Target Drops On Succession Plans… And Details From The Fed Minutes 8/20/25

0:02Live from the Nasdaq market site right here in the heart of New York City's Times Square this is Fast Money. And here's what's on the show tonight. Off target. The retailer changing CEOs, but is the new boss the same as the old boss? Investors might have thought so. We'll debate. Primed for a pop after a massive year. Palantir shares sliding, but one top analyst says right now is the time to buy. Plus, they love gold. Miners. Hertz and Amazon linking up. And The ESPN's big new streaming bet is the bundle about to get whacked. Hi, everybody. Thanks for joining us. I am Brian Sullivan in for Melissa Lee, coming to you live from the Studio B at the NASDAQ Market Site.

0:42On your desk tonight, we've got Julie Beal, Steve Grasso, Karen Feinerman, and Guy Adami. Welcome, everybody. Welcome to you. Thank you. Hi, Brian. I figured you had some comment. I was shocked. No, forget it. Since you opened that door, you obviously were making comments about the 1971 Who album, Who's Next. Yes, I was. Famously, the market, well, they asked in the song, you know, we're going to get fooled again. I mean, right? Pick up my guitar and play new boss, same as the old boss. And the market today is saying, you know what, Brian, we're not going to get fooled again by this target CEO.

1:21But back to you. You rolled in the top. You rolled in the Who. Tim Seymour's not even here. So let's start with that and a stock that has been decidedly off target. Target shares falling nearly 11 percent at the low of the day, closing down, call it only 6 percent. Now, they did beat second quarter sales and profit estimates. But here's the question, guys, that earnings even matter because Target unveiling its new CEO and it's a longtime insider. Really, it's the current number two to the current CEO, Brian Cornell, which shares more than cut in half on the all time high it hit during the pandemic.

1:59Can Target's next CEO really turn things around? Guy Adami, do you think this insider, the market didn't like it today? But what do we know and what do we think? Well, welcome, obviously, number one. The market is saying they wanted an out. They wanted something new. They didn't want more of the same. And that's the problem. And I think you just hit the nail on the head. The quarter wasn't an abject disaster. It wasn't particularly good, but it wasn't bad by target standards. I actually thought inventories, they're starting to get them under somewhat of control. But the market is saying we need a new voice.

2:33We need a new vision for this company. And you're not going to get it internally. I mean, you just said it. Go back to a four year chart. This is a company that made its all time high, I think, in the fall of 2021. And over that same course of time, Walmart's done nothing but go lower, left, upper right. Target's been the exact opposite. Now, it is somewhat target specific, but at a certain point, you've got to start finger pointing. And the market pointed its finger at management. Management didn't change. Okay. On that same album, they said nobody knows what it's like to be the bad man. Yeah.

3:02To be the sad man. Okay. I don't know this guy, Karen. Yep. I think about AT &T. AT &T had a CEO, Randall Stevenson. Market didn't like him. He leaves. His number two gets promoted. Market was shaky on him. Guess what? stock has soared since he took over. Are we being too hard on a guy that most of us probably don't know anything about? Well, that's probably true. Stanky probably did some bold things, though, it seemed. But anyway, going back to Target, I looked and said, you know, the board unanimously chose him. I looked at the board. The board is a who's who of a lot of corporate America, right?

3:38Had Safeway, Elevance, UPS, Clorox, CDW, a lot of great names. One sort of thing that was missing to me was somebody with real retail experience, like somebody from somewhere like, let's say, a Pottery Barn CEO from that division, something like that. So that was sort of surprising to me. I'd like to give the guy a chance, but I agree completely that was the problem with the stock today. Stocks down to lows, Steve, not seen since July of 2019. So really call it a six-year, a little bit more than six-year lows. But two ways to look at it. It should have never been as high as it was during the pandemic when everything got stupid.

4:15We were all just, you know, ordering stuff online. The valuation isn't out of line compared to a lot of other names. Yeah, I think people have just lost their trust in the name and it's an approve me state. When you promote the old, you get nothing new. Reverse of out with the old, in with the new. And when you look at what he's done, he was there for the collapse. Did he make the decisions that caused the collapse? I have no idea. But when you look at Walmart, guys said it before, the stock has doubled in four years. Target's down 64%. Right? So somebody's doing it right. Now, granted, Walmart's much bigger, much more powerful, but you have to get someone from the outside.

5:02And I'll leave you with this last thing. Nike did the same thing. Suffered. They brought in someone who's been there forever. You need new blood in this type of situation. My only, Julie, the only point I was trying to make, and we got Courtney coming up on the story, too, is that we don't, I don't know who this guy is. We don't know what this guy is about. We just know he's, he's from the inside. So it's kind of a sell first buy later. If I had to make the bull case on target, I would say number one, they got thousands of locations. Number two, 13 times forward earnings. That's near a 10 year or even more than a 10 year low.

5:35And they pay a 4.6 % dividend yield. You could start to make the case for Target, maybe? Yeah, I think you could make the case from a valuation standpoint, particularly the dividend yield. I wouldn't necessarily do it off of forward earnings because this company has seen its earnings evaporate in a way that is pretty alarming, and it's why it's where it's at right now. But I really agree with everyone on the panel, and particularly Karen's point, There's no one on that board that has really deep retail experience. And this is a clear retail turnaround story that needs to happen, particularly for Target.

6:14Target's way of differentiating was delighting people with cushions and lamps and things that they absolutely do not need. That takes a real merchant prince kind of a personality to change, not a COO, CFO. That's not what's really going to get it done. And I think until you inject a lot more enthusiasm for the actual merchandise, you're going to have a hard time convincing shoppers to come back after you've upset them for so many months. And they have upset them, Guy Adami. And so, look, I know this is a stock show, but if we were just kind of – I want you to be Guy Adami the consumer, not Guy Adami the stock analyst.

6:51I can do that. Right? Because Costco and Walmart know exactly what they are. Costco doubled down on it. We're Costco. Big bulk. look, we believe in this, we're going forward. Walmart, they never even engaged in this political stuff because they said we're all about low prices, period, that's it. Target sort of veered one way, then they tried to veer back hard the other way, and I just wondered, to Julie's point, if they've ticked off consumers too much to come back. That's part of it, no question about it. The product mix is a big part of it as well. If you're in the middle in the world of retail in this environment, you're absolutely nowhere, and I think that's where they found themselves.

7:27There's no compelling reason to go to Target at this point, and they haven't given people reason for it. Now, as you aptly said, wait for it. You look at the stock on valuation, you say it's a what, Brian? A bargain. See what I did there? Yes. But it's been a bargain for the last two and a half or three years in terms of valuation. So if you're playing that game, it's not the right game. What I will tell you, though, if you go back and look, I mean, it's at a moving average level. I think the 200-day or 200-month moving average is a level that has not breached, and we're right there now. So maybe that finds some support there.

8:01I saw a poll that 40 % of target workers lacked confidence in the company's future, 40 % of the employees. So we're sitting around a desk trying to trade the stock. That comes through. Investors have lost confidence, period. End of story. But I guess the point I'm trying to make here is that it's you keep trying to make it. Well, I'm just because I feel like we've been doing we've all been doing this a long time. It's always darkest right before dawn. Right. That's that 40 percent stock valuation. Ten plus year low. Everybody hates Target. They don't like the new CEO. Blah, blah, blah. Sometimes that's when you want to buy a company when it's hard to make any positive.

8:42Right. I always say, though, it's always darkest right after the time it was the darkest up until that point. But I understand what you're saying. At some point it gets so, you know, it's so cheap that everything is sort of in there already. Or it just goes to zero. Also, though, I wonder when a new CEO comes in, what's the first thing they do? I think they kitchen sink it, right? Why have the bar be high when you go in, when you kind of have a free quarter? It's not quite the same, clearly, as bringing in a whole new CEO. Because this CEO can't say, well, I wouldn't have done any of those things because they were the CEO for a long time.

9:14So all that hasn't been said, I'm Long Walmart. Okay, so Long Walmart. So let's bring in somebody that might know what's going on inside the company. That is our friend Courtney Reagan. I walked in on you on the phone. I apologize. It's okay. It sounded like a very sort of in-depth conversation. It was. First off, what do we know? Is it Fidelke? Fidelke. Fidelke. Yes. The new CEO, Michael Fidelke. Yes, Michael Fidelke. Started as an intern. Yeah. He's been there his entire one job. Big Ten guy, went to the University of Iowa, engineering, then Northwestern for his MBA. Okay. See where this is going.

9:50Took the job at Target in between. So he knows the company really well. Yes, he's COO. He's also heading up this enterprise acceleration office, trying to sort of fix this. What is that? Sort of Target's way of saying, we know things aren't going well. Michael Fidelke has been running this since two quarters or so, basically saying, here, fix it. Kind of giving him his own strategy office and team to focus on moving it forward. It's almost like a trial run, actually, for a couple quarters here. He's COO now. He was CFO. He's worked in human resources. He knows a lot about this company. I understand people were disappointed.

10:22You can see that in the stock price that it wasn't an outsider. Brian Cornell was an outsider. He was the first outside CEO Target has actually ever had. And people really loved when he did in the beginning. The peak stock price was about$266, I think, in November of 2021. Peak operating margins then to at about 8.4%. That was under Cornell. They had a really great pandemic. And then it's been a tough couple years. So Cornell has done some good things, and he's done some things that maybe he'd like to do differently. And we don't know, to your earlier point, how much of that was Fidelke's influence.

10:51How much of it would he have done differently, but he wasn't in that seat to do it. So we don't know, but I understand the frustration with the market. Let me ask a more macro question, because I see that Guy Domi is champing at the bit. It's not chomping, by the way. It's not? Well, you said that to me like I said it incorrectly. It's champing. I didn't know that. It's champing at the bit. That's a horse reference. Thank you. Where does Target fit into the retail landscape? Okay, because we just assume it's Target. Everything's going to be fine. Well, guess what? Amazon is there now. Right. You want to buy a lot of stuff you don't Amazon?

11:25Costco's got their own thing. Walmart. I know. What is Target? Well, I love your point earlier, right? Walmart knows what it is. Costco knows what it is. I would argue Amazon knows what it is. Does Amazon have this magical sort of cachet that the Target had? No, but they can get you stuff pretty cheap and pretty fast. And that's sort of what they do. And I don't think that's what Target should do. Target should find that Tarje again. But it's a really hard thing to do. And I think when Bed Bath & Beyond hired Mark Trenton, who had given Target some of that Tarje, whatever you want to say, that cachet.

11:59Tarje cachet. Right, I know. And then they put him at Bed Bath & Beyond. Look what happened there, right? So, like, you don't have a leader that has everything, I don't think, and they have to choose what they want. And Fidelke did come out and say, we have to lead with merchandise. And it has to be more than just these, you know, occasional sort of design partnerships. Everybody knows that, though. So who can do it? Can he? I don't know. I guess we've got to give him a chance, right? Market's going to give him a chance. You know, we have lost our way. I've been at Target my entire career. It is clear that we alienated half our customer base.

12:29We take full responsibility. But going forward, we're going to be the target that you all loved five or six years ago. I mean, this is not complicated stuff. This is crisis management. I think people want to give them a pass. Is it crisis management? I think it is. It's not? You tell me. I didn't say it. Let's pull up a Walmart chart and pull up a Target chart. Go back to back. Let's get a five-year back-to-back Walmart. Also, if we're going to pull up that comparison, can I also say people like to compare Walmart to Target, and we know that the mix is different, so it's not always an apples-to-apples comparison.

12:58And as people are saying, oh, bring in an outsider, guess who wasn't an outsider? Guess who else has been at the company their entire career? Doug McMillan at Walmart. And look what he's done. He's dropping bombs. Julie Biel, here's the thing. We compared Apple to Apple. I bet you, Courtney, tell me if I'm wrong, 95 % of the products are exactly the same. At where? Between Walmart and Target? No, that's not true. Gillette shaving cream, towels, apples. Groceries. Groceries. Are they all the same? No, they're not the same. They're not the same. They're not the same. They're not. What do we make of the company and the stock, Julie Biel?

13:28Thank you, Julie. Look, I think that they're not the same. They can do some of the same things. And for a while, people were actually pretty worried about Target expanding into grocery the way that it did because they were worried it was going to come after Walmart. They were getting people in, shopping for their makeup and their duvet covers and whatever else they get, and actually being like, oh, hey, I can get groceries while I'm here. And that was a real threat to Walmart. And now we're kind of in the reverse situation. And I just really don't think that like the person that was overseeing the organization as it made its transition away from DEI when it had been one of probably the forefront leaders of celebrating pride.

14:08I really think the company's lost its way. And it's not just its actual cachet. It's what the brand stands for. And I think that's what that 40 % of employees who are saying, no, thanks, I'm really not excited about the direction of the company. I think that's what that's about. Good points, Julie. And Courtney, I want to say thank you. I know you've done some great reporting on this. Julie Beal, thank you as well. I will say this, not about Target in general. Guy Adami, you mentioned bargain. I'm going to throw two other words at you. Value trap. Because just in retail, you've got to be careful, right, Karen?

14:40Where people say, well, it's this. It's Sears. Or it's Montgomery Ward. Or it's Walgreen. It has to come back. Like they did is what you're saying. Yes, yes. Did I make a point there? Yes, you did, of course. You often do. Often do. Just be careful. You know what's interesting? What happened? Julie mentioned duvet covers. One of the most difficult things to do in a household is to put that duvet cover back on. There's a trick where you do it like inside out. Have you seen this? I have not. You turn it inside out. You lay it on top. TJX. It's a whole thing. Watch a video. TJX. No, it's very complicated.

15:09The pair of companies, TJ Maxx, a bright spot for retail today. TJX, unlike Target, closing at an all-time high, up almost 3 % after beating earnings estimates and raising full year guidance, which assumes current tariff rates will, Karen, remain in place. This was a delightful quarter from TJX. I mean, the numbers were great. The call was great. They managed to do everything right. One of the things that they did was get a lot of inventory that they could sell at good margins. They also leave the quarter with more inventory, which you got it for, you know, their long inventory. Nobody's better at managing inventory than they.

15:50So there's a lot to like here. The only thing not to like is that it's expensive, but it deserves to be. They've done an extraordinary job. They're too expensive? I'm long, so I'm going home long. It's as if I bought it today. Could it get better than this, to your point? To your point, they optimized on people over-ordering goods to get ahead of tariffs. So they were able to capture. The more they get people's over-orders, the better they do on their spreads and their margins. Is this the peak of the over-ordering? I would probably say yes. So this was a great quarter. They shined, but I don't know if they could top this.

16:30Because what you're saying, I think, Steve, is that if people don't know what you mean by over-ordering, TJX, which is TJ Maxx, they get a lot of their goods because they buy excess inventory from other companies. They go in, they say, I'll give you 30 cents, 20 cents, whatever on the dollar. I'll buy all that stuff. And then they'll sell it with a markup. Everybody wins, theoretically. Correct. Yep. They win. I mean, 28 times. 30 times forward earnings, though. Okay, 30. I got 28. Okay, we'll call it 29 just to be fair. That's a bargain. But that's not unreasonable given what they've been able to do.

17:02They're great operators and they're getting the benefit of the doubt. Market is willing to pay up in the retail space for people to get it right. and they're not willing to pay up for people like Target. Let me just add one thing. These are under-promise over-deliverers. So they talk about having a good quarter. They will have that good quarter or better and beat like they do every time. Anybody love Ross? You like Ross? They've done a good job as well, but long TJX. Long TJX. All right, coming up, tech's tumble continues, but one analyst doesn't think the pullback is throwing a real wrench in the AI rally.

17:36We're going to make the bull case on that coming up. Plus, groceries, clothes, health care. You can find everything. Maybe not Target. We're talking about Amazon, including buying a car? That's right. Amazon and Hertz tying up to help you find your next ride. Fast Money rides on right after this. Short break.

18:02You're watching Fast Money. Here on CNBC, we'll be right back.

18:15All right, welcome back to Fast Money. Palantir shares sliding for a sixth straight day, notching its longest losing streak since April of 2024. Now, before we get too upset about this, the stock is still the best performing stock in the S &P 500 this year by a lot. But it is down nearly 18 percent from its record high just hit last week. But Wedbush's Dan Ives says it is time to buy this pullback. In a new note today, Ives writes, quote, tech sell offs are opportunities to own core winners and that the bull cycle will be intact for at least another two to three years. Joining us now, the aforementioned Dan Ives of Wedbush Securities.

18:59Dan, what do we make of the pullback on Palantir? Do you welcome it? I mean, look, I think these pullbacks are almost healthy. I mean, that's been our view of Palantir. I mean, if you go back since, you know, whatever,$10,$15, like you're going to have these pullbacks. But I just continue to focus on the opportunity. And I think they're really transforming and disrupting software and tech. And it's my view, and I get the valuation, next two, three, four years, I think this is going to be a trillion-dollar market. They will grow into it, and they are the poster child of the AI revolution, the nervousness I get.

19:37But it doesn't in any way change our view fundamentally what's happened in the AI revolution and where Messi of AI Palantir sits. All right, so trillion dollars, Dan, by the way, love your work. You know this. That's three times what it is now-ish. they're going to do, and I'm going to round up$6 billion of revenue. What does that revenue line need to look like in order to justify a trillion dollar valuation, in your opinion? Yeah, I mean, my view is that, and it's great to see it, you're ultimately going to be looking at$12,$15,$20 billion, my view, when you look out the next three, four years for Palantir, and a free cash flow margin that could ultimately be 40, 50%.

20:19So I get the valuation today. But our whole view is when you have the$2 trillion to$3 trillion that's going to be spent, I think Palantir, I mean, in 20%, 30 % of that, Palantir could win. So that's my view of it when you look out. And that's why pullbacks like this I get. But to me, it's not the time to run for the hills. It's actually I view these as opportunities to own it as well as a lot of these other tech names. So, Dan, to echo Guy's sentiment, you have been on spot on on all these buying the dips. But let's look more micro. Let's look more trading wise. When you is it is it a tailwind or a headwind that they get 55 percent of revenue from governments with the bulk of that obviously being from the USA?

21:05Yeah, I think it's been, to some extent, a tailwind foundationally speaking, because that's really how they've really become that golden child in AI, because they've taken that technology into the enterprise, AIP, and that's how it's all transformed in terms of the commercial side. But I do believe from a valuation perspective, you're going to get the value on what you do on the commercial side. But government, as we see transformations on sovereigns, we're seeing in the U.S., you're going to see it around the world. Palantir, along with, you know, along with NVIDIA and Microsoft, I mean, they're going to be some of the first calls.

21:42And I think that's not being factored into what I view as a sovereign as well as a commercial opportunity. Dan, it's Karen. Thanks for being on with us. So aside from Palantir, NVIDIA and elsewhere, I would assume that same two to three year time frame would hold for those as well. How do you how do you sort of think this plays out? Why do you get two to three years? Yeah, look, I mean, two to three years is a minimum because it's my view that ultimately this is the it's the it's the second inning of this game. and we've talked about is that the use cases on enterprise, they're multiplying, they're up 30%, 40 % even when we look back over the last few months.

22:23And you only have 4 % of enterprises that have even gone down the path in the US. You don't know what that's going to happen in Europe, eventually what's going to happen in Asia, ex-China. And that's why from NVIDIA to Microsoft to Palantir to my view of Alphabet, as well as the software names, you look at Autonomous, you look at names like Aqua. I mean, that's our thesis. Our thesis, it was 9 p.m. It's now 10, 15 p.m. at the AI party. That party goes to 4 a.m. And I think these are always opportunities, even though the DJ could stop playing the music for a few minutes. You got the musical references.

23:02You had the Messi reference in there. But let me ask you this. Even Messi has bad games. Dan, what is the risk profile on Palantir? Look, obviously, a high-risk profile, if you have any hiccup, any speed bump stock gets crushed. But Brian, my view is that's why we spend so much time in the field in terms of what we see. And they're really seeing, I think it's 10, 15 to 1 demand to supply relative to what they could do with no direct sales force. And that's why I think this will ultimately be a trillion dollar company. I think CARP has the vision. carp has the vision he definitely is a interesting interview as are you dan ives dan thank you very much dan ives woodbush securities julie bill you got a comment on palantir whether it's move up or it's 18 fall off its record high i mean a hundred times sales is a big number 200 times forward eps is a really big number and i just i continue to believe there's no asset that's so good that price doesn't matter.