Title: A Big Tech Pullback… And Time to Sell Tesla? 7/17/26

23:44But you remember they struggled for about a year for that stock price to really get back above the IPO price. This is, when we look at$124, it was$135 IPO. Forget about the 150 print. Forget about everything else. You got the allocation. That was a$135 IPO. So it's 10 % basically off that IPO. I'm still long. I got a very small allocation like the rest of the people got very small allocations. I've added to it. I'm still long it. I think with Cursor and when you have Starlink and who knows how many other companies he buys and how many, how many sites they put in for a million, a million permits for satellites.

24:23On scale, they're going to be the biggest in this space. I'm still on.

24:27Tim Seymour:Tim, what's your take on is it a bargain? I mean, like if you can get it at 135 or whatever, I mean, it's bargain now, right? I'm not sure this is on the shelves at Dollar Tree. I think this is a case where it's it's it's actually you can make an argument. It's still expensive, especially when you consider where the valuation of this company was back in February when they completed the acquisition of XAI. that looked genius and was genius. But actually, then suddenly the combined entity put XAI at$250 billion and SpaceX over a trillion. By the time we came at one and three quarters trillion, the sum of the parts were somewhere around$900 billion or less.

25:08So I'm just not sure there's value here. And at a time when XAI was really the driver for the valuation dynamic, especially at a time when we are hearing about Anthropic and chat GPT valuations. I wonder. And I think this could have been part of our conversation in the A block. So I'm not sure that it ever made sense. And therefore, I still believe in the technology. And I think Starship is a value unlock. I think there's a lot of pieces on the space side investors really haven't even had a chance to value. I think you could own it here. I think there are people that are picking at it here. That doesn't bother me, but I'm not going to call it cheap.

25:51I agree with what Tim said about, I think, XAI. It was in the presentation. That was the bulk of the value. The two other businesses were interesting, but that was not where the value was. And so if you look at what's happened to the rest of the stories, they seem a lot cheaper to me than SpaceX. So and that's our position. And price targets, Raymond James has an$800 price target on it. Five of the seven price targets are above the current price of it now. So people do believe in growth. And sometimes when you're looking at growth, it's not going to look like a value stock.

26:24Tim Seymour:There's a lot more fast money to come. Here's what's coming up next. Japan in a rough patch. The Nikkei tumbling into correction territory. Why investors are hitting the sell button. And what comes next for investments overseas. Plus, a red light for Tesla? The chart master says to sell the stock ahead of earnings, the reasoning and the big bets options traders are placing into the print. You're watching Fast Money live from the NASDAQ market side in Times Square. We're back right after this.

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28:26Tim Seymour:Welcome back to Fast Money. Japan's benchmark Nikkei sliding 4 percent overnight, sending the index into correction territory, now almost 12 percent from its June 22nd record high. Japan's broader topics index also taking a hit down almost 3 percent, way down by the memory and semi sell off. Before we go to the ambassador, I will go to you, Karen, because you flagged this. Yeah, I mean, this is not great price action for sure. This isn't this isn't Korea. This is a much broader, bigger. Right. So this is a really significant move. I don't know. You know, we had comments from not the trade, the finance minister saying, you know, we're prepared to take decisive action.

29:03The last time I saw some really big decisive action, it was not a good thing. But if you go all the way back to this, you know, the British pound, that did not work out well. Ultimately, you know, things turn around. But to me, that that's sort of scary. Now, I'm long. I'm long without the yen, you know, hedge through the end with the DXJ. But I sort of think there's bargains there. But this kind of rhetoric is somewhat concerning.

29:28Tim Seymour:Yeah. Tim, what was your take on the pullback? Well, first of all, the difference between the Nikkei and the topics is important. I mean, it's kind of like Dow Jones and S &P. Nikkei is price weighted. Topics is market cap weighted. And I think the topics is a lot is a lot more relevant and important. And the pullback of the the highest for the topics is probably five and a half, which is totally in line for MSCI All World XUS. In other words, off the top, international markets have not had a great run here. And you can argue, especially with more war and some of the pullback in technology, even though part of the international story has been rotation into international tech.

30:07Keoxia in Japan is certainly one of the larger memory names in the world. It's been under a lot of pressure with everything else. I am concerned about yen and JGB dynamics. I think we all should be. But the rest of the Japanese equity market is very strong. And I'm along Mitsubishi and Sumitomo in Idevo. And I actually love Japanese banks here. So I think there are reasons to be concerned about an aggressive appreciation of the yen. That's a risk moment for all equity markets. And I think it's why we talk about it.

30:39Tim Seymour:Coming up, a fork in the road for Tesla with earnings just around the corner. What should you expect from Elon Musk's other company and the troubling technical trend the chartmaster just can't ignore? Fast Money is back right after this. Missed a moment of fast? Catch us anytime on the go. Follow the Fast Money podcast. We're back right after this.

31:04Tim Seymour:Welcome back to Fast Money. Stocks firmly lower to end the week. The Dow shedding 400 points. the S &P down a percent in its worst day in almost a month, and the Nasdaq fell nearly a percent and a half. Oracle shares up by almost two percent, even after hitting 52-week lows during the session. Still, the stock is in the midst of its sharpest drawdown since 2002, down over 60 percent from its September record. Travelers jumping nine percent to lead the S &P in better-than-expected results this morning, thanks to lower catastrophe losses and stronger investment income, management reaffirming outlook and expressing confidence in its AI investments.

31:38Tim Seymour:And intuitive surgical sinking 14 % for its worst day in four years. This is despite a strong second quarter report. The make of robotic surgery equipment sees slower growth in procedure volumes for the full year. We sort of heard about that from some health insurers managed plans before. But you flagged this one. Yeah. So I just think people are doing less surgeries, walking into hospitals less. You have less covered people. These are the type of stocks that will definitely get hurt off of it. But when you think about the technology with these names, it's hard to really throw this one out and not give it.

32:13You always want to pull back on a chart. And we are running into some support. It's a little bit of soft support. And we're going back again, back to 2024. So if you want to take a dabble, three-day rule, maybe you take an entry point, a flyer out on it next week.

32:28Tim Seymour:Meantime, Tesla set to report earnings next Wednesday. and the chart master says it is a good time to sell. Carter Worth put out a note this morning putting a$330 price target on the EV maker that is about 13 percent below today's close. He points to these converging trend lines as well as a double top formation that has him saying, we are sellers here. Yeah, see that arrow pointing down? Tim, what do you think of Tesla here? Well, I think it's caught in some of the same, let's just say, baskets and index dynamics that are hitting some of the other names out there. We had deliveries recently. They came in better than expected.

33:09I'm not really sure what the numbers are that we're watching here. Once again, it gets back to self-driving. It gets back to robots. It gets back to numbers that I think are out there that aren't going to be entirely clear. I think this remains a place where the dedicated hold on and the fundamental marginal catalyst is still very unknown. So I'm not doing much here. I think the technicals are, frankly, the more interesting way to look at the stock right here. So when I think about Tesla story, I think part of it is this site. The call is right. Right. Is SpaceX going to buy them? And are they going to do it?

33:45They're going to do it for stock. They're not going to do it for cash. And so there has to be some of this move here, the SpaceX downdraft directly into Tesla. I agree with that. I think that people thought Tesla was a cheaper way to buy SpaceX. And now with SpaceX collapsing in stock price, people are thinking maybe I just buy SpaceX if I want to buy it. So they're not buying Tesla anymore. They're just buying the they're not buying a proxy. They're buying the one that they wanted to buy or get shares of it, a cheaper way to go through Tesla.

34:11Tim Seymour:Or they're not buying either. Or they could not be buying either. And it's just a risk-off period, which would be totally justified in the market that we've seen. I feel like Julie Beal is in the not buy either camp. I don't know why you say that. I'm such an Elon stan. I'm well known for it, honestly. But, yeah, no, look, I agree. I think that there's a lot of noise. And, you know, I was thinking a lot about how it was just a year ago, two years ago, we would talk about this AI pixie dust that really just seemed to drive so much stock movement. And I think it's almost changed in a strange way.

34:47And we're moving away from that. And I think that some of the magic of Elon, too, is starting to dissipate, because I think people are really starting to recognize that we don't have the robo-taxis. We were dependent on robo-taxis and robots, and we're still not really seeing it come to fruition. And I don't want that to take away from any of the achievements at SpaceX. It's an incredible company, what they've been able to achieve. But I do think that there is a rubber meeting the road that has to happen for these valuations to be supported, because right now it's not the numbers.

35:18Tim Seymour:Let's bring in Mike Oh now to get the options action on Tesla. So, Mike, what are you seeing? Yeah, so it was the second busiest by contract volume after NVIDIA trading about 2.6 million shares. And the options market right now is implying a move of about 7 percent, higher or lower by the end of next week after they report earnings. Calls and puts were about 50-50. So that's slightly more bearish than usual. And that continues the shift in sentiment, which I think Carter was talking to in the technicals that we've been seeing over the past month. Overall options volumes, big as they are, have been trending lower.

35:51And sentiment has been getting less sanguine. So in fact, on balance, options traders actually got net shorter by the equivalent of about$550 million worth of stock today. And one of the trades that we saw trading most actively was the September 400, 300 put spread. That one's now in the money that traded probably about 6 ,000 times around 35 bucks per spread. And I also think that on a fundamental basis, you know, most of their sales just on the car side came from threes and whys, and they didn't have any real competition from that in that segment. And now the Rivian R2 is coming online, and that could be a potential competitor.

36:25Tim Seymour:Right. Are you seeing increasingly bearish options activity also in SpaceX? I mean, SpaceX sentiment certainly has also shifted a little bit more negative. You know, and actually this is true across tech. I think it would be fair to say that as I'm looking at the market overall, if you're looking at technology, sort of higher multiple, high beta and long duration equity, this shift has been lower volumes and increasingly bearish. All right. Mike, thanks. Have a great weekend. Mike Coe. Coming up, the market's next big test, how a top portfolio strategist is navigating the key earnings week ahead and the biggest opportunities he's finding amid the volatility.

37:03Tim Seymour:More Fast Money right after this.

37:10Tim Seymour:Welcome back to Fast Money. Earnings season kicks into high gear next week with several big tech names set to report. For more on what the results could mean for the market and all the recent volatility, we are joined by J.P. Coviello, head of portfolio strategy at CitiWealth. J.P., great to have you with us. Thanks for having me. Great to be here. It seems like there is a lot on the line in terms of proving out the AI CapEx spend theory. Are you concerned at all about the narrative? I would say there's been a ton of hand-wringing about this narrative for really the past nine months, honestly.

37:40Every single quarter, we get the same hand-wringing. Is CapEx going to be revised higher? Is the rate of change going to tip over? For us, we're recalling Q1 earnings, for starters, right? 27 % earnings growth, the highest in two decades outside of a post-recession recovery. And now looking at this earnings season, we have 23 % expected earnings growth. For us, we're very optimistic here. We're informing clients, bring your cash off the sidelines into this pullback because the underlying fundamentals remain quite robust.

38:13Tim Seymour:Is there a lot of cash? I mean, we hear this all the time, cash on the sidelines. Is there cash on the sidelines that's like literally in cash that can be deployed? Literally in treasury bills, yes. I mean, when we look across client bases, we do see a lot of cash on the sidelines. As you know, we deal with high net worth individuals. They tend to carry a lot of cash. So for us, it's reminding them we are in a high inflation environment that does erode your real return. Let's think about putting some money to work as we come off the highs here and we see some volatility. Let's take advantage of that, right?

38:44So let me just ask you again about the earnings a little different way. Okay. Do you think, so the EPS might be up 23, 25%, which would be great. But how much focus do you think will be on the free cash flow? Absolutely. We'll be focused there too, right? As one of your prior guests mentioned, that's going to be a core focus for us. For us, the hyperscalers have room here, right? They have room to put money to work still, right? Their leverage ratios are not anywhere near where they could be from a negative perspective. So we see them as having ample room, actually, to keep putting money to work.

39:18They may even tap the debt markets in the future, right? That's a possibility. They have room to do that. We view this as opportunistic for them, right? So we're super focused on it, but we see them as in a great position still. JP, talk to me about themes. So you've located cybersecurity, which forever seemed like it should have been the thing that runs the first, and it took so long to get its sea legs. What do you think about it now, And do you see this being a longer in the tooth trade? Great question. We started looking at it a couple of months ago. Obviously, the software valuation compression to start the year as AI really came into the fore was an issue for the software as a whole.

39:59When we started digging into the agentic AI capabilities, we realized you need much greater observability. Right. When you have agents working alongside humans, you need password authentication. You need broader authentication. You need border control of what agents are able to access with respect to IP within a company. So for us, we see it as the most durable area of enterprise spend that's likely to continue for the next five to 10 years. It's already doubled over the past 15 as a percentage of enterprise spend. For us, we're very optimistic here for the bigger platforms. For us, that seems to be the area of focus.

40:35Tim Seymour:What is the primary inflation hedge in your portfolio? Leo? For us, great question, especially in a high inflation environment, as I mentioned. For us, it's global upstream natural resources. For us, it's the regime we're in. We start with where are we, right? As macro investors and fundamental investors, where are we? We're in an overheating regime. High growth, high inflation, right? Chairman Warsh spoke about the inflation problem a couple of weeks back. And for us, what has worked historically extremely well in a high growth, high inflation environment, that's the upstream natural resources portion.

41:07Now, you get exposure to the CapEx supply chain, right? You have some exposure to copper. You have some exposure to energy. You also have some exposure to agriculture. So for us, it's a real broad commodity piece within a bigger portfolio that can help diversify you and help in that higher inflation environment.

41:25Tim Seymour:JP, good to see you. Thanks for coming by. Thanks so much for having me. JP Coviello of Citi. Tim, I bet you like the commodity portion of the portfolio. I do like what JP's out there pitching. I think in a world where we have a more hawkish Fed, be careful, because I think you're going to get a stronger dollar. You're going to have commodities have some some some pressure. But I I love copper here. And I also think there's a dynamic with where there's a build out across power grids. There's a dynamic that's really bottom up fundamental. And I think, you know, I think there's a place to own commodities.

41:57One I would say is the problem with commodities. I'm not sure you want to have a 20 percent position to materials and commodities. So materials, at least as a sector and energy, this is where you have to be careful. I think it makes a ton of sense. It's more adding emphasis around the edges, but I'm not sure how overweight you can be. Julie? Yeah, I agree. I think commodities make a lot of sense from a diversification standpoint. And I think the biggest struggle we all have as investors is recognizing how interdependent and how tied to the AI narrative we all are. So any places where you can get a little bit of breathing room away from it, particularly in an inflationary environment, makes sense to me.

42:36You know, I think it's really important to recognize when we're talking about the 28 percent growth that we had in the first quarter, that something like 12 percent of it was Alphabet, Amazon and NVIDIA marking up their portfolios for, you know, their equity stakes in Anthropic and OpenAI. So, yes, it was good growth, but it wasn't exceptional.

42:56Tim Seymour:So coming up, could we be in for an end to earnings season as we know it? The SEC moving ahead with a controversial plan to ditch quarterly reporting requirements, the fierce scrutiny facing the move and what it could mean for investors next.

43:16Tim Seymour:Welcome back to Fast Money. The SEC facing intense pushback over a plan to scrap mandatory quarterly earnings reports in favor of twice yearly disclosures. According to The Wall Street Journal, the agency received over 200 ,000 public comments on the measure, with many warning the change would leave investors with less information. The proposal is still expected to advance, with proponents arguing it would ease the regulatory burden on public companies. Among the comments sent in, one from Wall Street Bets, of course, the forum for individual investors saying that, you know, professional investors have so much information.

43:48Tim Seymour:They have channel checks. They have their expert networks. They pay for research. They have satellite imagery. all these different things that give them a picture of how a company is doing. And all we have, they say, are quarterly reports. I think they should absolutely stick to quarterly reports for many reasons. I think that I can't imagine that J.P. Morgan is run where we don't know where we are in the quarter. Like if we just, you know, if it were for every six months that they just wouldn't do it. I think that that I think most significantly large businesses are already very much in position to do that.

44:22I think that investors need to see it. I think accountability is good. I would be maybe open to the idea of, all right, maybe you can do something a little more skeletal than the whole big quarterly call and all of that. Just have an income statement, a balance sheet and cash flow. And I think that would sort of suffice. I did see one also considering every four months, but I think every six is just way too long. And I think it would hurt companies more than help them, especially for smaller companies. Smaller companies, it's going to be more helpful for. Disagree. The expenses. I'm just talking about just the sheer expense of putting up the quarterly reports, I think, is the difference between being in the red or being pushed.

45:07Tim Seymour:I think they would be penalized by investors. We don't know what we've got. You could still file on 8K. We're not going to pay. So you could still file on 8K if you have anything that really is market moving. You file on 8K. You have a couple of days to file an 8K. It's just the 10K that you're not filing. Well, the 10K you have to file every year. The 10K is only a yearly filing. The Q is the quarterly filing. But that's a dense file. But the expense, I think JP Morgan's can afford it. The mega cap stocks can afford it. I think it's the ones that are the smaller cap names that you really have to check with.

45:36Those are the ones that have the...

45:38Tim Seymour:I think investors will penalize in terms of valuation on the companies that do not report quarterly. I think people put it, whatever information they have, they're going to figure it out. Whether they have it once a year, twice a year, four times a year, they'll figure it out. Up next, final trades.

45:56Tim Seymour:Fun story for Friday. Sotheby's just announcing results of its auction of Jensen Huang's leather jacket expected to sell for$40 ,000 to$60 ,000. It ended up fetching$960 ,000. That's about 4 ,800 shares of NVIDIA. Time for the final trade. Let's go around the horn. Julie Beal. I like Donaldson for some AI diversification, DCI. Timbo. They are not selling that leather at Walmart, but you should buy Walmart. This is a pullback, and I think it's to be bought. Karen. Yes. Bought back those JP Morgan calls. I was short at literally just about exactly the same price. It was big enough. Steve. Karen, enjoy that jacket.

46:36I hope you wear it well. Palo Alto.

46:39Tim Seymour:Thanks for watching. Fast Mad Money starts right now. All opinions expressed by the Fast Money participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of an opinion. Such opinions are based upon information the Fast Money participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

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