Closing Bell - Closing Bell Overtime: Earnings Bonanza As Stocks Rebound; Rivian & Reddit CEOs 8/6/24

Episode Date: August 6, 2024

Stocks rebounded slightly from Monday’s slide. Earnings from Amgen, AirBnb, Wynn, Super Micro, Instacart and Lumen. Robins CEO RJ Scaringe talks the latest quarter, production plans and more. Plus, Reddit CEO Steve Huffman in an exclusive interview on the company’s data licensing plans and growing revenue.

That bell marks the end of regulation. Ober Capital ringing the closing bell at the New York Stock Exchange. Third Coast Bank shares doing the honors at the NASDAQ. Stocks rebounding after Monday's market meltdown, but gains fading in the last hour until minutes. In 10 minutes still, every sector did close higher, led by real estate on the S&P. That's the scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I'm John Ford, back with Morgan Brennan. It's good to have you back. Well, we have a major hour of earnings on the way, including results from Supermicro, Reddit, Airbnb, Instacart,

Rivian, and many more. Plus, we'll talk to the CEO of Reddit and the CEO of Rivian before their calls with Wall Street analysts. But as we wait for those earnings, let's bring in Vital Knowledge founder Adam Chrisofulli. Talk about these markets. Adam, that's not exactly great if you're bullish to see the S&P close up just a percent after the stronger rally during the day. What do you make of it? Yeah, so, you know, I think what happened over the last several days, it certainly inflicted a lot of psychological damage. And so finding a base off of what happened, you know, it's going to be a process. It's going to take some time. You know, markets are going to want to see stability over the course of several days going forward, not just a single sharp V-shaped rally. You know, if anything, it's probably a little healthier if we have a series of more modest gains rather than a giant V-shaped move on a single session.

So it's more of a process than I think a discrete session. And we're gonna have to kind of sift through some more earnings, get some more economic data, hear from some more Fed officials, just get a better sense of where the macro landscape lies right now. Which matters more-

And you know, in the last 12 hours, sorry, go ahead. Which matters more right now, the earnings, the micro that we're getting, perhaps a consumer read from or the macro data? I think it's a little mixture of both. I think we've had some earnings reports out in the last 12 hours that were somewhat encouraging. So Caterpillar, CSX, Yum Brands, Uber, you know, some of these major companies with big footprints in the economy. You know, some of them are acknowledging headwinds. The biggest theme from this earnings season has been companies cutting costs to offset revenue headwinds to drive margins and earnings.

So there definitely has been a slong and cooling in the economy, but corporate America is evolving in response to it, and they're generating reasonably healthy earnings. You know, the jobs report on Friday certainly, I think, reflects a downturn in employment momentum. We'll have to watch the weekly claims closely. But the economy is not collapsing by any means. The services ISM yesterday was healthy. The Atlanta Fed today updated its GDP forecast nearly 3 percent. So I think the economy is on a reasonably sound footing. And the rate cutting process is going to start in about a month or so. Probably not 50 basis points just based on everything we're seeing, but 25 basis points and more to come in the coming quarter. So, you know, reasonably supportive backdrop,

I think, for equities. Okay. This is certainly a dynamic that we're seeing now come to fruition in the marketplace that you've been calling for for a number of months. We've got our first earnings report out, Amgen. Angelica Peebles has those numbers. Angelica. Hey, Morgan. We're seeing a mixed quarter here from Amgen. Their EPS coming a little light. It's 497 adjusted versus the 501 that analysts were expecting. But they did beat on revenue, and they are raising their full-year adjusted EPS guidance by about $0.10.

So they're now seeing a range of $9.10 to $9.20 a share. And the average estimate is $19.50. When you look at the different drugs here, we're seeing some weakness in their anti-inflammatory drugs like Otezla, but we are seeing some strength in cancer drugs. So we're going to hear more about that. They are noting that operating expenses are up, which is why you're seeing that weakness in adjusted EPS. But the big thing that we're really watching for is any updates on their obesity program. Remember last quarter, they said that they are moving their experimental drug Maritide into phase three trials, and that sent the stock up quite a bit. So we're still waiting to see the actual results,

and we're going to listen to that call later today to see what else we can find out. Morgan. All right. Angelica Peebles, thank you. Well, Lumen Technologies earnings are out. It was a mixed quarter for the fiber and telecom company, reporting an adjusted loss of 13 cents per share. That's a verse estimates of a six cent loss revenue coming in at three point two seven billion. That was better than expectations.

EBITDA a billion dollars basically in line full year EBITDA outlook of three point nine to7 billion. That was better than expectations. EBITDA, $1 billion, basically in line. Full-year EBITDA outlook of $3.9 to $4 billion. That was trimmed slightly from the company's previous outlook that was given back in April. Now, while the company lost 92,000 subscribers in the other broadband business, that was worse than expected, it net added 40,000 fiber broadband subscribers. Fiber is what's in focus for Lumen after it disclosed yesterday a $5 billion in new business related to AI connectivity and said in its filing that active discussions with customers to secure another possible $7 billion in sales was also afoot. It also recently inked a partnership last month with Microsoft. So all of this as AI data

centers require not just more power, but more networking infrastructure, more fiber for more connectivity. You can see right now shares of Lumen are falling. They're down about 6 percent right now in after hours. But after we got that filing yesterday, Lumen shares surged 93 percent in regular trading today are now up. The stock's gone parabolic. They're now up 385% over the past month. So tomorrow we will speak in a first on CNBC interview with the CEO of Lumen, Kate Johnson. That's going to be right here on Overtime. All right.

Not surging right now in Overtime. Airbnb, it is down more than 12%. Deidre Bosa has the numbers. Dee. Yeah, they're certainly not surging. They're slipping. They've been slipping since those numbers came out a few moments ago. Let me first're certainly not surging. They're slipping. They've been slipping since those numbers came out a few moments ago. Let me first get to the reason why. It is a weak revenue

outlook. The company says that it sees third quarter revenue between $3.67, $3.73 billion. The street was looking for at least $3.84 billion. I did have a chance to chat with the CFO, Ellie Mertz. She said that the single biggest driver of that weaker than expected outlook is what they're seeing in lead times. They are shrinking, meaning that people are not booking as much in advance as they used to. And she said that that's true in the U.S. and it's true around the globe. And I will just note that this is yet another hospitality company giving weak guidance and suggesting consumer uncertainty. Let me now give you those top line numbers. An EPS miss, 86 cents versus 92 cents expected. Revenue roughly in line, 2.75 billion, 2.74 billion was expected

despite that EPS line. Adjusted EBITDA is beating. They got over a billion dollars in free cash flow. So the quarter that just passed looks okay, but the quarter going forward is introducing some uncertainty. Back to you guys. All right. We've got those shares down 12%. Dear Jabosa, thank you. Reddit earnings are out as well. And Julia Boorstin has those numbers for us. Julia. Morgan, Reddit beating on the top and bottom line, reporting revenues of $281 million. That's ahead of the $254 million that analysts expected. The company also reporting a smaller loss than anticipated, losing six cents per share versus the 33 cent loss per share analysts were forecasting. The company's third quarter revenue guidance is also a beat. Reddit guiding to a range of between

290 million and 310 million for the third quarter. This is versus a consensus estimate of 279 million. The company also guiding to adjusted EBITDA in the third quarter in This is versus a consensus estimate of $279 million. The company also guiding to adjusted EBITDA in the third quarter in a $40 million to $60 million range. It was unclear how that compares exactly with estimates. Reddit's daily active users, a bigger than expected $91.2 million ahead of the $84.5 million that fact set estimates with the most unexpected growth coming in from overseas. The company's average revenue per user, $3.08. That was $0.06 ahead of estimates. And that strength coming from the U.S.

There, the ARPU is a big beat. Internationally, ARPU actually fell short of estimates. Morgan, back over to you. These shares are up pretty much flat right now. All right. Julia, thank you. Don't miss the interview with Reddit's CEO. That's going to be ahead of the earnings call, and it's coming up a little bit later right here in overtime.

Now we've also got some results from Wynn Resorts down a bit in overtime. Steve Kovac has the numbers. Steve? Yeah, John, that's because we have a miss here on the top and bottom lines. Let me give you the numbers. EPS was $1.12 adjusted. Street wanted $1.14. Revenues also a miss, just barely, though, $1.73 billion versus $1.75 billion. Also a miss on EBITDA. Street wanted $576 million. They printed here $572 million. Macau also missing revenue expectations, but Vegas was a beat. We see shares down 2.5, guys.

All right. Thank you, Steve. Rivian earnings are out. Phil LeBeau has those numbers. Phil. Morgan, this is a beat on the top and the bottom line. A smaller than expected loss in the second quarter for Rivian, reporting a loss of $1.13 a share. The street was expecting a loss of $1.21. Revenue slightly better than expected at $1.16 billion. And then you look at the metrics within the second quarter, an adjusted EBITDA loss of $860 million, roughly what they did in the second quarter of last year. Free cash flow, negative for the quarter at $1.03 billion, an improvement compared to the second quarter of last year. Gross profit, negative $451 million, just a little bit worse than the second quarter of last year. Loss per vehicle, $32,000, $32,705 in terms of how much they lost for every vehicle they made.

They end the quarter with just over $9.1 billion in liquidity, but they are affirming their 2024 production guidance of 57,000 vehicles and their EBITDA loss guidance, adjusted EBITDA loss guidance of $2.7 billion. Again, Rivian, once again, a smaller than expected loss of $1.13 compared to $1.21 is what the street was expecting. Guys, back to you. Okay, Phil, thanks. That stock is down between 4% and 5% at the moment. And Rivian's CEO is going to join us to break down these results in just a few minutes. And in the meantime, TripAdvisor earnings are out. Looks like it's down 8%. Seema Modi, what's going on? Well, John, earnings beat by two cents,

but revenue came in below expectations. At $497 million, Wall Street was looking for 505. We did see growth in Viator. That's the company's tours and experiences business of 13%, but its brand TripAdvisor was down 10%. Back in May, I may remind you that TripAdvisor did rule out the prospect of a merger after putting together a strategic group to look into alternatives. There was rumors of Apollo Group showing interest, but that didn't really come to fruition here. Shares of TripAdvisor down, as you said, in overtime. And it does follow a series of disappointing results and revised outlooks from the likes of Marriott,

Pebble Brook Host, and others. Morgan. Yeah, Airbnb as well. Seema Modi, thank you. Instacart earnings are out. We just keep going here. Deirdre Bosa has those numbers for us now. We keep going.

This is a happy story for longs at least. Shares are up more than 7%. It's a beat on the top and bottom lines. EPS coming in at 20 cents a share versus 13 expected. Revenue coming in at 823 million. 807 million was expected. And here's the thing that really matters. The outlook.

This is looking good again for the long C's. Third quarter, GTV, that's gross transactional volume, between $8.1 billion and $8.25 billion. The street was looking for $8.11 billion. And they expect the composition of this growth to be driven by more orders growth than AOV growth. And also they see third quarter adjusted EBITDA of $2. 215 million versus 205 estimated. So these shares are surging the after hours up nearly seven and a half percent. Back to you guys. All right. Deirdre Bosa, thank you. Delivery names. They're doing well. I mean, this follows DoorJash last week. Adam Crisafulli, we just went through a plethora of names. So

pick where you want to start and then we'll run through from there. But to me, one of the things that was particularly interesting is some of the weakness we're seeing here in travel, which up until recently was hanging in there where the consumer was concerned. Yeah, absolutely. And that's consistent. You know, the airlines were the first to really kind of acknowledge a change in the U.S. travel environment. And then the hotel companies started to also echo that sentiment. And now, you know, it's showing up in firms like Booking and Airbnb. So it's hard to say what is a genuine slowdown what's more of a normalization remember this industry had a huge rebound coming out of covid that lasted for many years so this just could be an issue of it

normalizing and facing more difficult comparisons um but certainly that that's been one of the big takeaways from this earnings season is the slowdown in travel. And that's going to translate from a macro perspective into hiring because the leisure sector has been, had been a huge, a huge source of job creation going forward. And so that industry now begins to dial back on headcount expansion that will have macro implications as well. Yeah. I want to get your thoughts on what we're seeing from some of these EV makers, because you had Lucid yesterday. You just had Rivian today. I mean, these are not names that are profitable. And I realize Rivian's under a little bit of pressure here right now. They're not profitable. They are getting these cash injections. They're striking these partnerships. And they are continuing to

move forward with their production plans. What does that signal about that landscape? Yeah, I mean, that industry is really tough right now, as we saw even going back to Tesla and also the big U.S. OEMs like GM and Ford. The EV market continues to struggle. These individual names, the Rivians and Lucids, you know, it's a very, very difficult industry, but they're moving forward. You know, they're increasing production. They're finding new sources of capital. No, but again, it's a hard market right now for the EV sector. And it's unclear if that's really going to change in the near term. Adam, anything in these numbers add wood to the fire on thinking that maybe yesterday was an overreaction in the markets or no? Yeah, I mean, I think in general,

it looks like a lot of these companies, you know, save for the travel setbacks, Airbnbs, you know, I'll be interested in looking at Supermicro as well. That's going to be a critical name for tech and AI. You know, but I think in general, the economy definitely is downshifting in its momentum from where it was earlier in the

year. But, you know, it's hardly collapsing. And corporate America is still able to generate relatively reasonable earnings. You know, we're now on the cusp of the July end quarter company. So next week we'll hear from Home Depot, Cisco, Walmart. So we're going to get a different type of corporate update on how the environment is right now. You know, but the calendar Q2 season, I think, was in aggregate OK. Like I said, companies are outperforming on margins and earnings,

but there definitely has been some revenue headwinds. All right. Adam Crisafulli, thanks for kicking off the hour with us. Good to have you. With all the major averages finishing higher by more than a percent today, the S&P finishing right around 5240. It looks like every sector in the green. Now let's bring in CNBC senior markets commentator Mike Santoli. He's back.

He's back in the action with us. He is taking a look at this market comeback. Mike. Yeah, Morgan, thanks for holding things together for me while I was away there. Take a look at the S&P 500. What's gone on just recently? You know, this is a chart that goes back to the middle of last year, which I wanted to show because it kind of shows

you the course of the correction that we started July 31st of last year. It was a much more gentle rolling multistage pullback, really not a lot of panicky, quick vertical moves lower, whereas here we have had a little more of concentrated, urgent selling, little mechanically driven stuff from the highs in mid-July. But we did go down and just go below that 200-day average last year before recovering in October. It also took about two and a half months from high to low. Here we have, again, much more deep and a short-term kind of panicky move. We also go back in time. We go down in price. I always say that. And we're back to the end of the first quarter levels for 5250. We had a little pullback off of that. So it's not as if we've really kind of cut into muscle here with the S&P 500. But it is

worth keeping in mind that we do have a reset of aggressive positioning and valuation and sentiment underway. Take a look at the equal weight. It's interesting. You can make the case a lot of charts look like this, a lot of individual charts look like this, currency charts, where maybe it's just kind of, hey, we took a trip to the bottom of this long developing trading range. It's been in place multiple months. Doesn't really seem like a trend change for now. So that seems like not really something to get too concerned about. And finally, valuation, NASDAQ 100. This is a decent proxy for the larger MAG7 universe. Absolute forward PEs down to about 24. You see, that's where we bottomed in April, too. You did get much lower than that during the

bear market as well as last October. But it seems like it's coming off the boil. This is the pandemic range. Unlikely, we're going to spend a lot of time up in that range around 30 times forward earnings. But you see on a relative basis, pretty much at the five-year lows of the NASDAQ 100 relative to the S&P 500. So none of this means, hey, buy with both hands. But it says progress is being made if the economy holds together in terms of resetting stock prices for maybe not as exuberant an environment. All right. I mean, look at these charts. And the takeaway here is that at least based on what we know right now, this looks like garden variety correction. Yes, largely so. I would say certainly in magnitude it is in terms of the speed, in terms of yesterday when you had panicky people forced to buy, you know, index protection on the downside at a 60 VIX, you know, implied volatility.

That's not normal. But where it's taken us in terms of equities is not unusual. The majority of years, 60 percent of years, have a 10 percent pullback. Of course, the problem is every really nasty downturn begins with what looks like garden variety routine stuff. So that's what makes the game tricky. All right, Mike, we'll see you again in just a bit. For now, let's get back to Angelica Peebles for some more on Amgen's earnings. Angelica. Hey, John, wanted to clarify some of those Amgen numbers we brought you earlier. The company is expecting full year adjusted EPS in the range of $19.10 a share to $20.10 a share. Now, analysts are expecting $19.50 a share,

and we're going to tune into that call in just a few minutes here. John. All right. We'll take more when you got it. Angelica, thanks. Now, we're just getting started in this busy hour of overtime. After the break, the CEO of Rivian is going to join us for his first comments on results before he talks to analysts on the earnings call. And later, an exclusive interview with the CEO of Reddit ahead of his analyst call at the top of the hour. We've got a packed overtime. Stay with us. Well, let's get a check on Rivian. Those shares are falling despite beating revenue estimates and posting a smaller than expected loss in the second quarter results. That's about 4.5% right now. Joining us now is Rivian CEO, RJ Scaringe, along with our own Phil LeBeau.

Phil. Thank you, Morgan. RJ, let's start off with the second quarter. Smaller than expected loss. What are you noticing right now in terms of demand for your EVs in the market? Yeah, as you saw for second quarter, our production was down. We made some changes to our production line to update the vehicle for our Gen 2 vehicles. But sales really exceeded what we produced because we continue to sell through our gen 1 inventory and we see a lot of excitement for

the products we're really pleased even just last week we saw jd power list us as the number one brand in their annual appeal study so we're continuing to see excitement around the product and and certainly working to get more of those Generation 2 vehicles into customers' hands. RJ, you end the quarter with just over $9 billion in liquidity. That includes a billion from Volkswagen with the deal you made in the quarter. And you've got another $4 billion on the way. Is that enough to get you through to R2 production in 2026? We talked about this in the past. For us, the launch of R2 is really critical.

It gives us a product that really allows us to access a customer that's much more price sensitive to get us into that sub $50,000 price point. And the financing we have in place not only takes us through the launch of R2, but also takes us through positive cash flow. It's great to have you on. I have an entire packet here of analyst notes, analyst questions, lots of them. Wall Street wants to know more about this VW partnership, what this looks like, why it's important, why it's happening now, the details around it, and how it's going to change the competitive landscape for Rivian. This is something that we've certainly been at work at for a while, and it really demonstrates the strength of the platform that we built, the electronic stack, the associated network architecture, and of course the software that's running on it.

And we're really excited about the opportunity to take that platform between our electronics and our software and apply them on a global basis to a lot more products and to have that help drive the transition towards electric vehicles. RJ, what do you see as the impact of perhaps a slowing consumer? Is your customer so high end and your market share in the position where you don't think it has an effect on you or does it perhaps make the availability of more affordable options more important? Yeah, I think it's hard to predict exactly what happens you know from a macro point of view uh certainly we're watching it very closely but as it pertains to our flagship product the r1 uh it is it continues to be one of the best-selling vehicles over seventy thousand

dollars uh we we see that uh continue to be the case and the excitement around the product and what it offers remain. But very importantly for us, as I said before, is R2. And R2 really represents an opportunity for a step change in volume as we introduce something that has a price point starting at $45,000. And that segment really has very little choice. There's a lack of products for customers to choose from that are thinking about electrification. And we believe there's a lot of latent demand, demand that's sitting on the sideline that's continuing to buy internal combustion or hybrid

vehicles because there's just not a choice that fits their brand needs or their vehicle package needs. RJ, one last question. You lost $32,705 per vehicle that you delivered in the second quarter, and yet you guys are still forecasting a modest positive gross profit during the fourth quarter. How do you get there? Well, the move from our first generation to our second generation vehicle had a bunch of consumer-facing benefits benefits the vehicle is fundamentally better than what we produced with gen 1 but importantly we've talked about this now for a while importantly it drove significant cost improvements into the vehicle both because of changes in the way the vehicle is built but also in the way that we've set up our bill of materials how we've negotiated with. And what we see for the Q2 numbers doesn't have

any of these updated vehicles in them. And it also has the challenge of for roughly a third of the quarter, one month of the quarter, our plant, our production was down. So we had an inefficient quarter as we made these significant changes to the vehicle, took down our manufacturing line, made big improvements in efficiency. And so we're going to start to see cleaner performance in terms of the new BOM's building material structure and, of course, the new operating structure where the plant's now running at a 30 percent, has a 30 percent higher line rate than what we had previous to the shutdown. All right. RJ Stern, CEO of Rivian and our own Phil LeBeau. Thank you. Now, super micro earnings, the AI hardware maker out.

Stocks higher, but off the high. Seema Modi has the numbers. Seema. John, a 10-for-1 stock split is allowing investors to overlook a big quarterly miss on earnings of $6.25 adjusted. The street was looking for $8.07. The outlook, though, for its first quarter revenue was better than what Wall Street had forecasted, and its full year outlook much better, very strong for the full year. CEO Charles Liang says Supermicro continues to experience record demand for AI

infrastructure, propelling its 2024 revenue up 110% year over year. Supermicro is a supplier to NVIDIA. It takes NVIDIA's chips and packages them into AI servers, which are then sold to the hyperscalers. The conference call is at 5 p.m. Eastern, and investors will be looking for any indication as to whether NVIDIA's Blackwell chip is delayed, given recent reports. And I would point out NVIDIA shares are also higher in overtime by around 4% on this report, guys. Yeah. Seema, thank you. Got our eye on both of those. And we've got much more ahead on all of today's After Hours action. Coming up, we're going to talk about Instacart and Airbnb's results and the read-through for consumer spending. Plus, the CEO of Reddit will join us to break down his quarter before he faces Wall Street analysts on the earnings call. Stay with us.

Welcome back. Airbnb shares are sinking after issuing a late revenue guide and missing on the bottom line. Instacart is jumping after beating on revenues and revenue and earnings. But joining us now is Needham senior analyst Bernie McTernan. Bernie, I got to start with Airbnb. It's such a big move. It's down something like 12 percent right now. The week guide, especially given the fact that we have Olympics, we have summer travel. What do you make of it? Yeah, well, I think whether this is the peak travel thesis that investors have been bracing for for two years now, but I think that that's what you're seeing in that, you know, Airbnb, whether it's booking, was talking about the same kind of thing last week, the airlines talking about before. So it's just, you know, weakness in the top line. This is why there's such a focus

for Airbnb to move beyond the core, whether it be sponsored listings or trying something like an AI OTA as an ability to try to go from a high single digit, low double digit grower back to Uber report this morning. It seems like they're going to be able to grow 20% constant currency for some time now. So it's really the difference between what we see from an Uber, a DoorDash or even Instacart reporting this afternoon after the close, this convenience economy that's increasingly taking consumer wallet share relative to travel, which seems like they were and maybe were on the other side of that. It's interesting because we saw this differentiation between consumer spending, between goods and services. And now as consumers seem to be tightening their belts further, it is digging down deeper onto the services side. They're willing to spend on things like Uber. They're willing to spend on things.

It would seem like Instacart and DoorDash. But to your point, not so much on travel anymore. How does that speak to, I guess, the spending flows and where the dollars are going and why? Yeah, well, why? I mean, I remember a quote from an analyst he used to work with that's just never, never, you know, think differently than the inherent laziness of the American consumer. And that used to be, you know, sitting on your couch and watching hours and hours of television every day. And I think that's what you're seeing now, where it's that, you know, people, you know, not wanting to cook, order out. It's just so much better or an easier, you know, an easier consumer proposition. So I think that's still what people are are willing to spend on here. And, you know, the ability for let's talk about Uber or DoorDash to continue to grow from here.

I mean, right now it's really dominated by power users. And I think it's that, you know, 30 percent of the users driving 70% of the bookings for these types of platforms, but the ability to convert a monthly user to a weekly user, a weekly user into a daily user. It's just, and then all the while eking out pennies per trip or per delivery. It's just these, these businesses just executing really strongly. Quickly, if you can, what does it mean that consumers, Airbnb consumers, are waiting later to actually make the booking? Yeah, well, no, it's demand, right? And so, you know, there used to be a rush where you had to book, you know, six months out, nine months out because there was a limited supply.

That's something that Airbnb has been very focused on in terms of growing their supply. Last year, even supply grew ahead of bookings. And so this is the other side of it where that you need that demand to continue to grow for grow with it. And I think we're seeing signs that we haven't seen signs that that supply just continues to outstrip demand. OK, Bernie McTernan from Needham. Thank you. Time now for a CNBC News update with Kate Rooney. Kate. Hey there, John. A Pakistani man with alleged ties to Iran has been charged in connection to a foiled assassination plot. Prosecutors in Brooklyn announced the charges today against Asif Merchant, reports that the FBI believes Donald Trump and other current and former U.S. government officials were intended targets.

And just one day after the longtime prime minister resigned and fled the country, Bangladesh's Nobel laureate, Muhammad Yunus, has been chosen to head the country's government until new elections can be held. Known as the banker to the poorest of the poor, he won the Nobel Prize back in 2006 for pioneering the use of microcredit to help the poor. And the Red Cross is facing an emergency blood shortage after the national supply fell more than 25 percent since the beginning of July. The Red Cross says extreme heat is the major culprit, impacting almost 100 blood drives just last month. The organization says all blood types are in short supply, but there is an urgent need for type O blood type.

Guys, back over to you. All right. Thank you. And when we come back, Reddit CEO Steve Huffman joins us exclusively before his earnings call at the top of the hour to break down Reddit's quarter. Be right back. Welcome back to Overtime. Reddit shares are under pressure right now in overtime, despite beating Wall Street estimates on the top and bottom lines and on daily active users. Joining us now in an exclusive interview is Reddit co-founder and CEO Steve Huffman with our Julia Borsten. Julia.

Thanks, John. And thanks, Steve, so much for joining us. We really appreciate it. You know, the stock is down right now nearly 5 percent in after hours trading, despite beating on pretty much every single metric. It seems like the stock's under pressure because despite your fast growth, both in terms of revenue and in terms of users, average revenue per user grew just 2 percent. And in the U.S., average revenue per user actually declined by 5%. How do you address the concerns that that raises about the long-term potential for the company? Hi, Julia. Thanks for having me. Look, I think we had a really strong quarter.

We were up over 50% on users, 50% on revenue, $39 million adjusted EBITDA. So we're getting closer and closer to that gap profitability milestone. Look, long story short, I think we're really proud of the progress we've made growing this business. Our work is working. And I think we're finding that users truly crave what Reddit, the content that we have on Reddit, and increasingly growing our customer base and more and more happy customers. So, you know, I can't always explain the short term, but over the long term, you know, our work is working. Our product is, I think, got a great fit in the market, and we love the way things look going forward. So really digging into those average revenue per user numbers, is there something going on here in the US in terms of the ad market

that you think impacted the quarter? Or is it the fact that you're showing fewer ads or something like that? Help us understand the discrepancy here and the fact that you actually saw a decline in ARPU in the US. The biggest driver there is we're actually just growing users quite significantly in the United States.

It was, I think we grew almost 70% in the US last quarter. And so, you know, average revenue per user, when users grow, that's the bottom half of that formula. So look, I think the top line numbers speak for themselves. Growing users significantly year over year, revenue significantly year over year. And so sometimes, you know, users outpace revenue a little bit and sometimes revenue outpaces users. But we'll take the strong user growth and strong revenue growth, you know, any quarter. Steve, it's John. Thanks for joining us. To what degree are you going to make the higher and more premium pitch to advertisers? And how much is the granularity of data that you have on user interests going to aid that? So we actually believe that Reddit is a fit for customers,

large and small. Every company's customers are on Reddit somewhere because Reddit has communities for whatever you're into, whatever you're thinking about watching, wearing, doing, going, whatever you're going through. And so as a result of the vast coverage of our content, pretty much every company's customers are Reddit users somewhere. And so I think this makes Reddit a natural fit for both the big brand advertisers, but also we can drive performance because Reddit is a place where people make decisions about what they're going to buy or do next. And I think that's a really powerful segment. And then another important point is that 30 to 70 percent of our users aren't on other social media platforms.

And so advertisers can uniquely find their customers on Reddit in a way that they potentially can't anywhere else. That is a fascinating metric. Steve, it's Morgan. It's good to have you on. You've also struck deals to license your content to OpenAI and to Alphabet's Google, and update on those deals, and perhaps just as importantly, do you have more potential deals in the pipeline?

So those deals are very exciting. They're major players in the space, and having those partnerships allows us to collaborate on, I think, interesting and exciting products for the future as the kind of the whole search and AI landscape continues to evolve. It's a brand new market. We're talking to lots of players, I think big and small, but it's really evolving before our eyes. So I think we're off to a great start, but more to come there for sure. So a question related to that is when do you expect those partnerships, such as the deal that you're making with OpenAI to access your data, to effectively educate and train OpenAI's chat

GPT? When do you expect that to meaningfully impact your revenue? And at the same time, you've been battling with Microsoft preventing them from accessing your site. When do you expect to either strike a deal with them or figure out where that relationship goes next? So look, we're recognizing the revenue in our current agreements today and they are now consumers of the Reddit data. So those deals are in play and the product work is ongoing. And as for other players in the ecosystem, look, I think we want to, we like Reddit's content being out there. It's a totally unique corpus. There is no artificial intelligence without actual intelligence.

And Reddit has an incredible supply of content that covers pretty much anything and everything reddit has historically been the most open of the platforms of our kind and we still really are and so we like reddit content being out there but we have terms that are really important to us in this new world to protect user privacy to to protect our content. And so we need to make sure that if our content, if Reddit data is going to be out there, it comes with some constraints. And so those are the sorts of things we ask for.

And so these conversations are ongoing. And, you know, they have their ups and downs. But our preference is for Reddit to be out there and accessible by everybody. Okay. Reddit CEO Steve Huff and accessible by everybody. Okay. Reddit CEO Steve Huffman, thanks for joining us. And our own Julia Borson for bringing that interview to us with shares of Reddit under pressure. Another thing to watch, John, is going to be the expiration of the stock lockup for Reddit, which happens Friday.

Yeah, for sure. And now after the break, Mike Santoli is going to take a look at what the corporate credit markets are signaling about the health of the economy after the massive volatility in stocks the past week. We'll be right back. Welcome back to Overtime. We've got some major drama unfolding between Microsoft and Delta after that cyber outage last month that cost Delta around a half a billion dollars, at least according to its CEO, Ed Bastian. Our Steve Kovach is here with the latest in this back and forth. Steve. Yeah, now Microsoft today is pushing back, John, on Delta's claims that Microsoft and CrowdStrike, of course, should be held liable for that IT outage that caused Delta to cancel flights for several days in a row. Microsoft pushing back on comments Delta CEO Ed Bastian made on our air last week that the outage will cost the airline about $500 million to make up for flights and hotels and so forth. Microsoft's attorney sent a letter to Delta's attorney saying, among other things, Delta declined assistance from

Microsoft to fix its computer systems. Microsoft's CEO also emailed Bastion and received no response and also alleging Delta is using outdated IT systems and the extended outage could be because of other vendors besides Microsoft and CrowdStrike. Not to mention, Microsoft pointed out, well, United and American Airlines, they were able to get up and running days before Delta was able to. They had a similar outage. Now, these are similar arguments that we heard over the weekend from CrowdStrike's lawyers saying in response to Delta's allegations, basically saying the same thing about, hey, you guys didn't decline our help and so forth. And Delta, by the way, to today's news, did not address most of what Microsoft and CrowdStrike have been saying.

Instead, a Delta spokesperson telling us the airline spends billions each year on its IT operations. Guys, this isn't over yet, and it's likely not the last legal threat from CrowdStrike or Microsoft in this outage. But it is the most prominent one. Seems like two arguments here. One, you didn't respond to our offer of assistance after things went wrong. And then two, you were underspending, arguably with us, leading up to this point. Arguably with us or your other vendors that are not us. I think in the letter they mentioned Kindrel and IBM, maybe some others that were mentioned there.

And I also point out, I believe Bastion said something to the effect of when he was asked by our colleagues, have you heard from CrowdStrike? Have you heard from Microsoft? And he kind of said no, which is interesting because they're saying, hey, we reached out and you guys kind of ghosted us and didn't accept our help. Wow. Yeah, so this is going to keep going. Yeah, it's unclear if a lawsuit's going to happen.

This is just lawyers talking back and forth, preserved documents and so forth. But it's a war of words right now. All right. So I am curious, because you just mentioned Kindle, IBM, possibly, how the other vendors would be playing into this. That's what Microsoft mentioned, by the way. Yes. And what that means in terms of the chain of events, I guess the software supply chain

here and the ricochet in terms of liability, because I'd imagine there's going to be insurance claims associated with this and everything else as well. Yeah. And by the way, CrowdStrike, these contracts, it's only a couple million dollars that they're good for. And here you have Delta asking for $500 million. By the way, the other airlines aren't saying anything. We don't hear any kind of stink being raised by them. They were able to fix their systems. We haven't heard any major company really come forward in the way Delta has.

But then again, Delta was the most visible out there. We saw people stranded for days at a time, even miners stranded and all those kind of awful things. The airlines got it the most visibly, but we've heard stories like Tesla had production problems, for example. Other major companies, including her own, were impacted that day. We couldn't even get on air on that Friday. So there's a lot more to come here. There's a lot more to come. We'll be watching. And of course, when we get CrowdStrike earnings, we'll see what comes out of that as well. It's going to be a big one. Steve Kovac, thank you. Well, let's check in on some more earnings movers. Shares of Upstart are up big after revenues topped estimates. The company

also reported a narrower than expected loss per share, strong third quarter revenue guidance. You could see those shares up 12 percent%. Fortinet is also jumping. Earnings and revenue topping estimates. Earnings guidance was well above expectations. Those shares are about 16%. And we're going to get another check here on Lumen. It's now surging. It's up 57%.

That's after a 93% gain in the regular session. Free cash flow guidance. It blew past estimates to $1 to $1.2 billion. That's versus fact set estimates of just $85 million and the company's own prior guidance of $100 to $300 million. Lumen CEO will join us tomorrow on Overtime to break down those results. And, John, I mean, we've talked about power capacity issues and how that plays into the AI infrastructure build out. We've talked about super micro and some of the others on the cooling side. Connectivity, fiber, which is what Lumen plays in and is a real turnaround story here.

This is what's going to be in focus when we have that conversation tomorrow. And given the parabolic move we're seeing in the stock, which in some ways kind of reminds me of super micro. Yeah, it's now down about 9 percent in overtime, which is the opposite of where it started out. But really interesting market with these micro moves and the question, what does it mean that we had so much of a fade into the close for the major averages? Yeah. In the meantime, we did finish higher this Tuesday, up 1% for the S&P. That's going to do it for us here at Overtime. Fast money starts now.