Closing Bell - Closing Bell Overtime: Netflix Earnings From Every Angle; Ben Silverman On Streaming Landscape 10/17/24

Episode Date: October 17, 2024

Netflix shares rose in Overtime after reporting earnings. We have you covered from all the angles: closely-followed analyst Mark Mahaney on the stock move; Propagate Content Chairman and former NBC executive Ben Silverman breaks down the content strategy and an update on the broader streaming wars; DoubleVerify is one of Netflix’s ad partners and its CEO discusses the streaming giant’s ad strategy and how it plans to grow. Plus, CSX CEO Joe Hinrichs on the health of the economy from his perspective and Robinhood Chief Brokerage Officer Steve Quirk on the company’s new Legend tool and the latest sentiment from the users. 

That's the end of regulation. Bell ring brands ringing the closing bell at the New York Stock Exchange. The Knowledge House doing the honors at the NASDAQ. Well, the Dow just setting another record close as solid economic data and bullish bets on chips lift sentiment. It looks like the S&P is going to close unchanged here and the NASDAQ well off the best levels of the day as well. That's the scorecard on Wall Street. But the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. Well, it is Netflix time. Earnings from the mother of all streamers just crossing. We're going through them now. We've got a great lineup of experts ready to break down those numbers

and the read through for the rest of tech. And the Netflix results just crossed. So we're going to bring you those in just a moment here. Let's bring in our market panel. In the meantime, Barbara Duran of BD8 Capital Partners. She's a shareholder of Netflix and Evercore ISI analyst Mark Mahaney, who has a buy rating on the stock. So, Barb, I'm going to start with you. But keep in mind, we're probably going to interrupt here in just a second. Once we get these preliminary results ready for TV, you are a shareholder. Stocks run something like and never mind. Julia Borson has those results for us.

Julia, that's right. We have the top and bottom line results here. Netflix beating on both the top and bottom with adjusted earnings per share of five dollars and 40 cents. That's versus expectations of five dollars and 12 cents. Revenues of $10.13 billion. Also ahead of estimates, oh, I'm sorry, versus estimates of $9.77 billion. The company having net additions of 5.0, sorry, I just have an adjusted number here on revenues. Netflix revenues of $9.83 billion, coming ahead of estimates of $9.77 billion. And the latest in terms of that subscriber number, because subscribers are always so key here, the company reporting 5.07 million net additions versus the 4.54 million, which was the estimate. Now, Netflix is going to stop reporting subscriber

additions as of next year. This is the second to last quarter when they will be reporting. And that sub number coming in ahead of expectations. The stock's only up about one percent, but I'm going to be digging through the report and we'll be back with more. All right, John. Yeah, we're looking forward to that, Julia. We'll see you in just a few moments. So, Barb, I'm going to go back to you as a Netflix shareholder. Stocks up 48 percent so far this year. Been some chatter about valuation coming into this report. We got a top line and a bottom line beat and subs coming in better than expected. Your initial thought. Yeah, because I think the expectations are clearly very high going going into this quarter. And I think the subscriber growth was for this quarter a wide range between four and nine. So this is, you know, a little bit towards the higher end of the low.

But I think what we want to hear, what I want to hear, it was about the ad growth because they've really been much slower to ramp. They've just recently started investing in technology to improve their data collection and their targeting. And so they've only right now on a run rate for a billion dollars. So they're really lagging there. But there's so much potential. Out of 190 countries they're in, only 12 have the ad tier. So this ad tier will be big once they sort out internally. And that's going to be the question on the earnings call. You know, what kind of a lag? Because the password sharing, I think, will continue to add subscribers, but not as much as they saw initially. So there could be a bit of a pause. But long term, we know they're the clear winner. The scale, the content that they have,

the ability to increase their cash flow and their margins is unparalleled in this area in the streaming industry. Okay. Mark Mahaney, you've got an outperforming a $750 price target on Netflix. Your take on the initial numbers and what you want to dig further into? Well, I think this is kind of a push quarter. They needed to put up upside. They did. That was expected. There were whispers they were going to do more like six million, whatever. It's slightly better, but the growth is slowing down in terms of the net ads. I think the guidance is really important. And then there's another issue that the market's waiting for, which is a price increase. This is a company that historically has been able to effectively raise price or at least tier it, you know, offer higher price point plans for those

who want something extra. I think their value proposition is so strong for Netflix, especially relative to other offerings out there. And look at the content slate that's coming in Q4. So I would expect them to talk about the timing for a price increase on the call. I think that'll move the stock one way or the other. But look, I continue to like it. It's not one of my top picks. Valuation is good. It's interesting. It's not compelling. I still think there's reasonable upside to 750. There's a more bullish case to be made than that. But these numbers here are fine. They're solid. It's kind of a push quarter for me. OK, I want to mention intuitive surgical results are out. The stock is initially up about three percent. We are going through those. But right now, let's go back to our Julia Borsten for more on Netflix. Julia.

John, just want to give you the company's guidance for the fourth quarter here. The company guiding to revenues of one, excuse me, company guiding to fourth quarter revenues of $10.13 billion versus the $10.04 billion that was expected. Also guiding to fourth quarter EPS of $4.23 per share versus expectations of $3.91 per share. So that's better than expected on both the top and bottom line. I also want to point out something about the ad business here, since there's so much focus on the potential

for the ad business. Netflix saying in its release that they continue to build the ad business and improve their offerings for advertisers, saying ads membership was up 35% quarter on quarter and the ad tech platform is on track to launch in Canada in the fourth quarter and more broadly in 2025. And just a couple more details here.

U.S. and Canada, that's the most mature market. They note that it had a 16% year-over-year increase in revenue, driven by 10% and 5% growth in average paid membership and average revenue per member. So I think that's going to be again in focus on the call when a lot of people, including Mark Mahaney, are expecting some commentary and a price hike. John, back over to you. All right, Julia, thank you. Mark Mahaney, speaking of, this strikes me as the type of earnings call where that caller, where that commentary could get the stock moving perhaps at a much different pace than it is initially on just these results? I think so. Julia pointed out something that's really important. You look at the most mature market, the oldest market for Netflix, and it's growing at 16 percent year over year. That's in line with they're a little bit faster than the business as a whole.

That's actually a reasonably bullish takeaway when your oldest, most mature market can sustain the growth of the rest of the business. And you've got newer markets coming in. I think Barbara had a really good point earlier about advertising revenue. I think just think the challenge for Netflix is that just haven't had a lot of users. I mean, it takes time. Marketers aren't going to step in on Netflix when they got 10 million people in the U.S. That's nothing. I'm putting it in context. You need to get something like 30, 40, 50 million U.S. users and then bring that number up globally. And then it becomes a must buy for advertisers. I think that's going to happen. It just takes a while. I also think Netflix probably started with the wrong advertising partner in Microsoft, but that's all right. That's all in the past. I think ad

revenue is going to grow. I think that's one of the great reasons to stay long this stock. And I think you start bringing in going into live sports in the NFL. There are a lot of people in the U.S. who've never tried Netflix because it or don't use it because it doesn't have live sports. You're opening up the TAM by if you can successfully bring in live sports. So that's another reason why I like sticking with the stock and then these margins that they're printing that show the earnings upside. That's great. That's exactly what people want. We're going to get free cash flow continuing to ramp. I continue to like Netflix. OK, Mark Mahaney, I want to mention Intuitive Surgical again briefly here because it is now up about 7 percent in overtime. I'm going to bring you up. We can. All right. Let's get to Kate Rogers and find out why. Kate. Hey there, John. Yeah, a strong quarter here for Intuitive Surgical, take you through the numbers. Earnings $1.84 per share, adjusted better than the $1.63 that analysts were looking for. Revenues $2.04 billion, higher than the $2

billion that analysts were looking for. Also on its DaVinci surgical systems, remember those are for bariatric surgeries. In the face of all of these weight loss drugs that are on the market right now, they place 379 DaVinci surgical systems. That's higher than estimates. And also worldwide DaVinci procedures grew approximately 18 percent. That's also better than anticipated in a seemingly tough market. And as you can see, the stock is higher by more than seven and a half percent on this quarter. Back over to you. All right, Kate Rogers, thank you. Barbara Duran, I want to mention Intuitive Surgical here because this is a stock that we saw a little more than a year ago take a pretty big hit on all of the excitement around glp1s and the idea that perhaps people

wouldn't need bariatric surgery anymore a lot of med tech players including intuitive surgical pushed back against that idea and perhaps these results are bearing that out yes yes i think so i think that was probably the last great buying opportunity in this name because if you look, first of all, they have the dominant share in the robotic minimally invasive market at 80 plus percent. Great reputation, huge installed base. And some of the estimates are that as not only if they spread geographically around the world, but the number of procedures, orthopedics, gynecology, urology. You know, the market is very under-penetrated in terms of this type of surgery and soft tissue. And one estimate is that there's probably 20

million procedures could be done a year worldwide. And worldwide, it's only 2.5 million. So there's huge potential in terms of just continuing to expand the market. And this is the leader. And they've got the reputation to get the business. So I think there's a lot more to come in this name. OK, we'll keep an eye on it. In the meantime, Mark, you're talking about free cash flow for Netflix just a few moments ago. And to your point, it is ramping for Q3 of 24. It looks like we're up to almost two point two billion dollars in free cash flow.

I know it's a new media company. We also call it sort of the unofficial kickoff of tech earnings as well when we're talking about Netflix. So how does this set us up for the rest of big cap tech? Well, I give you two points. One, I'm not sure Netflix ever really provides great reads and other tech. It's kind of a sui generis. You know, it's on its own kind of business. But the other thing is it tells you something about the stock sentiment going into this space. And so you had a beat and raise quarter here, I think. Yeah, pretty clean beat and raise quarter. You got like a modest, you know, modest trade up in the aftermarket that

tells you expectations were high. Look, of course they are. This is an all time high stock. So Spotify, so is Meta. So you better do a beat and raise if you're those companies and you'll get a little you'll get paid a little bit for that. That's why I particularly like some of the stocks that have got lower expectations, where there's more fear going into the estimates that I think are good fundamental franchises. Amazon's at the top of that list for me. So I think the stock read through is we're worried this is going to be a demanding quarter. You better have pretty clean results. If you do your stock, the stock will go up, but you're not going to get you're going to have very few big up trades unless you've got low expectations going in. Although, Mark, as we've been talking about it, that upward move in Netflix got a little less modest is now up about three and a half percent, maybe even a little more than that.

We'll see what happens as we're talking about. Well, as that commentary comes out on the call, Mark Mahaney, Barbara Dant, thank you for kicking it off with us and figuring out those earnings. Now let's turn to the chips. Shares of Taiwan Semiconductor surged after reporting a 54% hike in net profit in the third quarter. Net revenue came in 36% higher than last year, settling some fears after ASML's weaker results. And NVIDIA, a customer of Taiwan Semi, hit a record high today as investors get back into the AI trade. Mike Santoli now joins us for a look at the sector and the leaders. Mike. Yeah, John, the leaders really have built up a tremendous lead over the rest of the sector. And you take a look here, obviously, NVIDIA, the big winner.

You know, there was a bit of a late-day fade in all the leading names in semis, and you didn't get that decisive breakout above the former intraday high in NVIDIA. So we'll see if that means it's just a little bit of fatigue. But NVIDIA and Taiwan Semi, along with Broadcom, have really paced this entire group. XSD is the equal-weighted semiconductor index, And it looks relatively underachieving. 27% over one year is actually well behind the 34% gain over that time in the broad S&P 500. Take a look at the market cap weighted semiconductor ETF SOXS against that equal weighted one. You'll see they were very much in sync until, let's say, late last year when you did see that separation. It's almost all about NVIDIA to a lesser degree, Broadcom.

And so you see it's a little bit of a less inclusive story right here. Obviously, it's all about AI at the expense of everything else. Did want to show the overall semi-sector compared to the S&P 500 as well over a longer period of time. And you see it's just hanging on to this multi-year breakout. But it goes all the way back to late 2021. I mean, remember, that was the previous peak of the NASDAQ. And it's sort of just barely been keeping pace with the S&P since then. It's not an outright bearish thing, but it does show you that it's a very selective enthusiasm that's being applied to areas of semis.

And it does bring up the question of just sort of, you know, how much there is to go around when you have NVIDIA clicking to a $3.3 trillion market cap. Indeed. And going back to that first chart, Mike, talk for a moment about the difference between ASML and TSMC. ASML makes these huge machines, long lead times for manufacturing the most advanced chips. And part of what they said in their warning was that AI is still hot, but some of the other stuff, not so much. And that orders overall

for the other non-AI stuff weren't as big as they expected. TSMC seems to be reflecting the continued strength in the AI players, those that are higher there on your chart, right? And maybe they're just a bigger share of business. So investors seem to be having trouble digesting the difference between the whole semiconductor market, maybe equal weight, and these outperformers in TSMC benefiting along with those outperformers, no? Absolutely. So yes, memory, industrial, all the other parts, you know, smartphones, all the other subgroups that have massive volumes, but really not that much growth, perhaps is coloring the rest of the index. I'll still say, though, I want to see really do want to see NVIDIA try to break out of this range, because that's really going to be your tell us to say if, you know, we've really rolled forward all

this massive demand into next year, we're secure about it. Maybe we have to wait for the company itself to report results. But I do think that, you know, people are really looking for the excuse to kind of stay still play those winners. And we'll need confirmation of that at some point that it's the right thing. I can think of a couple of people in particular who would like to see that breakout. Mike, thanks. Well, after the break, much more reaction to Netflix earnings. See there now it's higher four and a half percent. We're joined by content creator and former NBC Entertainment co-chairman Ben Silverman. And Railroad CSX just turned in its worst day of the year after earnings missed the mark. We'll hear from the company's CEO about the results and why he's optimistic that a soft landing is still in department and amin jabbers is in

washington with the details amen morgan that's right the commerce department's saying right now that is making some regulatory changes in order to improve access to the commercial space industry. A couple of particular changes here that they say are designed to increase America's space industrial base. Three particular items here. The first one is removing license requirements for exports of certain items involving remote sensing or space-based logistics. The second one is changing license requirements for exports of certain spacecraft components to over 40 allies and partners worldwide. And the third proposed rule change here is focused on rules changes that would impact things like spacecraft capable of refueling other spacecraft and spacecraft that are capable of autonomous collision avoidance. So the Commerce Department here, Morgan, saying

that they want to increase America's industrial base, increase innovation, and they're making these rules changes to get some of the regulatory bureaucracy out of the way to do that. Eamon Javers, thank you. And this is definitely notable, John, because when we are talking about

American commercial space, I mean, I think there's quite a few space companies where it's not necessarily national security risk, where it makes sense to be offering some of these types of technologies and capabilities to our allies. I'm going to be really curious to see what moves on this. And we've got real time here. It looks like L3 Harris, which is very has a big space business. Boeing obviously makes satellites and has a space business. Lockheed Martin. You've got names like Rocket Lab as well, which I think is really well known for the rockets it sends to space, launching satellites for other folks.

But they have a big, burgeoning, faster-growing business that is about making spacecraft for other customers as well. And then quite a few startups, names that Manifest Space podcast listeners will be familiar with, like I think about Sierra Space or maybe a Stranas or some even some smaller names that are publicly traded that that have tiny market caps but are in this area as well so this is this is one potentially to watch and it'll be interesting to hear Oh another one that's

private now owned by private equity but max our max our space systems these are some of the companies that will be curious to hear their thoughts on these moves by commerce. Interesting. Keep an eye on that. Closer to home, we need to watch Netflix. That stock higher by about 4% after reporting third quarter results. And joining us now is Propagate content chairman and co-CEO Ben Silverman. He was formerly co-chairman of NBC Entertainment and executive producer of The Office. And he's author of the new book called The Night Before Christmas at Dunder Mifflin. Ben, about Netflix. It's higher right now after hours, kind of a beat and a raise here, but it

has been on quite a run. How much does Netflix's run recently reflect the separation in its business from the mainstream media players, which are not anywhere near all time highs? I mean, I think it's going to lead to more consolidation in the traditional media players and the kind of smaller streamer space because the moat they are building is is growing and quickly. And they're also out investing into original content, into sports content, into gaming, into technologies, all of which are going to continue, I think, to reward them as they expand their profits, but also as they expand their businesses. And one of the main things about Netflix is just what they've done internationally. You know, many streamers are looking to grow internationally where Netflix has been with massive operations in multiple markets. But they also have local content teams, not only local teams that are re-expressing the content from the United States and the productions that happen here, but also players who are commissioning content in local languages for local markets to the point that Netflix may look like cable in 10 years to consumers overseas. Okay. So mentioning a few of those competitors, we've got a few names on the

screen, but I'm thinking not just Disney, but Comcast, Warner Brothers Discovery, Paramount, etc. You mentioned investment. Netflix has the money from its streaming business to make those investments back into streaming. The others don't have that same capability. What kind of difference do you expect that piece in particular to make? Well, I think you start to really see it and you've seen it reflected in the Paramount sale and what, you know, Warner Brothers struggles. But, you know, Comcast has the ability to sell a lot of Wi-Fi and a lot of phones now and a lot of other businesses that can drive phone services, businesses that can drive investment in their content business, which becomes, I think, when they made that NBC Universal acquisition, an engine for the

whole company. Amazon is in so many businesses and, frankly, on the advertising and scale side, has a lead on Netflix by a huge margin in what they're doing. And so they clearly have opportunity to really compete, as does Apple. Apple's playing a little bit more of a what HBO was kind of 15, 20 years ago play and really going after this super premium consumer and super premium content. But their services business has grown. I think the companies that are in trouble are the pure plays. And they need to either consolidate to get to scale and mass, or they'll potentially find themselves, like MGM did, being acquired by some of these larger players in the future. I mean, given the fact that you do create and

produce shows for Netflix and others, just your sense of the spending outlook for content. And we've had analysts on this show ahead of Netflix earnings saying, listen, content spend, at least at Netflix, is very steady, even as we see free cash flow continue to ramp here. But we also know some of those more traditional media companies are really tightening belts and cutting costs. So how does all of that shake out? Well, I worry about that slippery slope, right? You're competing with a competitor who's now, you know, outgrowing and outspending. You can't cut to compete. You can cut to make a quarter, but you can't cut to compete in the long term. So it'll be interesting to see how that plays.

I do see a more mixture of investment. So instead of every TV series on the scripted side being $9 million, you're able to populate shows that maybe cost $1 to $3 million. You're able to commit to documentaries which have been unbelievably robust. We've been living in a golden age of television. We're also in this golden age of documentary and other genres that are much less expensive to invest in and can round out your portfolio of content. So I think they're going to have to be smarter about it. But they're not giving up, right? You know, NBCU just made a huge play and got the NBA and Amazon as well. And we know David Ellison and Larry Ellison behind him are going to be

able to pump a lot of resources into CBS Paramount. So I think we are going to find ourselves in an age where there's going to be renewed investment. I also want to just say one thing about the sports acquisitions that a lot of these platforms are making. They are key drivers to advertising, not only drivers in the ability to scale an audience at once, as Netflix will do on Christmas Day, as Amazon does on Thursday night, as NBC will do with the NBA and other players, but they're also events you can convene the advertisers. You can bring your key stakeholders to the Super Bowl. You can bring them to a ball game. You can bring them to a golf event. And they really serve in a myriad of ways for your advertising business beyond just

the ratings that an initial audience delivers on the game itself. And they're also unbelievable marketing platforms for your other content. Which, of course, explains why Netflix is forging further into it and why it's so competitive, these bidding rights. Ben Silverman, great to see you. Thanks for joining us. Thank you, Morgan. Who shares in Netflix now at 4%. Well, coming up, the changing makeup of the market. Mike Santoli looks at why energy and financials have lost their relative importance and the two sectors that have taken their place. And Netflix says it is still very early for its advertising initiative.

CEO of Netflix ad partner Double Verify breaks down how the streamer's ad tier strategy is playing out when we come right back. Welcome back. The S&P 500 closing fractionally lower. I mean, fractionally just off record levels. Let's get back to Mike Santoli for a look at the changing leadership among sectors. Mike. Yeah, Morgan, over many years, of course, the composition of the S&P 500 has changed quite a bit. And that actually explains, at least in part, why the S&P has been able to hold historically high valuations. At least that's the argument made by our friend Warren Pies over at 314 Research. He put together this analysis of the S&P and maybe explaining why it doesn't seem as overvalued as 22 times earnings might be. So this is, of course, tech and communication services as a percentage of the index compared

to financials and energy, obviously radically different over the mid 2000s, by the way, when the when the overall market looked really cheap because financials and energy were such a huge part of it and their low multiple sectors and their value sectors and they're more cyclical. And now we have tech and communication services, much higher quality businesses, higher returns on capital, typically not as cyclical. And so, therefore, the overall market gets the benefit of that. Take a look, though, at the action in the S&P 500's valuation. It's P.E. multiple over this bull market compared to what typically happens over the average of a bull market. It's really pretty similar point to point to what normally happens with valuation expansion after a bull market begins. That's this point here, the beginning of a bull market.

However, we're at this moment where that's about all you get from valuation historically. And it's going to chop sideways as a multiple from here, which means earnings growth itself is probably going to have to come in to push the market any higher if we're going to get there, Morgan. All right. Mike, thanks. That chart makes these crazy times look just downright reasonable. Well, time for a CNBC News update now with Kate Rogers. Kate. Hi, John. Vice President Kamala Harris and President Biden responded to the death of Hamas leader Yahya Sinwar earlier today in an Israeli strike in Gaza. During a campaign stop in Milwaukee, Harris said Sinwar's death is a moment to, quote, finally end the war in Gaza. President Biden called it a good day for Israel, the U.S. and the world.

The Biden administration today gave final approval to a new geothermal energy project in Utah. The White House confirmed to The Washington Post today the project could generate enough power for more than 2 million homes once it's operational. And in the days leading up to January 6th, Senate Minority Leader Mitch McConnell had some choice words for former President Trump. That's according to a new biography of McConnell obtained by NBC News. The Kentucky Republican called Trump, quote, a despicable human being, stupid and unfit for office. McConnell endorsed Trump months ago and said today that

whatever he may have said pales in comparison to what J.D. Vance and others have said. But that, quote, we are all on the same page now. Back over to you. All right. Kate Rogers, thank you. Speaking of former President Trump, cue the QR code, because that leads in perfectly to the latest installment of my On the Other Hand newsletter. This week's debate, would Trump's pledge to put significant tariffs on some imported goods to protect American jobs if he wins the White House be good for the U.S. economy? You can scan that QR code on your screen now to join the conversation, or type in cnbc.com slash OTOH. All right. Well, up next robin hood's

chief brokerage officer on what users are buying and selling right now and how much demand there is for the company's new options trading feature stay with us welcome back to overtime robin hood announcing new tools and products at its hood summit today including a desktop-based platform and features like index options trading in an effort to compete with more entrenched firms, joining us now is Robinhood's Chief Brokerage Officer, Steve Quirk. Steve, welcome to Overtime. So you were EVP trading at TD Ameritrade for 13 years until four years ago, right around the time when Robinhood was really starting to gain steam. Tell me how in particular is Robinhood Legend different from the kind of interface reimagining that you would have wanted to do at TD Ameritrade? Well first of all thanks for having me and we

have 800 of our our biggest customers here down in Miami with us. So thanks for bringing us in. We rolled out Robinhood Legend. So about 50% of all retail trading happens on a mobile device, and about 50% of it happens on a desktop. And we, up to this point, had only been competing on the mobile front. And now we have an alternative for people who like more real estate and more capabilities as either a complement to mobile or as a primary and then using mobile as a complement to that. And part of that is all the capabilities to trade equities and options and all the charting

functionality that is very important to our customers. And we've heard loud and clear that they need. Steve, this seems like a play for profits in part, which is a good thing, hey, because the most profitable trading is going to happen on that bigger screen with a more complicated interface. I can't help but notice there's nothing free about what you're offering here. This is supposed to drive, it seems, speed and capability.

Oh, no, it's free. The application is free to anybody on Robinhood. So all it is... No, but I mean the trades themselves, the types of trades that you'll be doing within this interface, some of the future stuff that you're bringing online, et cetera? Oh, I see what you're saying. Sorry, I met my misunderstanding. Yes, we're offering, we're rolling out futures and index options. And both of those will come with a commission, a competitive commission, industry leading commissions. But again, those are a complement to what we already offer for free on the option and equity side. So before I actually get into what you are seeing in terms of ownership and activity on the platform, I just have one more question on this, and that is, how much does this speak to the evolving and growing sophistication of current users and

retail investors and day traders versus you opening up the aperture to take on more professional traders? Yeah, I think it speaks to it on two fronts. Number one, Robinhood started and we have a very young, diverse client base. They started at a very young age, but we're growing up with them. And as we grow up with them, their needs need to grow. And so we've rolled out retirement accounts, yield, and joint accounts for people who are now getting married or have a significant other. So they're getting to a point in their investing journey where they have more needs. So we're addressing that. But what we've also seen is we're taking a lot of customers from our competitors who are looking for an alternative.

And so by addressing the desktop, we actually are catering to both the people that are growing with us, but the growing legions of people that are coming over to Robinhood and looking for an alternative to what they're already using. All right. Maybe we can finally retire that term dumb money then. So I do want to ask what you are seeing in terms of the act. Yeah. In terms of the activity on the platform, you have this Robinhood Investor Index. It's tracking the performance of the top 100 most owned investments on Robinhood. Break it down for me. What is the activity signaling about trading interests and about perhaps what we're seeing in the broader market? Yeah, I think probably the most interesting thing that we've seen is a broadening out. So, you know, this is kind of similar to what we're

seeing in the market as a whole. You know, the top seven that we talk about continually would dominate a larger percentage of what's being traded and held here at Robinhood. But now we're starting to see that broaden out, which is very healthy. You know, if you anticipate that there's another leg up here for the market, you want to see the base of this rally broaden a bit. That's what we're seeing within our customer base. But I would also point out there's a, you know, there isn't like what I'll call frantic buying even though we continue to see, I don't know, we're close to 50 new highs this year. I think there's

a little bit of trepidation in front of the election. So I think people are really kind of taking a look at their portfolio, assessing the risks, saying, am I comfortable with this? Because we do have an election, an upcoming election. We have interest rate decisions that are coming. I think they're just positioning themselves to be ready for whatever comes down the pipe. All right. Steve Quirk, we're going to have to have you back after the election to see what's shaken out then. Yeah. Appreciate it. Definitely. Thank you. After the break to see what's shaken out then. Yeah. Appreciate it. Definitely. Thank you.

After the break, what the CEO of CSX told me about his read on whether a soft landing is achievable and his company's stock turning in the worst day of the year. And much more ahead on Netflix's earnings results with that call starting off. Just a few minutes. Stock up almost 4%. Be right back. Welcome back. CSX, one of the worst performers in the S&P 500 today, posting its weakest day since 2020. The railroad growing earnings, revenues and volumes, but still missing expectations and trimming guidance, thanks in part to softness in autos and coal. I spoke with CEO Joe Henricks exclusively earlier today, and I asked him about that outlook. But we do see continued progress overall in demand. We've had seven consecutive quarters now of 3% or more revenue increase excluding fuel in our business. So

merchandise business is strong in ags and chemical. We are seeing some softening in steel and automotive, but domestic and remodel and international remodel is growing. So it's a mixed message, but certainly we are seeing growth in volume. So from your unique vantage point, it sounds like you still expect a soft landing. We do. I mean, you actually did this a year ago, I think in the same quarter, and we're still seeing that. If you think about it on balance, you know, across the markets in general, we're seeing growth. We'd love to see more industrial production. That would help us. But certainly the economy is growing and we're seeing

that in different parts of the sectors of our customer segments. Now, railroads do move many goods tied to many parts of the economy, including intermodal, which is a proxy on business inventories headed to retailers and other consumer-facing companies. Henrik saying CSX wasn't too impacted by the East and Gulf Coast port strikes, with containers routed through the West Coast still translating into business for the Eastern Railroad as they make their way across the U.S. This is something that we also heard about with J.B. Hunt earlier this week as well. Now, Henricks expects the peak holiday season to grow, but not very strongly. That's echoing the NRF consumer spending estimates that were released this week as well.

But I did also ask if with the Fed now cutting rates, he does expect that industrial activity to finally begin to inflect and recover. Well, we hope so. We haven't seen it yet. We need to see the automotive market continue to grow. We're the largest mover of automotive goods, so we're actually excited to see that happen. If interest rates come down, we need to get steel and metals back going again because they've been soft this year. If we add that to a strong chemical base and forest products picking up with housing, you could see that. But we haven't seen it yet. We're hopeful it happens in 25.

Now, the stock did finish down nearly 7 percent. We're going to get more transport earnings over the coming call it week, including Norfolk Southern and Union Pacific on the rail front. And we get UPS as well. Again, John, ahead of that peak holiday shipping and shopping season. All right. Good stuff. Well, up next, the CEO of Double Verify, which helps Netflix make sure its ads are being viewed by real people, not bots, on the outlook for the streaming giant's ad tier growth. That stock's still up almost 4 percent. Welcome back. Netflix shares are moving higher in overtime, about three and a half percent. The streaming giant saying in its earnings release that its ad membership was up 35 percent versus last quarter.

But that it doesn't expect ads to be a primary driver of revenue growth in 2025. Now, joining us now is Double Verify CEO Mark Zagorski. Double Verify is one of Netflix partners in advertising and media verification. It's great to have you on. That's exactly where I want to start with you, because they all Netflix also said that they are on track. The ad tech platform to launch in Canada and Q4 more broadly in 2025. Given the fact that you are a partner, what is going into standing up this platform, rolling it out? How should investors be thinking about it?

How should subscribers be thinking about it? How should subscribers be thinking about it? Yeah, I mean, look, obviously there's a lot to like about what happened with their earnings today and what they talked about on the advertising side. When you look at their ad growth and the growth in number of subscribers and the ad support tier, it's pretty significant. You know, that puts them probably over 50 million subs.

So their investment in technology to support the ads that are against that group of ad support subscribers is a pretty big deal. It takes time, it takes effort. But the one thing that was really telling is they said they feel like they're under-monetizing their ad impressions today, which means there's a lot of potential there. They've got a lot of subs seeing a lot of ads, and I think they're not selling them through at the rate they need to. That's why they're building their own tech. That's why they're partnering with other companies like Google and the trade desk to help drive what we call the fill rate in the business, right, which is how many of those ads actually get filled at the highest price possible. So what does that trajectory then potentially look like to fully monetize the platform and all of its offerings? I mean, earlier we were talking to Ben Silverman. One of the things he was talking about was

the fact that sports are so key to driving advertising and that this really speaks to perhaps why Netflix is pushing further into live programming and sporting events because of the flywheel it creates. Absolutely. I mean, their investments in NFL and WWE, those are tentpoles, right, that you can build entire advertising businesses around. And we saw the impact that had on folks like Warner this year when they lost the NBA, what that can mean to your overall advertising package right so you use those to bring advertisers in that's going to do two things a it's going to keep advertising relationships stickier and it's going to increase what we call their cost per million their cpms of all the impressions they have because now you can bundle you can bundle

wwe or nfl with drama programming or other types of sports programming. Get advertisers to stick, stay, and pay more money. So it is a multi-tiered strategy on the advertising side. It's content, it's technology, and sales. Okay, Mark, and of course, I've got to mention Double Verify itself is a public company. Ticker DV, market cap around $3 billion. I'll put it nicely. The share of the stock is as affordable as it's ever been.

So given the surge in advertising interest here and the need for clarity on making sure that these views are legitimate, what's the challenge in getting the revenue momentum that you need to get? Yeah, I mean, for us, I think we've had a really interesting year where we've seen some dynamics change in our business with regard to where our revenue is coming from. A lot of it coming from social and short-form video, which has taken over a big chunk of the ad dollar out there. But increasingly, and we're talking about Netflix,

we've seen growth in CTV, which has been a bright spot for us. And I think we'll continue to grow over time. So we're going to lean into those areas like CTV, like social and short form video, which continue to grow for us. And we look at a really strong trajectory in the second half of the year, which is going to eclipse the first half of the year's growth rate. All right. We'll keep an eye on it. Mark Zagorski, CEO of Double Verify. Thank you. Great. Well, JP Morgan is reimagining brick and mortar banking for the wealthy after last year's acquisition of First Republic. Leslie Picker is at one of these new financial centers in New York. Leslie. Hey, John, that's right. This used to be a First Republic bank branch. But now after this renovation and

officially opening yesterday, there are no tellers. There are no lines of ATMs. The hallmark of this branch location are these private conference rooms where the wealthy can have complex conversations with their bankers. It's all part of the JP Morgan strategy. We'll dig into it more when Closing Bell Overtime returns. Welcome back to Overtime. J.P. Morgan making a big bet on brick-and-mortar banking for the wealthy as competition for affluent clients heats up. Leslie Picker has an exclusive look at one of the company's newly opened financial centers. Leslie.

Hey, John. Yeah, up until last year, this branch, a Columbus circle in New York, was First Republic. Now, after a year-long, multi-million dollar renovation, this is one of the first two so-called financial centers that J.P. Morgan has opened. Now, it doesn't look like the typical chase that we're used to. It has J.P. Morgan branding, brown colors instead of blue, no tellers, one small, very small, discreet ATM machine behind a staircase, and high-end amenities to make wealthy customers feel at home. Chase Consumer Banking CEO Jennifer Roberts says this group is very profitable for the firm.

Our opportunity really is to make sure that they're doing business primarily with us, whether it be their banking or their wealth management relationship. And so we know that we have a very small portion of these customers' wallets, and we know we have the products and services and people to increase that. And so part of our affluent strategy is really to capture all of that wallet share and make sure their customers view us as their primary financial partner. The firm says it has 7 million affluent customers, which they define as those with $150,000 or more in qualifying deposit and investment balances. J.P. Morgan plans to open 30 of these financial centers by the end of 2026. 21 of these locations are legacy First Republic, and the rest will be renovated Chase branches. Separately, I wanted to just flag for you guys that J.P. Morgan just announced a new director would be joining the board.

Brad Smith, the former CEO of Intuit. Guys? Yeah, I know Brad Smith, Leslie Picker. I didn't know that name. Thank you, for sure. Out of West Virginia. So it's going to be interesting, of course, Morgan, to, thanks, Leslie, watch what's happening with Netflix after hours. The call is already beginning. They're talking about ads members watching some of the same material that non-ads members are watching,

which I guess would be encouraging if the profile is the same. Yeah, and, of course, we know that we're looking for any commentary on price increases as well. You got Amex and SLB tomorrow. Oil actually ticked higher just given what we're seeing play out in the mid-East. So that's another one to just keep an eye on, even though crude is down on the week. But now some concerns that Iran might retaliate again against Israel here. Yeah. We'll watch it all. All right. Well, that's going to do it for us here at Overtime with S&P finishing down one point. Fast Money starts now.