Closing Bell - Closing Bell Overtime: Moment of Truth for Tech 05/25/22

Episode Date: May 25, 2022

Twitter holds its annual shareholder meeting. Alex Kantrowitz from Big Technology and Casey Newton from Platformer highlight the key takeaways. Plus, shares of Nvidia sink in extended trading after reporting weaker-than-expected Q2 guidance. Josh Brown from Ritholtz Wealth Management and Bryn Talkington from Requisite Capital Management react to the numbers. And, Michael Santoli’s “Last Word” is “Saved by the Bond.”

Mike, thank you very much. Welcome to Overtime, everybody. I'm Scott Walkney. You just heard the bells. We're just getting started right here at Post 9. I want to get right to our talk of the tape today. The moment of truth for a once high-flying tech stock, a darling of investors, including my headliner today, Josh Brown. He's been in the stock for years, like all of you, has watched it get cut nearly in half and the big cap beat down. Is it poised for a rebound? And what is really riding on those results for a Nasdaq that's down 30 percent from its highs? We ask him right now. Josh, the CEO of Ritholtz Wealth Management, of course, a member of the Halftime Investment Committee. Welcome back. What's really riding on this? It seems to be a big one, like a referendum on the current state of big cap tech? I think it's an important name. By market cap, it doesn't come anywhere near the FANG stocks, although it did get close at a tie.

But still, four or $500 billion market cap companies matter mathematically to the NASDAQ. But I think you had it right. From a sentiment perspective, this is a company that has beaten earnings in each of the last four quarters. They play this game with Wall Street analysts very well. They're in six or seven very important segments of the market. Obviously, data center filters through to a lot of publicly traded companies. Their comments are as important as Google's, as Amazon's, as it pertains to cloud,

et cetera. So yeah, this is a big one. And it's a big one for me personally, because it's one of my favorite long-term investments that I'm involved with today. That's why I asked you about it. We're so fortunate to have you today. Are you concerned, given what we've gotten from some of these other mega caps? I mean, if I read you this thing, eight stocks, Josh, Amazon, Apple, Microsoft, Meta, Nvidia, Tesla, Netflix and Alphabet are responsible for nearly 60 percent of the year to date loss in the Nasdaq 100. And that was as of yesterday's close. Right. The losses have been big over the last month and year to date now. So how concerned are you given all of that leading into this? Well, the universe finds a way to eventually balance itself because that stat, you could have flipped it on its head a couple of years ago and pointed out how much of the upside was being driven by just these six or seven names. So obviously that was unsustainable. Had that continued,

these companies would now be 80% of the market if the pace of 2018, 19, 2020 continued. So of course that was never going to happen. That being said, NVIDIA is off 44% year to date, like on the year. So I think everyone understands the smartphone market is slowing. I think everyone understands the PC market is not going to be gangbusters. And yes, the big question mark is about gaming, but almost half of this company's business is the data center. And by all accounts, based on everything we've heard from other companies that play in that sandbox, those numbers at least should hold up and should exceed. Is that enough for the overall stock? We'll see.

But when you have a stock that's already lost half its market cap, given the environment, and by the way, that's in line with every other technology stock, I would point out, you have to ask yourself, to what extent are people really betting on some sort of a massive upgrade in guidance? I don't think they're going to get it. NVIDIA already told us over the weekend they're going to slow the pace of hiring. That to me sounds like a little bit of a sandbagging, but we'll see what happens. So I'm going to be a shareholder tomorrow, regardless of what they say tonight. But I do

agree with you. The stakes are pretty high for a lot of different sub-industry groups in the market right now. I'm trying to think about how high the stakes are for the Nasdaq in general, Josh Wright. I mean, it's down 30 percent. It's been unstable. Some say it's going down a good amount more than it's already gone down. This can either stem the tide or give reason for the sellers to start selling again. It's true. If they shock us to the downside, this will be snap times two or times three. So what you said is true, but it's a very big if. I would point out in the time that I've been long this stock, starting from the summer of 2015, so we're really talking about like seven or eight years now. This is a name that you have had to sit through 30 and 40 percent drawdowns on a regular basis, like every 18 months on average. You've had to suffer through a massive bear market in shares of Nvidia.

Sometimes that's taken place in otherwise good markets. And sometimes the stock has just come down with the NASDAQ or with the Dow. So you've had to sit through both company specific drawdowns when people have gotten too optimistic or the company's disappointed. And you've had beta. You've had market risk. So right now, arguably, you have the risk of both. You could have a risk off day for the market. We have roughly two or three a week these days where it might not matter what they have to say. And in fact, we're seeing the worst reaction to positive earnings surprises in the S&P 500 than we've seen any time since 2011. You got companies beating by five, six,

seven cents per share on earnings and selling off 4% the next day. It is not a great environment to make earnings bets. So I would not tell anyone going into this, you've got to get yourself long in the after hours. That is not what's working today for anybody in any sector. Let's not forget either that Snowflake's coming out too and may be one of the true poster stocks for the once insanely highly valued stocks that were out there.

Now it's been cut down to earth. That's down 65%. Oh, from 429 to the 120s. I mean, it was, remember, we used to say 100 times sales or above that when it came public. So yes, it's come back down to earth, but it's going to give you a good indication too about where sentiment is about the stocks that have come down to earth. But it's going to give you a good indication, too, about where sentiment is about the stocks that have come down to earth. Snow is supposed to report 409 million in revenue, which would be an 80 percent year over year revenue growth number. And that might not be enough. I'll give you a little bit of hope on snow. Did you see the follow through in Zoom today?

Yeah, I did. And I'm taking a look at Snow as we have this conversation. Again, those numbers are imminent. You can see the stock trading already lower in the OT. I can promise you our reporters, it is out. Is it out? It is out. We're going through it as we speak. We'll come on and let you know exactly what the deal is. But obviously, the market doesn't like the initial indication. But again, Josh, these are those types of stocks that have gotten absolutely destroyed. Some are willing to do some bottom picking here. Is that a good strategy in a what feels like a still very uncertain and unstable market?

Well, I brought up Zoom for a reason. This is a company that exceeded on customer ads, exceeded on revenue, better than expected earnings, and guided higher. This was a stock that went into the quarter down 85% from its high. They beat, they gave good guidance, and it had follow-through today.

It was up another 8 and a half percent. We haven't seen that in a while out of these growth tech names. So I'm giving you an example of where this maybe could go right for some of these high multiple growth names. If they actually get it together at some point and start to exceed what the estimates were and stop cutting estimates, which is all we've been seeing since January. I'll tell you what, it looks to me from our production team telling me that it's a beat on the top and the bottom line. Our Frank Holland literally going through this as we speak. Let's go to him right now. What do you see here? Because the stock's down 14, 15 percent. Maybe that has

to do with the guy you know better than me at this point. Yeah, Scott, we're looking at the numbers right now, as you mentioned, a beat on the top line. EPS was a 53 cent loss, but it's not comparable to the definitive estimate of a one penny profit on EPS. We're looking through the rest of the numbers, some pretty encouraging numbers right here when we're talking about remaining performance obligations. That's money that a snowflake expects to get in the near future, generally within the next 12 months. That's up 82%, 2.6 million. Net revenue retention rate was 174%. That's money from current customers. Growth right there of 174%. But the rest of the number is not giving us exactly comparable numbers. Some things that the street is obviously looking at, the guidance they are

giving is on product revenue. It appears in Q2 to be slightly below what Street Account says. But again, we're looking at it very closely. We want to make sure we compare these numbers. But we can confirm a beat on the top line, EPS of a 56, excuse me, 53 cent loss, not comparable to the one penny profit that Refinitiv is offering. And as you can see, shares down more than 11 percent right now. OK, you get more. You bounce back on right away. OK, that's Frank Holland for us. Frank Slootman, by the way, the chairman and CEO of Friday, 1130 AM. That's a CNBC exclusive interview

with Mr. Slootman there. So we'll continue to follow that. Let's add someone into the conversation now as well. Bryn Talkington, requisite capital managing partner, a member of the investment committee too. Another holder of NVIDIA shares. You worried? Yeah. Well, I think, you know, Josh, Josh did a lot of things, you know, spot on. I'm not worried about NVIDIA's earnings. I'm worried about what the market makers and what the algos are going to do when the earnings come out. Because as you saw with Target, as you saw with Walmart, as you've seen with so many companies, these companies are getting cut 25 percent after their earnings come out. And I just think that's, you know, it hasn't happened since 87 for our target. And so I think that going into

NVIDIA, if we see any weakness, which I'm sure we will, I mean, China's been shut down. You had auto weakness last quarter. You know, I bought puts on the stock, just protective puts, because I don't trust the market here. I'm a very long-term holder of NVIDIA. You know, their revenues quarter over quarter, last quarter grew 8%, 50 plus percent year over year. NVIDIA has been, I believe, the fifth best performing stock over the last three decades, Scott. But there's a ton of volatility here

and it's still not a cheap stock. So I'll wait and see with everybody else. But I do think the bias, if I was going to bet here, is the market is going to find a way to pick at this name. I did want to go back to something on Zoom really quick, though, that I thought was really interesting is, you know, Zoom now has a multiple. I think that's cheaper than a lot of consumer staples. I think it's cheaper, it has a lower multiple than Clorox versus like a snowflake is not even remotely close to having an E. And so I think as people are digging through the rubble,

there are these companies like Zoom that are actually growing with multiples. And I think that the follow through you've seen the past couple of days is people coming back to that name and saying, hey, you know what? It's not expensive anymore, it's growing and has an E. And so I think you'll continue to see people looking at those growth names with earnings going forward.

Josh, you wanted to say what? I just think this is really important and applicable to what we're seeing with Snowflake after hours and perhaps applicable to what Gwen was saying about NVIDIA, which I agree with. Think about who the buyer is for these stocks outside of the index fund, which from one week to the next, we don't know if SPY and the triple Qs are going to take in money, right? Some weeks the money goes to the bonds. But outside of them, who is getting money and then allocating to 30 times sales companies

like Snowflake? Who is buying NVIDIA that doesn't already own it? Nobody. and then allocating to 30 times sales companies like Snowflake. Who is buying NVIDIA that doesn't already own it? Nobody. The natural buyers of these stocks are seeing redemptions. Tiger Global is not stepping up to the plate. Like the types of funds that historically would jump in if NVIDIA gets nitpicked after the close. They don't have net capital flowing to them.

And that's one of the things that's so frustrating for individual investors. It's so non-intuitive. They look at a company and say, wait, this looks like good news. I don't understand. Why is it down 30%? Because there's no buyer. The liquidity is leaving this part of the market.

It's out of favor. Even the momentum ETFs, they're about to flip out of tech and get into oil when they rebalance. So if there are no buyers, it almost doesn't matter what these companies say in the short term. And you have to hope that in the aftermath, people say, oh, wait a minute. Maybe Zoom got too cheap. Maybe Snowflake's too expensive. Maybe NVIDIA shouldn't have been cut in half. Like you have to let that play out. It's not going to happen with algorithms.

The algorithms aren't sentimental at all. They don't care. Yeah. Bryn, I mean, to your point earlier about not trusting the market, it is in respects a sell first, ask questions later market, a buyer strike, the kind of which Josh was just describing. That's what makes it so unstable in some in some points. It makes it hard for the Nasdaq to bottom until there's more general confidence in the environment to step in and buy an NVIDIA on a big decline or any number of other stocks that may have declined. What is eventually deemed to be too much. Well, right, because also talking about liquidity, you know, looking at the Fed notes today, you know, when I was reviewing them, two of the different Fed members, you know,

we're starting QT in about three, you know, three or four days. And two of the Fed members even talked about, you know, how quantitative tightening can create, to their point, unanticipated effects in the financial markets. And that hasn't even started. And so we've already seen liquidity evaporated from the equity markets before QT. Now what's going to happen over the next few days and the next few months, I still feel like we're in this big experiment with the Fed, as the Fed is not only raising rates, but at the same time, which is unprecedented, starting taking down a $9 trillion balance sheet. And so I think investors need to be very comfortable being uncomfortable because although today was a good day, these high multiple names, although they're growing, NVIDIA's earnings, if they hit them this year, I think will grow around 25%. That being said, the market's saying, I may not want to pay the multiple it is today and wait until QT starts and come back in later.

So I do think this market still is going to set up to be a treacherous market this year. Yeah, speaking of, forgive me for stepping on your toes there, Bryn, to Josh. And lastly, the minutes. What did you make of the Fed minutes? I mean, the market fluctuated a little bit. It seemed to be as expected. Risks for inflation skewed to the upside. 50 basis points appropriate at the next couple of meetings.

So we know what's in store for June and July. Concerns about Treasury market liquidity, the effects on commodities market. What did you make of all of that and the way that the market reacted to it? The reaction didn't seem much. You had a real big rally in bonds that seems to have followed through today. But that started about a week and a half ago. So now you're seeing actually the curve flattening out. The recession calls getting louder.

There is a disease in this market where people think the Fed has any greater knowledge than anyone else about the future course of prices in the economy or employment or they really have no idea. And I can cure you of that disease just for fun. Batnick and I were going through the minutes from the meetings last spring, March, April, May era Fed commentary. We were reading the St. Louis Fed's blog posts. They were talking about core PCE getting up to about 3% and then moderating. So it's about 7%. So it's really important that we don't drive ourselves crazy with a snapshot,

a point in time where 12 people have coffee in Danish and talk about the latest data that we've already seen. I don't think that there's anything in there that's actionable for 99.99% of investors, maybe for Ray Dalio, not for the rest of us. Yeah, I got to bring up one more comment, too. I mean, let's throw up Snowflake again, guys, in the OT if we can, because I am seeing some more additional information coming out from the release that could be one of the reasons why the stock has been under some pressure here. There's a stock down 14 percent.

And again, our Frank Holland's still going through it. First quarter adjusted operating margin, 0 percent. Estimate was 66.5 percent. They see their fiscal year or full year, excuse me, adjusted operating margin at 1 percent. The estimate was 67.3. So you don't have to be a rocket scientist to take a look at that and say that, well, that's well below what the estimates initially were. Whether that is the particular reason why the stock is reacting the way it is, that's yet to be known. And again, we'll try and

get to the latest answers there. But that cannot be judged as good by the street as that stock sells down. There it is down 13.2 percent. Guys, thank you. Josh, my thanks to you. Bryn, we'll see you again soon. Up next, we are talking Twitter. By the way, we're still awaiting NVIDIA as well. But Twitter's annual shareholder meeting is kicking off this afternoon. Casey Newton, Alex Kantrowicz, they are standing by to break down all of the big headlines from today's very high stakes meeting. I want to show you shares of Williams-Sonoma. They are out. It's a beat on the top and the bottom line.

Stock's up nearly 10 percent. Courtney Reagan is going through that and will pop on in just a moment with the actual color from the quarter in what has been a very trying time for some retailers, apparently not Williams-Sonoma, at the higher end of the scale, obviously. And that may be contributing to why this was a good quarter and why the street is receptive to it at this particular time. Let's talk Twitter, though. Meeting its shareholders today. The company's future now hanging in the balance.

That 5420 offer from Elon Musk still said to be on hold. The stock has plummeted far below that level by now, as you know. For more, we bring in our experts, big technology founder Alex Kantrowicz, the platformer founder Casey Newton. Both are CNBC contributors. It's good to have you both back. Alex, talk about the meeting today. What do we know? Because it doesn't seem like much actually happened relative to the deal, which is interesting. Yeah, we don't know anything more than we did relative to the deal, which is interesting. Yeah, we don't know anything more than we did prior to this meeting, which is bizarre.

It's a shareholder meeting. These are the people that have invested in your company. And again, I go back to what CEO Parag Agarwal is doing. I have no idea what's going on here. He won't comment on it. He won't take any questions on it. These are the people who own the company, technically. And he's saying we'll talk about it in another meeting.

And he's citing regulatory and other reasons. What are other reasons? I'd really like to know, but apparently we're not going to find out anything more today. Yeah, Casey, I mean, is that how you see it? I'm looking at a tweet from inside the meeting. We cannot discuss the transaction today, was the CEO's response when asked. That's right. Look, I think Twitter is operating by a simple principle right now. No sudden moves.

They have a signed deal in hand to get $54.20 a share. They're going to do everything in their power not to jeopardize that. So in that case, that meant deflecting every question about the deal and trying to end that meeting as quickly as possible. Yeah. I mean, Musk has pretty much been able to control the narrative, right, Casey? There have only been select instances where, you know, Twitter has responded. Now, Parag has done a few tweet threads and things like that.

And frankly, as I said to you last week, maybe he doesn't care. Maybe he doesn't think he has to. He's got the bird in his hand. 54-20. That's exactly right. And, you know, at the risk of tempting fate, I would note that Elon's tweets about the deal have slowed down considerably over the past four days. He's moving on to population collapse and Elden Ring. So maybe Parag feels like he is sort of regaining the upper hand just by staying focused on getting the deal across the finish line. Hey, guys, can we just bear with me for a second? We're going through the NVIDIA release as we speak. Can we show the stock, though, in the OT to at least get a handle, guys in the control room? Can we get at least a look at the stock to see what we're doing here, given how highly anticipated this was?

And you can see it's an initial sell off of north of 7% or so, 7 and a third. Of course, all of this is literally developing as we speak. The numbers have just hit the tape. We're going through them. You'll hear from the reporter. But this is a stock, really, that's been in the battleground. $400 billion market cap was once a lot higher than that. Stock's

been cut down by some 40 plus percent this year alone. So that's why it was so highly anticipated. The sell off there about 9 percent. We'll come back to that in just a minute. We'll get more, of course, on that. Let's go back to our guests related to Twitter. Alex, I want you to listen to what the famed VC Jim Breyer said today out in Davos about what fair value should be for this. Listen. Elon is a genius, as Mark Benioff said. One of the best entrepreneurs of all time. He's paying too much for Twitter.

I think the fair market value of Twitter, in my humble opinion, is $25 to $30. I mean, this is not just some guy on the street corner giving his opinion. Jim Breyer's got the chops to think he knows what the fair value of this is. $25 to $30? What do you make of that, Alex? Well, look, I'm out here in Davis, too, not to brag. I mean, that's exactly what I'm hearing from everybody that I speak with, that people are sure that they're not going to get the $54.20 that Elon has signed for. And I think the number that Jim is giving is right on target, somewhere in

that range. Maybe in the bull market that was always going up, Elon made a good deal for Twitter. The market as it exists today just does not have the ability to support that price. Look at what's happened to Tesla shares, for instance. It's not like Elon has a trivial amount of money that he could spend on whatever he wants. It's much more costly to him at this point. So I think what Jim Breyer is saying is spot on. And we hear that Elon is much more quiet on Twitter. I think he's looking at his bank account and he's not in the mood to party anymore. All right. So, Casey, the $44 billion question is, does it get marked down? Well, look, it's not Twitter's fault that Elon offered them $54.20 a share, right?

And this deal is legally binding. So it does still seem likely that he's going to try to force them back to the negotiating table. But I always come back to the fact that we have a signed legal agreement here. And buyer's remorse typically doesn't let you get out of a deal like this. All right, we've got to leave it there, guys. We've got some busy action in the OT. That's Alex and Casey. I know we'll see you again soon.

Christina Partsanovelis has NVIDIA for us. Christina? Scott, what we're seeing is that earnings or revenue right now is coming in at $8.29 billion, which is a beat, and yet the stock is reacting negatively. Earnings per share came in adjusted at $1.29 billion, which is a beat, and yet the stock is reacting negatively. Earnings per share came in adjusted at $0.136. The reason why we're seeing part of this massive sell-off is the Q2 outlook. Q2 outlook coming in lighter than expected at $8.1 billion, plus or minus 2 percent, according to the company.

They said that they have to account for roughly $500 million pertaining to Russia, as well as China lockdown. So they're still preparing for that in the next quarter. They did say that data centers, because I know Josh alluded to that earlier, data centers was the largest part of this business, even though gaming had a record quarter. So you are seeing top line beat, but unfortunately, outlook much lower or lower or lighter than anticipated. I should use a lighter word. So lighter than anticipated and hence the sell off so far. All right. I appreciate that, Christina. We'll hear from you again, I'm sure, before this hour is through. Josh Brown, your initial reaction,

what I think about when I hear what Christina said, I sort of remember what Chuck Robbins had to say of Cisco, right? Russia is an issue. The China lockdowns are an issue. And then you try and gauge where real demand is in your core businesses. Well, look, if you were trading it for the earnings, then, yes, you would be have your next phone call be to your parents and yell at them for allowing you to grow up in a room with lead in the paint. So I think this really boils down to why do you own it? What is your holding period? And what are you expecting from the company's fundamentals over what period of time? I don't know a lot of people that get long a name like this into any specific earnings quarter because they think they have an edge. So, you know,

for me, it's like hard to relate to why the stock would be down 8% over China lockdown in Russia. So as always, I would say, wait for the call, listen to what they have to say. If the outlook is getting worse for other reasons beyond just those two very idiosyncratic specific things, OK, new lows are probably justified. But we don't know that yet. That seems ambiguous. I'm thinking of, you know, Pete Najarian today on the halftime report buying it ahead of the number. Right. And he'd been looking at it for a while. He's doing options. That's not in that. No, yeah, I think he's doing options, though, right? No, no, no, no. He actually bought the stock. Now he has some options against it as a hedge, obviously, but he did buy the stock. And that's sort of what I allude to earlier. It's like

you look at stocks you like and you're like, OK, enough is enough in terms of the selling. So you're willing to make a gutsy move. I would have waited a day right ahead of the quarter. Yeah. In this tape, I would have waited a day because what's your worst case scenario? They report a great quarter. The stock goes up seven percent. And then by the afternoon, it's flat. Then you buy it. Like, I guess that's just that's just the environment. That's not always the right thing to do. That's the environment we're in. Name one company that reported just the environment. That's not always the right thing to do. That's the environment we're in. Name one company that reported a good quarter a week ago or two weeks ago and is higher now.

I can't think of a single one, not even one. So I don't know that that's something that I would have done, but I make other mistakes. So I would never be critical of what another investor decides to do. Yeah. No, I just bring it up certainly as a reference point, not to tee him up for you to knock him down in any stretch. And I think you and me know that. Love Pete. Bryn, Bryn, what's your reaction here to the numbers and to the stock?

Listen, I'm not surprised. If it actually opens down only 10% tomorrow, I think that's kind of a victory because the market has been taking these companies out to the woodshed. But if you take a back, read the report, listen to the earnings, you know, NVIDIA is at the cross section of every important technology over the past 30 years and probably over the next 20 years. And so at some point in time, NVIDIA is going to give investors another fat pitch to go into the stock at a much cheaper valuation while the company continues to get stronger and stronger. And so, like, I have a rule. I don't buy stocks right before earnings just because, especially in this market, because who knows what's going to happen.

And I feel like the bias is to the downside. But ultimately, this company is getting stronger and stronger because think about artificial intelligence, autonomous driving, data gaming center. Those aren't going anywhere. What's happening is we are in a tightening cycle with the Fed. Market is risk off. This is a wonderful company that literally will be at the cross section of every port, every main important technology, you know, going forward. So I think this is a good year to accumulate the shares if you don't own it. Josh, bring you a tweet from Jim Cramer, who's, you know, channeling our thoughts too, in that he says NVIDIA forecast, just like Cisco, Russia and China. When will tech factor in China and Russia? Cisco's was supply from China. Let's hear what NVIDIA has to say about China. I'm waiting for all tech to talk about Russia, China, and remembering that only Facebook, Google have none. Right. I told you right as I

as I heard this report, as Christina was going through it, the first thing I literally thought of was Chuck Robbins sitting right here on the set with Jim, David and Carl and talking about the impact from Russia and China. The point I'm also trying to make here, Josh, is that those issues have so muddied the outlook, it's hard to get a true look under the hood of these businesses because they're so greatly impacted by what is taking place in other parts of the world that have nothing to really do with real demand. Yeah, I think that's right. It's a really tough time because you have a whole host of reasons that companies could give to be more cautious in their outlook. And every one of them makes complete and perfect sense. And if you were sitting in that chair or Jim

Kramer was sitting in that chair or I was sitting in that chair, we would probably do that. We would say, look, here's what the macro situation is. And then we have this trouble pocket because of China. And that's a huge question mark. We don't know how much longer they're going to spend pretending that COVID doesn't exist. And then you have this thing with Russia. It's literally the biggest armed conflict in Eastern Europe in 80 years. What kind of guidance do you honestly want me to give to you? You know, I don't think they should they should go about it as nihilistically as I just did. They should probably be more specific.

But I'm just saying, if ever a company that's a global technology business wanted to ratchet down expectations, well, every other company in their peer group is doing it. Why not now? Why not us? So, again, that gets back to the environment that we're in. I would actually be suspicious of a technology giant coming out and saying, things are amazing. We know they're not amazing. Just give us the truth. That sounds like what all of these companies are doing. It's the smart move to make right now. Yeah, it just makes it,

you know, I would suggest a little bit harder for the Nasdaq to find a real bottom yet. You know, I'm looking at stocks like Apple, which are trading a little bit lower in the OT. And I suspect that some of these other mega cap stocks and this was once sort of close to the mega cap level, even though it's come back down to earth a bit, they're likely to suffer a little bit in sympathy with what's happening here. Guys, I thank you so very much, Josh and Bryn. Guys, I thank you so very much. Josh and Bryn, I know I'll see you again soon. And now it's time for a CNBC News update with Shepard Smith. Hi, Shep.

Hi, Scott. Thanks. From the news on CNBC, here's what's happening live from Uvalde, Texas. This afternoon, the governor of Texas, Greg Abbott, gave us an update on what we know about yesterday's activities here. And among the headlines today, he said that the shooter at this school sent out three messages on Facebook. The first, I'm going to shoot my grandmother. The second, I just shot my grandmother. And the third, I'm going to shoot up an elementary school. Now, Metta, the owner of Facebook, tells NBC News this afternoon that all of those were private messages, and none of them were received before the shooting itself actually happened.

In short, according to authorities, there was no real warning of what would happen at Robb Elementary School behind me. We've learned new details about the shooting of the gunman's grandmother and how that transpired. And in addition, we're learning much more about the shooting of the gunman's grandmother and how that transpired. And in addition, we're learning much more about the victims here, some of them 9 and 10 years old. One, a beloved school teacher who had welcomed kids to the third grade just a few short months ago. Graduation was set for this weekend. They're working on coming up with a new plan for that

and bringing in grief counselors for the little boys and girls who witness things no child ever should. A special edition of the news this evening, 6 o'clock Eastern, 5 Central, two hours of coverage here from Uvalde and the other big stories from across the country. Scott, for now, back to you. All right. I appreciate that, Shep. Thank you. That's Shepard Smith. Overtime's back right after this. Welcome back to Overtime. Tech is getting some welcome reprieve today from the recent selling. Our next guest says, though, momentum investors could soon rotate out of that trade. BTIG's Jonathan Krinsky here to break down his call. It's good to see you. I'm curious as to what you think about, you know, the Nasdaq's gone through so much pain and whether you think it's specifically

close to a bottom or not. You know, the short-term market call is very difficult here. You have a lot of cross-currents. Obviously, you have month-end. You have some very weak parts of the market that are coming into month-end. And so when you add that up with positioning and sentiment, you know, clearly you can make the case for a countertrend rally. But, you know, that in our view, that's that's the small part of the equation. And we still see a significant move lower ultimately for both the S&P and the Nasdaq. So, you know, again, it's it's it's kind of the equivalent of, you know, over the last 12 years trying to call for market pullbacks. You get these three, four or five day little pullbacks and ultimately the trend resume resumed higher. We think it's kind of the opposite now where you can get a three, four or five day rally.

You know, it's it's not changing the primary trend of the market, though. Remind our viewers, you know, people who don't see you every day, how you got from a point where you thought we could initially go below $4,000 on the S&P, which you were obviously correct on. But how do you go from, I think we may break $4,000 to what is now $34,000 to $3,500, a medium term of you for the S&P. How'd you get from A to B? Well, you know, when you're following trend, just when you get to a point where the market can pause does not mean it immediately is time to reverse that trend, right? And so 4,000, it seemed like a logical spot to pause. I think we're seeing that consolidation, that congestion phase. And that's why we think the near term is very difficult. You're kind of coming to terms.

Look, we were down seven straight weeks on the S&P. You've had a lot of damage done. And so it would make sense to see some kind of consolidation here as we move into the summer. Where we get to 34, 3500 at this point is really a culmination of a couple of things. First, it's really, just from a pure technical perspective, it's the pre-COVID highs and the 200-week moving average on the S&P. 200-week moving average tends to be tested in bigger market drawdowns. Secondly, we've just seen more and more evidence of more stocks and more sectors round-tripping their COVID moves. So, you know, we saw it in the ARK names, we've seen it in a lot of the high growth names. And so, you know, ultimately, it makes sense for the S&P to

really retest where it was before COVID. And then ultimately, you know, the last piece of the puzzle is the fact that, you know, in bear markets, eventually everything does succumb. And we've seen most areas of the markets get hit, but we haven't seen energy. We haven't seen really the mega cap defensives and pharma. So that's that's what gets you down to thirty four, thirty five hundred. Hey, Jonathan. OK, I thought we're going to have some news, which we will in just a moment. So we're up five percent or so on the S&P since the rebalance. And you said something interesting just now. Do you actually, I mean, do you think that this, what you called a consolidation, but this bounce, if you want to,

if you want to call it that, I mean, has enough staying power to last for, I don't know, a month before sort of greater reality sets in on what still needs to happen for the major averages? I mean, how do you, how do you see that? Yeah, I think that's perfectly reasonable, even two months perhaps. You know, if you look at an analogy, and again, we're not saying this is anything like 2008, but just to look at the 08 bear market to put things in perspective, from October 07 into July of 08, the S&P was down about 20%, just as we are now, right? And then we had a two-month reprieve, a two-month bounce from July and August into 08, the S&P was down about 20%, just as we are now, right? And then we had a two-month reprieve, a two-month bounce from July and August into 08. And what's remarkable is in August of 08,

the VIX was actually below 20, if you can believe that, a month before Lehman Brothers. And so, you know, I think it just goes to show that markets, you know, once they kind of, you know, exhaust themselves in one direction it doesn't mean that you have to reverse and go in the other direction you can simply kind of come to terms of the price over here and i think that's where we're at you know i would be surprised if we go straight down to 34 3500 but again you know if we go up to 4400 4200 we don't think that changes the primary trajectory and i think that's the key piece here. All right. Well explained. And I appreciate you doing that. I got to run. I do have that news that I was anticipating. Jonathan

Krinsky of BTIG. Let's go to Julia Boyston now. There has been an amended filing regarding Twitter and Elon Musk. Julia. That's right. Elon Musk is seeking additional funding for his Twitter bid after his margin loan commitment has expired. This according to a new filing showing that the reporting person, that is Elon Musk, committed to provide initial $6.25 billion in equity financing to fund a portion of the merger consideration. And this is as of the latest here. So this is basically the latest showing how Musk is going to be looking for that additional financing. And he is effectively upping his

total commitment unless he gets more outside funding to thirty three point five billion dollars. Scott. Yep. Of the of the forty four. All right, Julia, thank you so much. That's Julia Borsten with the latest there. It's still developing a story, really a drama that continues to play out in front of all of our eyes, including our next guests, Jacob Asset Management Chairman and CIO Ryan Jacob. He's a Twitter shareholder. He's been trimming shares since Mr. Musk's offer joins us now on the news line. What's your immediate reaction to this news that Julia just told us about first and foremost? Well, I think it just reinforces the idea that Elon is still moving forward with the transaction, even with a lot of reservations. But he has all the financing in place, and he has a buy-in from the existing shareholder base.

So, you know, we're still in a position where we think that this transaction is still likely to close. Were you in favor of the transaction? I know you sold a good portion of stock when the offer was made, and the stock obviously popped. And I'm sure you're happy about that. Are you in favor of it? Yes. I think that a lot of what Elon put forward informally or what we've heard through other channels make a lot of sense and what shareholders have been asking for over the past several years.

The company's just been very slow to act and very slow to adapt to make these changes, and that's the reason why a lot of shareholders are frustrated. And quite frankly, the share price never really reflected the full value of the platform. What about price? $54.20 versus $39.75 or $6 where it's trading right now? I mean, do you think they should do a haircut on the price? Well, theoretically, the board holds all the cards here. They have a signed deal and they can move this through regulatory approval to closing. Practically speaking, Elon still has some options and could delay things if he chooses to, which is in really no one's interest, especially the company's.

So my guess is we'll probably see some sort of negotiated solution here, and it could involve a haircut of the share price. But, you know, with the original offer at $54.20, there's still some room there and for it to still be a good investment for current Twitter shareholders. I mean, you said it's in no one's best interest to delay this further. Isn't it clearly in his best interest to do exactly that until he thinks he can get a better price? I can understand why Twitter obviously wants to hold on to 5420 because they may be desperate looking at their stock price where it is now. And as you said, they've got the signed offer. They got the bird in the

hand. As I said to our guests earlier, why would they even consider renegotiating anything? The longer he holds out, the better for him, no? Not necessarily. You know, from a strict legal perspective, you know, they could force the issue and try to close the deal. And in the meantime, we're already seeing some brain drain from Twitter. And I know Elon's intent is to slim down the company. But, you know, if this does get protracted, you know, it's really, it's going to make it more difficult for him once he takes over. So, and I think just, you know, for a lot of different reasons, I think it makes sense

for all parties to kind of come to some sort of negotiated solution here. And my guess is that's what we'll see over the coming weeks. Did you ever think that a white knight was going to emerge? Had you held out hope for that at the beginning? I did. Actually, I did think we'd see perhaps a Salesforce comeback or one of the other large. I mean, you're only talking about a few dozen companies globally that could hope to acquire a company like Twitter. I think as every long-term shareholder feels that Twitter is a unique social platform with global reach and clearly was not being fully – the value was not being fully realized there.

So we did think there was an outside chance, and we're a bit surprised that there were no other offers. But in this case, you know, I think that this outcome for Twitter shareholders is about the best we could hope for. And I think even for Twitter's long-term future, if Elon is able to execute on his ideas, you know, Twitter should have a bright future. Yeah. That's Ryan Jacob joining us there on the news line. Interesting he says Salesforce because I hope all of you saw Sarah Eisen's interview today with Mark Benioff, who said, nice asset. My shareholders asked me not to do it, so I didn't. And he walked and apparently wasn't interested in coming back either. We'll talk to you again soon, Ryan. I appreciate your time.

Up next, we have more on the big earnings action in the OT plus Santoli's last word. We're back right after this. Big news. Yes, it is big news. It's a big move, too. That's what I really wanted to say. For William Sonoma, it is soaring in the OT. Courtney Reagan has more on the quarter, as I told you all she would. Hey, Courtney. Yeah, shares up here 17 percent, Scott, reporting 350 adjusted compared to estimates of 290. Nice beat there on the bottom line on stronger than expected revenues of 1.8 billion compared to just over 1.8 billion estimated. The company is also reaffirming its guidance for the full year and the longer term. They also put up some really strong comparable

brand revenue growth of 9.5%. Destree was only modeling that growth to be up 3%. A lot of strength from the Pottery Barn and West Elm brands there. And actually, Pottery Barn team kind of negative on the comp sales, however, still beating expectations. Gross margin expanded to 43.8%. Everything here, Scott, looks pretty good. The company not pointing out anything dour when it comes to macroeconomic pressures. Of course, we're going to hear more details on the call, but in the OT, shares up 17 percent for Williams-Sonoma. I think you can count this one as a winner. Back over to you. And Court, I was wondering going in, you know, been home for the last two years.

People have bought a lot of stuff for the house from those brands that you mentioned, by the way. Also, right. West Elm Pottery Barn and William Sonoma proper. I was wondering what the picture was going to look like now. And apparently the fears that maybe I had and some others aren't valid. Yeah, it's pretty impressive, too. When you look at the first quarter of last year, their comps grew more than 40 percent. So to put up nine and a half percent on top of that is really pretty phenomenal. And we know that the lead times still are pretty long for a lot

of these items, but it looks as if people are comfortable waiting. They want what they want. They're still in this nesting mode. They want their homes to be a comfortable place, perhaps for living, but maybe for hybrid work, too. It's pretty phenomenal what the company has been able to do here. All right. That's Courtney Reagan with the latest there. Appreciate that. Box shares are also on the move in the OT because of results. Frank Holland, back to you. Box shares now down about 3% after a beat on revenue, but a miss on EPS, two cents below the quarter per share the street was expecting. Still solid guidance, Q2 and full year in line to slightly above what the street was looking for. As you mentioned, I spoke with CEO Aaron Levy just a short time ago.

He said the strengthening dollar, the primary factor for the EPS miss, Levy told me we've been seeing some international currency volatility with the yen and the euro relative to the U.S. dollar. That provided a bit of a headwind, and that ends up hitting more of the bottom line in the near term. Again, shares down just about 3% now after a beat on revenue, miss on EPS. Remaining performance obligations, a metric of money expected in the future up 16% now to a billion, plus a guidance raise putting the company in line is slightly higher than what the street was expecting. Call starts in just a few minutes.

Scott, back over to you. I know you'll be on it. Frank Holland, thank you very much. Coming up in the OT, we have Santoli's last word. All right, your last word, Mike Santoli. Stocks have been to some degree saved by the bonds. So the growth fear is bringing yields down. Coming into this month, one of the big stress points on the market was the fact that stocks and bonds going down together.

It reduced every investor's kind of risk budget. The ability to buy the dip in stocks was basically impinged by the fact that you were also losing on your fixed income. So you see here in the last few weeks, bonds have started to get a bit stabilizing stocks. Now, this is a delicate relationship. There's no saying the 10 years, you know, from 320 down to 275, it's going to go lower from here. We're going to retrace. So I think it's worth keeping in mind that a lot of it is asset allocation into the month end, perhaps, that has helped stock. Less than 20 seconds, obviously, but bring it full circle to where we started.

So NVIDIA reports stocks down. The impact on the market is? I think the impact on the market is going to be fascinating to watch because we've been trying to isolate these blowups and Snap, you know, arguably did not swamp the overall tape. Yeah. All right. Good stuff, as always. That's Mike Santoli. I'll see you tomorrow. Fast Money's now.