Next Catalyst For Meta At Record Highs… Plus Lux Consumer All Shopped Out? 9/23/24

0:02Live 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. Mega Meta, the Facebook pair hitting new records today and catching a big price target upgrade on Wall Street. Is it off to the races for this stock or time to take your profits and run? And a luxury letdown. Wall Street analysts sounding the alarm on high-end spending, what it means for the big players in the space. Plus, Novo shed some gains ahead of a key hearing on Capitol Hill. Shares of GM hit the brakes on a negative call. And hi-ho, silver, why one of our traders tonight thinks the shiny metal is about to play catch-up.

0:34I'm Melissa Lee coming to you live from Studio B at the NASDAQ on the desk tonight. Steve Brasso, Karen Feinerman, Guy Dami, and Katie Stockton, founder and managing partner at Fairlead Securities. And we begin with the meta melt up. The stock closing at an all-time high today after Citi raised its price target to$645. That implies a nearly 15 % upside from here. Analysts writing that meta's generative AI investments give the tech giant a, quote, competitive advantage with Instagram reels, ad loads, and usage continuing to accelerate. Great. Meta is the second best performer in the so-called Mag 7 this year, surging 60 percent compared to NVIDIA's more than 130 percent gain.

1:11Can the stock keep powering higher? Karen, this is your largest holding. So you think it will. I do. I think it will. Although I think that if you look at the chart, I mean, it's somewhat of a little bit of a nosebleed here. So I think that it's possible it's sort of, I don't know, Katie would have better terms for it. it consolidates, whatever you want to call it. So I think to sell some upside calls here wouldn't be a terrible idea. But I do still believe in the long-term story. I think if you look at, you know, we always come to this issue of how are we going to monetize all of this AI spend?

1:46And so they seem to really be able to do it right away, right? And in a tangible way that we can see. And I also think we haven't even begun to see how efficient they could become also from AI, They spend an enormous amount of money. We know they're going to spend, I don't know,$39,$40 billion of R &D spend, but they also spend$22 billion of SG &A. So I think you could end up with some margin improvement both from revenue growth and from running more efficiently. Yeah, we talked about this a long time ago in terms of all these investments. And Meta is one of the few companies that can actually make the investments and apply to their own business.

2:25The analysts here pointing out that they see that this is a clear path to LLM or large language model ROI. So instead of selling it and seeing if it's going to come, it's using it. Without question, we've said at Walmart and Facebook of the two companies seemingly able to figure this out. Good for them. And you can't do this, I know. But if you sort of back out that whole sort of dark period from the fall of 21 into sort of December of 22. You mean the meta period. Yes. I like what you did there. I mean, the stock went from$400 to$100 over the course of 11 months or so. I mean, this stock, if you look at it, it's been lower left, upper right, a series of little sell-offs along the way, but extraordinarily constructive.

3:05And despite the fact that Karen points out, you're right, this move has been extraordinary. It's not expensive. It trades 23 times next year's numbers. And I think it has a growth rate on earnings and revenue to sort of back it up. And now with the AI kicker, yeah, I think, what are the reports? Last week of October, I think this continues to sort of grind higher. How does that chart look? Well, we have a breakout in Meta, and it is pending confirmation. And for that, we require two weekly closes above a key level. That's about 543 in our work. The stock has been range bound for almost the entire year.

3:37So it's really good to see it advance from this range on improved intermediate term momentum. And like Karen, though, I don't think we chase here at the same time. The targeted objective from the breakout is about 597 using a measured move, which just assumes the trajectory will maintain itself. However, we also have a countertrend signal simultaneous with the breakout that would suggest we get about nine weeks of consolidation. So Guy talks about what you named the meta period. So the meta spend, everyone had a problem with. The stock was back in the 90s when the meta spend was going on. You reverse that and you call it AI spend.

4:15The stock's 500 and change. Well, there's a year of efficiency in between. Oh, that's right. The year of efficiency. To save money for the spend on AI. And then if you remember the TikTok competition, that's gone to the wayside. So this is still about ad spend. And he's done a masterful job of not pissing off Congress. No one's bringing him parading through Congress anymore. If you remember, he used to be on those meetings, three-hour-long meetings. They've gone away. He's not picking a horse for the presidential election. Does the ad spend stay to the point where it eclipses the spend on AI, and no one seems to care as long as it makes them more efficient?

4:55So would I buy it here? No, I think the market's probably in the – I'm in the camp where maybe we test a little bit lower range. I don't think we sell it dramatically, but I think we sell off. So I would not be a buyer right here. Yeah. I mean, the focus was was all about how AI is helping content personalization or recommendations. Right. And so that usually when you have increased ad loads is what they're seeing based on this personalization. You have increased engagement. There's a correlation with that. And of course, longer term engagement is what it's all about. So in terms of the next catalyst, Karen, what do you what do you think?

5:29I mean, well, just I would just want to go back from it. Remember when the Apple privacy rules hit and that was that was a very jarring to the whole industry. And yet they were able to sort of get out of it first. And now that is way in the rearview mirror as this iteration now has allowed them to do such targeted marketing that I think the spend is is still there and it's still working. So I don't know. I feel like the momentum is not over, but I feel like the expectation of the stocks is getting a little bit higher. And Reality Labs is no longer a hindrance. It feels as if there's going to be either a bleed or a slower bleed of money.

6:09But back then it was this is a problem. It's taking the focus off of where they make their bread and butter. Right. To Steve's point in terms of being sort of the poster child for bad Internet content and behavior. I'm sorry, Steve is the poster trope? No, no. Okay, got it. Thank you for firing. Thankfully, TikTok kind of stole the spotlight. I mean, you know, and the idea that it could go away is another sort of booster to the story. Facebook wins that without question. And then, you know, Reels is part of this whole conversation. They've definitely seemingly have figured it out. Now, the existential risk, if there is one to Facebook, to me, is if the economy really slows down.

6:48because I think a lion's share of their advertisers are probably small and medium-sized business. Now, with that said, you can actually make an argument that that will work for them because in a slowdown, Facebook will be the one that wins, right? Everybody else gets sort of thrown to the wayside. So I don't want to say they win in any environment, but if you were concerned about the economy and potentially small and medium-sized businesses slowing down, that, I guess, is your risk. Yeah. We had mentioned at the top, Katie, that is the second best-performing MAG7 stock so far. Is it the best chart, though?

7:17I mean, where does it fall? Yeah, I mean, they do have challenges right now. Apple's seen a loss of intermediate-term upside momentum. NVIDIA is stuck in this triangle formation that feels like it will never end. And Microsoft has a long-term overbought downturn. So with its breakout, assuming it is confirmed, which today's close wasn't great, you know, we would say it probably is the best of the top five. What was wrong with the close today? It closed pretty much at all-time highs. Near the lows of the day. So we like to usually see the momentum held up through the close. Let me ask you, I just hope I don't put you on the spot here.

7:53Netflix, which has also had quite a run. And I think is this a new time? I think today similar up all time high, close at all time high, but a little bit off. And it's had a huge run. It has. And it's yeah, it's right near all time highs. It still has momentum. But if you go back, it does still have resistance from 2021 that it contends with. So this would be sort of a natural place for it to maybe pause, consolidate before it then breaks out. It's going to, you know, come back to the top down influences. Right. How is Netflix or Nvidia trading? Is it getting out of its triangle formation? Because with that, I think we can see these really meaningfully advanced still because they have consolidated.

8:35Right. But without that, without the sentiment that's derived from a breakout in NVIDIA, I don't think we'll get there. Katie's right to point it out. I mean, we basically opened on the highs in Facebook, 573 and change, and spent the rest of the day sort of grinding lower, closing effectively on the lows of the day, although still higher on the day. That's something to watch. Now, if it was a big volume day, which it was not, it was in line with historical volume, I'd say. But again, one day, that's not a trend make. But you're right to point that out the way it traded today without question.

9:03Well, another potential catalyst for Meta, its Connect Developers Conference kicking off on Wednesday. Julia Borson joins us now with more on what we can expect there. Julia. That's right, Melissa. Two analysts were out with bullish notes today on Meta ahead of its Connect Developer Conference, which is happening Wednesday and Thursday at Meta HQ in Menlo Park. Now, shares for Met are up over 89 % in the past 12 months, gaining just about 3 % today after Citi raised its target price to$645. And B of A reiterated its buy rating on the stock ahead of that Connect conference. Now, analysts expect the company to reveal prototypes of its new augmented reality glasses, including potentially holographic capabilities.

9:49We'll see what that means. The company is also expected to launch a lower-priced Quest virtual reality headset, analysts expecting a$299 price point that's down from the current$499 price for the Quest 3. The company is also expected to showcase new AI capabilities and some new generative AI tools, cities saying that new generative AI creative tools have potential benefits to advertisers and therefore to the company's top line. Newstreet Research writing last week that while Meta will share nothing about its ad revenue or its ad business, which is, of course, its core business, that it will give insight into both near and long-term returns of its generative AI investment.

10:32So that's what we're going to be watching for, Melissa. I'll be there. All right. Keep us posted. Julia, thank you. Julia Boorstin, you cited this conference. I mean, how much do consumers want to spend on guys like nothing? He's not the consumer that's going to spend it. You're not the target audience. You sent me to Staten Island a few years ago. This was pre-COVID. Oh, yeah, flying like a bird, and it got you sick? Two days. Yeah, it's true. That's not even kidding around. I'm sure the technology is bad. One would hope. Five years ago you did this. I digress. But, I mean, even at$2.99 sounds like a great discount, but I don't know.

11:09I think that it's the right time. It depends on when it's going to hit the shelves. I think there's a certain amount of early adopters. I'm usually an early adopter with technology. Guy has a rotary dial flip phone. I am. You are? You don't think I am? I'm always buying a newer phone. Okay. I think that's the way I gauge it. I bought my kids the Oculus. So there's a different – I'm willing to give it a shot and see how the technology plays out. Does it move the needle? not to the point where you needed to move the needle, but its perception is reality. So the more they get their name out there, the more they touch different buckets of revenue, the better it is for the stock.

11:45Yeah. How do you view this, the wearable side of it? Well, I mean, I'm glad that it's not the main push because that really wasn't working well. Just as an aside, I do have in the closet a Vision Pro, obviously Apple. But the key part is it's in the closet. Exactly. So, I mean, the Ray-Ban thing, it seems to be, I don't own one yet. I do think it's intriguing. If you go way back, do you remember the Snap glasses and the Google glasses? I don't know if now is finally the time because Vision Pro was not the time. But I still think that the whole driver here really is still advertising. Guy just got a kaleidoscope.

12:24So they're the best. An Etch-a-Sketch. You know, you make fun of Etch-a-Sketches. No, they're wonderful. They're wonderful. They're wonderful toys. Because if you screw it up, you shake it and you start again. Right. As opposed to, like, all the technology today, you can't do that. I mean, what if I shake this phone? It's just going to break. Wait, do you know what happens? You can shake it and it erases what you just typed. Yes. I'm not joking. I'm really not joking. You can experiment with that during the break. We've got a news alert on Novo Nordisk, the CEO's testimony for tomorrow. Senate hearing just released in the last hour.

12:58Angelica Peebles got the details. Hey, Angelica. Hey, Mel. Well, yeah, we are going through the written testimony from Novo CEO Lars Fjordgaard Jorgensen. And in the testimony, Jorgensen repeatedly talking about the complexity of the U.S. health care system. He says that Novo is just one player in the system and the company doesn't control what patients ultimately pay for their medications. He points out there's a big difference between the published list prices of drugs and the actual amount of money that Novo receives after it gives discounts to the PBMs. He's saying that the net price of Ozempic has decreased by 40 percent since launching in 2018 and Wigobi is on the same trajectory.

13:34Now, remember, price is the focus of tomorrow's hearing. Senator Bernie Sanders comparing the price of Ozempic and Wigobi in the U.S. to other countries. Those drugs, both around$1 ,000 a month for a month's supply here and much less overseas. I'm not seeing any acknowledgement of those discrepancies in this testimony, so we'll have to hear more tomorrow. The organization also saying that Novo's invested well over$10 billion to develop GLP-1s and committing over$30 billion to expand its manufacturing. So, again, we're still going through this, and we'll see if there's anything else. And there's going to be much more tomorrow.

14:07Melissa? Angelica, thank you, Angelica Peoples. And we should note Novo Nordisk shares have lost about 10 percent this month alone under pressure for various reasons, including the pricing issue. It's a 21-page document, the testimony, single space. So this is a very long thing. And he really goes through in detail how much they spent on R &D, because you can't just say it costs X amount to manufacture a drug and that's what you should sell it at. There's a lot more that goes into in terms in terms of R &D over the past decade, all the facilities that you need for the R &D, all the facilities you need for the manufacturing, which they are ramping up by purchasing a lot of these plants from Catalent.

14:45So that's ongoing. All of the drugs that you try to develop that don't go anywhere. Exactly. So, I mean, we had that very interesting woman on from Yale who went through only purely looking to get to get at what does the manufacturing cost without addressing any of those other issues, which obviously you need to. But you can imagine that Sanders will have a different take on this. It costs about a billion dollars, right, on average to bring a drug, a drug to market. So to both of your point, there's an awful lot of money that goes by the wayside. No one ever sees. But it's been Novo, it's been Lilly, and a lot of these other smaller drugs, the GLP sort of pipelines that are very low market cap names, are probably going to be coming into the cycle as well.

15:30That's why you want to be in the XBI, which is the small cap drug biotech index. Katie might have some thoughts on this real quick. I mean, if you look at this, Carter talks about a bearish to bullish reversal. If you go back to May, this could be somewhat of a bullish to bearish reversal. if we close below 122-ish, which was the low back in May. So it has not traded particularly well, as you just said earlier, Mel, since the middle of June-ish. It's something to watch. I think actually the support level is pretty critical right now for the story. Yeah, I would agree. It looks like a head and shoulders top.

16:01I think if you look at it, take a step back, you'll see the head and shoulders. So if it stays down below the 200-day moving average, which it just penetrated on the downside, I think it's got a problem from a technical perspective. And we're also seeing a broader rotation. I think we spoke about this before from sort of the winners and they're rotating into the losers. So Lillian to Pfizer is one. Oh, Lillian to your Pfizer. Yes. Well, I have Lillian, too, but my Pfizer. Yes, I know that would be good. It's been a long time waiting for Pfizer to be from ridiculously cheap and a nice yield to something better than that.

16:35Coming up, shares of Intel getting a bump again today on news of a potential big investment. Will it be enough to help the chipmaker launch a real turnaround? Plus, cars and kicks, Wall Street weighing in on GM and Nike. But analysts aren't loving what they're seeing under the hood or in the soul. Don't go anywhere. Fast Money is back in two.

16:55This is Fast Money with Melissa Lee right here on CNBC.

17:07Welcome back to Fast Money. Intel shares jumping again today after a Bloomberg report this weekend that Apollo Global has proposed a multi-billion dollar investment in the struggling chip maker. This on the heels of headlines Friday that Qualcomm had approached Intel about a possible takeover deal. Shares up nearly 8 percent in the past week, but down 55 percent this year. Guess who bought a little today? Uh-oh. Steve, why? I did. This was one of those things. What does Carter say? So bad it's good? This is what I felt like this was the second entity in on Intel. So if Qualcomm doesn't work out, Apollo's there.

17:40Think about how much money the U.S. government has given Intel. Eight and a half billion in direct funding, 11 billion in loans. I don't know how many. It's probably much more than that. I don't think they're going to let it fail. And I don't think they're going to let it go sideways for that much longer. And also, do you think the CEO is probably not going to be there six months from now? I don't think he is. And I also think that that's going to be another pop in the stock. I, quite frankly, am looking for maybe a 10 percent pop from here and I'd be happy. So it's a quick, quick trade for me.

18:15This is not an investment. What do you think, Katie? Well, it's risen into a gap on its chart. So that sometimes creates a vacuum of resistance. But the next resistance at the top of the gap would be close to 29. Now, it's a long term underperformer. It's a long term downtrend. And that means it has a lot of risk when you're taking these countertrend positions. But the gaps can create those vacuums short term. Companies like they buy stock in companies every day. You don't hear like what is this an investment in the company? Is this in what is this exactly? What is what are they getting for this?

18:50Like why? It was unclear to me. It's unclear to think many of us. So with all that said, I get it. And Steve's probably right. And Katie's probably right. Maybe it trades 25 or so. The problems at Intel are far-reaching. Now, you want to play it for a trade. That's fine. But now you've had three or four days of each better news than the next. And the stock basically can't get out of its own way. So I think if it gets to 25, you pull the ripcord and play it from the short side again. So I agree. Guy had a very interesting thought. Why does it? If they want$5 billion worth of stock, go buy it. But what else?

19:24Why wouldn't they? They must want something else for it. I'm sort of intrigued by the Qualcomm thing. I think that I had heard Stacey Raskin, who I think is great, was saying, I don't know, this might not be so great for Qualcomm. If I were the U.S. government, I really would be pushing for that deal. Wouldn't you be tapping somebody on the shoulder and saying, hey, why don't you buy some assets from it and why don't you help Intel out a little bit? Yes, I think so. And, you know, in terms of we know it's a very difficult antitrust environment. I don't think that would be the case here. So I don't know.

19:56I don't own it. Maybe it bounced or not. I'm not really sure, but I do think it's intriguing that Qualcomm thing would be an elegant exit. There's a lot more Fast Money to come. Here's what's coming up next. Two iconic companies, two negative calls on Wall Street, why analysts say these names aren't stepping on the gas, and how they expect those stocks to perform. Plus, shop till you drop. It seems the luxury consumer has done just that, how retail buyers seem to be all shopped out, and where a slowdown is impacting the space. You're watching Fast Money, live from the NASDAQ market side in Times Square.

20:32We're back right after this.

20:41Welcome back to Fast Money. Shares of General Motors decelerating on a new note from Bernstein. Analysts downgrading the stock to market perform. Bernstein saying after the stock's recent run, our data signal rising earnings headwinds. and that there will be a need for additional cash in order to meet strategic goals. Additional cash? That doesn't sound good, Guy. No, it doesn't sound good, but their price target is still$53. So, you know, it's interesting, given a run, and Katie can speak to this, this 49 level has been huge resistance for a while. So I admire the call. I admired even more if they said, you know, it looks like the stock run is over.

21:17We're lowering our price target to 42.5 or something, which actually would make more sense in the context of that entire note. Katie? Yeah, I would agree. There is some strong resistance there, and I feel like usually these downgrades are less timely than that, right? So they're not near a resistance. They're often into a downdraft. So it could be timely. I do think that we have downside to the 200-day moving average, which is, you know, 43-ish. Yeah. Meantime, Tesla erased all of its gains for the year effectively today. Well, we thought no one was going to buy another EV again, and we saw GM and Ford say we're going to cut back on everything.

21:52So then that leads people back into Tesla. And if Tesla is going to beat their car numbers, then that creates a vacuum to the upside. I would probably wait because I think it's probably preloaded on the bullish side for Tesla. I'd give it time to breathe here, but impressive. Yeah, October 2nd delivery numbers, October 10th robo-taxi event. And the thinking, according to Barclays, is that they are going to have a prototype of the vehicle. And not only will they have a prototype, but there will be rides because it's being held on a private property where you don't need to have any sort of oversight or you can do whatever you want, basically, on that property.

22:27And that's what people are waiting for. I'm sorry. Given the run, October 16th-ish, they report earnings. So it's not a big run. I mean, valuation, you can't make a case on valuation. You're making a case on momentum right now into these events. But this has been a pretty significant resistance level. We'll see how it trades. All right. Let's move to Nike here. J.P. Morgan putting the stock on negative Catalyst Watch ahead of earnings next week. Analysts citing downside risk to consensus estimates and challenges in the product portfolio and global macro headwinds. While J.P.M. is encouraged by the appointment of Elliott Hill as CEO, it says it does not expect Nike to recapture revenue until fiscal 2027.