Closing Bell - Closing Bell Overtime: Stocks Surged After Fed Pause; Jason Furman On What’s Next; DoorDash CEO On Strong Quarter And Consumer Spending 11/1/23

Episode Date: November 1, 2023

Stocks surged after Fed Chair Jay Powell’s press conference and the Fed held rates steady. Jefferies Chief Market Strategist David Zervos and BD8 Capital’s Barbara Doran break down the market action including earnings from Qualcomm, Airbnb, EA, DoorDash, Roku and Etsy. Former CEA Chair Jason Furman on the Fed and health of the economy. DoorDash CEO Tony Xu talks the latest quarter and consumer trends. Moor Insights & Strategy CEO Patrick Moorhead on Qualcomm’s earnings. Plus, outgoing BlackBerry CEO John Chen reflects on his tenure and what’s next.

Just off session highs, a Fed-led rally as the S&P closes back above 4,200. Tech leading the gains, yields falling. That is the scorecard on this Fed day, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Fort. Yeah, and dozens of earnings reports are hitting this hour, including numbers from Qualcomm and Supermicro, along with household names like Airbnb, EA, PayPal, and DoorDash. We will bring you the highlights and exclusive interview with DoorDash co-founder and CEO Tony Hsu

before he talks to Wall Street. Plus, former Council of Economic Advisors Chair Jason Furman joins us with his first reaction to the Fed decision and his read on the economy ahead of Friday's jobs report. And now let's get straight to the market and the post-Fed reaction. Stocks gained steam during Chair Powell's news conference. Ten-year treasury yields pulled back sharply. Tech and communication services led the gains. Senior markets commentator Mike Santoli joins us now. Mike, we're above 4,200 on the S&P now. Is this momentum? It's the start of it, John,

and potentially what we've done is recaptured the ground lost in the S&P from when the mega cap earnings really started to flow last Tuesday. So we did a round trip, made a visit down to some really old levels several months ago in terms of the overall index. And it's the start of this idea that we can gain some traction if Treasury yields do back off a little bit. It did get a little extra push from the press conference that Fed Chair Powell gave, where he essentially declined several opportunities to strike a more hawkish tone, essentially saying, look, we can be patient for a while. We don't really think we're going to need to get economic growth a lot lower than it is right now to take care of inflation. So folks were geared for perhaps the possibility he wanted to focus investors on the

possibility of this December rate hike. He didn't really seem to have that agenda. All right. Got to get to Qualcomm earnings. They are out. Christina Parks Nevelis has the numbers. Christina. Despite a global slowdown in smartphone shipments in Q3, Qualcomm managed to post a beat on the top and bottom line with adjusted EPS of $2.02 on revenues of $8.7 billion. Keep in mind, in early September, Qualcomm announced that they would continue to supply Apple with phone chips for the next three years, helping the handset segment bring in $5.5 billion in revenues, higher than estimates. Internet of Things segment fell in line with estimates, and auto beat despite weakness from other chip makers like OnSemi and Lattice. That's Qualcomm's 12th quarter of double-digit revenue growth, but keep in mind, auto does contribute a smaller portion to total revenue. For Qualcomm's Outlook, though, on Q1, that was

a major concern for a lot of chip makers this current quarter we're in. Well, Qualcomm calls for an EPS range of $2.25 to $2.45 adjusted. That range is higher than estimates. Mandelman saying their product roadmap has never been stronger, and that's why you're seeing the stock up 4%. All right, Christina, thank you. Mike, the low end of the range is Qualcomm's giving is right about in line with consensus, so the midpoint significantly higher, and autos sound better than they did under on semi. What do you make of it? Yeah, another example of folks braced for worse than we got. I do think it's been fairly encouraging the way semiconductors in general have traded, even when NVIDIA had a rough day the other day. Pretty much all the other stocks in the

sector were up. And of course, AMD managed to turn it around to the upside. So it's just another example, I think, of investors sort of turning from how bad are things going to get to maybe the market has already cheapened stuff and priced in some of the difficulties right here. So Qualcomm, not usually this stock that has a wide range of expectations surrounding it, but they did manage to sort of please a street that was maybe braced for something worse. Yeah, shares are up 4% right now. And we also know November seasonally tends to be a really strong month for semiconductor stocks, for the SMH specifically. Mike Santoli will hang right there. We're going to bring in our panel because Jeffrey's chief market strategist, David Zervos, is here on set. And we're also joined by Barbara Duran,

BD8 Capital Chief Investment Officer. Good afternoon to you both. David, it's great to have you here in studio. I do want to circle back on the Fed with you because we did have this late day. And stocks were higher all day. But we had this late day rally for stocks. We saw Treasury yields come off more aggressively in the final hours of trading here. And the takeaway seems to be that Fed Chair

Powell reserved the right for more rate increases, but there's a sense that maybe his tone has shifted and he was not redirecting the market, to use Steve Leisman's term, toward another rate hike. You see it the same way? I think that's largely right. I think he, this was about as dovish as you've seen Chair Powell since all of this began. I don't think there's been a more dovish press conference since this all began, and even in the lead-up to rate hikes last March when he was prepping us for us. I mean, he said that the balance of risks for over-tightening versus under-tightening are basically now symmetric, which is something new. He didn't say that wasn't in the statement, but that was reiterated twice during the press conference.

That was my biggest takeaway, is that I actually thought it was as close to a victory lap as I've seen, which I'm not sure is what he wanted to give us, but he gave it to us. And I think the market's applauding it, but he has to be quite careful with it because he did reserve the right to come back. If inflation picks back up, he could definitely give us another one or stick with higher for longer for a much more extended period of time, which is certainly plausible and probably even likely. But it was much more victory lappish and much more, I think, dovish than we've seen in the past. Interesting. Barbara, I want to get your thoughts on this as well, whether you see it as a victory lap. And given the fact that Powell also reiterated the fact that maybe we haven't

seen the full effect of interest rates, how much this has yet to translate to earnings and to corporate balance sheets, especially given the fact that we have had a pretty noisy quarter so far? Yeah, well, first, I do agree with David. It really struck me as a victory lap to say basically the risks are balanced. We are in perfect alignment here. And he also said when asked directly, he does not see a recession, which indicates he does see a strong economy while saying at the same time, we've got moderation in job growth and wages. And also it was interesting, he added this time to credit conditions tighter financial, acknowledging what's happened in the backup of rates,

but was reluctant to commit to saying what this means in terms of interest rate hikes. And certainly several strategists have equated it to three to four 25-bip hikes. So what I think, you know, my takeaway, you know, as an equity investor, given what's happened in the last three months with 10 percent correction, a lot of stocks have come down. There's bearish sentiment. Technically, we look oversold. You saw that ISF number come in today in terms of that was manufacturing weaker than expected. We've been watching credit balances go up, delinquencies go up. The economy clearly is slowing. There's concerns about consumer spending. So I think we may just be still on target for a, quote, soft landing.

And that's positive for equities. If you look at earnings that have come in so far, and this week's going to be about the halfway point. But if you look at looking at what facts that some facts that numbers, if you do the blended average, both what is estimated, what's been reported, it's coming in at about four plus percent. X energy, that's 10 percent. That marks the first positive quarter in a year since third quarter last year. And of course, that is what the market is looking at in earnings. And guidance has been pretty decent. It obviously depends on the sector and the company, but it is setting up, I think, for a possible year end rally. I think a lot is discounted right now. And certainly that was a that was a very positive and highly confident

pal today. OK, well, speaking of earnings, Airbnb, those results are out. Deirdre Bosa has the numbers for us. Heidi. Hey, Morgan, it was a solid, mostly in line quarter. But what may be hitting the stock is a weaker than expected fourth quarter guidance. Shares are down about 4%. Let me give you the numbers. Revenue coming in at $3.4 billion versus $3.37 billion expected. EPS of $6.63. I'm not going to compare that to the Wall Street estimate, however, because it includes a $2.8 billion one-time non-cash income tax benefit.

Adjusted EBITDA, though, that coming in better than expected at $1.83 billion, which is $1.74 billion. Gross bookings a little better than expected, as well as the third quarter average daily rate. Guidance sees Q4 revenue of $2.13 to $2.17 billion. The street was looking for just a smidge higher at $2.17 billion. The street was looking for just a smidge higher at $2.18 billion, expects its adjusted EBITDA margin to exceed Q4 of 2022, guys. So we'll continue to digest this, but shares are down about 4% in the after hours. Stock is up about 40% year to date.

All right, Dee, thanks. And moving in the other direction, DoorDash. DoorDash beat on top and bottom lines. Revenue came in at $2.16 billion versus $2.09 expected. Non-gap loss per share was $0.19 versus a larger $0.40 loss expected. The guidance also beats expectations here. DoorDash says Q4 marketplace gross order value will be between $17 and $17.4 billion versus $16.6 billion expected. That's overall sales of goods through the marketplace. The guide for adjusted earnings from DoorDash before interest taxes, depreciation, and amortization between $320 and $380 million. That's 350 at the midpoint versus 250 expected. Peeling the onion a bit on what's driving this demand and efficiency orders and gross order value both beat up 24%. The top line beats here are interesting, but the earnings outperformance is eye-catching with EBITDA in Q3 and the Q4 guide, both about 40% above consensus. And coming up, DoorDash CEO Tony Hsu is going to break down those results in an exclusive interview

before he speaks with analysts on the earnings call right here on Overtime. All right, stay tuned. Electronic arts earnings are out as well. Steve Kovac has those for us. Hi, Steve. Hey, Morgan. Yeah, and shares climbing. We saw revenues beat and some solid guidance here. So let's go over the numbers. EPS coming in at $1.47, but we're not comparing that one to estimates. Revenues, a slight beat here, $1.82 billion versus the $1.78 billion expected. And then some guidance looking good here. Q3 net bookings in line with expectations. They're looking at $2.25 billion to $2.45 billion versus street expectations of $2.35 billion for this quarter. And then for the full fiscal year, estimates remain the same despite this quarter's revenue beat,

expecting between $7.3 billion and $7.77 billion versus expectations of $7.58 billion. And then let's talk a little bit about EA Football Club 24. That's that new soccer game from EA without that FIFA partnership they lost last year. EA saying they have over 14.5 million active accounts for this new football club game in the first month. By the way, I'm going to have an exclusive interview with EA CEO Andrew Wilson going over these results, the M&A landscape in gaming after the Microsoft Activision deal, AI, and a bunch more at 10 a.m. tomorrow on Squawk on the Street. Guys, I'll send it back to you.

All right. Who needs FIFA? That's up almost 4%. All right. Now for some streams and homes. Roku is also up quite a bit. Julia Boorstin has the numbers. Julia? That's right, now for some streams and homes. Roku is also up quite a bit. Julia Boorstin has the numbers. Julia? That's right, John. Roku shares are shooting higher in after-hours trading after reporting revenue that beat expectations. Revenue is coming in at $912 million versus the $855 million estimated.

Earnings per share did meet estimates. Sorry, were worse than expected. A loss of $2.33 versus the loss of $2.12 that was expected. But I think a key factor here that's driving the stock up 10% after hours is guidance. The company is saying it sees fourth quarter revenue of $955 million. That's a hair ahead of expectations, but even more important, guidance for fourth quarter adjusted earnings of $10 million versus what analysts were expecting, which was a loss of $51 million. So this is really key here.

You see the stock surging on that guidance for better than expected profitability in the fourth quarter. I want to transition over here to the results from Zillow. We heard from Zillow Group as well. Zillow shares are pretty much flat on these results, beating on the top and bottom line. Adjusted earnings of 33 cents per share versus the 22 cents expected. Well, revenues of 496 million were ahead of the 481 million that was estimated. But a key thing here is that the fourth quarter guidance for Zillow is lighter than anticipated. The company guiding to a revenue range of between 316 and 334 million. That's below the 458 million that analysts were looking for.

And adjusted earnings of 40 to 60 million, also lighter than the 76 million estimate consensus. So that's the key factor here. Weighing on Zillow shares now down 1 percent. Back over to you. All right, Julia, thanks. David Zervos, if you take out the housing connected names from those reports, Zillow and Airbnb and look at some of the consumer going on. I'll highlight DoorDash because I was looking closely at that. A little bit better than expected. Guidance into Q4. How much is that notable and does it fit into what we heard from the Fed at all? Well, we are coming off a pretty incredible Q3 from the consumers. So I think a lot of these

companies saw strength. They saw strength that was probably unexpected as well and presumably are going to keep going with that forecast until they see otherwise. And that seems to be, I think, the general rule here. We've had weakness in manufacturing. You saw that data today. But really, all the intermeeting data that came out for the Fed, I thought was remarkably strong. Whether it was the GDP data or the payroll data or anything, retail sales, we saw some big numbers. And a lot of it focused in on the consumer. So it doesn't surprise me that much. It also doesn't surprise me that we keep getting these earnings surprises, if you will, to the

upside, because we still have a decent amount of inflation in the system at 4%. Nominal growth is strong. Earnings are a nominal variable, as we pointed out for many quarters now with our clients. So I think it's not that surprising. And by the way, some of the housing data, as you want to kind of push it as weak, and there are some weak spots, I mean, it's pretty remarkable, honestly, how well some of the housing data has done, given where we sit in mortgage rates. It's held up pretty darn well, especially on the overall price levels. The activity's low, but the levels are high. Barbara, I know you were watching DoorDash and Qualcomm, among others. Qualcomm did better than the flat numbers that many expected. And DoorDash also at Perform. What does it mean to you?

Yeah, I'm actually surprised on Qualcomm because that's really their main business is smartphones. And so it'll be interesting when they get on the call to see what they're seeing. You know, the inventory must be down a lot. You know, we're waiting for replacement cycles to kick in. A lot of purchases were made during COVID. So, you know, I think that's sort of stock specific, not so much tied into a broader demand story. DoorDash as well, that is a more, it's both a macro story and stock specific story in that it's consumer discretionary spending. You know, people have been for some years ordering more at home, having things delivered. And of course, during the pandemic, that really stepped up. But since

the economy has been open for a while now, they continue to do well. They're gaining share against Uber Eats and Grubhub. So I think you're seeing a lot of good things there and they're reaching scale and that can help costs. But it looks like the consumer is still spending and still ordering out. You're not seeing the pinch. So I think, you know, people are trying to guess when the consumer runs out of money. And some people are saying by end of this year, which is just a couple of months away. But it still looks like with jobs, wages, we still have excess savings, not so much in the lower income, but we still have excess savings that are higher than the pandemic. And so there's still money to be spent and people still have income. And there's still a lot of people with low debt. They really took advantage

of the low interest rates, particularly with mortgages several years ago. So I don't see the consumer spending falling off a cliff. Clearly it's slowing. You've seen that with credit card delinquencies, as mentioned earlier. But that still is just in line with where it was in 2019 and not remotely where it was in the 2008 crises. Yeah. All right. Barbara Duran, thank you for joining us. And David Zervos, thanks for being here on set and joining us as well. Thanks for having me.

Thank you. Great to be here. We're going to dive a little deeper into the Fed. Let's get to Jason Furman, former Council of Economic Advisors chair. Jason, it's great to have you on. Do want to get your reaction to what we heard from Fed Chair Powell. It was the second straight meeting where we saw the Fed hold steady. We just had a conversation with David Zervos about the fact that maybe this was the most dovish we've heard, or we'll say least hawkish we've heard, Powell, in a while since inflation reared its ugly head. Do you see it the same way?

I don't exactly see it the same way. I do think they raised the bar on more rate hikes, and they raised it so high that we may not hit it. And that's completely fine. But the sense in which it's not dovish is he's sitting there with a 10-year rate of around 4.8% and basically saying he's fine with it, that we're going to continue with something like that. So in some sense, we're in a tighter financial position than we've been in for the last two and a half years. And he's not letting up from that position. Yeah. And we saw that at the FOMC statement, the word financial was added tighter financial and credit conditions for households and businesses. How long does it take for that

to translate to economic activity? Does it move more quickly than the Fed's own interest rate hikes? I think it moves more quickly. I mean, look at where mortgage rates are right now, above 8%. And you're seeing effects of that already in the housing market. One thing that Chair Powell was very good about, there was no victory lap there. He knows that inflation has come down, but that it's still way above where he wants it to be.

But the fact that we've made progress, the fact that there's more tightening in the works from those financial conditions in addition to credit means they can afford to be patient. And that was basically what he was saying today. So Jason, we still got this tight labor market. We got a jobs report coming up. After this color from the Fed,

what's most important in that jobs report? I continue to look at wages. They have moderated some. We didn't see that same moderation in the ECI that we saw in the average hourly earnings. But that'll be the first thing I look at because that's the way you referee between how much of the strong labor market we have is demand, which is a concern for the Fed, versus supply, which is perfectly fine and sustainable. And it does look like a lot of the growth has been coming from supply. We had Gundlach on last hour on CNBC, on Closing Bell, talking about the impact on bonds here. Take a listen. I believe that we've started a bond rally here. I think

we've had such a brutal increase. I think the Fed is sounding the right tone. I do think rates are going to fall as we move into a recession in the first part of next year. Does what Jeffrey Gundlach said there make sense to you? I mean, as we move into a recession is far, far more confidence about a recession than any forecaster should have. I'd hope we would have learned that lesson over the last year. A recession is always a possibility. If we get one, we're going to see big rate cuts.

But the most likely scenario is no recession. I think the most likely scenario is inflation stays above 3%, in which case the Fed is not going to want to see those long-term rates come down very much. And they're certainly not going to lower their short-term rate. Okay. Jason Furman, always appreciate you being with us. PayPal earnings are now out. Leslie Picker has the numbers. Leslie. Hey, Johnny. PayPal coming with a double B here. The bottom line jumping 20% to $1.30 per share on a non-GAAP basis. Analysts were expecting $1.23.

Top line slightly surpassed estimates at $7.4 billion on an FX neutral basis, a gain of 9% year over year. As a result of Q3 performance, PayPal is increasing its non-GAAP EPS guidance for the full year, but lowering operating margin guidance to 75 basis points of expansion from 100 basis points previously expected. Concurrent with earnings, PayPal also naming a new CFO today, Jamie Miller, who most recently served as global CFO of EY. She takes over next week from acting CFO Gabrielle Rabinovich, who has been in this role since earlier this year. This evening's earnings call will also be the first for new CEO Alex Criss, who joined the company during the last few days of the third

quarter. In the release, he says, quote, my first 30 days leading PayPal have confirmed my belief in the company's strong assets and market position. Other key numbers from the quarter include total payment volume that grew about 15% to $387.7 billion. PayPal processed 6.3 billion payment transactions up 11%. Non-gap operating margin contracting 18 basis points to 22.2%. And both new executives will be tasked to revive a stock that slid 27% in the year going into earnings, although shares are currently wobbling around a little bit, looking about down about half a percent right now as investors digest the numbers and await

the call, which begins in about 40 minutes or so, guys. All right. Jamie Miller, no stranger to turnaround companies. She was also CFO of GE at one point. Well, super micro earnings are out and Christina Parts Nevelis has the numbers. Hi, Christina. Now we're seeing a pretty strong earnings report for this chip company that helps with servers and storage. They posted adjusted EPS of three dollars and forty three cents. That's a 23 cent beat on revenues of $2.12 billion. For the Q2 guidance, also a beat. Both ranges, the EPS of $4.40 to $4.88 is much higher than the $4.06 the street was anticipating. The Q2 revenue guidance, also higher, $2.7 to $2.9 billion. The company said that despite the ongoing GPU supply constraints and their press relief, they were able to work diligently and meet these challenges.

And they're still seeing demand for AI infrastructure and compelling new compute and storage products. And so that's the reason why they're raising their fiscal year 2024 outlook to 10 to 11 billion dollars in revenue. So,, beat top and bottom line, beat for Q2 earnings. And they say they're raising their fiscal 2024 outlook. However, there's another line further down in the report that says they're maintaining it. So there's a little bit of a mistake in that press release. Nonetheless, you can see the stock up 2.5%. Yeah, they make the CPU, GPU muscle cars that hold NVIDIA and so many other chips. So that's an important one to watch. Christina, thanks. Etsy earnings also are out. Julia Boorstin is back with those numbers as well.

Julia. That's right. Etsy beating on the in terms of earnings, earnings coming in at 64 cents versus the 51 cents estimated. But as you see, Etsy shares are down about three percent. Revenues missed estimates at 636 million, a hair below the 641 million estimated. But there was also a warning from CEO Josh Silverman about the fourth quarter. He says, quote, there's no doubt that this is an incredibly challenging environment for spending on consumer discretionary items. It's therefore important to acknowledge that this volatile macro climate will make it challenging for us to grow this quarter. So that key warning about Q4 seems to be weighing on the stock.

Back over to you. All right, Julia Borson, thank you. Of course, it is the holiday season, so that is one to watch. After the break, we'll take a deeper dive into Qualcomm's strong quarter and look ahead to the big release of the week from Apple. That's due out in 24 hours. Yeah, and later, it's the end of an era at BlackBerry. Longtime CEO John Chen is retiring at the end of the week. He's going to join us for his exit interview

and his big picture thoughts on the tech landscape when Overtime comes right back. Let's get another check on Qualcomm. The stock is higher by about 3% at the moment after reporting results that beat on both lines. Earnings call is at 445 Eastern, about 15 minutes. Let's bring in more insights and strategy CEO Patrick Moorhead for some insight. Pat, this stock is up about 10% in a week if this move holds. What's it say about smartphone demand and maybe inventories out there? We've had some good news on the clients from Intel and AMD thus far.

Yeah, my channel checks plus with what Qualcomm initially brought out says that Android inventories are down and stabilizing. And this was sooner than I expected, but we may have reached the trough here. And I think that says good things about China. I think it says good thing about Android and obviously how Apple is doing. We'll see very shortly. But Qualcomm's also our participant there. And I also think investors got excited about Qualcomm's foray into the PC market with what they're calling Snapdragon X Elite. Still well off the 130 a share plus levels of a few months ago. But, I mean, it does perhaps also signal some more life in the autos market post on semi. They were warning about some weakness in the European premium end of the auto market.

But Qualcomm did pretty well there, right? Yeah, they did a lot better than I think people expected. And it's the first time, I think, at least from how long I've been covering them for quarterly earnings, that we saw auto introduced into the line item as something that helped them beat the quarter, right? They talked about two things. They talked about smartphones and they talked about automotive. And I think we all thought, I think, potentially based on what we saw with On Semiconductor and what happened with Tesla and the declines there, that that would come in and impact Qualcomm. But obviously,

they have different automakers, different types of cars they go into. So I was surprised on this. We all knew about Qualcomm's giant backlog of $10 billion. But this is the first time that I've been truly impressed by the top line of it and its ability to change the overall company earnings and revenue. Patrick, how much of a read-through is this to Apple tomorrow? I think it says good things about what Apple can do. And I'm expecting Apple to do pretty well with their new phone line coming out. OK. Patrick Moorhead, thanks for joining us. Shares of Qualcomm up 3.5% right now. We have a news alert on Disney and Comcast. Julia Boorstin has the details. Hi, Julia.

That's right. The sale of Comcast's stake in Hulu to Disney is moving forward as expected. Comcast is exercising its right under the put-call agreement that they had. Disney then issuing a press release and filing an 8K, confirming that it is moving forward in buying the 33% in Hulu that it does not yet own. By December 1st, Disney is saying it will pay its percentage of the floor value, $27.5 million, minus capital contributions, which it has made. So Disney then confirming it will pay $8.61 billion and that that will happen by December 1st. In the meantime, the companies will continue their negotiation about the

additional amount that Disney could end up paying the premium that they decide that the two companies are going to negotiate the premium they agree upon to that floor value that was set years ago. So we see this is all moving forward as expected. They say while the timing of the appraisal process is uncertain, they anticipate it should be completed during the 2024 calendar year. Back over to you. Okay. One to watch. Julia Borson, thank you. Shares both companies up fractionally right now. Time now for a CNBC News update with Brian Sullivan. Hey, Brian. Hey, Morgan. Thank you. Secretary of State Anthony Blinken is heading back to Israel and Jordan. A department spokesperson said that Blinken will underscore the Biden administration's support for Israel while also emphasizing the importance of protecting

civilians. Meantime, Donald Trump Jr. just took the stand in former President Trump's civil fraud trial. Prosecutors began their questioning, asking about his professional background and company accounting. And listen to this. The Pentagon is launching a new tool that collects data about alleged UFO incidents. With it, current or former federal employees can report claims of government activity they think could be related to UFOs. And tonight on Last Call, Washington, D.C.'s attorney general joins us to talk about why he just filed suit against some of the city's biggest landlords, alleging they colluded to artificially keep rents high. That is live tonight, Last Call, 7 p.m. Eastern Time. All right. Brian Sullivan, thank you.

And now DoorDash stock. We mentioned jumping in overtime after the company reported beats on both the top and bottom lines and strong guidance. You can see there it's up a little more than 7%. I spoke with Tony Hsu earlier about these numbers and what's fueling the growth. Well, we're actually seeing customers increasingly come to the platform now, you know, for use cases outside of restaurant delivery. And, you know, when you look at the number of customers that come into the industry that shop outside of restaurants, whether they shop for convenience items or grocery items or flowers or pet food or liquor or retail items, almost half of those new customers coming into

the industry for the first time come to DoorDash first. A non, you know, insignificant percentage actually now come to DoorDash, you know, notinsignificant percentage actually now come to DoorDash not for restaurant food as their first purchase with the platform. And certainly when we look at customer segments that have been with DoorDash for longer periods of time or that have been higher users of the platform, we're just seeing greater frequency of cross-selling and cross-shopping behavior into all of these different categories. I think we're becoming a bigger part of a customer's journey and their daily lives. Perhaps once we're a habit at the dinner table, now we're becoming a habit for all of their other use cases. What are you seeing in high-end versus lower-end restaurant habits? We're seeing, well, over three years now,

I would say, you know, we've certainly seen the rise of inflation, both on commodity goods, whether it be grocery items or convenience goods. We've also seen that on input prices, when it comes to the food that restaurants have to use to sell their product. And we've seen for certain segments some trade-down effect where they're purchasing fewer items but actually still continuing the same number of purchases. purchases, and when you kind of add in the increased prices because of the inflation, as well as the reduced number of items, it kind of nets out to be a wash. But what we still see is customers are still looking for that treat. In addition to just feeding themselves or buying their deodorant or whatever daily necessities that they're looking to find, they still are looking for opportunities

to celebrate, whether it's for Halloween, just what we celebrated here in the US yesterday, or someone's birthday, or giving a gift to friends and family. And so we still see all of those occasions. How aggressive are you going to be in building out the advertising business, particularly when it comes to grocery? Well, our advertising business has grown tremendously quickly. Again, another business that did not exist even during when the

and something that we just started a couple of years ago. We're seeing best in class returns on ad spend for our advertisers, while also protecting the consumer experience. And that really is the name of the game of the advertising business. And, you know, to us, building the best and the biggest advertising business is really about building the best and biggest marketplace business because we understand that, you know, it's really the engagement and the activity, the genuine connection between consumers and merchants that even allow us to build an ad

business in the first place. Now, your question specifically with respect to ads and grocery, we've actually built, you know, a grocery business largely from scratch without really an ads business because, you know, we kind of built them together at the same time. We certainly will be pushing in that direction more as we see, you know, greater relationships and deepening of relationships with CPG partners in particular. But at the same time, we don't believe that we need that funding source to build a standalone profitable grocery business. I also asked him about the surge in profitability, at least EBITDA this quarter, and that's projected for Q4, and whether that's the new normal as

DoorDash continues to invest. 2023 certainly was an inflection year for us. I mean, as you pointed out, looking at our P&L, our Q3 results on the bottom line in the quarter almost resembled the entirety of the profitability in 2022. And so what's happening there are a few things. Number one, you have continued growth across all of our businesses. Even our U.S. restaurants business is growing at faster rates at bigger scale than a year before. You see that in all lines of business, international, new categories, our ads business, our B2B platform business. That's the first point. The continued growth and accelerated growth, I would argue, at higher rates of business lines that were already profitable or on that path. The second point is improved unit economics across the board in every line of business. And so when you multiply these two

numbers together, you get a massive profit pool in which you can invest. But we've been pretty disciplined with those investments. I mean, if you look at the OPEX, the headcount has been roughly flat for four, four and a half quarters now in a row, yet the revenue has grown by over 30% or around 30% in that same time period. So when you put all of that together, I think that's how you create the results that you saw. But we're always in investment mode. I mean, DoorDash is a business whose goal is to solve many problems and certainly more problems in local economies to make all of these physical businesses successful. We have a long road ahead to do that, but we're going to do it in efficient ways. I mean, and I think you saw the kind of scale benefits certainly of our platform, as well as the track record of discipline execution in

2023, yielding some of the results that we're discussing right now. We, you know, want to keep making those investments. And our goal is to build the biggest business that will maximize total profit dollars in the long run. Morgan, you actually said that his cost of acquiring Dashers, the drivers, it moved down, right? Despite the tight labor market, it seems to be more influenced by inflation and the need that people have to make extra money. Most dashers work less than 10 hours a week than overall labor tightness. That earnings call starts in just over 20 minutes. That was a fascinating conversation. I mean, when he talked about the fact that even restaurant business is growing and growing at a faster, growing faster and at a greater scale than the year before,

that really got my attention because there had been that narrative that was out there in the market that maybe we would see a slowdown coming out of the pandemic. And obviously, when you get these deliveries, there's a lot of fees associated with it on top of all of the food inflation. So that, to me, was very telling and really juxtaposed that against Etsy results and the commentary we got there about the state of the consumer. Yeah, the street was expecting a growth slowdown this quarter and next. Nope. All right, and you see it there in the shares.

DoorDash up 7% and Uber up in sympathy. Up next, Mike Santoli looks at the state of the consumer, or state of consumer spending, I should say, and credit, what it could all mean for the economy. Stay with us. Welcome back. SolarEdge earnings are out and the stock is sinking. Pippa Stevens has the numbers. Pippa. Hey, Morgan. Well, the stock is down 21 percent here after a top and bottom line miss and very weak Q4 guidance. But starting here with the latest quarter, SolarEdge reporting a loss of

55 cents per share adjusted, while analysts were looking for earnings of 89 cents, revenue coming in at $725 million, also short of the expected $768 million. But once again, it is the guidance that's weighing. During Q4, they expect revenue to be between $300 and $350 million, while Wall Street was looking for 688 million. They expect Q4 margins to be between 5 and 8 percent. To put that in perspective, that compares to 21 percent during Q3 and more than 30 percent in Q2, the CEO pointing to a slow market environment. And also remember, this comes after they issued preliminary results just a few weeks ago warning about this big slowdown. And even so, the stock down 23% here. Morgan? Oh, I mean, these solar stocks have just,

they've been getting hammered, despite where they sit in the market more broadly. Another big move with SolarEdge. Pippa Stevens, thank you. Let's get back to Mike Santoli with a look at consumer credit. Mike. Yeah, Morgan, obviously an area of focus and some concern. You've seen this significant uptick in things like subprime auto delinquencies and credit card balances

inching higher. There is an initiation report of the sector, consumer finance sector, a TD calendar. It had some interesting overall data. This shows you the total credit limit in aggregate from bank issued credit cards over time. This goes back to 2010. You see, we're up to four and a half trillion dollars in bank offered credit lines. The uptake on that, though, is if anything below the longer term average, a bit over 20 percent. That's how you get to your trillion dollar plus credit card balances. But you see that in most of the 2010s, we were above that. So there is access to more spending if, in fact, consumers want it. Naturally, not all of this is distributed, you know, equally across all households. But in aggregate, take a

look at the household financial obligations ratio. This is kept by the Federal Reserve. It counts debt service payments as well as housing related payments. So it tries to say what's your kind of monthly financing and housing nut compared to your disposable income. And this goes all the way back to, you know, 40 years or so ago. And you see we're just way down. Yes, we plunged in the in the pandemic because people had all the savings cushion and the stimulus. We're back up, but we're still at sort of unconcerning levels in terms of households ability to handle rising rates, rising debt payments. Obviously, again, lower income households having a much bigger struggle. There's a lot of folks with no mortgages or locked-in mortgages,

and so they're benefiting while others are not. But also the market has kind of prepared for a worst-case scenario, not the worst, but worse, for the consumer finance stocks. You see this over a couple of years, way out underperforming the S&P 500. They look cheap unless credit losses really start to surge, guys. Yeah. And of course, we've gotten commentary, including from some of the restaurant brands that reported just this morning about the state of the lower end consumer, Mike. Yeah. But I wonder if we should be thinking about this credit situation a little bit differently

where the consumer is concerned, to your point, because people were able to hang on to more money. They were able to pay down some of their debt during the pandemic. They were able to take on larger lines of credit. And now they're starting to use them. And I wonder if that's its own version of stimulus that we haven't been talking about in that way enough. It's definitely something that offers more flexibility in terms of maintaining spending down the road. Now, it doesn't make anybody happy if prices are going up and you have to spend more and take on more debt just to get the basics. I get why consumer confidence levels are very low. But in terms of that, bringing, you know, bringing us to that moment of truth where all of a sudden people are spent out and the economy has to really buckle.

We're not really there. Yeah, we see it playing out in the macro and the micro. Mike Santoli, thank you. Up next, John Chen, the man who transformed BlackBerry from a phone maker into an enterprise software company on the outlook for his industry as he prepares to leave that company on Friday. We'll be right back. It is the end of an era. BlackBerry CEO and executive chairman John Chen is going to retire at the end of this week. He first took the helm a decade ago. Now the company is on a path to divide its IOT and cybersecurity businesses. During his tenure with BlackBerry, also served on the boards of Disney and Wells Fargo, he joins us now. John, I've known you for a lot longer, I guess, in those 10 years.

I was surprised at how long you stuck it out, helping to lead this company from its near-death experience at the hand of the iPhone. You're planning an IPO of the QNX automotive business next year. why leave now? Why? Sorry, what was that? Why leave now? Oh, why leave now? Well, it's, first of all, we made a strategic decisions of splitting the company. And then in addition to that, I think a couple of things that I want to achieve were to stabilize the company financially, set a new strategy and software, take advantage of the technology that BlackBerry always has in security, and then launch two business units, one in cybersecurity and one in IoT. There has been a lot of ups and downs, but my terms is up. And I figure that that's best to leave it to the next shift, so to speak. Yeah. So the cybersecurity business has been struggling, whereas that QNX business has been sort of powering things. How do you see AI influencing how the two pieces of this business do from here. Yeah, so cybersecurity came,

a big part of cybersecurity came from our acquisition of Silence, who has been from day one an AI company. And we have the most AI patterns in cybersecurity, in threat detection. So it's already a big part. It's not, you know, we're way before everybody make it fashionable. It's already a big part of our offerings. And on the embedded IoT side, it will take advantage of the AI, but I believe that the next generation, when we're working on Ivy, which is our analytics platform that we co-developed with AWS or Amazon, I think that will take a lot of advantage of AI, particularly all the AI algorithm that Amazon has.

So, John, it's Morgan. We're talking about how BlackBerry will essentially split into two next year. What will be next for you? Oh, I don't know. I guess starting next Monday, I'm unemployed. And so I'm sure I'll do something. I haven't figured out what the next thing is yet. Well, one of the things that you have done over the years to serve on boards, Disney right now and the rest of the media industry is going through a bit of a reckoning also having to do with AI. What are your thoughts on how artificial intelligence affects potentially media and distribution even outside of the technology tool makers? I don't know much about the distribution side. I think in

terms of the creative side it's going to be a profound impact. And so, you know, you need to just follow the strides that has just recently been over, and I think there's another one brewing. So, you know, the content creation is going to be a challenge. But on the other hand, you know, AI, for those of us who have been with AI for a while before, as I can use the word fashionable. AI has its ups and downs. I mean, it has this good point and its challenges also. So I wouldn't be all AI.

I think this is a little bit of an overhype at this point. There's a lot of talk about how the work on AI is going to move from data centers to the clients. Cars are one of those important clients. It's where BlackBerry's QNX has a lot of business. How rapidly do you expect that move to happen? And what sorts of companies do you think will benefit that maybe we haven't seen a stock impact in so far? I don't know.

It doesn't seem to me today, but this is always, I have to qualify that. It doesn't seem to me today the OEMs, the car makers themselves, have a strong monetization effort in AI. Obviously, they know AI and they need to program that in, so to speak. I see a lot of new startup applications, whether they make the runs on the OEM platform, the so-called software-defined vehicle platform. I think those people will take a lot of advantage, you know, battery management, the cars, the wallet, crash prevention, safety. The list just goes on. Smart 911 and so forth.

I see a ton of that. BlackBerry has invested in some. I think we have about 20 or 30 applications that runs with the car, with the cloud, and take a fully advantage of the AI part of the world. So those people, if they're successful they either going to merge into an oem or they're going to create an ecosystem themselves john chan appreciate you stopping by overtime to spend some time with us before this weekend when you can start doing whatever you want john chan thank youerry, good to see you. Up next, all the after-hours earnings that need to be on your radar

as we count down to a wave of earnings calls set to kick off at the top of the hour. Stay with us. Welcome back. Some more earnings movers for you. Clorox shares rising after revenue topped estimates. The company experienced a major cyber attack in August. You might remember CEO Linda Rendell saying that the attack, quote, caused wide scale disruptions that are impacting our short term financial performance. Stocks are higher 5 percent right now. Mondelēz, another winner in overtime. The Oreo and Ritz cracker

maker raising a full year organic revenue guidance and EPS growth guidance as well. Those shares are up 3%. And finally, check out Elf Beauty. Investors feeling pretty after the $5 billion company topped estimates on the top and bottom line. Those shares are up 5.5%. I always think of Keebler when we have Elf Beauty because those are the first elves that come to mind. We are heading into the holiday season as well. Tomorrow's going to be big. Apple, right?

The biggest of them all reporting. Yeah, we've got Apple tomorrow. And of course, the thing that the street is watching is the fact that they're expecting a fourth consecutive quarter of top line decline. The key is going to be the current quarter to the holiday quarter and what iPhone 15 demand is looking like. Also, the vertical integration that Apple continues to push forward with, with the M3 chip, which you just had announced this week, the more they can do that, the more profitability gets helped and the more they can expand into services that helps profits as well. So, you know, as the inventories get worked down from Qualcomm's results, it appears that that's happening. And as they're able to pull on that, maybe good things happen. Yeah. And of

course, that's the big one. But we have a flurry of other earnings reports over the next day. And then, of course, we've got jobs report and all of the data that leads up to that on Friday as well. Some surprises today. Just to recap, I mean, Qualcomm did better than expected. DoorDash really, on the results and on the guide and profitability, pretty darn strong. So glad Tony Hsu stopped by Overtime to tell us about it. Yeah, I thought Electronic Arts EA was really interesting too, especially in a post-FIFA world, leading edge of AI there.

That's going to do it for us here at Overtime. Fast Money starts now.