Netflix Swings After Reporting… And Trump Takes Aim At Powell 4/17/25

0:00Live from the Nasdaq market site in the heart of New York City's Times Square this is fast money Here's what's on tap tonight. A big beat for Netflix. The streaming giant surging after hours and continuing to massively outperform all its traditional media peers. We'll go inside the numbers and the conference call coming up. And Trump versus Powell. The president reportedly has been discussing ousting the Fed chief as the central banker holds rates steady. We'll dig in on the implications for the Fed and the rest of the market. And Eli Lilly soars on new oral weight loss drug results. United Health posed its worst day since 1998 after its latest earnings report.

0:34And Dollar Tree closes at its highs of the year. What's got the discount store in the premium section today? I'm Melissa Lee coming to you live from the studio via the NASDAQ on the desk tonight. Tim Seymour, Steve Grasso, Dan Nathan, and Guy Adami. We kick things off with the blockbuster numbers coming out of Netflix's latest earnings report. The streaming giant reporting a top and bottom line beat. But for the first time, not reporting subscriber numbers. The conference call is underway. Julia Borson is live with the very latest. Australia. That's right, Melissa. A top and bottom line beat driven by a far stronger than expected operating margin.

1:07The company also guiding to a very strong Q2. Now, on the earnings call just now, co-CEO Ted Sarandos was asked about those ambitious five-year goals that leaked in the Wall Street Journal reported, which sent the stock higher earlier this week. He said those are aspirations, not forecasts, and they do not have five-year guidance. There were a number of questions about economic uncertainty and the potential impact on Netflix. Co-CEO Sarandos, as well as Greg Peters, saying that they have not seen any significant changes in the plan mix and the way subscribers are behaving, and that entertainment has been historically resilient in economic downturns, but that they are paying very close attention.

1:49Notably, the company is not changing its 2025 full-year guidance, saying there has been no material change to our overall business outlook since our last earnings report and saying they are currently tracking above the midpoint of their 2025 revenue guidance range. On the call saying that content and marketing expenses will ramp in the second half of the year. And they did acknowledge macro uncertainty as one reason why they hadn't made any changes there. Now, the company did say that price hikes in major markets, including the US, UK and Argentina that they've rolled out recently have performed in line with expectations.

2:24They also announced their price, their hiking prices in France today. As to how those price hikes are working, they just said on the call that they have healthy retention trends. And then one interesting nugget on the company's live event strategy, they said they're going to expand from their current U.S. focus to other countries over time. So Melissa, we'll see what that means in terms of bidding on sports rights. Back over to you. All right, Julia, thank you. Julia Borson, just off the after-hour Recession highs right now higher by about 3%. A couple of days ago, we were talking about Netflix as being tariff-resistant, recession-proof, whatever you want to call it.

3:01It looks like, according to the results and the guidance, like it is. No doubt. And they're operating better, too. I mean, operating margins, 31.7%. Then they guide to 33 % next quarter and guide for up 15 % year-over-year revenue growth, which sort of justifies evaluation, which is something I think collectively we've been saying for a while. So the all-time high, I think, was 1 ,064, something like that, back in February. I think, I think, this quarter's good enough to get it through those levels. And there's still secular trends around streaming. I mean, people forget. I know the death of linear TV we've talked about forever, but streaming's still only 44 % of TV time, and Netflix is taking a marginal share of that over the competition.

3:39So I would say recession resilient. I would say there are three different or four different areas people are having easy time pointing to. The growing ad revenue is part of this. The story that the operational efficiency guys referring to better margins, economies of scale and content. I mean, really, the content's been extraordinary. And then when you put that into, hey, this is a decent value prop, whether they raise prices on you by two bucks a month or not, think about where the consumer is spending money and where they will hold on to at least that allocation of their wallet. They spend$18 billion on content, which outspends everybody by a large margin.

4:14But do you know Amazon Prime actually has a bigger market share than Netflix, quietly, on their Prime video? That's excluding their music on one side. But when I look at this, it looks toppy. So I look at a chart, and the guy pointed out 1065. You look at 1 ,000 was the last lower high. I think it can get to where Guy's talking about. But the fact that they don't provide the subs, I think they know their growth is slowing. I think at this point, they're the name to beat. But I probably wouldn't be buying into it right here. You know, it's hard to find mega cap companies in this. They think they're going to be a mega cap company by 2030, right?

4:58They kind of got it to a trillion dollars in market cap that, you know, have this sort of growth from an EPS standpoint, you know, north of 20 percent, mid teens sales growth. And, you know, the one thing I'd just say about the recession proof is like we're not in a recession yet. You know what I mean? Like, so let's see how this goes. Let's see what sort of tariffs are put on services in, you know, in the EU and some other places where, you know, important growth areas. So, you know, the silver lining, though, is that ad sale, that ad sales growing off such a low base, you know, and they really keep talking about doubling them.

5:30That's really helping that operating margin. I think that's probably helps justify the sort of valuation it has right here nearing, what, 40 times. The context, though, of this market is that people are willing to pay up in terms of premium valuations for companies that can deliver in this environment and that do seem to be relatively recession proof or relatively spending pullback proof. This is one of them. So I get what you're saying about high valuation or maybe it looks toppy, et cetera. But we've seen this happen again and again. I mean, look at Walmart. There's so many other names that we say that one is executing.

6:04And most of their business is already outside. Most of their revenues are 56 percent outside of the United States. So that's been a growth, a tailwind for them when they say they're going to grow internationally. But they're already bigger internationally than they are here. I think be careful because we thought Medica do no wrong. Right. This was a story. And I'm watching an analyst community that's saying this is their top Internet play. And you can call Netflix a lot of different things. It could be media. It could be Internet play. So when things seem like there's nothing that can knock it from the sky, be careful.

6:35But I do think even at I'm seeing, you know, roughly 32 times 12 bucks of EBITDA. You know, you've got a story that's actually very defendable. And I think it's something that I think right now in a world where there are other places that have a lot of issues to them. This is actually relative value for a tech space that's not cheap yet. I think the caveat that you brought up is the biggest sort of overhang and question mark over the stock. And that is we're talking about reciprocal tariffs on stuff that we sell, stuff that comes into this country. How about services? And what if there is a reciprocal?

7:07Are we counting services? Apparently we're counting that now. Some people don't count services. Now we do. Now we don't. But in terms of the tariffs, we weren't talking about that. But if there is some sort of tariff on these digital services, that could really not. I mean, the U has threatened that. Right. And we're seeing this get ratcheted up no matter what region we're talking about with the tariffs. I mean, a lot of folks and maybe it's a negotiating tool. You know, these guys have been excluded. The services in 2018, 19, when we were kind of going through that trade war. So there's no discount for that.

7:34That's the one thing I would say is, you know, as you get back towards these all time highs, you know, maybe it doesn't kind of hold that. I'd be surprised if it establishes a new range. As Tim said, you know, one of the few big companies out there, it's mature as they are, that actually margins are increasing in this environment. So that's good for them. Look, I get all the on the margins. I think you stay long Netflix here. All right. Meantime, new reports that President Trump has discussed replacing Fed chair Jerome Powell as head of the central bank. that after the president lashed out against Powell on social media for not cutting rates fast enough.

8:05Steve Leisman is here in-house. He's got the very latest. Steve. Well, the bidding, I think, we began this morning with this tweet from the. Is it still a tweet if it's on social? It is a post. It is a social media post. SMP. OK, a lot to say, though. It's a lot to say. Waste a lot of time. I'm sure Elon's happy. Waste a lot of time talking about it. Exactly. So it began this morning that way with the idea that the president said he can't wait till the Fed chair is terminated. And it was the use of that particular word that created the to do or the fuss, because the question is terminated as in passively terminated when his term is up in May 2026, or terminated by an act of the president, which most people believe he cannot do.

8:50I keep thinking about the following. Let's say the president does follow through with this. And I think it's a real risk, right? What is not a real risk that the president has shown is a line he will not cross here, OK? What happens to the value of the dollar? What happens to our bond market in that case? Now, perhaps the good news here is the following, that it appears, according to The Wall Street Journal, he has talked about this privately and he has been counseled not to do it. The idea that there are people around the president counseling him not to take this act is probably a good development.

9:24Megan Casella reached out to the White House and was told that the president is not considering at this time removing the Fed chair. It did not say the Fed does the president does not believe he has the right to do this. But he did say that they did say that that there is no consideration of it at this time. So I think this hangs over the market for quite some time. We should note that among the people counseling him not to go ahead with it is Scott Besson, which is a really important nugget, right? Not irrelevant. Not irrelevant. One of the people he apparently was talking to was Kevin Warsh.

10:00I would find it difficult to think that Kevin Warsh would take this job if offered to him on the backside of the chair being terminated. Even though we expect him to be the guy, right? Well, he could be the guy. I will tell you he's a little bit more hard money than perhaps the president wants. Can I turn to camera three and say, Mr. President, don't do this? Is he allowed to do that? I mean, it just seems like of all the things that are going on right now, what do you have to gain? Do you really want, by the way, what does the market want? What is gold telling us? Which I've not been a gold bug for a very long time because it's interesting to me that gold would not rally amid trillions of negative interest rates around the world.

10:41But it will rally in this sense when the dollar looks like it's really the question. So what is the gold trade here? The gold trade is a substitute not for bonds and preserving your value or your principal. It's a substitute right now for the dollar and the safety of the dollar. You must have been watching Fast Money yesterday. And the Swiss franc. It was all about this. And the Swiss franc. Absolutely. Absolutely. We had a conversation a couple of weeks ago, and I said, you know, the president just declared an economic emergency. And we had the conversation. I said, I think what he's setting up for is to fire Jerome Powell for cause.

11:15And now we're seemingly in the midst of this. But you brought it up. But get a little more granular. What happens to the bond market if somehow magically that happens? And I do think it would be tragedy. Can I test the back room here, the production room? Sure. They're going to win, by the way. They're going to win? Let's put up a chart of the Turkish lira. Oh, you stole my – because we turn into Turkey. Yeah. That's exactly what happens. Erdogan is how he's pronounced the president there. He took over. He subverted the independence of the Turkish Central Bank, who I used to know the Turkish Central Banker.

11:49And he was a pretty well-regarded independent dude. And then he actually left. And the new guy, the president said, OK, that's not the way it's going. Is it up there? Look at that. It's got to be a longer. It's got to be a long period. Yeah. But it's got to show. But anyway, they win. I mean, I'm not going to fight with Sandy on air. No way. Anyway, so bottom line is that's what happens. The dollar would lose value. Our bond market would lose value. People don't understand all of this that goes on every day. You guys talk about this. It's all a series of consensus. I agree that that bond has value to it.

12:27I agree to give you this green paper and you agree this green paper has money. when the consensus erodes among humans who are involved in this trade, the whole thing erodes. And that's why you go for gold, because ostensibly, you know, as Jackson Brown sang, in the fury of the final hour, we'll all agree that gold is OK. But we don't want to go there. We don't want to test that. These consensuses that we have are things that allow us to go to, OK, I have dollars. Dollars are good. Dollars are accepted. Dollars are OK. But then you have an independent central bank that will be a non-independent central bank that is subject to the political whims of the president.

13:08And therefore, you do not have the idea that the Fed will secure the economy from inflation. Period. End of story. Steve, great to see you. Thank you for coming by. It's always nice to get you. That's a deep cut. That's a deep cut. And one of the many reasons. I think, by the way, I think Steve kind of quietly laid the gauntlet down for the rest of the show. Well, it's called after the deluge, right? I used to play that one. Well, right now, Steve, you're running on empty. We've got to move on. No points for running on empty. See you, Steve. Come on. Jamaica said you will. It's cold now. Our next guest is not worried about President Trump's attacks against Powell.

13:45Katerina Simonetti is senior VP and private wealth advisor at Morgan Stanley Private Wealth Management. Katerina, great to have you with us. You're not worried at all. You think this is just Trump asserting that he believes rates should be lower? Well, it is fair to say that we have seen President Trump criticize Jay Powell before. As a matter of fact, I believe somewhere around 2019, he called him a golfer that can't putt. So administration absolutely might have their opinions. But Jay Powell has one year left in the office, and he is going to finish his term. At least he absolutely should be.

14:26And it's fair to expect that Fed, which is an independent entity, is going to be data-driven in this decision on whether to cut rates or not. And tariffs, rightfully so, present severe, significant inflationary pressures. So we need to give Fed more time to analyze the data, to see how the effects of this policy will trickle down into the data. Yes, we saw good numbers just recently, and that's great. But the tariff policy is not going to be immediately reflected in this data. There is delayed effect there. So naturally, we expect Fed to be very thoughtful about this decision. And for us, we don't expect Fed to cut rates at all this year.

15:10So, Katerina, am I being too cynical, thinking if they have to refinance over$9 trillion in debt, somehow, some way he will cut Powell? This is who I'm referring to, obviously, on his on his own. And should President Trump sort of just leave him alone? Because he chairman Powell does not have a great approval rating. President Trump's approval rating is actually better than Chairman Powell. So is it on a refinancing and refinancing debt mechanism? Do rates have to come down regardless of what's going on? Well, as we know, for Jay Powell, all options are on the table. And as the time goes by, as they look at the data, absolutely, this is something that they will be considering.

15:59And I'm sure that they're taking in this information, all of it, you know, as much of it as it's coming in and are figuring out how this will be the effect that it will have on growth, the effect that it will have on the economy. And yes, this is one of the options that should be considered, but it is too early to call it yet. We have to just wait and see. We have to give this a little bit of time to see the effect it's going to have not only on inflation, but on the broad economy in general, on earnings and on overall positioning as we go into the end of the year. Katerina, I guess I'm curious your opinion on does does the does the dynamic with the president in an environment that's the Fed seems so boxed in?

16:48Do you think that the Fed really has to dig in even more in this environment? Or do you think the Fed is really holding whatever line they're going to? In other words, my view is that Secretary Besant really is of the school that he would rather see the Fed be less involved in both the economy and the markets and that fiscal policy shouldn't be the cure-all. I think he's on the side, actually, of not doing anything. But I'm just kind of curious if you think that the current rhetoric means that one side has to give more than the other. I think it makes perfect sense to see it that way. And also we have to understand that from the president's perspective, he sees the long-term benefit of the tariff policy to be so strong that he is encouraging the investing public to kind of look beyond these short-term risks.

17:35But we also have to appreciate that for the Fed, it is the short-term effect. It is really month to month that they're looking at. So we're seeing here the clash between the long-term perspective, what is being done for just the good of the country from the administration's perspective, and the Fed and Jay Powell who are looking at the immediate effect, at inflation, at potential recession, at what this means for the economic growth in the short run until we see these long-term positive effects come to fruition. Katerina, great to see you. Thank you for your time. Thank you for having me. Katerina Simonetti, what are we doing this highly uncertain?

18:22Not only do we have the uncertainty of trade policy, but you have this sort of outlier scenario of potentially Jay Powell being out. I think a lot of roads lead to higher rates, and I'm still on that camp. I'm not saying I'm right, but, you know, the TLT, I think, will visit levels we saw in October of last year, which is like 82, which means 10-year yields get north of 4.8 percent. and they're not going up for the right reasons. So I think higher rates are a bad thing right now, Mel. Yeah, and the other thing is the longer this kind of negotiation goes on and the longer we don't know what the concessions are, I just think the more complicated it gets.

18:54There's no manufacturing that's coming back this year, next year, that's going to be meaningful for this economy. So I think the longer this goes on, I think more it weighs on the economy and the greater likelihood it's inflationary and the greater likelihood rates go higher. Coming up, an easy pill to swallow. Eli Lilly shares surging on new drug trial results. The edge you could give the pharma joint over competitors. That is next. Plus, shares of UNH cratering after its latest earnings report. Why the company is slashing its profit forecast when Fast Money returns. Back in two. Welcome back to Fast Money.

19:23Eli Lilly soaring 14 % for its best day since August 2023 after posting positive results from a late-stage trial of its obesity pill in patients with type 2 diabetes. Angelica Peebles joins us now with all the key takeaways. And it looks like the key takeaway is that it was as good or maybe even better than Ozempic. Exactly, Mel. The main takeaway here is that Lilly has a daily pill that can compete with those weekly shots. Now, in the trial, people on the highest dose of Orpherglypron losing 8 % of their body weight after 40 weeks. And that's already at the high end of expectations. And they didn't see a plateau.

19:59So remember, people with diabetes tend to lose less weight. So this bodes well for the obesity-specific trial that we'll read out later this year. And two doctors I talked to today said that they see this pill becoming a popular option, especially for people who are wary of weekly shots. I have patients every day who are like, is there going to be a pill version out? So I feel like this is revolutionary as far as providing patients who are a little, like I said, reluctant to using an injection and they can see some similar results with injections, but have the ease of taking a pill every day. And they're just a little bit more open to it.

20:44One factor here will be the cost. Now, this pill can be made much more easily and at a much lower cost than other GLP-1s. So the hope here from these doctors we talked to is that Lilly prices this pill below the roughly$1 ,000 a month for the current list price of ZepBound and Wagobi. Mel? The soonest it can come to market is when, Angelica? What's the projection? Next year. So the plan is that they're going to file for obesity later this year and diabetes next year. So depending on how long that review takes, we could see it on the market as soon as next year. All right. Angelica, thank you. Angelica Peebles.

21:19And of course, you got to Take a look at Novo Nordisk, which is down 7.6 percent on the back of these. We've been saying for a long time that Novo in particular is under pressure because of these looming results. Here they are, and we see the stock reaction. Yeah, but I also thought you could make a valuation case probably$15 or$20 ago at least, and here we are at two or three-year lows. It did trade about four times normal volume today. Maybe that's good news. Maybe that's some sign of capitulation. But, I mean, they're clearly losing right now in a pretty big way. Yeah, I mean, if you consider this drops into the same safety profile of the existing out there, this is obviously, as the stock showed today, this is a huge, huge event.

21:56The question is, where can this stock trade when people kind of felt that they were in the pole position anyway? So there's no question that this is greater news. And I can kind of see I'm with Guy, by the way. I might even have been more vocal than Guy on Novo. I really just felt this was one that was so underperforming. underperforming. But the reaction today tells you that pole position has just gotten even that much more in the lead. Yeah, it's up 14 percent today and only up nine percent year to date. So I don't know how much more juice you could sort of get out of it here. This but the the TAM, the total addressable market for this is huge.

22:31You're going to have a lot more people that are afraid of needles that don't want to do it on every day. It's just a it's a it's a non starter for so many people of the original medication. Once you go to an oral, the TAM really increases a lot. Coming up, shares of Alphabet taking a hit today as it comes under the Monopoly microscope for the second time in less than a year. The ruling against the company and what it'll mean for the stock. Plus, we're keeping an eye on Netflix shares after hours as a company conference call just wraps up. It's higher by 2.25%. All the headlines from that one ahead.

23:01You're watching Fast Money live from the Nasdaq market site in Times Square. Back right after this. Welcome back to Fast Money. Alphabet share is falling today after a judge found that Google illegally monopolizes two online advertising markets, publishes ad servers in ad exchange. It is the second time in eight months the company has been deemed a monopoly and comes ahead of another trial next week where the DOJ is pushing Google to sell its Chrome browser. The initial reaction was down three plus percent, although it paired those losses. What do you make of this sort of reaction? We've been talking about this for years now.

23:36And so when a lot of these, but it's getting closer, right, to remedies. And I think that's the thing. And so the fact that it sold off three and a half percent quickly and kind of regained a bunch of it. I mean, like the likelihood is, listen, Sunderbachev, he gave the money. Google gave the money. They're on the dais at the inauguration. They may, the DOJ might follow through. Then he's going to have to grovel, you know, to the White House or Mar-a-Lago. And it probably ends up okay because that was the whole trade. But so was Zuckerberg. Well, you know what? I think they're going to do the same thing.

24:01It's kind of mob tactics, right? You let the government do what they're going to do, and you go and you grovel. And, you know, these guys deserve it, by the way. The question also is, for those people that have felt Google is a sum-of-the-parts story that's been waiting to be unleashed, I mean, I don't know. I mean, is it that bad if you're a Google shareholder if they spin this off in a world where we do know they have other businesses that I think they're very focused on? So it is interesting that the regulatory pressure seems to be building against this company. It is also interesting that this company's probably never been, it probably hasn't been this cheap in, I don't know, since at least the COVID lows on a trailing basis.