible for them to get that production done very easily at their own plants if they want where they'll build uh at the plant the ai plant they'll build uh energy generation and that will be incredible but it's technology and artificial intelligence all made in the usa beginning immediately stargate will be building the physical and virtual infrastructure to power the next generation of advancements in AI.

20:53And this will include the construction of colossal data centers, very, very massive structures. I was in the real estate business. These buildings, these are big, beautiful buildings that can employ a lot of people and physical campuses and locations currently being scouted nationwide. They're making their choices of locations. I think they have their choice. I'd like to ask Larry, Sam, and Masa to say a few words and just talk a little bit about what they're doing. And if you have any questions, and then we'll go into a couple of other subjects also. But this is, to me, a very big thing,$500 billion Stargate project.

21:34I think it's going to be something that's very special. It'll lead to something that could be the biggest of all. So, Larry, maybe we'll start with you and we'll go down the line. Thank you. Thank you, Mr. President. Thank you, sir. Thank you, Mr. President. We certainly couldn't do this without you. It would simply be impossible. AI holds incredible promise for all of us, for every American. We've actually been working with OpenAI for a while and with MASA for a while. The data centers are actually under construction. The first of them are under construction in Texas. Each building is a half a million square feet.

22:15There are 10 buildings currently being built, but that will expand to 20. And other locations beyond the Abilene location, which is our first location. The kind of applications that we're building, to give you an idea, maybe the most charismatic and the one that I think touches us all is electronic health records, not just maintaining electronic health records, but by looking at electronic health records, understanding the condition of the doctors, better understanding the condition of their patients, and being able to provide health care plans that are much better than they otherwise would be.

22:52A doctor in Indian River Reservation would be able to see how a doctor at Memorial Sloan Kettering would treat the patient, or a doctor at Stanford would treat the patient. We actually provide all of that information, all of that guidance to the doctors who are treating cancer patients or patients of any other kind of disease made possible by AI. I'm not going to take a lot of time. I'm going to pass it to Masa, but this is a very exciting program for Oracle to be a part of. Thank you. Thank you, sir.

23:29Thank you. That's good. That's great. I feel tall now.

23:39Thank you. Well, Mr. President, last month I came to celebrate your winning and promised that we would invest$100 billion. And you told me, oh, Masa, go for$200. now I came back with 500