Power Lunch - TikTok's Future 3/15/24

Episode Date: March 15, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. “Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Morgan to Power Lunch, everybody, alongside Contessa Brewer. I'm Tyler Matheson. Glad you could join us. Leaders turning to laggards. It's been a nice start to the year for the markets, but two of the MagS7 have stumbled out of the gate. Big time. Apple down 10% this year. Tesla down 35%. We will drill down on those names and what they mean to the broader market. Well, it's never too early to start investing. Schwab recently reported a sizable increase in investment accounts set up for children. We're going to talk to one teen investor who self-publicly. a book on the topic. But first, let's get a check on the markets right now. And as you can see, that's a lot of red, folks. Down industrials off by half a percent. S&P 500, down a little more than that. And then NASDAQ composite off. 0.86%. Shares of Adobe falling sharply, even though the company beat on earnings. The problem, according to analysts, the guidance, or lack thereof, for the coming year, we have heard a lot recently about people photoshopping their pictures. It is not clear how much

money Adobe can make off of that. And right now, it shares off by almost, well, 15% down 14.25%. And we have a special guest here joining us for the entire hour, Sarat Sethi. He's managing partner at DCLA and a CNBC contributor. Good to have you with us. Good to be here. It's been a pretty good start to the year. It has. It has. And what's nice is to see the rally broadening. So it just not just the magnificent seven or the less than magnificent seven. Maybe five. No, I think what you're seeing is at least the breadth of the market improving. And you're seeing other areas of the market actually attracting capital,

not just the bond market as well with rates where they are. So whether it's in commodities, healthcare, financials, industrials, I think you're seeing some of those sectors that have lagged actually see capital flowing in there. And companies actually doing pretty well. So I think that combination, you know, along with the overhang now of how long are rates going to be where they are. We talked about the Magnificent Seven becoming the Magnificent Five. Let's bear down on that. We begin with two widely held names that are both having a bit of a rougher start to the year, Apple and Tesla.

And here to help us dig a little deeper in what's going wrong for these two heavyweights is Tony Sakanagi, senior IT and hardware analysts. Tony, welcome. Good to have you with us. Good afternoon, Tyler. Why don't we start with Tesla? What's going on there? You know, the company entered the year with a very rich. valuation multiple. And it's in a period where it may not grow much. Last year, earnings

were down. This year, earnings will very likely be down. And the automobile business this year may not even grow. And unfortunately, 2025 is likely to be the same. So you have a stock that's trading at, depending on where you think numbers are this year, somewhere around 60 times earnings, and there's no growth. And you were talking about how there have been shifts in the Magnificent Seven. I think part of the challenge for Tesla and to a certain degree for Apple and why you're seeing investors vote with their feed is neither are growing this year. And it's tough paying up for companies that aren't growing. So there's clearly concern for Tesla in the near to medium term about its ability to grow. Ability to grow. They seem to have put a lot of emphasis

on a lower priced automobiles, including a new model that I think is coming out next year, the Model 2, if I have it correctly. Do you think going down in price is a long-term win for this company or not? Tesla absolutely has to make its cars more affordable if it wants to become an industry leading car company. You know, right now, Tesla's models are largely at $40,000 and above, and that's a relatively narrow market. So Tesla's aspirations and its valuation suggests that it's going to be a dominant car company, you know, potentially as big as, you know, Toyota or Volkswagen, who are the biggest car

companies in the world today. But in order to do that, you have to appeal to a broader set of consumers rather than, you know, relatively affluent consumers. So it absolutely has to go down market. And the challenge is it's going to take some time. The car will likely only debut at the end of 25. It will take some time to ramp that car. So Tesla may not see, you know, real volume benefit from that car till late 26 or even 2027.

And that's a long time for investors to wait. Is that why BYD, though, is outpacing Tesla right now that they have more models to choose from for lots of different consumers? Absolutely. I mean, you know, Tesla really has four models and two of them are above $70,000. BYD has almost 30 models and they start in China with micro-evees at under $10,000. So they're certainly able to, you know, and they largely play in the Chinese market, offer a full suite of products from low end to more expensive ones. They just introduced a luxury car that's over $150,000. So they are providing enough choice to offer the entire marketplace, which Tesla is not.

It's really playing in the luxury niche market at this point. What about the idea, and you see the Big Four talk about it, too, the saturation of EVs and the move to hybrids, at least temporarily until kind of the next wave of EVs come, or maybe those that have longer distance? So is that part of kind of what's affecting the Teslas of the world, too, given the valuation they have compared to what you would call the legacy automakers? I think it's affecting the broader EV marketplace to some degree. We still think, you know, EVs will be 70% of vehicles sold by 2040.

We still expect healthy growth in EVEs. Evis screwed 35% last year despite, you know, this slowdown in this move to hybrids. But more broadly, yes, there has been some recent movement for consumers to want to buy, you know, hybrid vehicles as opposed to pure electric vehicles. But I do believe as EV costs come down and many companies, not just Tesla, are driving down prices of EVs and ranges are improving and charging infrastructure is improving, that EVs ultimately will be the dominant form of propulsion going forward. Interesting. But the broader issue is really Tesla specific and not having the model range.

that it needs. Let's pivot, if we might, to Apple, which you have a market perform rating on underweight on Tesla, by the way. You mentioned that the problem with Apple is no growth this year. Does that mean that we have to wait until 2025 for an iPhone refresh cycle? Maybe it's called the AI phone to come online and give that company the boost that we've grown accustomed to seeing from it? Yes, Tyler. So 50% of Apple's revenues come from the iPhone and the iPhone's also really important in driving Apple's services revenue. So to some degree, as iPhone goes, so go the fortunes of Apple. And the last couple years, the iPhone cycles have been very weak. And certainly we think there's potential for a stronger cycle next year. Many

consumers upgraded with the 5G phone in 2021 and 2022 haven't really had an imperative or a need to upgrade since then. But if Apple is able to come out with a compelling iPhone, and we do think there will be AI capability on the next iPhone, that could stimulate upgrades and lead to a stronger cycle for Apple. So certainly directionally, we're optimistic that sales on iPhones will be better next year. Apple down 1% today. Tony Saginawaghi, thank you so much for joining us today. I appreciate your insight. So we've talked a lot about the MAG7 and their big run-up throughout the last year. And you said you like that the rally has broadened out.

But does it concern you that these two big mainstays are not having that big chug forward? No, because I think if you look at it and you say, just take a step back and look at like Microsoft and Apple, their market caps are bigger than the whole basic materials and energy sector. So at some point, can that growth rate still be there compared to the rest of the market? Can you still do that? Now, these are still good companies and you want to own them, but you don't want to own them for us and the size that they are represented. Take for example, the S&P.

So I do want to play in other areas of the market, too. I want to be in, you know, a company like a Disney that I think is completely undervalued or a J&J to that fact or even your parent company, a Comcast. Because the next three to five years, to me, the opportunity exists more in some of the other stocks. Not to say I don't want to have these in my portfolio, but I do think your opportunity to grow is better somewhere else. And what about copper right now or other commodities? How appealing is that to balance out the portfolio? So I think commodities are a very interesting part of the portfolio now. I mean, one is the inflationary side, but the second part is the secular

demand for copper. For example, we haven't built a copper mine in 10 years. And if you look at where copper goes into, not just the EVs, but it goes into all the data centers. All the data that are growing because of what's happening, well, AI chips are being, you know, used in all these other places. Look at all the new housing that takes copper. And so that's another example of a commodity that you can play by owning a company like Freeport McNamaran or tech. So, again, a diversified portfolio that gets you exposed to other things that are growing, not just the same things that did for the last five years. As when you get asked by your clients and customers, you know, why do you own this? Why don't you have more on VINIA? Do they ask you that?

So the question we get is, why did you sell my NVIDIA? Exactly. And you get back to that and say, hey, listen, nothing grows to the trees. And we love NVIDIA. It's a great company. But the question is, what is the risk here of NVIDIA? I own it. I still want to own it, but the size is very important.

It's just grown beyond where you're comfortable. 2020, the stock was cut in half. So it's a very volatile stock. It's a very own stock. And it also, I mean, next week, they're going to have their conference talking about where they're going to be. But we all know with chip companies, the demand can be double-ordered.

I'm giving you the bare case, right? That all of a sudden, meta says, hey, we don't need X-chips. We need 0.5x chips. And that kind of goes down. And all of a sudden, your margins start going down. So basically, yeah, the stock's trading at something like 30 times next year's earnings,

but what happens if the E goes down, right? So you want to own it again. You want to own it part of your portfolio, but you want to say, hey, what are the other things are going to work if this work? So do data centers work? There's a portion control. is really what we're talking about. Absolutely, because we know what happens when it becomes too big,

and we've seen. History has told you in 99 what happened, told you in 2009 what happened when you owned too many financials. It's the same thing happening during COVID as well. So these are cycles. They're very hard to time, as we know, but you want to own it. A little ozempic on the Nvidia, right? So right, thank you. Which means you can still eat. You can still eat, but you just will get full. All right, coming up, the Education Department aimed to make applying for federal financial aid easier. However, it got worse, worse, much worse. We're going to discuss that next. Welcome back to power launch, despite a months-long delay of the new FAFSA application, say that fast five times.

The rollout has been far from smooth with many users facing bugs on the official website. So far only 5.7 million FAFSAs have been submitted far from the 17 million expected annually. New York Times out with an article earlier this week stating that many colleges are now taking a proactive, the move of extending the May 1st deadlines for students to commit to their schools to allow more time for the government to sort the issues out and those students and their parents to make a wise choice on what the net cost of the school might be. Joining us to discuss this on set is Sarah Harborson. She is the founder of Application Nation and Admissions Revolution

and the author of Soundbite, the admission secret that gets you into college and beyond. There's a lot there, Sarah. Welcome. Good to have you with us. So what has gone wrong? I am going through this. I am telling you it is mightily frustrating to deal with FAFSA and the website. What went wrong?

Yeah, I have a high school senior too. It was all coming out of the FAFSA Simplification Act that was passed in 2022, but it's really now the FAFSA Complication Act. There have been so many complications mistakes in the actual form. formula for getting aid glitches, families were not able to get through filling out the full façet. It was supposed to simplify the process. It has caused tremendous delays both for families and for colleges. They're not able to deliver financial aid packages to the students who get admitted. Well, it looks like they're not even able to accept all the applications that should be committed. I mean, if you have 5.7 million applications coming in when 17 million are expected

annually and you said that you went on and you couldn't even figure it out. You go on and it stymies you. You go on and it says, oh, I'm sorry, we're doing work on the website right now. You'll have to come back in three days and so on and so forth. So I suspect that if they're expecting 17 million, I'll bet you a big hunk of 17 million are trying to make it work. Only 5.7 million have actually gotten to the finish line here. But I think families got scared off and that's what I'm concerned about. I'm worried that students are going to get admitted to college and they haven't applied for financial aid. And we've seen these price tags in terms of tuition. So they're going to have to make a choice not knowing potentially what their financial

assistance award would be. And how do you see that playing out with the private versus public institutions? Because so many families are now focused on outcomes, right? I'm sending my child to college. What are they going to come out with? And when you see the price tags of the private versus public, are you seeing something kind of changing there in the landscape? The price tags on the private colleges and universities are into the $70,000 to $80,000 range per year. And those public universities are a steal a lot of the times. You know, if we look at two schools in Georgia, Emory University, a private research university, 83,000 plus a year.

But the University of Georgia, if you're in state, 28,000, even if you're out of state going to the University of Georgia, you're going to be paying about $48,000. So those public university price tags are looking a lot more attractive. Financial aid, of course, is a big part of how families afford college, but also scholarships. Do you have any advice for families who might have to put the financial aid part on the side for the minute and then focus on what they can do with scholarships? So not every college and university is going to offer merit scholarships, but a lot do. And I would say that it is a buyer's market right now.

Every single day I have one of my students tell me I got admitted a couple of weeks ago, a couple of months ago, I got a merit scholarship, and then out of the blue, some of these colleges and universities, both public and private, are letting them know, you know what? Here's another $1,500, another $5,000, another $10,000. And what that indicates to all of us is that there is a lot of uncertainty on the part of families, especially with the FAFSA, but there's even more uncertainty with the colleges about whether or not, they're going to be able to meet their freshman target. When are those colleges going to find out or get the information that they need from the education department? That's been delayed, right? We're hearing that mid-March, and we are right there, that colleges will start receiving the data for these students' FAFSAs. But that's a quick turnaround because most of the regular decision results are happening

right now. And that May 1st deadline is approaching for students to make final decisions. Question number two is, what advice would you have for a parent? like me, who's in the middle of this and is struggling to get the computer program to work for them. You just have to keep persisting, persisting, persisting, or what? I think you have to have a little bit of luck and a whole lot of patience. And I think... Two things I don't have.

And I truly believe things have gotten better in terms of filling out the FAFSA. But I think we lost so many families in that early stage when they went on initially and struggled mightily and just said, you know what, I'm not even going to give it a try. And that's unfortunate because this new Simplification Act was supposed to bring so much more money, especially to students who needed it the most. All right. Thank you very much, Sarah. We appreciate it. We'll have you back. Thank you. And good luck to your daughter.

Same to you. Yeah. Thank you very much. Further ahead, more and more teens are getting into investing. Custodial accounts surging in popularity. We will speak to a young investor who decided to invest. invest early. Oil finishing the week above $80 a barrel after roughly 4% gain on the week. Pippa Stevens joins us. Oil, there it goes.

Yeah, so we're up 4% on the weekend, firmly above that $80 level, which it took so much to get above. And the city's global head of commodities told CNBC this morning that kind of everything is going right for oil bulls right now. We have tightening global inventories. We have a drop-down in onshore inventories as ships are rerouting. We also have murmurs of a shifting global demand outlook. And so things are going very well, and that is supporting the price of oil. We've also seen this week, both the IEA and OPEC, raising their demand forecasts for the year. And notably, we've seen an uptick in Ukraine targeting Russian infrastructure.

So they've stepped those up. And RBC now notes that there have been eight attacks on the refineries that account for about 27% of Russia's output. Now, it hasn't all come offline. Yeah, I was going to say, has it taken it offline? Not all of them, but three of the eight have seen a significant drop down. And this comes as Ukraine is trying to target Russia's key revenue source, which, of course, is their fuel exports. And so that then is lifting oil stocks this week up at the best group, both today and for the week. The refiners continue to lead the way Valero's up 10% on the week, followed by Philip 66 and Marathon Petroleum as well.

Bank of America did upgrade Valero today. However, one notable underperformer, I should say, is EQT. That named down 10% this week on continued weakness in now. gas. They also did announce that big deal earlier this week to buy pipeline company Equatrans. All right. All right. Thank you, Pippa. We'll leave it there. Pippa, thanks. Let's go over to Julia Borsson now for a CNBC News update. Tyler, Ukrainian officials say at least 20 people died in a Russian missile attack on the port city of Odessa today, dozens more reportedly injured. The Ukrainian president bowed retaliation.

Local officials say the two Russian missiles fired from Moscow, occupied Crimea, hit a residential area, and that it destroyed at at least 10 houses, a three-story building, and other infrastructure. President Biden hosted the Irish Prime Minister today at the White House with the St. Patrick's Day visit was overshadowed by the country's differing approaches

to Israel. The Irish leader used the sit-down with President Biden to push for a permanent ceasefire in Gaza and discuss the humanitarian crisis there. The president said he agreed more needed to be done to get aid into the enclave. And the International Monetary Fund is

investigating a cybersecurity breach. It was first detected back in February. The IMF says the 11 email accounts involved have been re-secured. Sources tell Reuters the compromised accounts did not belong to any of the top IMF officials. Back over to you. Thank you very much for that, Julie. Appreciate it. After the break, the Senate pumping the brakes on the TikTok ban. But if the House's quick action was to strike fear into China, well, that maybe didn't work. Details in today's tech check when we return. All right, the future of social media app TikTok still uncertain. The latest, the Chinese government, is now reportedly signaling that it won't allow a forced

sale of TikTok. Meantime, the bill still heading for a showdown in the Senate. Deirdre Bosa joins us now with today's tech check. So what are the implications of what China is now saying, Dee? Well, China is not going to make this easy. So even if TikTok's investors, many of them American, which you talked about, earlier this week, want to sell off, want to fork off TikTok from its parent company, Bite Dance.

Bite Dance is still Chinese. And there's this question of a technology transfer, right? The source code that was developed in China by bite dance engineers that serve the basis of TikTok. That is the secret sauce. That is what has made TikTok so popular, 170 million users here in the U.S. So China is essentially saying that they're not essentially. They are saying that Washington is using a robber's logic here.

see something good and so they just want to take it. So that raises the stakes and, you know, it makes it very, very unlikely that Beijing is just going to let this thing go. China could protect the source code, right? How could it do that through its export control list? Back in 2020, guys, when we were talking about this during the Trump administration, remember Walmart, Microsoft Oracle, they wanted to put something together to potentially buy TikTok. China then, the communist government added content recommendation algorithms to that list. That's exactly. where bite dance and TikTok play. So it would essentially need Beijing's approval

for any kind of technology transfer or sale to go through. And as we've heard overnight from the Commerce Department, that is increasingly unlikely. They say that they should play by the rules and restrictions of the country in which it's based, which is China. So if you don't get the source code in some sort of sale or acquisition of TikTok, you don't really get TikTok, is what I'm hearing you say.

And that if the, secondly, if the source code were to remain as part of a Chinese controlled company, would that, while the rest of the company is American-owned, would that solve the problem here or not? So I've been having this conversation a lot over the last few days here in Silicon Valley. And there's kind of, like, I hear two different opinions. Some say that, sure, if you fork off the U.S. TikTok side of things, you could hire a bunch of really, really good AI data scientists to replicate it. But then there's another group of people I'm talking to who say that would be nearly impossible.

Meta, snap, another social media company would already have those data scientists. Why would they let them go? Why was it so difficult for meta to get reels up and running? So they think that that's very unlikely. And remember, too, that the Chinese internet developed a very different way. They have very different views on privacy.

So part of the magic that is TikTok and why it's become so popular here, because it was built in a very different environment, which could be difficult to replicate Tyler. So, yeah, it's a question, what is it worth without that source code? Deirdre, thank you for bringing us that. Appreciate it. Quick programming note here. Be sure to catch an exclusive interview on overtime.

Today with Kosoaventures, Keith Ravois, he threatened to stop funding Republican candidates or any leadership packs run by Republicans who vote against the TikTok ban. That's at 4 p.m. Eastern. Let's get to Kate Rooney now for a news alert on Sam Bankman-Free. What do you have? Kate? Hey, Contessa. So the government prosecution side is filing a sentencing request in that Sam

Bankman-Fried fraud case. This is from the U.S. District Attorney, the Southern District. Damien Williams says, while the guidelines sentencing for his crimes would exceed 100 years, that's effectively a life sentence, they say a sentence of 40 to 50 years is necessary to serve such purposes. So lower than the sentencing guidelines, they go on to say that Bankman-Feed is deserving of a severe sanction proportionate to his role in historic fraud. And the government urges the court to impose a sentence that underscores what they call the remarkably serious nature of the harm to thousands of victims and prevent this defendant and anyone else out there really sends his powerful signal, as they say, to others who might be tempted to engage

in financial misconduct. Reminder, Bankman-Fried was found guilty on seven counts of fraud and conspiracy. He is set to be sentenced on March. 28th guys. And of course, at his age, 40 to 50 years would still be essentially a life sentence. Kate, thank you very much for that. I know you're following closely. Still ahead. Teen trading surge, almost a quarter of America's teens already have started investing. Some are seeing big return. So what can the grownups learn from an 18-year-old making big money moves? That's next. Welcome back to Power Lunch. Today's teens have unprecedented access to technology.

And sometimes they use that tech productively, such as starting investing early. In fact, a recent study from Fidelity found nearly a quarter of teens already have a stake in the markets. And of those that don't, 90% plan to start investing in the near future. Hey, maybe early financial education is starting to pay off. My next guest is in the first group. He put his bar mitzvah funds at work during the pandemic when he was just, are you ready for this, 14 years old? He says he's seen huge returns outperforming to brookering to business. broader markets. Joining us now for more is Ian Weinberg. He's a teen investor, a high school senior

in Michigan, and his dad, David Weinberg, joins us as well. Ian, great to have you here. And David, thanks for bringing him in. First of all, okay, what was your interest in investing, especially in equities? I think that I was interested because my dad had always been watching CNBC and been talking about it. And during COVID, I was bored, you know, done playing video games and FaceTime calls. And there was just a point. book sitting by my bed, a teen investing book, and I picked it up and read it, and I just fell in love with it, like, the fact that you could grow your money, and I learned about outpacing inflation and all this stuff, and that's when I really learned about investing. How much money did you have

to start investing? I think I had a few thousand dollars to start, and my dad, I had some money from my vermitzvah, but I started doing jobs and doing some other stuff to earn money, and I stopped, like, going to Starbucks and did other ways to save my money to them. And where did you put your money to work? In what stocks have you seen the most return? Invidia stocks probably my best stock. My dad actually helped me into that one by... He was big into video games back then,

and Vivida was a big, you know, the video game chip leader, so we bought Nvidia, I think. Was that helpful that he made the connection to the games that you were passionate about and interested in? to where you could put your money to work and actually make money on them, not them making money off of you? Yeah, I mean, that was a great idea by him. It turns out now that they're not really as big in the video games now with the AI demand, but it just shows like investing in things you're interested in, and that can help you research.

So how much has your dad helped you here? And did you, David, for example, look over his shoulder and say, Anna, you don't want to put your money into that one. Maybe you should look at this one. And how much did you steer the process? How much do you steer it today? When he first began, I kind of overlooked, oversaw every trade and kind of told him, you know, if there's a good, what I think, my opinion kind of thing.

But over time, I kind of let him take the reins on the account as he, you know, got more advanced and just, you know, really understood what was going on and how to manage money. He kind of took over and was asking me, can I just manage the account? And he does all his own trading and does everything on his own now. You say you're up 2,000 percent on Nvidia trade desk over. 200% Appian, 320% percent. What is your underlying, Ian, investment philosophy, apart from just making a boatload of money? I would say my philosophy is to invest in companies that interest you. Like, I'm interested in technology. I could sit and watch YouTube videos about it. I

could read about it. So, like, trends that are going on in society, people moving to the cloud and all these companies doing that, that interest me. So I've really focused on finding stocks in that category and I know diversifying is big and I've done that with S&P 500. I own that ETF, but when I choose stocks, I try to find stocks that I can like fall in love with, not fall in love with, but understand the business model. What are some of the things you recommend to some of the young viewers out there in terms of looking for new ideas, researching, what can they use that you've been using that is easy for them to do? Well, I would look at CNBC and just like start reading about the market and read books about it, because the more you learn, the better off it's going to be.

And you can start to make connections and just use all the resources you have to find companies that you can invest in. And even if you don't know much, I think investing in the S&P 500 is the way to go, you know. How has investing helped prepare you for college? I know you're getting ready to head off there. What have you learned that you think will be helpful? I feel like I've learned that in society that you can really be. build your wealth by just being, using, like, using your brain power and just being smart about it.

Like, instead of going off to college and spending all this money, I could be saving it and putting it away and investing for my future and for my kid's future and for retirement, like reducing stress on me financially, so I can be financially. You got a long time before retirement even, long time, a long time. But it goes fast. It does go fast. Yeah. And I, one thought on using YouTube here.

I've used YouTube for surgery, you know, looking for surgery, how I can perform my own surgery. Don't do it. Don't try this at home, man. Congratulations, David. Thank you very much. It really speaks highly about you guys' parents and giving him that opportunity. Thank you so much. All right.

Still ahead. Adobe shares off 14% as the company warns of soft sales ahead. We get our traders take on that name and more in today's three-stock lunch. And as we celebrate Women's Heritage Month, we're sharing the stories of some of our newly-named CNBC changemakers Here is National Women's Soccer League Commissioner, Jessica Berman. At the age of 16, my career ambition, career goal was to be a commissioner of a professional sports league. So I feel really proud that I was able to achieve that. Our league is at this extremely pivotal and transformative moment where the world is recognizing the value of women.

And I'm just really humbled and appreciative of the opportunity to be able to shine a light on our our league and everything that we've achieved to date and what's to come. Time for today's three-stock luncheon. We're taking a look at some of the movers. Here's our trades. CNBC contributor, Boris, Blasberg of BK asset management. First up, Boris, we have McDonald's shares of the fast food chain down nearly a percent today after the company suffered a global tech outage.

That forced some restaurants to halt operation. What's your take on McDonald's today? I like McDonald's. I think as all IT crises, this is a one-day affair. they'll fix it. Long term, I think they're just going to start to see the benefits of digital ordering. I think the company is one of the most, it's actually the most profitable company in the restaurant business, just to give you an idea how profitable it is, $85,000 of profit per employee versus $11,000 against Starbucks. It's also, because it's going to the app, it's only just

going to start now, be able to gamify their whole ordering experience, take a lot of lessons from Starbucks, and I think that's going to increase both customer loyalty and customer ordering. And then also finally, you know, everybody's been roasting Wendy's for the dynamic pricing model they're going to go to. In my opinion, I think everybody's going to go to that model. I think restaurants are going to be very much like hotels. They're going to go from maximizing yield. And it's not going to be at all out of the ordinary to think you're going to be able to book your meal or two for one meal five hours ahead of time in order to create demand. I think all of those things.

We'll all eat lunch at three o'clock. So, Rod, what are you thinking McDonald's? I think it's a really well-run company, globally well-run company. just a valuation of 20 plus PE, just be, I wanted to come down a little bit before as a value investor to get into it. But a very good company, if you hold it, I wouldn't sell at these levels. I hear the themes, the emerging themes here about valuations. We've heard that a lot from you. Yeah, all right, let's move on to shares of Adobe, down 14% today, weak guidance, despite earnings beating estimates. And the company announcing a $25 billion share buyback. Boris, the trade on

Adobe. The trade on Adobe, in my opinion, is actually sell puts. And the reason why is because Adobe is definitely facing a whole bunch of headwinds going forward because it's, you know, it's a dominant player in the creator economy, but there's just a tremendous amount of competitors nipping at its heels. So it has a lot of problems in terms of pricing power going forward. At these levels, it's very expensive. But at 450, it's probably a really good buy. So it's a great way to get a foothold into, I think, a long-term quality stock. Sirot, it's not as expensive as it was yesterday. It's down to $79. I mean, prior to yesterday, it was up 80 percent, you know, calendar year to year.

So I think 25 times earnings, fabulous company, great management, great CEO. I do agree with Boris. I think you wait for a better entry point because one of the things that happens in stocks like this is you get in a momentum investor base that might not want to hold it for the next couple of quarters. So you get that opportunity. But I do. This is on my watch list. I do want to own this at some point. Alta shares also down today after the beauty retailer issues full year earnings guidance on the low end of the forecast.

Boris, what do you make up that? Well, I think asking two guys about what they think about beauty is problematic and best, but I'll give it my best shot here. Alta, I think, is facing a couple of headwinds going forward. It is in a very competitive space right now. It's great company, tremendous, and it's still growing. But here's the problem. Its rate of growth is actually slowing on all the key metrics, operating earnings, same-store sales.

All of those things are slowing and their guiding lower as they go forward. And I think, you know, coming out with Sephora and some of the online brands, It's going to be a little tough for them. So I am just going to, I would rather stay steady at this point rather than take a position in ALTA. I agree. I would not invest in this. I think retail investing here is a little tough, especially for a stock like this. You've got comps that are really good.

People went back to work. I think the earnings growth is not going to be there for the stuff. Exactly. I forgot one other thing, which is the macro component that, you know, we may be seeing peak of investor spending at this point, and that could really weigh down and going forward. So that's another danger point today. All right. Thanks, gentlemen, Sarat and Boris. Boris Schlossberg. Thank you. Still ahead, the Weight Watcher's CEO looking to rally troops as the company faces some major roadblocks.

We'll share details when Power Lent returns. We've only got a few minutes left in the program and several more stories we'd like to tell you about, so let's get to it. Weight Watcher's CEO sent an internal memo to employees reassuring them that company is financially sound. Also saying its new GOP1 weight loss drug clinical's business is growing faster than it said, just about two weeks ago in its earnings report. At that time, it also announced that Oprah Winfrey is leaving the board in May, and shares fell about 20%. That stock now, at $2.25 a share,

it is under $150 million amid concerns about the company's debt load and these new GLP-1 drugs. And you could see why employees would have the jitters and why the CEO might feel the need to reassure. All right, March Madness kicks off this weekend with Selection Sunday and Women's College Basketball, like women's. sports more broadly is surging in fan engagement and viewership and in sports betting. Draft Kings told us the amount wagered or handle on women's sports has roughly quadrupled

over the last three years. But even though women gamble, a lot in casinos and online, about equal to men, when it comes to wagering on sports, American men far outnumber the women by 95 percent, according to a 2023 Eilers and Cricic research report. The American Gaming Association says that number has grown. estimates 26% of U.S. sports betters are women. Penn Entertainment, of course, spent billions ditching the barstool brand with its bad boy locker room humor and relaunching as ESPN bet. And in fewer than two months, Penn boasted a 35% increase in women on its digital database over the previous

year. BetMGM told me this year a 51% increase in the number of female betters wagering on Super Bowl. And why do you think that was? Travis. There you go. There you go. Taylor, Travis. It was a Super Bowl romance. So what they did was they got women to sample sports betting.

But you know what? Now the sports book apps have to figure out how do we keep them there? How do we make them sticky? Because like the NFL, it's not enough that you have a fan. They have to be avid fans for there to be a revenue boost. And you have to get them back in and again again. It's kind of like a little bit of adrenaline rush every time you do it. So how do you, that's the magic bullet.

What we saw Edward King, who's the founder of Akias investing, said to me on a panel last night or last week at a gaming conference, look, we could have so much more growth in this industry if there were more focus on getting half of the population to engage in these platforms. And I thought that was really prescient in telling. You got to figure that women's basketball, the NCAA women's term, is going to be given a big lift by Caitlin Clark. Betting interest will probably rise on that. I'll bet the handle on those games.

It's going to be much, much bigger than otherwise. And when you see the surgeon betting on women's sports, it doesn't necessarily mean that women are doing it, but it does indicate that there is this rising tide that may lift all the boats. And look, it's probably good for the sportsbook's bottom lines. If they can get women to engage, you will see that with Draft Kings, with Fandul, and with others.

But also it's good for the women's sports. I think it's great for all the sports, because coming out of COVID, this was something that everybody could get together. And you're seeing that even with the WMBA. You're seeing that with the other sports also. So I think it's a very positive thing. All right, let's talk about Bitcoin a little bit, proving just again how volatile it can be.

The cryptocurrency trading at the 67,000 level after being above 72,000 just last night. So if you got a Bitcoin, well, now it's back up to 70,000. There it is. So that's the kind of volatility. How do you play Bitcoin in your holdings at all? So we don't. I mean, one of the things that's happened is, is we know, the SEC approved.

ETSs and Bitcoin. So you've seen some advisors to allocate it to their clients. I think it's still harder. The use case is still out there. I think as more people kind of try to figure out how to use blockchain. But for some people, it's kind of like gold. If I'm going to have gold in my portfolio, I want to get a little blockchain. But it's starting to get there.

A lot of the firms are starting to put their clients in there. So I think, and again, you're talking about a scarce asset, right? That's the whole thing with Bitcoin. So time will tell. Apple reached a $490 million settlement to resolve a class action lawsuit, alleging that CEO Tim Cook defrauded shareholders by concealing falling demand for iPhones in China. Cook told investors in November 2018 he would not put China in the same camp as other countries facing sales pressures like Brazil, India, and Russia. But Apple told suppliers a few days later to curb production.

And there you're seeing the fallout from that, that his words had an impact. and that there will be a big settlement to pay out on that front. A half a billion dollars in big settlement to pay out there. Very interesting. We had the segment there with Ian Weinberg, the young investor. He has written a book. We forgot to mention the book, and I want to hold it up here. There it is.

It is called Invest Early to Grow Your Wealth. I'm sure it's available on Amazon and other places like that. There's the book, Invest Early to Grow Your Wealth. One of the things he does is he invests in things he knows and understands, products, he uses things out of the sort of Peter Lynch playbook. Very impressive young man, and I think he's got a great head on his shoulders. And importantly, I think that if we see this surge in youth investing, if we see young people getting more educated about how to make their money work for them,

that all of the companies that we talk about on a regular basis are going to be more interesting and have, you know, there's more of a future when you make sure that the young people know what they're doing with their money rather than just spending it on stuff. Yeah. I would say that his college application process went well. He's a book author. He's made 4,900% in Nvidia. I would think the raw school of business at Michigan was a pretty easy slam dunk decision.

But by the way, he's not profiting off of this. All of the proceeds from this. All the proceeds go to a charity. Yeah, exactly. Very, very nice. Markets right now, let's take a check right now on how we're looking. Dow Industrial is now off half a percentage point. The S&P 500 about the same in the NASDAQ can posit it down.

128 points or 0.8%. Sarat, always great to have you with us. Thank you for having me. Thank you for being with us. And we will see you again soon. Absolutely. Sirat Sethi. Thank you for watching Power Lunch.

And closing bell starts right now.