Closing Bell - Closing Bell Overtime: VanEck CEO On Bitcoin ETF Inflow Surge 3/13/24

Episode Date: March 13, 2024

VanEck temporarily cut its bitcoin ETF fee to 0% on Monday and inflows have surged more than $200M. CEO Jan van Eck talks long-term strategy and competing with the larger players. BD8 Capital’s Barbara Doran and Cantor Fitzgerald’s Eric Johnston debate if the market is in a bubble. Evercore’s Mark Mahaney shares fresh Netflix data, plus what a TikTok ban would mean for US entertainment stocks. Raymond James Global Head of Private Capital Sunaina Haldea on what her clients are doing and what Reddit’s upcoming IPO means for the broader markets. 

It's a mixed picture today. Stocks closing near the lows of the trading session, though, after some late-day weakness. That is the scorecard on Wall Street. The action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Ford. It's a mixed day for the major averages. The Dow extending its win streak to a third day, while the S&P and Nasdaq fall for the third time in four sessions. Bitcoin, though, keeps booming, topping 73,000 today. And VanEck seeing a boom in inflows to its Bitcoin ETF after temporarily waiving fees. CEO Jan VanEck is going to discuss this anti-fee for all.

I see what you did there. Plus, we've got Evercore ISI's Mark Mahaney on how Congress moved to potentially ban TikTok in the U.S. Could impact social media stocks, American social media stocks. Let's get to today's action with our market panel. Joining us now, Barbara Duran of BD8 Capital and Eric Johnston of Cantor Fitzgerald. Great to have you both on. As we mentioned, it was a little bit of a mixed picture today. Big tech taking it on the chin.

Barbara, I'll start with you because even though that was the case, the Dow did eke out an ever so slight gain here. And the equal weight version of the S&P actually outperformed as well. Looks like Russell 2000 also higher. How does that speak to the action that we're seeing in equities under the surface? Yeah, Morgan, everybody's trying to figure that out. I think what it means simply earnings are now just about done. I think 99% of S&P 500 companies have reported. We're now in kind of a news vacuum because people wanted to see, are earnings really going to pick up this year? Obviously, the market is discounting the expectation that the Fed is done raising rates and will at some point cut rates. So now you're seeing all these these false starts and maybe not false starts into rotation into industrials and materials, sort of the classic cyclical names and, you know,

financials. And they have outperformed as has the equal weighted S&P this last month. And given the the mega cap tech, how much they've run and other names like Lilly, I think it's normal to have a rest here. Does that mean the leadership's going to change? I still think it's going to be the mega cap tech and names like that that will continue to lead. They will rest here. There could be more pullbacks. But, you know, I think you saw the action on Friday and Monday when tech sold off. But then it was a big rebound yesterday.

Nvidia, case in point, down 10 percent in two days, up 7 percent yesterday. So I think that the tech will still be in play. But I think you are clearly seeing a broadening out in the market. Eric, I mean, the other piece of this is what's going on in treasuries, right? We saw yields tick up, although the 10-year treasury yield's been very range-bound these last couple of weeks. The curve's deepening as well. We've continued to see an inundation of supply hit the market. 30-year auction results were pretty well received here. But in general, how much is the equity market poised to, again, perhaps more meaningfully,

or not, take its cue from the bond market? Yeah, so the equity market's been largely ignoring some of the big inflation data points that we've been seeing over the past month. So if you look at inflation break-evens, they're actually at a one the past month. So if you look at inflation break-evens, they're actually at a one-year high. So five-year inflation break-evens trading around 2.42%, close to a one-year high. You have financial conditions that are some of the easiest financial conditions that we've seen in the last 10 years. You have some commodities that are hitting two-month or, excuse me, four-month or one-year highs. So copper hit a one-year high today. Oil is at about a four-month high. And then, of course, you're getting data points at a CPI the last two months, including the

super core number that was quite hot. So the bond market has been somewhat reacting to that. But really, the equity market has been largely ignoring it. And really the view right now is that despite those numbers, despite some of the inflation numbers ticking up, Powell is going to cut rates. And whether it is June or shortly after, he is indicating he is going to cut rates. And so for the moment, they're ignoring it. But I think that's a significant risk to watch because these data points are piling up. Barbara, you said that you like NVIDIA the most of the big techs, and Jensen Huang's big GTC keynote is coming up just Monday in overtime. So is that a sell the news event, you think, or can you buy NVIDIA ahead of it? John, it's a question of whether

you're a trader or you're a long-term investor. I mean, you could be trading NVIDIA all along the way, but you've also missed out on a lot of gains. And NVIDIA has gone pretty much straight up, which we cannot expect forever. But I think what he's going to talk about is what he talked about last week. There were those two conferences, you know, sell-side conferences. They talked about having visibility into strong growth into 26, 27. They talked about the addressable markets being much larger, and that will increase, you know, as people get ideas about how to apply this and new business ideas. And so I think that's going to be another, you know, very positive day. And

if you're a trader, yes, the stock could run up, take profits. If you're a long-term holder, don't sell. Okay. And Eric, last month you joined us broadening out and said you were medium-term bearish equities, but that wouldn't play out until we got some signs the economy is materially weakening, which we haven't. You also said we could get a blow off top, taking the S&P over 5,000 and then dropping 5%. Right now we're at around, what, 51.70-ish, I think, 51.65. Does that mean we're due to drop to 4900 from here? So I think we're very susceptible at this moment. So not only is it the inflation data points that I was just speaking about, but positioning and sentiment is very extended. So one of the things we look at in the option market is looking at skew.

And right now, calls have become very rich to puts. So essentially what's happening is people are grasping for upside calls because they're bullish, because they're trying to get that exposure. And it's happening in such a dramatic way that it's showing that positioning is getting extended. And if you look across investor types, you're really seeing it, whether it be the individual investor, we're seeing the small lots and options

market trading a significant amount, showing that the retail investor is getting heavily involved in the options market. And there's been a lot of positive AI news for sure. And there are some events in the coming week that is have been on people's radar screens and so these are some of the things that you know could become a place where we could see a local a local top I think we're certainly susceptible to that and there has also been a lot of crowding in the momentum trade which is a trade that we've liked in terms of quality, mega cap to mag five. But it's also getting in the short term, you know, extremely extended and crowded. Yeah. I mean, the word exuberance is getting used around some of the market activity

we're seeing. And so so, Barbara, it raises the question, are we at a rational exuberance levels yet? Well, I think that's a question lots of people are asking. Is this a bubble? Is it not? And I think if you look at the stocks that are creating the question about the bubble, they are going up. These are momentum stocks that are going up, not just on sentiment. They are going up on true fundamentals, real earnings growth, quality, the management's,

the business model, the balance sheet. So I would not call that a bubble. Yes, they're getting a bit stretched in the short term. I mean, there's no disagreement with Eric on that, you know, but I just think that we are not in bubble territory by any stretch. And also, you know, Eric mentioned about options, retail options. Yes, we're seeing an increase in that, but there was a report last week, we are not seeing that much of an increase on margin on the retail side. And that's usually when you're getting into trouble territory. You know we've seen Bitcoin go up

although that's for very solid reasons. You see lots of more chatter on the reddit so the world but. You know what I don't think we're into a totally speculative stage yet so. Well I I guess it would be hard to love Nvidia as much as

you do and think we were in that. Barber and Eric Johnston thank you both. And now let's bring in senior markets commentator Mike Santoli for a I love NVIDIA as much as you do and think we were in that territory, Barbara Duran, Eric Johnston. Thank you both. And now let's bring in senior markets commentator Mike Santoli for a look at the excitement among small traders lately. Mike? Yeah, John, as you were just discussing right there, and a few ways to represent this. One is the middleman of that retail excitement trade, Coinbase, Robinhood. This is a two-year chart.

I put it up against the CBOE. That's the big options exchange, which has been in a slow but steady growth mode as the use of equity derivatives, traded equity derivatives, continues to increase. And now you've seen both Robinhood and Coinbase surge off of relatively depressed levels to meet that on a two-year basis. Both Coinbase and Robinhood had been at much higher prices, though. Really, when we date back to the peak of the pandemic era, retail exuberance, meme stock trade, we're going back three years plus to get to that absolute fevered moment. So this doesn't really take you there. But it does say that's come back in a hurry.

Another way to gauge that is an ETF that was created during those days, the buzz. That's the social sentiment ETF, BANEC social sentiment ETF. This basically just grabs at the stocks that are most trafficked on social media. And you see, again, very aggressive move off the lows. However, not quite where we were back here. This, of course, is, you know, MicroStrategy, Nvidia, Coinbase, you know, down the list of things that you might expect to be in that area there, John. Mike, but if we're getting back toward there, I mean, that area back in late 21 was peak Zoom and, you know, all that stuff that kind of went off the

cliff after that. So even if we're close, isn't that concerning to some degree? Well, it could be concerning for sure. And by the way, a couple of times we've talked about this, about a bubble or not a bubble, and the word yet keeps coming up. Well, nobody says you have to get to any particular place. Nobody says we have to return to those conditions that we had right there, or we could overshoot them. And I think the fact that it's extremely hard to handicap and to find those indicators that say,

yep, now we've reached that moment of maximum enthusiasm where the only way from here is down, it's impossible to gauge it. But I do think it's worth keeping in mind what sort of the prime mover on an intraday basis seems to be right now. And it is much more about, you know, kind of retail investor excitement and the chase as opposed to, you know, the kind of big, slow moving money. OK, Mike Santoli, we'll see you in a little bit. In the meantime, we're starting to get earnings. UiPath fourth quarter earnings are out. The automation software company reporting Q4 revenue of $405 million. That beat estimates of $384 million.

No EPS number given, but first quarter of GAAP profitability as a public company. If you take a look at that, it was GAAP operating income of $15 million. Non-GAAP, $111 million. Positive free cash flow adjusted non-GAAP as well. Annual recurring revenue of $1.464 billion. This was up 22 percent year on year. It was a little bit ahead of the consensus on FactSet. Q1 revenue guidance of $330 to $335 million. That's a little light, but full year revenue slightly ahead of expectations at $1.55 to $1.6 billion. Now, I spoke with UiPath CFO Ashim Gupta about

the setup for fiscal 2025. Have a listen. We're seeing continued strong demand across our customer base. Customers like TD Bank, as an example, they're expanding our AI-infused platform across their operations to drive changes in customer experience. We ended this year with 288 customers that spend more than a million dollars with us. That is up 26%. That momentum is carrying forward into fiscal year 25. What we're hearing is people don't want digital transformation. They want AI transformation.

And that is giving rise to the need for business automation platforms, which is what UiPath is. The demand for AI and automation together provides really strong ROI. And that gives us a lot of confidence heading into the year, which is why you see us raising our total year guidance for both revenue while continuing to create profitability by increasing our non-GAAP operating margins by 100 basis points. So Gupta is saying macroeconomic variability, it's impacting lower-end enterprise customers sub $100,000. It's the reason UiPath is actually focusing on leaning even more heavily into those higher-end customers. He did note profitability coming not just from cost discipline, but also, as he put it, strategic aggressive investments into AI. Remember, UiPath had historically centered around robotic process automation, that the strategy is continuing to shift, saying they're seeing,

quote, tremendous amounts of opportunity, even among those bigger spenders, as Gen AI unlocks more and more demands. In terms of the industries that are driving the most demand, health care, financial services, there's some oil and gas. There's some retail on the grocery side, particularly. And interestingly, the public sector as the IRS and USDA are using UiPath to automate processes and are some of those customers that are, in fact, continuing to expand. So you can see shares of UiPath are up 8 percent right now in after hours on these results. Yeah. Moving around a lot on some heavy volume there. Yeah, I'd also just note you can catch that entire interview with UiPath's CFO by scanning the QR code

that is on your screen right there, following us on LinkedIn, where we will be posting that exclusive content in just a short while, and get those comments before the conference call. Awesome. Well, the House passing a bill that could ban TikTok in the U.S.

Up next, we're going to look at the potential fallout for American social media stocks if that becomes law. Plus, VanEck Funds waiving the fees on its Bitcoin ETF as it lags rivals in assets under management. Well, coming up, the company's CEO on whether this fee fight is going to boost inflows. Stay with us. Welcome back to Overtime. Evercore ISI out with a new note on Netflix just moments ago, raising the price target to $640 a share from 600. The firm also raising full year estimates for 2025. And joining us now is the author of that note, Mark Mahaney from Evercore ISI. Mark, good to see you. So mobile only a significant factor here, huh?

Yeah, it is. But I think the bigger picture here is you've got this ad supported plan that's been rolling out now for a year or two. And I think what it's done is created a lot more incrementality than maybe the market realized. It's broadened the price points, lowered them. So you bring in more subscribers. We find 40% of people who are signing up for this Save Our Plans subscription and ad-supported plan, 40% of them are either new to Netflix or people who churned off in the distant past. So it's expanding the customer range. It's also giving the company something of an anti-churn kind of safety net. It allows them to raise prices at the high end because you've got this kind of lower price option there

in case anybody wants to churn because of price sensitivity. Well, there's a lower price option for you. And third, it gives some pricing power to do that, to kind of stretch the band-aid a little bit. There's just a lot of wins behind this ad-supported offering that I think you've been underappreciating. It's what led to its outlead to these greater, stronger-than-expected sub-numbers. The HR initiative is also out there. So we've got these two nice growth engines, and I think both are working for them well now. It's one of the reasons we continue to like the stock, despite the run-up, even with the run-up. Netflix's media peers are in a state of upheaval business model-wise. And I wonder, does that end up potentially affecting Netflix's stock eventually because of just how ETFs, you

know, passive is working these days? Or is Netflix a port in the storm that's going to end up picking up share and advantage during this time? I think it's absolutely the latter, John. I think you had rising competitive intensity in streaming for 2017, 18, 19, and 20, and then it peaked. Then when the CEO of Disney got fired for streaming losses, that was your peak moment. And ever since then, you've had a decline in competitive intensity which has also shut up in the fact that some of these studios are not willing to uh sell their content license their content to netflix that they weren't willing to do before that's why suits band of brothers and other shows showed up on netflix's last year that wouldn't have happened in prior years

so netflix is starting to run away with the category is the wrong way to stay it's overstatement but the competitive intensity has clearly come down. There's less money spent on content and customer acquisition. And that benefits the leader in the space. And right now, that's Netflix. And shock of all shocks, they're generating more free cash flow than any of the traditional media companies. So good for them. Yeah. I mean, it's incredible that that's the case. They've become such a free cash flow generator when a couple of years ago, there was a lot of folks just thumbing their nose at the fact that they couldn't seem to find a path towards profitability. Now they're forging the way. I do want to shift gears a little bit because, and I realize you don't cover ByteDance or TikTok, but we did just get this

TikTok bill that passed through the House that would basically force, if it were to become law, it would force ByteDance, the Chinese owner of TikTok, to either divest TikTok or basically enact a ban on the apps through app stores. So there's it's my sense that there that now that this is past the House, that there is increasing potential support within the Senate, that you could maybe perhaps actually see this make it across the finish line. I realize there's a lot of ifs attached to this, but what would it mean for the other social media companies that have been competing so aggressively against TikTok these recent years and that are U.S. based, don't have ties to a country like China?

Well, I think what the market has been assuming in the last week is this kind of news flow is built up about this potential vote. And now that it passed, it's that you may actually that the odds are greater now of a TikTok ban than at any point. I have no idea whether it will go over the finish line or not. But marketers, advertisers, the checks that we've done, they're having to reconsider and come up with plan A, plan B, plan C for what they do with that TikTok spend. That TikTok spend in the U.S. was roughly $5 billion, $6 billion last year, something like that. Now, that's a little bit bigger than the size of Snap. It's about 15th the size of Meta. But those are the two companies that if you're running social media campaigns, if you're using influencers, and that's a very viable marketing category, and you're going to have to shift away away you'll shift away if you're a marketer and

advertiser so i'm already hearing that campaign my guess is that if you're if you're considering a major new campaign on tiktok you're pausing that and you're looking at other channels this it's kind of hard to see why this doesn't benefit snap and meta even if uh the ban doesn't go through there's enough uncertainty now. Marketers don't like that. So you'll start seeing a little bit of those budgets move over to both Snap and to Meta. Interesting. OK, one to keep watching from that standpoint as well. Follow the money. Mark Mahaney, thank you. Thank you, Mark. Up next, VanEck CEO Jan VanEck on whether slashing fees on his Bitcoin ETF to zero will help jumpstart inflows, which have been lagging rivals.

Plus, Raymond James, global head of private capital advisory, on where she sees the biggest investing opportunities right now when overtime returns. Welcome back to Overtime. We have got an earnings alert on Sentinel-1, a company beating on both the top and bottom lines, Q1 and full-year guidance just in line with estimates, and maybe because of being in line, that stock is trading quite a bit lower, down 10% right now in overtime.

It's been such a mixed picture for these cybersecurity-related names. Yeah, in line is not great, I guess, in this environment where expectations have gotten so high. And the stocks have rallied so aggressively. Well, the rally in Bitcoin rolls on. Speaking of big moves, crossing above 73,000 today. This is the fee war on the Bitcoin ETFs has intensified. VanEck this week temporarily slashed its fee to zero percent until next March or until

it hits one point five billion dollars in assets. Since then, ETF has seen net inflows of just over 200 million dollars, according to crypto research firm CoinShares. That has moved it from the ninth largest to the sixth largest U.S. spot Bitcoin ETF. And joining us now is VanEck CEO Jan VanEck. It's great to have you back on the show. And I'm going to start it right there. Why slash to zero? And is it really sustainable to be able to do this for the next year? How do you make money if that is the case? Well, we've always thought that our fee had to be competitive, Morgan. And we came out with one of the lowest fees initially at 25 basis points, which we've lowered to 20. But to be honest, I thought waiving fees was kind of a gimmick. But then I saw

when all these ETFs launch at the same time, it really matters in the minds of investors. And so we've always wanted to be price competitive. So we joined the party this week. So how sticky do you expect those inflows to be? Because at some point, whether it's a year from now or whether it's when you reach that one and a half billion dollar mark, you're going to reinstate fees. Given the fact that it is a competitive landscape, do you expect those investors to stay put? Yeah. I mean, first of all, we've been talking to our clients about crypto since 2017. So we have long term relationships with a lot of people that are allocating.

And second of all, as we've seen over the last couple of weeks, tax considerations are really a big deal. So the reason probably that Grayscale hasn't gotten more redemptions is that people have gains and they don't want to realize those gains for tax reasons. Especially if, like we think, we're just in the middle innings of a bull market for Bitcoin. Jan, what's the long term value of a crypto ETF investor? What else do you think they're going to want to buy from you? What other kind of business are they going to do? Well, our average client has three or four of our ETFs. They usually start with one. So it could be GDX, it could be Moat, or it could be HODL. But it's a relationship that we develop over time, and usually they look at other ETFs. We also have a family of crypto funds. We have two private

funds that perform really well that are not available retail in the United States for regulatory reasons. But so we have typically a broad relationship with our clients and we want to stay in the conversations. And that's why we did the fee cut. long as you're gathering those those funds that you're getting flowing in from cutting the fees to then get your sales folks saying, OK, look at all of the value that Vanek can supply to you. Again, a lot of the value, John, is just the conversations with clients and an honest discussion about where we are in the cycle and where Bitcoin fits in your portfolio. So, you know, that's that's really what what we're targeting is to stay involved in those conversations. You know, I came on your show a

year ago, was very bullish Bitcoin at that point, still bullish now, happy to discuss that. But at some point, it's going to be a time to take profits. And hopefully we'll be an honest voice about that with our clients. Yeah, it's like you took the question right out of my mouth. And hopefully we'll be an honest voice about that with our clients. Yeah, it's like you took the question right out of my mouth. And the fact that you were bullish, you were bullish early. We are trading at a record here. We know more investors. The base of investors has expanded with the advent of these ETFs like yours. Just how much further do you think this has to go? And what do you think is propelling Bitcoin right now? Well, there was two dynamics that we talked about a year ago. One was the macro cycle of the Fed and interest rates, which a lot of people talk about.

I guess I would put more weight on the Bitcoin cycle, which is the happening that's happening next month. But then around the happening where the amount of Bitcoin coming to market is cut in half effectively. And so after that time period, you see another year of a bull market with typically 20 percent drawdown. So you want to buy the dip. So this is still, I guess, in the Bitcoin cycle, we're still right in the middle of it. OK, 20 percent from these levels wouldn't be that bad. Jan, thank you. Jan Van Eck. Good to see you. Time for a CNBC News update with Pippa Stevens. Pippa. Hey, John. Jury deliberations are now underway in the trial of James Crumbly,

whose teenage son killed four people in a 2021 school shooting in Michigan. He is facing manslaughter charges. The shooter's mother was convicted on the same charges last month. The judge instructed the jury to take their time and that they were welcome to deliberate into the evening. A U.S. delegation held secret talks with Iran's deputy foreign minister in January in an effort to stop Houthi rebel attacks on ships in the Red Sea. That's according to the Financial Times, whose sources say the American delegation tried to convince Iran to use its influence over the Houthi rebels. The indirect talks were the first between the two nations in almost a year.

And non-essential staff for the United Nations began to evacuate Haiti today for safety concerns amid ongoing gang violence and unrest. The U.N. spokesperson said despite the announcement, essential staff will stay and provide humanitarian assistance. Morgan and John, back to you. Pippa, thanks. Meantime, Lennar earnings are out, and our Diana Olick has the numbers. Diana. Yeah, John, it was a mixed bag for Lennar's Q1. EPS came in at $2.57 a share, which beats estimates of $2.20, revenue of $7.31 billion.

It's a slight miss. The street was looking for $7.39. The red flag in the report is gross margins down to 21.8% from 24.2% in the previous quarter. That's a lot of the incentives they're using to get buyers in. Average sales price for deliveries was $413,000 versus estimates of $421,000. Lenar's executive chairman, Stuart Miller, said in the report, we remained focused on consistent production pace, driving sales pace, while using pricing, incentives, marketing spend, and margin informed by dynamic pricing to enable consistent

sales volume in a fluctuating interest rate environment. He added that affordability continued to be tested by interest rate movements. Now, Lennar saw a 28% increase in new orders and a 23% increase in deliveries year over year. We had been watching the amount of cash the company had, which analysts seemed concerned about in Q4 at $6.2 billion. That dropped to $4.9 billion in Q1. Guidance on both Q2 deliveries and new orders slightly higher than expected.

I'll have an exclusive interview coming up with Stuart Miller in the next hour on Fast Money. Back to you guys. All right, we will look forward to that. Diana, thanks. Meanwhile, I'll note that UiPath, which Morgan brought you earlier, still up 8% in overtime. Up next, Raymond James, Global Head of Private Capital Advisory on whether a successful Wall Street debut by Reddit might open the floodgates for more IPOs. Overtime will be right back.

Welcome back to Overtime. We have some breaking news on Under Armour, and Julia Borson is here with that. Julia. Under Armour announcing a leadership transition, announcing that Kevin Plank is returning as CEO, and Mohamed El-Aryan will become Under Armour's lead director, who's named chair of the board. Now, Stephanie Lenard, who joined the company as CEO in December 2022, that means she was there for just a little bit over a year. They say she will remain an advisor to the company through April 30th of this year, but she is stepping down as president and CEO. Plank is succeeding her and returning to that CEO spot.

He did leave Under Armour in 2019 in the CEO role and he became executive chair and brand chief, but now he is back in charge, returning as CEO. Back over to you. All right.

Big move. We've got a fair amount of this with founders returning to companies when they're underperforming or maybe in need of some sort of turnaround or strategy reshift. Yeah. Work for Zuckerberg. We'll see what happens from here.

Met Reddit meantime on deck to IPO, marking this year's first major tech debut. And for more on IPOs and the state of the private markets, let's bring in Sunaina Haldia, Raymond James, private capital advisory global head. Sunaina, welcome back. Is this a big deal, Reddit itself, outside of just being the first? It's not the leader, certainly, in social networks. Absolutely. Investors, especially institutional investors and private equity investors, are watching this IPO very closely to see if it does open the markets up. The market's having been shut for almost 18 months now. There are nearly $3.7 trillion worth of assets sitting in private

equity that includes buyout, growth capital, venture capital, investors, books, many of the largest of which need to be coming to the market to access IPOs. And so this is being watched very carefully to see what the appetite is like, how does it perform, and does it mean that many more companies can come out or not? Sunaina, why is this even a question? I mean, we've got the major indices near or at record highs. We've got risk assets. We're just talking about Bitcoin surging to records as well. In this environment, usually IPOs are just a bonanza. John, here's the crux of it, right? While we know that the Fed is likely to cut rates in the second half of this year, we still have interest rates at highs. And we know that investors have ridden

the indices to record highs. The question is, will they take profits from some of the index performance, Magnificent Seven performance? Will they take money out of treasuries and CDs and revolve them into other risk plays, including IPOs? That's the open question. Now, we'll see how Reddit performs. And if Reddit performs, the Natzak CEO is on record saying that they've received almost 100 confidential filings of companies

who might want to come out this year. So that's a big backlog, and all of it will be want to come out this year. So that's a big backlog and all of it will be watching how investors react to Reddit. Yeah. And we talk so much about how public market investors are going to react once Reddit starts trading. But I wonder how important this is for private markets, too. And we know that private equity is sitting on quite a number of companies, for example, as well as, you know, the startup world sitting on companies, but private equity sitting on companies that are going to have to realize exits. Maybe there's dry powder

waiting in the wings. And I wonder how much of the private markets are actually seized up or frozen or thawing slowly until we do see some more of these exit strategies realized. Certainly for the largest, maturest private equity funds out there, we're talking about large buyouts or even venture funds with large companies sitting on their books. The IPO is the exit path of choice. And private equity institutional investors, we're talking about the pension plans, endowments, foundations that put money into private equity funds, have been waiting quite patiently over the last five to six quarters for the distribution rate, the return of capital rate from private equity funds to increase back to normal conditions. Now, until the IPO market window opens and or the M&A markets pick up, that is not going to happen. So having the capital markets open back up, both equity and

debt, is an important exit pathway for the entire private markets industry at large. And that's what's at play here. And so broadening back out then and looking at the overall state of private equity, with so much dry powder on the sidelines, if the IPO market doesn't open back up, what's the impact? What do they do? Well, they have to go back and assess other alternative exit pathways. There's really two others that are available to the private markets players today. The first one, of course, being an M&A sale. Are there trade buyers for these companies? Are there other private equity funds that are perhaps larger that could buy some of these businesses?

And finally, there's the secondaries market. The secondaries market has a conduit for these sponsor-backed, sponsor-led transactions that can help them exit and provide liquidity for older investors and bring in a new set of investors. Both those pathways, M&A and GP-led secondaries remain open to private market players that hold these companies. But certainly for the largest, maturest companies out there, the IPO is one and sometimes the only route for them to bring those companies out for liquidity. All right. Sunaina, thank you. Sunaina Haldai of Raymond James. All right. Well, speaking of one of those largest private companies, SpaceX just getting cleared here in the last few moments for liftoff literally tomorrow morning. As soon as tomorrow morning, the FAA issuing a license for the third Starship test flight.

That launch window opens at 8 a.m. Eastern. This will represent or mark SpaceX's third launch attempt for its mega, super, super powerful, really unprecedented because it's also fully reusable, rocket and transportation system for deep space exploration. We've had two attempts over the past, call it year, up until now. But we haven't actually seen a fully successful mission where Starship has made orbit and done what it needed to do. So this one is going to be watched very closely, and I'd note not just by investors and by the space community, but also by government and the likes of NASA, which does have a contract with SpaceX.

It is Starship that is contracted to be one of those key human landing systems that actually lands Artemis astronauts for the government on the moon in the coming years. So this is a moment here as it does attempt that next launch. We'll watch that for sure. We've got a news alert, meanwhile, on Robinhood. Kate Rooney has the details. Kate? Hey, John. So Robinhood is seeing a significant jump in assets under custody and trading volume. They just put out an update on their February numbers. It's looking like assets under custody were up to 118.7 billion. That was up 16 percent from January. Net deposits, meanwhile, were 3.6 billion in January. That translates to about a 42% annualized growth rate if you compare it to January 2024.

There you have some data here on crypto volumes, up 10% margin balances. We're up 6%. And then it's also looking like securities lending, which is a high margin part of the business, up 8%. But it is lifting shares here. You can see, John John up more than 8%. But trading volume and assets typically translate into revenue growth for Robinhood and all the brokerage firms. So seen as good news here by the market.

You can see shares up after hours. John, back over to you. Yeah, some follow-through on what VanEck was just telling us. Kate, thanks. Up next, Mike Santoli looks at the mega shift in leadership among mega cap stocks when Overtime returns. Welcome back to Overtime. Mike Santoli returns with a look at a mega cap reshuffle that is happening in the market right now. Mike, I mean, time to rebrand Magnificent Seven?

Yeah, I think it has been time for that, Morgan. You have Tesla having fallen out of that. And actually, Tesla's also fallen out of the top 10 largest stocks in the S&P 500 as well. We've crossed over with J.P. Morgan in the mid-$500 billion, around $555.40. You see that happen just about once before they kind of touched in late 2022, I think it was. And Tesla did rebound from there. The reason that J.P. Morgan is now the 10th largest and Tesla was already below that is we only count the free-floated shares. So therefore, Elon Musk's 13 percent share in Tesla does not count in the index weight. But you do see here that the top 10 of the S&P has become maybe, you know,

a little more stable if it stays this way in terms of J.P. Morgan and Berkshire Hathaway being in there. Very interesting stuff. Mike Santoli, thank you. Meantime, we are getting some news on Fisker. Phil LeBeau has that story. Phil. John, this should not come as a big surprise. The Wall Street Journal reporting that Fisker is exploring a possible bankruptcy filing. This is not a surprise because remember, just a few weeks ago, the company issued a notice saying that it was at risk of not being a going concern in the future due to its mounting

debt has about a billion dollars in debt, only two hundred and seventy three million dollars in sales for the most recent quarter, stock down about 45 percent. And again, reports from The Wall Street Journal that Fisker is exploring a possible bankruptcy filing. Guys, back to you. Yeah, below 18 cents. Ouch, Phil, thanks. Up next, we're going to get analysts' reaction to Lennar's earnings and what the results could mean for the rest of the home builders. We'll be right back. Welcome back to Overtime. Shares of Lenar are falling in overtime after reporting earnings just a short while ago. They're down about 1% right now, but joining us now to discuss the results ahead of the company's earnings call tomorrow morning and ahead of the interview in the next hour with the chairman is Alan Ratner, Managing Director at Zellman & Associates.

Alan, it's great to have you on. I want to get your thoughts on the results we did get because we did see double-digit increases in new orders. We saw double-digit increases in deliveries. But as Diana Oleg pointed out earlier in the hour, gross margins actually slipping as the company does continue to roll out incentives in this dynamic mortgage interest rate environment. Hi, Morgan. Thanks for having me. Yeah, listen, this quarter was straight down the fairway. Everything was generally right in line with expectations that the company set forth three months ago. The margin softness is really a function of what was a tougher sales environment in late 23, when rates were pushing up against 8%. Since then, we've seen incentives dialed back a little bit, and the commentary suggests that we should see some sequential improvement going forward. But

this quarter, in my opinion, is right down the fairway. The stock's been strong year to date, so I'm not surprised to see it down a touch in after hours, but a good quarter. Alan, I wonder what this means for the future, though, because Lenar said the average sales price net of incentives was $413,000, down 8% from last year. And on the last earnings call, Stuart Miller said, we will recover margin quickly and efficiently as lower interest rates enable us to reduce incentives. But it doesn't seem like we're getting much lower interest rates as soon as people might have thought a quarter ago. Yeah, I think that's fair. You know, the second quarter guidance suggests margins should be up about 70 basis points sequentially. So you're seeing a little bit of an improvement. But I agree. I think the reality is right now it is a competitive market from a discounting standpoint.

And builders have a choice to make right now. Do they pursue the volume? Do they try to build up gross margin? Lenar has been pretty unapologetic that they are using their margin as a shock absorber to maintain a certain level of volume. They want to deliver 80,000 homes this year. So I think margin is going to be more of a secondary concern, quite frankly. Okay. Do you buy the stock here, especially given the fact that it has been trading at all-time highs? Yeah, I think we could see a little bit of some near-term profit taking on this, given how strong the stock has been.

But longer term, we think Lennar is a winner. We rate it out for form. And I think any significant pullback I would use as a buying opportunity. All right. Alan Ratner, thank you for joining us. Thanks for having me. Well, tomorrow brings another big day for retail earnings and results from one big tech name.

Find out what to expect on the other side of this break. Welcome back. Investors digesting two very different reads on consumer stocks. Williams-Sonoma shares hitting a record high after the housewares retailer beat earnings estimates. You can see right there, finishing the day up almost 18%. It hiked its dividend, announced a billion-dollar stock buyback. But Dollar Tree, it was the worst performer in the S&P 500, down 14% after missing both top and bottom line estimates, saying it will close nearly 1,000 stores.

Wall Street will get much more of an outlook on dollar stores tomorrow when Dollar General reports as well. Plus, John, we are going to get results from retailer Dick's Sporting Goods, and then in our hour tomorrow, Ulta Beauty. Yeah, that's exactly why we're asking CoreSight's Deborah Weinswig about those store closures with the dollar stores yesterday. And it's not just the retailers on the earnings calendar. Adobe's numbers are going to be released right here in overtime.

We're going to speak exclusively with CEO Shantu Narayan before he dials into the conference call with analysts. And seeing as Adobe's software is one of those AI drivers. Oh, yeah. Right. A big part of the question, whether there's going to be demand for these chips, for these hardware systems, is the software going to drive it? So I'm going to be curious to see those results. And of course, ask Shantanu about how that's going. Yeah. I mean, look no further than the kerfuffle or the controversy, if you will,

that happened in UK with the royal family with a doctored photo. Not to get into the details or politics of that, but it does speak to how much potentially some of these AI capabilities are already being used or accessed. Well, that was just straight up Photoshop, though. They can see it was just straight up maybe sloppy Photoshop. I'm sure Shantanu would say people can do much better than that. No AI involved, but of course, yes, that's the latest conspiracy theories floating around the Internet about that. But interestingly enough, a lot of retailers are using Adobe software online to try to understand data-wise what's going on. So there's a link between some of these retail results

and even the software results from the likes of Adobe. It is interesting, too, when you see what happened with Williams-Sonoma. It does speak to a higher-end consumer, which is something we talked to Neiman Marcus, CEO, about last week. And you have seen this pretty stark bifurcation. So it'll be interesting to see how something that's very discretionary and has been very strong, like Ulta, for example, is going to perform with those results tomorrow.

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