Closing Bell - Closing Bell Overtime: Shift4's Jared Isaacman on Earnings, Space Policy Under Trump; Ares Top Private Market Ideas 11/12/24

Episode Date: November 12, 2024

Stocks had their first down day since the election as investors took a breather and Treasury yields rose. Earnings Instacart, Skyworks, Cava, Flutter. Top analyst, Mark Mahaney of Evercore ISI, takes a deep dive on Spotify earnings and why he likes the company. Ares Global Head of Wealth Management Raj Dhanda on top opportunities in private markets and how to allocate under Trump 2.0. Shift4 Payments founder and CEO Jared Isaacman on earnings, the consumer and space policy. 

That's the end of regulation. State Street Global Advisors and the World Gold Council ringing the closing bell at the New York Stock Exchange. Insulet doing the honors at the NASDAQ. While the recent rally taking a pause, at least for today, as the S&P 500 ends in the red for the first time since the election a week ago. 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 Fort, who joins us from Washington, D.C. Yeah, a little light off the dome, but not mine. Well, the Dow and the Russell 2000,

the big underperformers today as treasury yields keep heading higher. And now investors are awaiting earnings from several big names, including Spotify, Skyworks, Instacart, Kava, and Flutter. And we'll have instant analysis, of course, of all those results. Plus, Shift4Payments founder and CEO Jared Isaacman breaks down his company's disappointing quarterly results

and how fintech will fare under President-elect Trump. Well, let's get to the market panel. Why don't we? Vital Knowledge founder Adam Christofoli and Wilmington Trust head of investment strategy and CNBCbc contributor megan shu welcome to both of you megan so the uh the major indices mostly lower a lot of people wondering what a second trump administration is going to bring for equities you say there are puts and takes it It's unclear. But I wonder particularly what your take is on big tech, because whether it's NVIDIA and the likely China export restrictions that we're going

to continue to see, whether it's Apple, Amazon, Google that have at times been in a President Trump's crosshairs, it looks like it could be iffy, no? Yeah, I think you are really describing the dynamic that we have been focused on, which is that a Trump 2.0 economy is probably one, you know, our overarching message is one of wider distribution of outcomes. So potentially higher highs, but also potentially lower lows from some of those riskier policies that you've dimensioned so well on the network. As it relates to technology, I think this is a perfect example of a sector that's kind of caught in the crosshairs of those policies. And I think here it matters magnitude of the policies as well as timing. And when you think about regulation, so a lighter regulatory touch, particularly right now when artificial intelligence is at its really ascent and a very critical part of the technology picture going forward, we think that that would

be helpful for big tech. But then if you move into the latter half of 2025 or 2026, tariffs probably become a little bit more of a focus. And there, big tech is at risk from retaliation as well as supply chain disruptions. And then overarching all of that is really the interest rate backdrop, which moved higher today. and we don't see moving meaningfully higher from here I think to see the ten year yield move much above four and a half percent would require. A bigger

rewriting of growth expectations than we expect- but that would be a headwind to valuations as well so. Over all we are still constructive on big tech and technology but I wouldn't be moving too much out in terms of an overweight.

We think you need to maintain that exposure and keep a long-term time horizon. As we've been talking, Skyworks results have crossed. The initial move on that is higher. We're not ready with those yet, are we? We are. Pippa Stevens has those numbers. Pippa. Hey, John. So for Skyworks, earnings coming in at 155 adjusted. That was three cents ahead of estimates. Revenue at 1.02 billion. That was in line with estimates. Now, non-gap gross margin for the period was 46.5 percent. That was also in line. Q1 2025 revenue guidance was slightly soft. Now, the company did say that AI is poised to ignite a transformative smartphone upgrade cycle propelling demand. And they said that they're in the early stages of this multi-year trend.

You see their shares up about two and a half percent. Guys. All right. Thank you, Adam. Christopher, we want to get to you on technology. Don't know if you want to talk about Skyworks, but I'm curious about some of these marketplaces. Shopify had a really strong day, up 20 plus percent, I believe. Applovin is up just about doubled in the past month. Shopify gave a big, strong holiday forecast.

Its Q4 tends to be influenced by payments volume. So we've got Spotify, different from Shopify, coming up this hour in a slightly different space. We're going to talk to Shift4. What do you see potentially happening here in digital marketplaces and payments that investors ought to be paying attention to? I think for a lot of these companies, they have such powerful growth tailwinds that they're almost agnostic to the regulatory or the political environment, which is why on days like this where yields spike and you saw weakness in a lot of the more economically sensitive groups, these names tend to shine. They almost take on a utility or a staples-like characteristic of being almost a safe haven.

They have this duality to them of being both growth and safe havens at the same time. So I don't think there's a ton of anxiety politically when it comes to tech. Obviously, they're going to be impacted, you know, depending on what happens with the M&A policy. Supply chains could be at risk depending on how tariffs shake out. But I think it's more kind of investors taking a step back and looking at what would the implications be for domestic growth? What are the implications going to be more importantly for rates and inflation as these policies are pulled out? Adam, I'm going to hit the pause button because we've got Instacart earnings out, and Deirdre Bosa has those numbers for us. Hi, Dee.

Hey, Morgan. Stock is volatile in the after hours. It's initially up by more than 2%. It's now lower by about 6%. Let me give you the numbers. It was a beat on the top and bottom line. Guidance, though, is mixed, which is probably hitting the stock right now. EPS of 42 cents versus 22 cents expected. So big beat there. Revenue of $852 million versus $844 million expected. Beat on all of the other metrics from the third quarter, the key ones anyways, including gross transaction values, orders, and adjusted EBITDA. The Q4 outlook, like I said, is mixed. GTV, that's gross transaction volume, is about in line with the midpoint. The midpoint of the streets expectation is in line. Adjusted EBITDA, though, a little bit light, and that is likely what is hitting

the shares. This is, of course, a measure of profitability. So you see Instacart or Maple Bear shares down more than 7 percent now. OK, Deirdre Bosa, thank you. Spotify earnings are out. Julia Boorstin has those numbers. Julia. Yeah, Spotify missing on the top and bottom line, but we see the stock shooting higher and after I was trading now about 9 percent%. That reflecting a gross margin beat and sort of some mixed expectations, mixed guidance for the fourth quarter. The company's EPS of $1.45, short of estimates of $1.72. Revenues of 3.99 billion euros, short of the 4.02 billion euro estimated. Now, gross margins, though, of 31.1% ahead of the company's forecast and the street account estimate of 30.2%. Monthly active users of 640 million, also 1 million more than expected, while premium subscribers of 252 million also ahead of estimates.

Now, for the fourth quarter, the company is guiding to revenue that is short of consensus, but also guiding to monthly active users and premium subscribers, as well as margins ahead of estimates. So what we seem to be seeing here is some pricing pressure here. Subscriber growth is quite solid ahead of estimates. For an average revenue per premium user, a 471 euro is 5 euro cents lighter than estimates. But investors seem to be liking these numbers here, particularly those gross margins. And we see the stock now up 10 percent. Morgan, back over to you. It's a big move for Spotify. Julia Boorstin, thank you. Adam, I'm going to go to you on this because we see two big moves

in opposite directions right now with Instacart and Spotify. I want to get your thoughts. Yeah, it looks like for Spotify, you know, a big part of the story for them has been margin expansion, cost control and ongoing premium sub growth. And it looks like for Spotify, you know, a big part of the story for them has been margin expansion, cost control and ongoing premium sub growth. And it looks like they kind of hit on all three marks for the quarter and the guide. I mean, I'll have to look at details. I think for Instacart, it's more an issue of just the stock had a big run, elevated expectations. It doesn't seem like there's any major fundamental issue in the quarter or the outlook.

And then for Skyworks, you know, the guidance did look decent versus expectations that one of their big peers, Cuervo, a couple weeks ago had very bad guidance. So it's somewhat of a relief that they are also not guiding below for the December quarter. But I still think there's some anxiety about the overall health of the smart market, of the smartphone market, and then just potential share loss in certain devices. OK, we've got more earnings to bring you. Flutter results. Contessa Brewer has those for us. Hi, Contessa. Hi there, Morgan. Flutter has a big beat on top and bottom lines. Earnings per share adjusted come in at 43 cents versus the 10 cents the street expected. Revenues of $3.2 billion ahead of the consensus here.

The consensus on revenue is $3 billion. It came in at $3.248 billion to be exact. Okay, the key earnings metric, adjusted EBITDA up 74% year-on-year to $450 million. That's $100 million above consensus. U.S. revenues higher by 51% over last year. U.S. EBITDA, a profit rather than the expected loss. In fact, the company is raising full year guidance slightly because of its performance internationally. In the release, Flutter warns that customers have been winning so much money,

though, on NFL games in the fourth quarter that it largely eradicates the big wins in the third quarter. Just off a call here with CEO Peter Jackson, who tells me it wasn't as expensive as it was for competitors because FanDuel's pricing accuracy. It's producing margins that are much higher than its competitors. And also, this football season, he says all of the in-game wagers and that parlay action means the volume of bets at peak moments exceeded Super Bowl action.

You can see the shares there up about 7 percent. The call starts shortly. All right, Contessa, thank you. Megan, close this out for us. My question's about the consumer into Q4. I was just talking about Shopify. They gave a bullish guide that had investors in that stock excited. DoorDash had a strong quarter on the top and bottom lines, but you've got to contrast that with what Home Depot said about consumers stretched by high rates, and Instacart's guide was mixed. Which ones of these should investors pay attention to, expecting whether the consumer is going to continue to have spending power

into and through Q4? Yeah, well, that's the hard part is really taking all of these mixed signals and trying to filter out the noise and figure out what we are hearing from the consumer. And our view is that the consumer is holding up well, certainly has been a continued upside surprise for 2024. We do expect some slowing into 2025, and that's reflected in our estimate for G. D. P. to slow to one point eight percent. Next year but consumers are definitely as we

look at the array of different company commentary. Being more discerning not you stopping purchases or- really pulling back on activity just being a little bit more selective maybe smaller purchase sizes and I think that is

a result of some slowing in the labor market, as well as wage gains and some reduced excess savings. All of that's going to come together so that the consumer is still in good shape, but not going to be as much of an upside driver for economic growth going forward. All right, Megan, Adam, thanks to you both. And now get your napkins out because cover earnings are out. The stock is popping. Kate Rogers has the numbers. Kate. Hi, John. Yeah, popping on this strong report for Q3. EPS beat reporting 15 cents better than the 11 cents estimated. Revenue is also a beat here, $244 million above the $234 million the street was looking for. Adjusted EBITDA, $33.5 million, also above the $29.5 million estimated. Same-store sales, a big beat for

the quarter, up 18.1 percent, much better than the up 12.2 percent analysts had estimated. On this report, also raising its full-year outlook up from its 2024 guidance given back in August. Now expecting a full year outlook of net new Kava restaurant openings between 56 and 58. That's up from 54 to 57. Also projecting same store sales growth range of up 12 to 13 percent. That's much better than the up eight and a half to nine and a5% previously forecast. Kava restaurant-level profit margin now in a range of 24.5% to 25%, slightly above what it had previously guided, and also a guiding for adjusted EBITDA in the range of $121 million to $126 million, also much higher than the previously given range of $109 million to $114 million.

The stock is up just under 10% now. It is up over 230 percent year to date. It's neck and neck with sweet green, actually, for the best performer of the year. Back over to you, Morgan. All right. OK, Rogers, thank you. Now let's turn to senior markets commentator Mike Santoli for a broader look at semiconductors. Mike. Yeah, Morgan, you know, NVIDIA was up today. You see Skyworks bouncing after results just a little bit ago. But in general, the longer term uptrend in semiconductors is now being called into a little bit of question. This is a five year of the semiconductor ETF, the the Sox, which is market cap weighted and therefore gets the full benefit of NVIDIA's move.

But you see here it's been pulling back and it's challenging its 200-day average. There's nothing too extraordinary about that since that average is in an uptrend, but it definitely has not participated in this last little run of indexes to new highs. Now, take a look at the relative performance to the S&P 500. And you really go back almost, I don't know, three and a half years or so to early 2021 when we were first at this level of relative performance for the semis relative to the S&P 500. Now, what that generally means is you prefer to see semis among the leadership groups. It's not an absolutely crucial thing. We have some attention being turned to more non-tech growth sectors and other cyclicals. But it's definitely worth keeping in mind here because typically, if you want to have a maximum bullish view, semis ought to be participating.

We know the real story between the divergent performance in some of the winners and losers in this group. Take a look at the market caps of Broadcom relative to Qualcomm and Texas Instruments. And the reason this is interesting is they all had almost exactly the same market cap about two years ago. And then, of course, Broadcom enters into the sweet spot of AI demand, and it's added about $400 billion in market cap, whereas you've had very little added to the likes of Texas Instruments and Qualcomm based on their end markets. Morgan. Well, I'll take it. Very interesting, Mike. Thank you. Well, up next, Evercore's Mark Mahaney reacts to Spotify's results and tells us what he wants to hear from management. When the analyst call begins at the top of the hour, that stock is higher in overtime, more than 7.5%.

Plus, we're going to discuss the biggest opportunities in the private markets right now with Aries Global Head of Wealth Management. When Overtime's back in two. Welcome back. Occidental Petroleum earnings are out. Pippa Stevens has those numbers. Pippa. Hey, Morgan, a mixed quarter here for Oxy. Adjusted EPS coming in at $1. That was 26 cents ahead of estimates. But revenue was $7.15 billion, a little bit short of the $7.23 billion that Wall Street was looking for. Total production for the quarter was 1.4 million barrels of oil equivalent per day. That was a little bit ahead of estimates. Now, the company did say that they saw their highest quarterly operating cash flow this year during Q3 and that they've made significant progress in their deleveraging

efforts, achieving nearly 90 percent of their short term debt reduction target stock up about one percent here. Guys. All right, Pippa, thanks. Well, Spotify shares are shooting higher in overtime despite a miss on the top and bottom lines. Let's bring in Evercore ISI head of Internet Research, Mark Mahaney. The margins here look good. Mark, tell me what you think. I'm particularly interested in the impact of the strong dollar on this company and the significance of this subscriber beat. Well, the subscriber beat was nice. It was solid. It was somewhat modest, though. John, I think the real outlier here and why the stock's up 7% is we just got record high gross margins and the guidance. It's 31% this is a low gross margin business to begin with but 31% gross margins that's a record

high and the guidance implies that it's sustainable i.e. the next quarter's gross margin guidance is kind of roughly in line with this quarter like that's been the overhang issue on Spotify shares since their secondary since their offerings since their since their listing, you know, whatever it was, five years ago, the business doubled in revenue, but gross margins never moved. The stock didn't work. Then when the gross margins moved, the stock worked. You got more evidence of it today. So we continue to like the stock. So is this a cost cutting story? They've done that to this point. Margins certainly had upside. But I'm curious about the overall growth story here. Is this an audio Netflix, or do they face some of

the same challenges that all of the content subscription names that aren't Netflix are facing, but on the audio side? It's a very different pitch than Netflix, or a very different structural setup than Netflix. Netflix has got gross margins that are almost double what Spotify has because they create their own content. And there isn't this huge consolidation amongst the video content suppliers. There aren't three major video libraries out there. Good for all of us. In music, however, there are three major labels. And so that's why the gross margins are so much lower at Spotify. But over time, I think they've gotten slightly better terms from those labels and they've been

able to roll in more kind of advertising or promotion type revenues. Look, if you're an artist or a label and you want to break globally, the best, the biggest platform out there is Spotify. And these artists and labels are paying to get promoted on Spotify. And that's very high margin contribution for Spotify. So I think that's really helped them too. And then maybe podcasting has really come through. Look how influential podcasts have become, you know, just in this country. And, you know, the leading podcaster globally and in the U.S. is Spotify. I don't think they've monetized that podcasting platform well enough yet. So that's sort of the upside out there. But I'm very intrigued. It's been a very successful pivot for this company over the last couple of years.

I give him a lot of credibility, credibility for that. That was exactly where I was going with you, Mark, was the podcasting business, because it does seem like a small collection of several that have very, very large followings are really making all the money in the podcasting world. And everybody else hasn't totally figured out how to crack the code and monetize. And I wonder if you think Spotify will be the company that does it. I think they will. But, you know, it's primarily the artists. There's a few of those podcasters that are making a huge amount of money because they're able to reach large audiences because people love their content. So they got these massive followings, Joe Rogan. Now, the advantage that Spotify has is the platform is big enough. Now they've created a marketplace that's big enough. They no longer need to do these aggressive, exclusive distribution deals and pay out

multimillion-dollar contracts to get people on their podcasting platform. It's already established. So I still think this is a small part of Spotify's business, single-digit percent revenue contributor. But I'm intrigued by the power of podcasting now and the ability for Spotify to better monetize that over time. I want to find new growth areas for the company because, look, this is a stock that's gone hyperbolic over the last 12 months for good reasons. But if you want to buy now, you need to have new greenfield opportunities. And I think podcasting is still one of those. So in light of that, does premium now become a key metric that moves the stock? Because we had a miss on the top and bottom lines, but we know the premium results for the quarter and the guidance around it were better than expected.

And it does raise the question at a time where consumers are continuing to tighten their belts and opt for ad-supported platforms on the video streaming side, the fact that premium premium is growing? Yeah, I'll throw a different direction by you on that question, which is I'm really intrigued by the opportunity. They talked about it on the earnings call last quarter. It's not in a press release. I want to hear management talk about this quarter, which is what about that super premium offering you mentioned last quarter, like 18 bucks a month? I mean, look, they've got 252 million subscribers globally i'm sure they're five to ten percent so we're talking like 10 25 million people who would pay you know 20 dollars for they love music so much of course they're people like that who would for something extra though so wrap it all together audio books unlimited you know podcasts unlimited music unlimited and maybe some exclusive new um music uh you know you get to hear the new whatever album 24 hours before everybody

else does. Like, I know the real music diehard people out there. We all know that. And I think there's a real opportunity for actually Spotify to take up pricing over time. So I'm waiting to hear when they get that, when they're able to announce that. OK, we'll be listening to the call. Mark Mahaney, thank you for breaking down the results with us with the stock higher. Another stock that's higher right now is Rocket Lab. We've got those earnings out and they're shooting up 18.5% right now. It was a beat on the top and bottom lines for Rocket Lab. Earnings, a loss of 10 cents per share.

That was a penny better than estimates. Revenue also better than expected, coming in at $105 million versus estimates of $102 million. That represented a 55 percent increase in sales. In terms of the guidance, saying adjusted EBITDA loss of $30.9 million is what's expected, it looks like, for the current quarter. That is better than estimates. Adjusted gross margin for the last quarter, I should say. Adjusted gross margin of 31.3 percent, also better than estimates. Adjusted gross margin for the last quarter, I should say, adjusted gross margin of 31.3 percent, also better than estimates. For Q4, Rocket Lab is expecting revenue of $125 million to $135 million. That is also better than street

consensus and sees Q4 adjusted EBITDA loss of $27 to $29 million, which is basically in line with expectations. The company also talking about its Electron rocket, which is its small rocket, and the fact that they've so far launched 12 and that that's a record for the year with more launches expected to go in November and December, speaking to development of the medium lift neutron rocket and the space systems and that all of those businesses together really propelling, it looks like, this guidance that would be a record amount of revenue for the quarter in Q4. So you can see shares are up 15%.

This is a stock that has been soaring triple digits since the start of the year, John. Yeah, lifting off in overtime for sure. Well, up next, Aries Global head of wealth management on how the private markets will perform under a second Trump administration and where he sees the biggest opportunities right now. And check out shares of Tyson Foods, the big winner in the S&P 500, the meat producer bringing home the bacon or maybe having something to crow about, meeting analysts' fourth quarter estimates thanks to a huge turnaround in its chicken division, and that's partly due to lower feed costs. We'll be right back. Welcome back to Overtime. The post-election market rally taking a bit of a breather today as investors prepare their portfolios for 2025 in the incoming Trump administration. Our next guest says private markets need to be a part

of your allocation. So joining us right here on set is Aries Wealth Management Global Head Raj Danda. Raj, it's great to have you. Welcome. Working great to be here. Let's start right there. When it comes to making the case for private markets in retail investors' portfolios, what is it? Well, it's really simple. They're just too large to ignore. You know, the democratization of alternatives is important in that it sort of sets the backdrop. There's more access, there's more education. But fundamentally, the private markets really dwarf the public markets in size. If you simply look at the breadth, there's 20,000 companies that have over 100 million in revenues, 90% are private. And so you really are, you know, you really can't invest if you're not thinking about the private markets. The way we

think about it is it's not an alternative anymore. The private markets have such diversity. That was how we would go to the public markets originally, to find a diverse set of opportunities. Today, it's the private markets that provide that diversity. And when we see the stock market at record high or hovering right near record high, it does seem like the 60-40 portfolio is working again, finally, the first time in a while, at least for now. So when you do look to the private markets, what's compelling, especially as you do look to 2025 and a new administration that, at least right now, seems to be igniting animal spirits? The 60-40 narrative is increasingly dated. And in our narrative that's a hundred percent of the public

markets zero to the private markets we you know there's there's day trading and then there's wealth management and they're very different things the private markets really solve several different client issues durable income is lacking today it's some sort of a defensive instrument, and so private credit has filled that and will continue to be a solution. So many wealthy individuals have really concentrated risk, and so the diversification of secondary strategies is solving that issue. And then tax is a solution that's lacking often, and particularly in the public markets, it's very hard to have tax-efficient solutions. The private markets do that really well

for real estate and infrastructure. Raj, thanks so much for being with us. My question has to do with, I guess, a category of wealthy individual that's maybe not your typical wealth management client, but is now being pitched this private market idea. And I guess my concern for that person, that family is around liquidity and transparency. It's going to be a little bit less than they're used to and just being able to look at an app and see what the price of your stock portfolio is. Right. So how much education preparation does there need to be for that potential private market investor? Yeah, it's a great question.

In fact, the dialogue around liquidity, around volatility, correlation, is driving a significant amount of the flows into the wealth channel for alternatives. So we find the perfect place to start is to have a conversation around a client's goals and think about what is the liquidity they need. Inevitably, and for decades, retail investors have overpaid for liquidity. They'll have 90% of their portfolio in liquid assets,

and the top financial advisors have to spend an inordinate amount of their time keeping the clients invested during the downturns. So after you've done appropriate liquidity planning, alternatives still will be in the private markets will still provide great solutions for a higher risk adjusted return. Volatility is another discussion we have all the time where the volatility can be a distraction. Correlation is a conversation we have all the time in our education, thinking about what's the right construction in a portfolio that addresses the client's goals.

So one of the other things that Ares is involved in and has gotten some attention lately given the fact that the nfl greenlit aries is one of four firms that is now able to invest in football teams is sports investing what kind of opportunity is there for individual investors through the wealth channel well we love talking about sports aries was one of the first to have a dedicated strategy for sports media. And it was really almost a half dozen years ago around COVID where the narrative started to become clear. We all see the demand for live content. We come in on Monday and Tuesday and talk about sports. We don't talk about much else anymore. And so the media rights,

the ancillary real estate opportunities, everything that goes with sports assets globally is an addressable market in the trillions. And it's one that we think individual investors can now be investing in early. And there are many different ways to do it. You can do it through European football. You can do it through F1. You can do it through the NFL, where, as you said, we're one of the few teams

that is involved in the minority stakes. So, again, to my comment about correlated assets, the great thing about these sports assets is they've been growing at you know the mid-teens low to mid-teens last 10 15 years that's really just an equity opportunity and a majority owned opportunity today and one of the things aries is known for is flexible capital so we can provide some increased amount of debt we can we can expand the capital structure and that will create value in addition to our history there. So we're excited to go to market with some sports and media strategies in the near term. All right. Raj Danda of Aries, thanks for joining me here on set. Great to have you.

Yeah, good to see you. Time now for a CNBC News update with Kate Rogers. Kate. Hi, John. Former Massachusetts Air National Guard Jack Teixeira has been sentenced to 15 years in prison for leaking military documents. In March, he pleaded he admitted rather to collecting classified military documents and sharing the secrets on the social media platform Discord. Three former detainees of the notorious Abu Ghraib prison have been awarded $42 million for their treatment there. A jury today held a Virginia-based military contractor responsible for contributing to the detainees' torture and mistreatment 20 years ago. The contractor, CACI, says it will appeal that decision. And Apple and A24 are reportedly in early development on a film about FTX founder

Sam Bankman Freed. According to multiple outlets, the movie will be written by girls creator Lena Dunham and based on the Michael Lewis book Going Infinite, which details Bankman Freed's rise and fall. Back over to you, Morgan. Definitely going to watch that. All right, Kate Rogers, thank you. Well, Shift 4 shares slumping after the payments processor missed Wall Street's third quarter profit and revenue estimates. But up next, founder and CEO Jared Isaacman on whether he is seeing signs of a

cutback in consumer spending and more. Welcome back. Shares of fintech company Shift4 Payments closed out the day 5 percent lower after reporting third quarter earnings this morning, which showed the company missing Wall Street's estimates. But joining us now is Jared Isaacman, founder and CEO of Shift4 Payments. Jared, it's great to have you back on the show. Oh, thanks for having me back, Morgan. It's great. So you did actually post a record Q3 in terms of your results, but arguably the street had a very high bar for you to hurdle. It does seem like narrowed full your guidance and specifically volumes were what analysts focused in on. So I guess what are you seeing right now in the payments processing space, especially across the many industries and customers that you do serve, whether it is restaurants or

hotels and hospitality, airlines and on down the line? Yeah. You know, just yesterday we hit our all-time highs. So I'm not surprised the stock took a little bit of a breather. But if you look at our KPIs, whether it's net revenue, volume, gross profit or EBITDA, they all grew over 50 percent year over year. So honestly, I think when investors just, you know, realize that they can annualize Q4 and realize 2025 is kind of in the bag, that we'll be back to making new all-time highs. So, and with respect to your question, you know, how's the consumer holding up? Where are we seeing spending changes? You know, restaurants certainly softened a little bit. You had some same store sale on Q3, but we've started to see a little bit of a rebound in October.

Hotels are back up to growing same store sales. Sports entertainment is doing awesome. Ecom is doing really well. So I think just people are not, you know, in a rush to go out for the hundred dollar steak dinner as much as they used to be. And we've talked about that before. So something else that you did in the last couple of weeks is you launched this new pay with crypto offering. And that enables merchants to accept cryptocurrency for both e-commerce and also POS systems at a time where we are seeing Bitcoin and other cryptocurrencies rally aggressively right now. What do you anticipate in terms of uptake and actually seeing a utilitarian use for some of these cryptocurrencies? Yeah, it's a good question. I mean, this was this was never a major bet for us, but we've had a small crypto innovation center for the last couple of years. And we've got a very big global e-commerce customer that I think you know well, Morgan,

that's moving into all these new countries. And in those countries, you know, Visa and MasterCard are not necessarily your primary forms of payment. So I think, like, the idea is we always want to invite more payment traffic on our rails. And it's honestly, it's a responsible thing to do when you process for as much of, like, you know, the restaurants, the hotels, the stadiums. There's so many different types of customers we touch at this point. Offering up a variety of different payment methods is important. And it's in new geographies where, again, Visa and MasterCard just doesn't have the same presence.

So we announced Tau Group is one of our first beta customers. Blade is going to be another one of the betas. But I think largely it'll be incremental volume on top of the transactions that we're already taking. Jared, to ask about international a little bit more, there have been expectations that you would have been up and running in more of those international hotels and restaurants. You say now that's in place. And I'm wondering, what are the conditions that matter most on the macro side for you to really continue to see demand in those international markets where you've now got that infrastructure set up? You know, it's a good question. I mean, you know, as I mentioned, I mean, we grew payment volume well north of 50 percent year over year.

So I'd say like we are largely not like our results are not necessarily driven by same store sales growth. I mean, look, one, you know, one percent, two percent here and there, same store sales has an impact. But largely, like when we think about going into Europe, we're talking about taking the same kind drive large scale adoption of our restaurant, hotel and stadium products across Europe and even in other markets. We mentioned this quarter we'll be going into Australia, New Zealand and Latin America as well in 2025. a second Trump administration coming in for 2025, what that could mean, what you're anticipating, both for your company and for the payments processing space. But also, given the fact that last quarter you did make another, your second, history-making space flight, what do you expect the policy piece on space could look like, too, especially with someone like Elon Musk in the mix? Yeah, I mean, look, I think that

this new administration coming in is clearly going to do things that are very pro-business and I think remove some of the red tape and regulatory challenges across a number of spectrums, whether it's the M&A front or, you know, advancing cryptocurrencies and stable coins. So, I mean, the market has clearly responded over the, you know, over the last week that this is probably very good, you know, very good for business. And I think Shift4 is positioned like incredibly well to take advantage of that. You know, turning to the space front, I'm so excited for what this means for SpaceX. I mean, you know, it's almost been like controversial to give contracts to the company that has the best product at the lowest cost in SpaceX. Like you almost had to throw money away on alternative vendors just to appear not to be too Elon friendly.

When really as taxpayers, what we should care about, you know, is low, you know, best product, lowest cost. You know, let's let's get a lot of starlings up there and improve connectivity across the world let's return american astronauts to them and move on to more be incredibly helpful for that by just you know making sure again you know american tax taxpayer dollars are going to the right place for the most impact um right now that's spacex jared isaacman great to have you on. Thank you. Thanks, Morgan. CEO of Shift4, which, John, stock ended lower today, 5.5%, but is still up 10% since the election. All right. Well, stocks may be near all-time highs, but total shareholder yield is approaching

record lows. Up next, Mike Santoli looks at whether a turnaround for investor payouts could be on the horizon. Be right back. Welcome back. Mike Santoli returns with a look at why the total shareholder yield is approaching record lows. Mike. Yeah, John. So this is really just another sign that the starting point for future investment returns is a little bit challenged versus history. So total shareholder yield is just the dividend yield of the stock market plus whatever companies use to buy back their own share. So buybacks plus dividends over time.

This goes back some 60 years from Bank of America. And we're at pretty much the low end of the range. Largely, that's because the dividend yield right now is about one and a quarter percent. But then you have a similar amount added by buybacks, which is our cash kind of sent out by companies into investor pockets. But it's still not really enough to make it that much of a cushion right here. I know there's a lot of excitement about a potential trillion dollars in share buybacks this year. But that's not really that big as a relative to the size of the overall stock market. So there is the capacity for these payouts to go up. Dividend payout pretty low. Companies have a lot of cash. So maybe that's one of the more

bullish ways of looking at this, as well as, of course, Morgan, going into companies that already are generous with their cash distribution plans. Okay. Mike Santoli, thank you. Up next, all of the overtime earnings movers that need to be on your radar. As more analyst calls get set to kick off, stay with us. Welcome back to Overtime. Take a look at shares of Rocket Companies. That's not the space company, Rocket Lab. It's Rocket Company, FinTech company, mortgage lender.

Earnings were in line. Company beat revenue expectations. It said both purchase and refinance market share were up year over year. However, fourth quarter guidance coming in a little light on the top line. Those shares down almost 9% in overtime, Morgan. All right. Well, do hedge funds deliver more alpha historically with a Republican or a Democrat in the White House? We're going to break down those numbers next. And be sure to scan the QR code on your screen. That's right there right now to register for tomorrow's CNBC Delivering Alpha Investor Summit. That's in New York. It's featuring some of the biggest names of Wall Street. Welcome back to Overtime.

Tomorrow is CNBC's Delivering Alpha Investor Summit in New York. Should hedge funds be cheering the upcoming change in the White House? Well, Leslie Picker looks at which political party tends to deliver more alpha for that industry. Leslie. Hey, John. Yeah, hedge funds actually generate more alpha under Democratic presidents than Republican ones. On an average annualized basis, hedge funds underperform the S&P 500, regardless of who is in the White House. But when it's a Democratic administration, the underperformance is about 180 basis points, whereas with Republicans,

it is more than 330 basis points. This is based on data going back to 1991 collated by HFR. Now, if you strip out 2008, which was an anomaly in many ways, They tend to underperform, but Republicans do get a very slight alpha edge. And the total net asset flows were higher under Republican administrations than Democratic ones since 1991, even though the Democrats served six more years in the highest office over that time, Morgan. This is really fascinating, Leslie. I mean, it raises the question, does the hedge fund industry's performance and flows impact the way that participants are donating to the two political parties? There's a much bigger gap here and it kind of surprising results. According to a recent report by Open Secrets, Morgan, hedge funds have been contributing far more to Democrats than Republicans, despite some high profile GOP donors like Ken Griffin and

Paul Singer. In fact, the 2024 election cycle, individuals in the industry donated $31 million to Democratic candidates, while half that amount, just $16 million just, went to Republican candidates. Of course, the industry is not monolithic, and their donations may have more to do with their personal beliefs than whether they think the president will impact returns and flows, guys. All right, Leslie Picker, thank you. Looking forward to all the delivering alpha coverage. And in the meantime, John, we saw the market take a breather here, but tomorrow inflation's on deck and CPI very much in focus, especially given all the Fed speak we're getting. Indeed. But I'm going to end this hour where I began thinking about Shopify. It's just at such, not Spotify, which had earnings with Shopify. It's at such an interesting level after this 20%

gain today. It's kind of similar to where it was at some highs, I think, in 2021 before it had a bigger pop up above 150 a share and then came down. So can it continue powering from here in the whole digital economy that it's sort of gotten off sides for a while post-COVID? Yeah, it's a huge move for that name, to your point. Shopify, Spotify, rocket companies, Rocket Lab, always lots to talk about here at Overtime. All right, well, that's going to do it for us here. Fast Money begins right now.