Power Lunch - Opportunities amid the selloff, Tilman Fertitta on the price of steak and Beyond Meat’s wild hour. 4/27/22

Episode Date: April 27, 2022

The market pullback is creating opportunities for investors. You just need to know where to look. Kelly & Tyler talked to our market experts about avoiding value traps and which Nasdaq laggard will turn into a leader. Plus, Beyond Meat shares spiked, then were halted then fell on headlines about its partnership with McDonald’s. And, Tilman Fertitta told us why prices are never going back to 2019 levels. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch. I'm Tyler Matheson. Here's what's ahead on this busy midweek day. Finding opportunity, stocks attempting to rebound after a brutal sell-off. We are tracking the technicals uncovering value and finding oversold stocks that have the potential these days to rally. Plus, the power player, Tillman Fertita, he's back. His multi-billion dollar business empire includes restaurants, hotels, casinos, giving him a unique view of the consumer. of rising costs of labor, the vital economy, the component of the economy's health. We will have an in-depth interview with Mr. Fetita later this hour. Kelly? Looking forward to that, Tyler.

Thanks. Hi, everybody. We saw the Dow a moment ago at session highs up about 457 points. We were around 420 at those levels. We're just under that right now. Pretty even across the major averages today after yesterday's really awful session, especially at the close there. But today we're seeing some gains of around 1.1 to 1.2%.

Microsoft is helping those results after the bell last night, really changed sentiment. You can see the shares up almost 7% today that is certainly helping the Dow. It had upbeat guidance as well. And it's offsetting the damage from Boeing, which is the worst performing Dow stock today. One of the worst on the S&P after an earnings miss in a report. Investors are very unhappy about Boeing shares down 8.5% tie. That's a day for Seattle companies or Seattle area companies. The S&P down more than 11% so far this year.

The index's forward PE ratio has fallen from above 21.5 in January down to 18 below 18 today. Now, that could make some stocks look attractive if you're hunting for value. But the key is to avoid the so-called value traps. Let's bring in Sarat Setti. He's DCLA managing partner. Sirat, welcome. It is always great to see you. Let's try and give the viewer some idea of what's the difference between.

a true value stock, one that is selling below its intrinsic value, and a value trap that may just be selling at a low price because it deserves a low price. Right. So I think you have to parse it in a couple of different ways. One is the easiest ways to look at the balance sheet. Value trap companies end up with balance sheets that start to deteriorate because the cash flows themselves that investors think are going to be down in the future are less than what they expect. And especially in a rising rate environment where you have cyclical industries, they can end up as value traps because the business itself is deteriorating, margins are coming down, and what investors had basically forecast for future cash flows do not

take into account two things. One is obviously the margin deterioration, but then also the higher interest rate costs. And then you see a multiple contraction. And eventually some of those stocks, actually, Tyler, perversely, end up with high P.E.'s. That's because their earnings keep on decelerating, and the stock price is higher than the earnings. It's higher than the earnings. So look at the cash flows, what's happening there, look at the margins and what's happening there. Can you name for me today, and I'm not asking you to be Mr. Nasty here, because that will be the furthest from your personality, can you name for me today a couple of stocks that are in that category of ones that are just not value plays, but

value traps. So I would actually look at a couple of the the stocks that we've kind of talked about before, but more of the, you know, the state home stocks. Opposite of that, the car, you know, companies like a Peloton. Peloton really has become a value trap in the sense that where are the margins going to go? Are they going to be deteriorating? What are the cash flow is going to be of this business? And the multiple you were paying for it, well, it used to be priced to sales. it's still price to sales, but investors are demanding cash flow. They're demanding really free cash flow at this point. So I would kind of look at companies like that that, you know, two years ago, the extrapolation of earnings was so high that today it's kind of like how are we

slowing down the deceleration. Yeah, interesting. So some of the stay-at-home stocks, classic example there being Peloton. So, all right, we've covered the ones that may be value traps. Let's look at some ones that you think are knocked down, but may have potential to move back up as people begin to focus on some of those fundamentals. What are they? Some names. Yeah, so look at a General Motors last night. What did they say? Our forecast for this year is going to be $7 to $9 billion of free cash flow. Here's a company that if investors are fearful of a downturn, they are forecasting a real cash flow business. They're talking about EBIT in the $13 billion business. And the thing about GM is that they have a very strong

balance. Yatala, one of the things they've done is they've kept the cash to pay down debt and they're not giving investors a dividend. So they're reinvesting back in the business. And they're reinvesting into two parts of the business. One is the current business. And the next is the EV business, which they expect over time to produce over half a million cars the next two years. So you've got a company that's investing in the future, has current flash cash flow with this business. And it's trading at six times earnings. This was a stock that was $60, just not a few months ago. is now 40 and expected to earn close to $7 this year, and they're forecasting that, hey, things aren't that bad.

The key to this stock, Tyler, I think at this time in a slowdown, compared to what we had before was, what is the discipline of a GM and the other auto companies? We've seen that in the airlines, and that's why the airlines are rebounded. We need to see that in the auto companies so that when things actually stabilize and they catch up to all the supply chain issues, will they go out and just produce as many cars as they can, or will they then say, we are going to produce as many cars as can at a profitable margin,

similar to what the airlines are doing this summer. So go ahead. I'm going to get a quick thought in because I don't want us to lose out on your other choice, which is CVS. For me, the question in part is, is it a retailer, is it a health care stock, which is it, and how do you price it, and why do you think it's a good value? Right. So 12 times earnings, $40 billion of cash flow coming down, they've de-levered. They're doing opposite of what I was talking about,

They're getting to the stage where cash flow is going to be really growing. I think of it as a combination and the health care multiple that they're against are, you know, companies like Etna, sorry, companies like United Health at 22 times, they're trading it 12 times. Plus you have a reopening play. People are going to the store more. They're going to go visit the labs, the doctors, they're going to get their things. So a combination of those two, and they're cutting down their stores. 10% of their stores are going to be decommissioned just this year.

So again, 12 times earnings. As you said, the market's down to 18. It could come down some more, but you want companies that are growing cash flow. CVS projections to grow cash flow, single digits this year, double digits the year after. So I like that story along with it, a nice, solid growing dividend. Sarat, you're always all over it. Thanks, my friend. Sarat Sethi.

Appreciate it. Thank you. Let's turn now to those charts suggesting the NASDAQ 100 is reaching some critical territory. The index is rallying today, but it's down 10% this month. And our next guest says the trend could get worse. before it gets better. Let's bring in Bill Strzullo. He's the chief market strategist with Bell Curve trading. Good to see you, Bill. How much worse do you think? Well, Kelly, you know, when you take a step back and look at what's the key time frame here, the key time frame in the

U.S. equity markets is the rally off the March 2020 lows. This is when risk assets around the world bottomed. And you look at something like the NASDAQ 100. It was the key mover, a driver on the way up. And it's been the one that's been most disappointing, the way down. And now it's at a point where you really need to get back above minimally 13,500 in the next week or so. Maybe we give it to the end of the Fed meeting May 3 or May 4. But the bottom line is that the NASDAQ 100 has to rally pronto. To just sit here isn't good enough. The onus is on the bulls to move the market higher. Otherwise, we're going to have another big move to the downside to the mid-range of the whole rally off the March 2020 lows, which comes in

around 11,800. 11,800. So we're talking about another, you know, 1,300 point decline or so in the NASDAQ. I mean, so you want to see a pretty rip-roaring, pretty strong rebound in the pretty near term to rule out that scenario? Yeah, I mean, look, the path of least resistance

is still lower. Sitting here doesn't do it. And, you know, you can make the same argument with a number of the major indices in Starks. You know, it looks like today you can, you know, it looks like a decent day today because you're getting a little bit of a bump for the upside. But this isn't good enough. Like I said, minimally, I want to see it.

The NASDAQ 100 back above 13-5 in the next week. I won't really feel like you can breathe a side of relief until it's up around 14,000. To just sit here really just further entrenched the trend, which is still to the downside. The S&P 500 chart, you think, looks a little better, but some of the same dynamic playing out here? Absolutely, Kelly. I wrote my notes that I expected the S&P to bounce this morning. You know, you bottomed around 4,100, which is the Fed 24th low, so I'm not surprised at all that the market's moving higher. But 40-50 points doesn't do it. You know, again, you've got to get back in the S&P somewhere around 435, 4,400 before the market,

you can take a step back and feel like the market's okay. to just sit in this 4,200, 4, 1,400 area says that we're still going to go lower. Where does the next major stop and the S&P 500 take you? The objective off the sell-off from the January highs would take you somewhere down around $39.50, 3,900. And just to close things out here, your view on Apple is reminiscent of all of this, thinking, you know, it basically hit your target at the highs, and now it's mean reverting back to fair value, which is where around $20 below current levels? Yeah, I mean, look, Apple has followed our path almost perfectly.

You hit the target off the March 2020 lows, which again is the key driver in the U.S. equity markets up around 180. Now it's in a mean reversion mode, and that could take you all the way down to 135, 120. And so I still don't think that that's done on the downside either. All right. We will leave it there. Bill, thanks so much. We appreciate it.

My pleasure. It's Trasulo. All righty, coming up, Visa shares rise on strong results and a recovery and travel spending rival PayPal on deck. Its stock hired today, but down 72% from its 52-week-high. Actually, PayPal has now turned negative. Top analysts will tell you where to find opportunities in the payment space, plus three battered-down stocks in the NASDAQ 100 that could be set to rally. A trader will name names later this hour, and as we head to break, a look at the bounce back and some Chinese internet names, including, I just love saying this one,

Pinduoduo, JD.com, and Alibaba and Baidu. Welcome back to Power Lunch. PayPal is set to report results after the bell today, with the stock down more than 70% from its highs. But take a look at some of the older payment names, the Visa, MasterCard, MX Networks of the world. They're outperforming the new kids on the block like PayPal, block and affirm, so far this month at least. Is it out with the old and no, I should say, is it out with the new and in with the old in the payment space? Lisa Ellis's partner and senior equity analyst at Moffat Nathanson. Lisa, good to see you again.

And you say, you know, you like these three networks kind of in one, two, three order here for the first time in years. Why? Yeah, that's right. Never happened before. We have them lined up Visa MasterCard, MX, 1, 2, 3. That is primarily driven by the recovery and travel. That's what drove Visa's big beat last night. night to give a sense for it pre-pandemic, international travel was almost a quarter of revenues

of these three networks. And for Visa, it's still only about 15%. So there is significant upside still to come to revenues as travel remixes back into the business. And the key thing is those are revenues that come in at nearly 100% incremental margins. And so they flow straight through to the bottom line. And that affects Visa, MasterCard and MX. It's one of the cleanest positive catalyst we've ever seen for these stocks. In addition, they also, on the margin, benefit from inflation because their revenues are tied to the dollar value of payments. And they're also good stocks to own in a rising rate environment, particularly Amex, because they've got, you know, net interest income balance sheet exposure. Sure. So on the flip side of things, let's talk about

PayPal, which has been breathtakingly bad. And people are wondering what's going on with Is it an execution story with Venmo? Anecdotally, I have people telling me to Zell Vem now. We know what Cash App did to make a lot of inroads there. So is it a business model story? Or is it macro headwinds that have taken even block, which owns that rival Cash App down a similar amount? We look at what's happened with the firm.

I know you don't cover Robin Hood, but that stock in single digits yesterday. Yeah, the reality is for PayPal, it's both. frankly, this whole group is definitely in the fallen angels category. These were stocks that were huge during the pandemic. The business has got a big boost from people being stuck at home, buying things online, et cetera. And we're seeing the natural kind of tailing off of that growth across the whole group.

In addition, of course, in a rising rate environment, these are high multiple stocks, a lot of the value of the stocks in the terminal value. So when you're in an uncertain rising rate environment, they're just difficult stocks to own period. But PayPal also has a bit of an own goal going on. They've had some pretty significant execution issues over the last six to eight months. And then more recently, the CFO announced that he's departing the company to go to Walmart. So there's some deck chairs moving at the senior levels. And investors are really sitting on the sidelines waiting to see, you know, what the new leadership team's going to, you know, do coming in. And also, you know, how they're going to

reinvigorate the growth of PayPal and really start executing. better. Venmo is a great example, but there are others in the business where, you know, they've got great assets but haven't been able to drive them, you know, drive the business performance that we expect. What are those execution issues? And my sense, as an old guy, is that Venmo was the hot new thing a year or two ago, and has it lost its edge? And if so, why? Yeah, PayPal's had a bit of a chronic problem with being really good at strategy and getting initiatives off the ground, but then sort of losing them when they get to about the 30, 40 yard line and not pushing them all the way through. Venmo's a great example, fantastic asset, wildly popular brand, and yet they have struggled to

monetize it in the same way that, say, rival cash app has been able to monetize that product. In addition, PayPal has these very prominent, promising partnerships with international firms like Mercado Libre and China Union Pay that should be big drivers of international growth for them, and yet their international business has been really the weakest part of the business over the last couple of quarters. Sort of stuck in the mud, sounds like. Yeah, exactly. Lisa, thank you so much for your time today. Appreciate the insights.

Thanks, Tyler. Thanks, Kelly. You got it. Lisa Ellis. And we got a market flash for you on Beyond Meat, sharply hitting its session high in just the past few minutes. As a McDonald's executive announces the MC Plant Burger will become a permanent menu item. Those comments were made at a fast company event. and shares of Beyond Meat are currently up nearly $6.

They took it away there, but you can trust me. It was moving higher even as you spoke. You know, the big plant burger is a big deal. It's basically the best possible scenario for some of these companies to land a big contract like that. We've seen efforts with Duncan that haven't always necessarily panned out. So, you know, Beyond Meat shares are still at, what, about 40, a little bit below 40 that we showed there,

and their high was near 200. So they've absolutely been a reset, but this news probably couldn't have come in a better time for beleaguered investors. All righty. And let's move on now to Caterpillar, set to report results in a week of lots of numbers. Industrial rival GE sinking after reporting serious inflation pressures. Could Cat face the same clause plus opportunity and volatility? We'll take a look at some NASDAQ 100 names with serious declines, but serious potential upside.

And we celebrate Financial Literacy Month. Did you know that? Featuring some of our CNBC contributors, here is CNBC contributor Anna Valdez on how sources of growth can empower ideas. My journey through financial literacy started when I arrived here, came from Mexico City. I was born and raised there, I studied there. I realized coming into this fabulous country that there were possibilities of growing my business, through, you know, access to capital from banks, all the way to the way. to VCs and all the sources of growth that could empower a fantastic idea that probably wouldn't

have happened in another country. That was my journey from Mexico City all the way to here, becoming an entrepreneur and becoming financially littering. Welcome back to Power Lunch. I'm Dominic Chu. We want to bring you a market flash right now on NCR shares, which right now that stock on pays for its worst day in over two years, trading at its lowest level since December of 2020. That company provides payment tech, for businesses and a reported quarterly earnings that came in under expectations. It also slashed its guidance for the full year as well. And the results can serve as a microcosm, if you will, for the current economic situation globally,

with CEO Michael Hafer, attributing the disappointing results to high inflation, rising interest rates, the war in Ukraine, and the spread of the Omicron variant. So even as the company saw revenue growth in some of its key segments, it was not enough to fend off some of those bigger macro issues that we've been watching. Tyler Kelly, I remember when it used to be National Cash Register back over to you. Oh, I do indeed. All right, let's go now to Bertha Coombs for a CNBC News update. Hi, Tyler. Here's what's happening at this hour. Lawyers for the Parkland school shooter want the judge to end the death penalty trial if she dismisses more than 200 potential jurors from the jury pool. That would mean Nicholas Cruz would be sentenced to life in prison without parole.

The judge has ruled jury selection should be restarted because of errors she made during juror questioning. Dr. Anthony Fauci says the U.S. is out of the pandemic phase of COVID infections and hospitalizations. He told the Washington Post, America is now transitioning to a period with slower COVID spread as the disease becomes endemic. And Microsoft says Russian government hackers have carried out dozens of cyber attacks against Ukraine. Microsoft says the hacks began more than a year ago and may have laid the groundwork for Russian military operations in Ukraine. Back over to you, Kelly. Bertha, thank you very much.

Let's get another check on shares of Beyond Meat, which are now halted on volatility. As Tyler mentioned a moment ago, the stock was soaring on the back of news that the McPlant Burger will become a permanent menu item at McDonald's McPlant, obviously being a Beyond Meat product. The shares look like they've reopened. Now they're up 25% in the session.

So about a $9 pop here to $45 in change with a major positive catalyst for B-Y-N-D. Ahead on Power Lunch, we've seen how markets are reacting to growing inflation and economic uncertainty. But what about consumers? Are businesses seeing any signs yet of a slowdown? Tillman Fertita owns restaurants, hotels, and casinos all over the country. He joins us next with his view on the economy. What goes down must go up. And today it must go up.

314 points on the Dow. We've got 90 minutes left in the trading day. Let's get you caught up on the markets, on stocks, on bonds, commodities, and a look at the state of the economy with consumer and power player, Tillman Fertita. Let's begin with Bob Pazani and the rebound. Magically, he appears behind me, Bob. Tyler, all I got to say is thank heavens for Microsoft and to a lesser cent for Visa because Microsoft far and away the most important stock earnings report of the week. Apple, of course, coming up shortly here. There's Microsoft really helping turn things around.

Revenues beat. Guidance was okay. Cloud was strong, right across the board, strong. Consumers looking great. That's what essentially the takeaway for Visa is. Both of them, you put them together, there are 200 points on the Dow, just those two stocks. Google, of course, Alphabet, not in there, but missing on revenues. Google advertising was below that, and we're not far from 52-week low on that.

But a lot of damage has been done. There's a lot of big-cap stocks that are at 52-week lows right now. So Boeing's there. That's killing the Dow for about 100 points. Verizon's been terrible. It's down 10% the last five days, straight down. J.P. Morgan, the big Money Center banks are down. They're one of the worst performers of the year. It's down more than 20% on the year. Only thing that's worse is Walt Disney. That's close to down 25% on the year, although flattish today. Same time, no break for Kathy Woods. Most of her big stocks are sitting at 52-week lows. Tesla's the exception here. but Unity Software, Roku, Shopify, Coinbase, Twilio, all 52-week lows.

The thing that's most common, they have in common is they either don't make money or they have very, very high multiples, so very little money, actually. And that's what the new low list for them includes. As for the S&P, we're well off of the lows, but we essentially went right at the closing March 8th, that was 41, 71. We were right at it, and just a few points below that, we'll see if we can stay above that. But as you can see, that's only about 40 points away. And Tyler, we break through that, of course. Mentally, a lot of people are going to be in a bare market. Back to you.

All right, Bob. Thank you very much. Let's go to the bond market now where yields are looking for direction as inflation and growth concerns linger. Rick Centellie is tracking the action for us, Rick. Yes, Tyler, you know, yields are up today. But as you look at a one-week chart of five, you can see that they have drifted lower. They're building off of yesterday's low-yield basis. much all maturities. That one week of five year, I will draw your attention. We're hovering

right around 280. We had a very iffy auction of 49 billion of those five years, and the high yield closes 298, so you could see how much we've drifted. If you look at a month to date of 10 years, realize they closed the end of last month at 234, and we also know that as you open the chart up, that the high yield close was 19th of April. It tried to go to 3%. We closed at 2.940. We closed at 2. And that was, as you see, the highest yield close since 2018. And even though we've drifted a bit, the amounts are small. If you look at the big action today, it's actually foreign exchange. The dollar is definitely king at the moment.

Look at it one week of the Eurovers of the dollar on pace for its fifth lowest close. It represents close to 58% of the dollar index. And you can see it's going back to March 2017 before you'll find a lower close. And remember, it's been since December. of 2002 since we've traded parity, and many believe that could happen. And finally, the reverse side of this is the strength in the dollar. Look at this chart. If we stay above the middle of the chart, those highs from March 2020, right around 102.80,

and we're above that now. It'll be the highest close for the greenback since early 2017. Wow. Kelly, back to you. That's the big story. I'll pick it up. Rick. Thanks very much.

The energy complex closing for the day. Huge moves in the net gas space as Russia's gas. PROM, halts gas supplies to Bulgaria and Poland. Pippa Stevens has the story. Hey, Pipa Stevens has the story. Hey, Pip. Hey, Tyler. Well, this is significant because it's the first instance of Russia weaponizing energy by turning off the taps. State-run gas prom said supplies to Poland and Bulgaria will be halted until the two countries make payments in rubles. Now, Poland especially has shored up supplies and storage is about 80 percent full, but this is a first step and consequences would be much

more severe if Russia cut off countries like Germany or Italy. European natural gas spiked more than 20% at one point before pulling back to 108 euros per megawatt hour, putting that move in U.S. terms at the high, those prices were equivalent to nearly $40 per MMBTU. Now, European Commission President Ursula von der Leyen called the move another attempt by Russia to blackmail the EU with gas. She reiterated the block is determined to move away from dependence on. on Russia as soon as possible. Now, here in the U.S., not gas prices are also jumping up more than 3%

and crossing above $7. Producers and LNG names like Tellurian, Chenier, EQT, and range resources are all rising. A more muted the move for oil, though, which is slightly negative here with WTI at 101.71. Tyler, back to you. Hi, thank you very much. All right, let's turn to inflation, labor, and supply shortages.

All the perfect storm for travel and leisure companies and with demand soaring, can the leisure and entertainment industry keep up with higher demand for a power player view of the industry and much more. Let's bring in Tillman Fertita. Forita Entertainment Chairman, this is a power lunch exclusive. Tillman, it's great to see you again. We've been missing you. I know you've been busy. Welcome back.

It's great to be back. I just haven't had a lot to talk about lately, Tyler, but it's good to be back today. Let's talk about a couple of things. I remember at the depth of the pandemic about this time two years ago. You said you thought that the economic recovery would be a 2022 phenomenon. You're looking in your business. You're looking pretty prescient on that. Is that what you're seeing now in hotels, in restaurants, in live events?

Business is very good, Tyler, but it even got good at the end of last year. And the world came back just like we thought it would, but it even came back better. But where the consumer's out spending money in all aspects, hotels, restaurants, casinos, concerts, sporting events, it's good. It just those costs are up. But it's been better in some places. You know, here's a definition. If you take the East Coast and the West Coast, when it comes to restaurants,

same store sales are still down 10 percent because the lockdowns for so long has changed people's habits. in the rest of the country, from the south to the north to the Midwest, you're up right now 7 to 8 percent. So business is good, but it's just lagging where the lockdowns were the hardest on the east and the west. I think you're exactly right, and I obviously all roads lead to me, but I think that people in the New York area kind of got out of the habit of going out. There's still a little gun-shy, but it's coming back. I mean, it really is. So, Let's talk about inflation.

It cuts in two sort of deleterious ways to an entrepreneur like you. One, it rises input costs for you, food costs, all rents, labor costs, and so forth. And for the consumer, everything gets more expensive. You go to a steakhouse now, and we're coming close, close, close to the $100 steak, because your input costs are much higher. This is what people have to understand. Please forgive your neighborhood restaurant or wherever you go for two reasons. And I'm going to use a cheat sheet like our president does.

But from 19, beef is up 30 percent. Chicken is up 140 percent. Pork is up 30. King crab is up 100 percent. Lobster 50, fish 30, shrimp tin, and grains are 120 percent. And hourly labor is up almost two. 20% and we don't have the hourly labor that we need. So usually when a waiter had two tables or three tables, now they have four or five.

So I feel sorry for the consumer that they're paying a lot more and they're probably not getting as great a service, but it is what it is. And it's nothing that your neighborhood restaurant can solve for you. And so please be patient with them because it is expensive, but it's expensive. people still say, I can still spend less going out to a restaurant because when I go to the grocery store, I end up buying so much more and I'm shocked, you know, at my bill when I go to the grocery store. We hear that all the time.

Well, it's true. I went and tried to buy a couple of steaks, not big ones, and it was $24 for two little small rib-is. They were delicious, by the way, but whatever. So do you think these- And we're not cooking them for you, see? No, I'm cooking them. on my own grill on my overpriced oven with the million dollar renovation. At any rate,

let me ask you, do you think these higher prices are here to stay? Tyler, I've never seen when prices hit, you always have items that spike every year from lumber to seafood to whatever, oil, but if they start staying flat for a six-month period to a nine-month period, then it tends to stay. No, I don't. do not see a lot of your proteins coming down drastically. Do I see it getting a little better? Yes, 100%. We're definitely in a huge inflationary period, the biggest that I've ever seen, and I've been around a long time. But it's never going back to where it was in 19. I'm hoping that we can get back down into the 10 to 25 percent range. But you've basically priced King Crab.

out of the market where nobody can even afford to buy it. Right. And we've got to see certain items come down. And it is ridiculous what a stake cost us today, you know, even at the grocery store. Yeah. Let's turn to a couple of items that bear on your business more directly. And one is the sale of Golden Nugget online gaming to draft Kings, a deal that you announced last August. Is that transaction on pace to contract?

close and given the, it was supposed to be an all-stock deal, given the fact that the Draft King's stock is off very, very substantially since last August, have you had to renegotiate the terms? Where does that stand now? Will you close it by May 31 and will you still get a billion and a half out of it? Well, it was done as an exchange ratio. And so we are getting the same amount of shares, but of course it's not, the value isn't a billion and a half dollars anymore. But if you look at, it's not just Draft Kings, if you look at every other online gaming company out there, it's universal. And even if Golden Nugget online gaming wouldn't be trading based on where Draft Kings is trading because of the exchange ratio, we would probably

be somewhere approximately where we are today also. So, you know, it is what it is. But I look at this as a long-term hold. I will be one of the largest shareholders of Draft Kings, and I think it's one of those stocks, because it's a tech company. You've got to remember that. It is technology, and you're going to look up,

and it's going to be just like an Amazon or a Tesla or one of these other tech stocks, that you're going to look up, and it'd be back to $50 to $100 again in the next few. years. When they turn the corner, like all tech companies, and become profitable, they become real profitable. And I saw that myself operating Golden Nugget Online Gaming. But I love that they'll be funding the losses for the next few years. That sounds pretty good. You get somebody

else to fund the losses. Let's talk a little bit about the SPAC deal that you, you characterize it. I would say you walked away from. You have been remarkable at the next year. number of times you've either been private and public and private, and that was yet another way to go public again. Why do you think the company is better staying private? What happened there? You had to pay a $33 million breakup fee, as I understand it. Would you ever again consider taking these businesses private through us back? Walk us through what happened and why you made the decision you did. Yeah, it was a lot of different decisions. And you've got to remember when I decided to take the company public again, it was in the midst of the pandemic. And as we came out of the

pandemic, and there's a lot of different reasons. And it was going to be a controlled company that I owned 70% of the stock of. And, you know, I even think you get excited of saying, gosh, you know, you can see, oh, you're going to own 380 million shares and you get caught up in it, but also the business changed and our business got better. And you sit there and you think, I'm one of the few people in the country that own 100% of a company that's going to do a billion dollars in EBITA. And, you know, you just start talking to family members and I had an opportunity to to get out and you start looking at all the new regulations and all the new filings and

who's going to be on your board and who's not going to be on your board and are you doing this and are you doing that? I mean, the government is into running companies that they shouldn't be doing today and telling you how to operate your companies and like I said. Public companies, public companies. Yeah, but it's still, but even as a huge private company, But so what? A public company is made up of shareholders of Americans, okay? And I still don't think the government, as long as you're following all the rules that you should be doing to protect the shareholder,

I don't believe that we should be so much into social issues, you know, when you're running a company. Our job is to make as much money as we can, and that's what capitalism is all about, is making money and doing the right of the right. thing and being charitable and being a diversified company. And we try to do all those things as a private company and I would have done it as a public company. But at the same time, the main reason was it was a different time. And like I said, you have a company that's going to do a billion dollars in EBITA and you own it. Why go share it with the public? Just keep it yourself. Yeah. And you've taken on a fair amount of debt, as I understand it. What does higher interest rates mean to your cash position, your carrying costs of that debt real quick?

Well, I mean, it definitely has an effect, but we're also, you know, an extremely liquid company. But if you're not going to have shareholders and you want to grow, you have to do it through debt and through your own equity. And so a private company that's growing is going to always carry more debt than a public company because you're not out there selling shares. Right, right. But we have debt, but we have a tremendous amount of cash low, and we have a tremendous amount of cash on our balance sheet. And we're out there right now looking for big deals to do.

You've got to get your capital from somewhere. And as a private company, as you point out, that may be the debt market. Next time you come back, I want to talk to you. Let's make a deal here. Let's have a conversation about the role, the appropriate role of companies, public or private, like Disney, in speaking, out on contentious social issues, because I know you'll be interesting on it. TILM Fertita will make a date. Thanks a lot, my friend. Thanks, Gass. Appreciate it. Good. Kel.

We've got another market flash on Beyond Meat, which has had a volatile hour. It's halted again. Kate Rogers has more for us. Kate? Hi, Kelly. And the stock initially halted and then rallying on that fast company headline. We're getting an update here from the McDonald's side saying the headline was misconstrued. The McPlant has been a part of the global core menu lineup since November 2020 for markets to pull down as they choose to. There are no new updates in the U.S. meaning that a permanent menu edition of the McPlant in the U.S. is not being announced. And that headline was misconstrued there. This came out of conversation with Beyondmeat's CEO, Ethan Brown, and McDonald-C-MO Morgan Flatley talking about the future of the partnership there

and flatly seemingly announcing, you know, that they were confident in the future of both Beyond and McDonald's working together and talking about overseas success of the McPlan, not necessarily that it was going to be a permanent fixture in the United States. This is all interesting, of course, Beyond Meat Stock has really taken a beating over the last six months. It was down about 60 percent, then rallied today up about 30 percent on those headlines. But analysts at BTIG earlier in the spring had talked about kind of a tepid franchisee reaction and response to the McPplant, saying it wasn't selling as well, and that a national

rollout was likely not imminent. So definitely a story to watch here. We'll bring you any other updates as we get them. Back over to you. Kate, thank you. And the shares, which were up about more than 25% at the highs on those hopes, let's call them now, are up about 5% right now. So they've come back down, although not entirely. They're back to 37 and change. Coming up, some other beating down NASDAQ 100 stocks that could be ready to rally. Our trader has some names to name in today's three stock lunch. Welcome back, everybody. Yet another name we're watching our, or I should say is Carvana, which was halted twice in just the last few minutes. According to the Wall Street Journal, Apollo Global Management has put up about $1.6 billion to bolster the company. The stock has collapsed 75% in the past year, and it's still down about 2.5% today on these financing details, Ty.

All right, up next, major NASDAQ 100 laggards that could turn into leaders. We'll tell you about those in just a minute. Welcome back, everybody. We are looking for some buying opportunities among these NASDAQ 100 laggards. Names like Invidia, Match Group, and Align. CNBC Pro ran a screen of names down more than 30% for the year, but which have 70% of analysts with a buy and potential upside of 20% based on those targets. These are three names we came up with. So which one is the best buy? Let's bring in Larry Glazer.

He's a managing partner at Mayflower Advisors. All right, Larry, your favorite of these? Three stocks here. What would you go with? What do you, which one do you pick at the bar? Sure. Well, look, it's been tough sledding in the NASDAQ. And there's no question that when the sledding gets this top and the VIX gets this high, you need to pick a leader in the field and you need to stick the quality. And that's NVIDIA. The future is all about chips. The future is all about data centers. This is a leader in that field. The smart money likes data centers. The analysts like the company. This has got all the right moves for the future. You need to close your eyes, hold you know, take the plunge and look towards the future because there'll be more chips and then video will be a part of that story. You say you're not going for match, but you would look at a line here? Look, match may not be a match for your portfolio. It's all about in real life today, right? And that match is an online story. I want to be in the offline reopening stories.

And with Align, it's all about the smile, right? You go back to the office. You want to have nice teeth. We want a smile goes a long way. And align will put a smile in your own. portfolio. Earnings we need to watch very closely. They're coming out. It's a very exciting time. They've done an amazing job cultivating cosmetic dentistry. It's an awesome company. It's a premier brand. I really like the story. And I like it because it's not supply chain. It's not dollar. It's not China. It's not all the nonsense that's affecting the rest of the things. Teeth. It's teeth, man. That's Alina there that Larry is a big fan of and Invidia as well. Larry, thanks so much, Larry Glazer. You can find the rest of the names with this potential

website on our CNBC Pro website. All righty, more power lunch is next. The day is almost here. The CNBC stock draft airs tomorrow. We got celebrities. We've got Deadpool star Ryan Reynolds, star of Real Housewives of Atlanta and Candy and the gang, Candy Burris, Shark Tank's Kevin O'Leary Plus on the court, two-time NBA champion David Robinson and the St. Peter's Peacock.

Remember them from the NCAA from the board. Former Macy CEO, Terry Lundgren and CNBC favorites, Tim Seymour, Stephanie Link, and Delano Soporouro. Congratulations, of course, to last year's winner, Andre Iguidala, of the Golden State Warriors. I believe they won last night. I can't remember. But at any rate, the real star last year was, of course, Jim Kramer. He's sort of a different division. His two stops actually outran all the others. on the program. He said Ford and AMC would be his two picks. They would have been the two best performers. Jim will be with us tomorrow. Melissa Lee is well to talk through all of these picks and, you know, give us some thoughts. The stop draft is tomorrow. Get you ready for the NFL

draft later that night. Meantime. Thanks for watching, Power Line.