TechCheck - May 20, 2022
good friday morning welcome to tech jack i'm carl king tonight with d drabosa john is off delivering the commencement address at his alma mater this weekend congrats to him today a pretty significant intraday swing stocks have turned lower and we're bargain hunting for some tech names these small and mid-cap names to target and what to watch within software then what's wrong with apple stock's having its worst month since 2020 we'll give you some bowl and bear cases this hour later on a big beat and a surge for palo alto networks ahead of our ceo interview monday why cloud and cyber security stocks may be quote too cheap to ignore d and happy friday carl it has been quite the week we will kick off today's feed with some opportunities within tech cnbc did a screen of relative cheapness on a number of different metrics don chu joins us with that screen dom what are the names you got all right so a multi-factor screen if you will our analyst team over at cnbc on the market side of things wanted to find a relative value kind of more deep value hunting type at least stock picking screen so here's what they came up with first of all if you look at the s p 500 overall not just the nasdaq 100 but the s p a broader measure you've got those s p components a forward price to earnings ratio from a valuation basis of each of those stocks that is now below their five year average forward p e so it's trading each component at a discount to where it has on average for the past five years the stock also has to have declined by at least 20 percent from its recent highs expected earnings growth of 20 so still a decently good profit generating business trading at a discount and a discount valuation and then at least half of the analysts who cover that stock say that it's a buyer equivalent rating a lot of different factors but a number of stocks passed the test and we're going to focus on some of the tech names right now may be no surprise that when it comes to value and profit growth and everything else with regard to kind of the overall pullback we've seen semiconductor stocks many of them made that list advanced micro devices amd is now trading at a 61 discount to where it normally does on a forward price to earnings basis over the last five years qualcomm is 38 below its valuation micron 35 western digital 28 discount and nvidia also trading at a 28 discount so when it comes to value hunting in technology guys it comes down to whether or not some of these names are have been punished unduly and maybe still have profit potential carl those are some of the names that we're talking about many of them in semiconductors yeah dom it's a it's a good spotlight and i think we're hearing a little bit more of this over the last day or so sort of first in first out some of the names that have been beaten down the most it's interesting i'm looking at chinese stocks today and they've done or held up relatively well this week they got to be part of that list as well at least in terms of how far they've dropped and now some of those macro factors fitting in like beijing potentially easing up on regulations some covered restrictions eased as well so so if you look i'm sure if you looked at the nasdaq 100 where some of these u.s listed chinese tech companies trade they might meet some of that criteria as well you'd have to look at some of the profit growth potential there especially in light of 10 cents results that were somewhat disappointing with regard to its growth trajectory but i would also point out that if you look at some of these bigger names outside of technology i mean it's brand names that have been punished right on that list outside of technology guys disney is on that list chipotle is on that list the top of that list is a couple of home builders in pulte and dr horton so you know when it comes to the s p 500 obviously not just tech but tech is certainly a big part of that discount story guys yeah some of the valuations on the home builders in retail this week dom have really been dramatic thanks for that dominic chu our next guest has been buying meta amid this volatility making it his portfolio's largest tech holding saying he's also looking to pick up some more apple if the stock falls further joining us this morning is wedgewood partner cio david rolfe david great to have you to start the hour appreciate it hey carl how you doing uh what's the rationale behind the metabye well again we think this business model is very durable it's certainly been through some tough times um the stock's been just slaughtered and i think if the valuation down here if you're a bear on the stock i think you have to really make a case that the business model has been disrupted it can't grow that the share buybacks large share buybacks down at these valuations which are at free cash flow uh yields that are very accretive you have to you have to take apart all of those uh elements of the story at least in our minds uh not to own uh meta and uh again as you mentioned we recently bought it we've suffered through it and it's now our largest home right are you more interested in the long-term play of of metaverse and reality labs or is it more a function of if we are going into a dramatic slowdown that advertising the way it's targeted at meta is something that corporates are going to try to spend as much as they can yeah that's certainly the number one element of our polish stance everything else on that you mentioned that's on to come hopefully they don't spend too much on that but uh um i mean it's the best one of the best advertising platforms out there and as you mentioned as advertisers rationalize their spend i doubt that they're gonna cut too much from uh from meta and even uh and even uh alphabet which we also own yeah we're looking david at a list of your top holdings you've got meta first alphabet second and i guess what you're laying out right now is you like the advertising story but with increasing worries about that macro picture um the likelihood of heading into a recession ad budgets marketing that's typically the first thing that companies cut um do you like these because they're better insulated from those forces or because you think that maybe the macro picture isn't going to be that bad perhaps a little both again certainly if if we do head into a significant recession if the fed breaks something as they enter uh uh quantitative tightening you know they're going to get hit on those budgets the good news is is that these stocks aren't trading at pes of 30 or 35 or 40. and so uh again when we when we consider the risk reward for each of these companies we like what we see and therefore there are two largest holdings yeah so david we've been talking a lot about the mega caps what about some of the smaller more speculative growth stocks uh donchu was just talking about this that have sold off so much and might represent some value here are you fishing into some of those names yet we pretty much avoid stocks that don't generate earnings interestingly enough in your in your previous segment one of our larger holdings is taiwan semi it's not part of the s p 500 or the or the nasdaq 100 but as he went through that screening that stock would probably qualify as well so we're we're big fans of the semiconductor space our favorite is uh taiwan semi you don't see it in a lot of growth portfolios it's not in a lot of indices and etfs but without tsm the likes of amd and nvidia and apple i mean the world revolves around at the very high end tsm we think it's probably one of the most powerful under-owned tech stocks in the space david on apple uh you know a lot of people talked about it trying to defend 150 then defend 140. i think here this
morning at 137 is roughly the 100 week moving average which i know b of a said was some critical support because the 200-week moving average is 97. how cheap do you think it needs to get before you get more interested well if well i'll tell you what carl you've seen it time and time again over the past couple of weeks if a company reports earnings that are even a questionable a slightness it's sell and ask questions later so uh all stocks are in that penny box right now given the environment the stock has been hit pretty hard this year but over the last year it's still hung in there it's hung in there pretty well um it's always been a very large holding for us um i'd like for it to get hit i i hope they have a chance to buy more stock at lower levels and so this is the time that i you know we we've owned apple continuously since 2005. we like to root for lower prices so we can increase our weightings and so uh we wouldn't mind the stock to get hit a little bit further in here but uh other stocks like neta we've added the paypal they've been crushed so apple just hasn't been hit this hard yet but uh if it does uh it'll it'll cross the plate and it'll be a fatter pitch for us yeah it does feel like whether it's apple or tesla for example today 666 a lot of it's pinned around what q2 is going to look like vis-a-vis china right and and whether or not the market can get its arms around what would be obviously a disappointment within the quarter who knows what else comes well certainly if we get a really bad iphone number um out of china that's going to dent the full case anything negative on the product side out of china is going to is gonna hurt apples so i mean obviously our antenna are focused on that but uh no doubt about it with with a lot of tech companies china is a significant wild card and um it's probably gonna get worse before it gets better and david as we've been talking just in the first few minutes of the show uh stocks have turned lower the nasdaq is now down eight tenths of a percent as we talk about that china question mark cisco ceo chuck robbins brought up the idea yesterday on our air that once it does open we don't even know when that is there's going to be a lot of congestion the airways the ports are going to be filled again so do you think that the market has this priced in that there's going to be another leg to this and that could be a ton of disruption once china does open back up uh probably not i mean the supply chain you know you look at look look at the look at the uh traffic jam already in shanghai can you imagine what it's going to be like if it opens up so i mean we're going to have to cycle through like we did about a year ago all of the stories about supply chain disruptions coming out of china and um it's hard to make the case it gets better anytime soon it's a mess that's exactly what it is uh david appreciate the candor as always with the dow now down 2 30 on this on this friday we'll see you soon david rollins thanks carl thanks stephen and certainly china plays into the chip story dom also talked about it at the top of the show perhaps an opportunity demand for chips remains high but those companies continue to face headwinds take shares of applied materials the stock is lower by about four and a half percent after missing top and bottom line estimates for the quarter issuing a weaker forecast unexpected citing supply chain issues amplified by coveted lockdowns in china what we were just talking about here with his outlook for the space bernstein senior semis analyst stacy rasgon stacey it's great to have you today i know you love the secular story as do many but those short-term headwinds what will investors have to endure here or should they be getting in now because of that long-term story uh and so look we're at that point of the cycle now where investors are getting very nervous has been it's kind of peak cycle versus stronger for longer debate going on i'd say from a fundamental standpoint the stronger for longer has been right it's already lasted longer though it started to show some cracks but from a sediment standpoint i'd say people are very firmly in the peak cycle camp and and we've been seeing it obviously like multiples have just been collapsing um through the year now something that may be a little like mildly encouraging um if you look at the degree of multiple compression that we've seen multiples have come down by a third you went from about 21 times in the beginning of the year about 14 times and if you look over the last like i don't know 8 or 10 cycles of last 10 or 15 years that's about the degree of multiple compression that you typically get as as things are going into this period so that that's good at the same time however we have not seen any earnings revisions and that's where i think investors are looking for now they they actually are very hesitant broadly to step in front of most of these companies without actually seeing estimates come down um we're at that point of the cycle yeah isn't it kind of wild that we haven't seen earnings revisions yet i mean amat last night talked about all of these issues in china it was one of the later companies to report in the earnings season we saw those warnings from cisco as well why why haven't they come down yet why are you now well now they are starting to come down but it's not demand related it is supply chain right so just to look at aim out in the semi-caps for example this is actually the third quarter in a row that that amount and most of their peers have been having issues they've been having problems with the supply chain perversely the semiconductor capital equipment players have not been able to get semiconductors in the wake of all the shortages um in order to be able to build the tools and to ship the tools and so it's been causing problems for a few quarters unfortunately for applied materials it looks like things those kind of issues were starting to get better for them but then the lockdowns happened in april and so this is something new um not a lot to do about what could you do right and we're hearing different things from different semiconductor companies especially on the impact of china and the lockdowns um it really depends on your china exposure depends on how much uh critical exposure you have specific to the shanghai region texas instruments for example took a haircut um some others have said it's not much of an issue amet's getting hit for sure yeah that was i thought that was fascinating stacy where they said they reversed some supply chain challenges in february and march and then it went back in reverse in april between them and cisco this week this notion you know we have this notion that uh lockdowns being lifted uh will create much better conditions but cisco's point is well everybody's going to rush to the bar and that in itself whether it's ports in shanghai or eventually ports in la are going to keep these things around longer than we think you know i mean frankly it's already lasted longer than i think people would have thought and it's funny every time something starts to get fixed something else pops up it's like whackable right and and this is actually part of the issue most of the companies that are even even seeing impacts they're kind of suggesting they're guiding like it's going to get better and eventually i guess it has to but i mean we've had like i don't know two years now where new stuff has been popping up all the time and so i don't i don't know what's going to happen like something like more constraints will it be you know ports like who who knows i don't know but i i'm amazed things have been frankly as resilient as they have been just in the wake of these kinds of disruptions and it's not surprising to think we are cracking in some sense well which which makes me curious as someone who covers an industry that is so notoriously cyclical i mean how much of past cycles experience is feeding your your knowledge in your world view right now yeah look every cycle is different right and there's a couple different flavors you can get supply cycles you get inventory cycles this has been a major cycle and to be fair we've never had a cycle like this kicked off by a global catastrophe before so this is cycle is kind of unique in the sense that it was sort of hitting everything almost every single end market in almost every single geography simultaneously certainly over the last like year or two right um i don't think we've ever seen supply chain disruptions of this magnitude we've seen individual cases you know we have the um the the tsunami back in 2011 we have the thai floods like inundated the hard drive plants in in thailand for example so we've had some point examples of these things that the the industry over time has has managed but we've never seen anything like this before so it's in some sense we're in uncharted territory but every cycle like i said they kind of rhyme but every cycle is different this but this one's major and unusual and i know that we've been focusing on the supply side of this amat other semiconductor companies have really been adamant that demand is intact but do you think stacey there's any reason to question that going forward especially as the macro backdrop worsens yeah so we'll see so actually there are some signs of demand leaking especially in consumer focused areas so smartphones smartphones have been deaf and by the way any stock that touches a smart one has been deaf because smartphones smart gyms especially in china been very bad um pcs pcs have were incredibly strong in the wake of kovit and those are starting to roll over tvs you know guys like target reported you know obviously the the retail like industry has been an apocalypse right um and target was talking about you know week week tv sales for example so anything consumer focused has been weak um enterprise focus data center those kinds of things have actually been quite strong and they've been holding up um automotive has has obviously we've had shortages and production constraints but but demand and everything has been strong industrial has been strong so far so those are okay but yeah some cracks at least on the consumer side we've seen yeah um death and apocalypse stacey yeah you didn't put it mildly thanks for your insights stacy rascal talk to you meantime the market weakening through the morning all three major indices now in the red we've seen a about a 600 point swing in the dow from the highs now down 270. palo alto though hanging in there we're going to get more on that as tech check is just getting started you can see palo alto at the top of that screen gets get a gut check on it as shares pop following strong results frank holland joins us to break down some of those numbers hey frank hey there carl uh palo alto having its best day since hitting its all-time high back in april after beats on the top in the bottom line strong guidance and ceo nikesh aurora really laying out the opportunities for the company created by the cyber threat related to the ukraine war we have deployed protection for over 3 400 new indicators of attack that defend organizations from disruptive and destructive russian cyber attacks as you might expect we're seeing heightened interest from commercial and government customers in europe really a strong quarter all around billings money actually collected from customers that was up 40 aurora also said the company was able to mitigate supply chain issues and have product when many of their competitors did not very different story than we heard from cisco just the day before the cfo also added the company aims to reach the rule of 40 combined free cash flow margin and revenue growth by next quarter this quarter that number just over 54. the results giving a real boost to the entire cyber security sector especially those companies specializing in zero trust architecture you mentioned what cyber stocks are too cheap to ignore octa and z scale are both more than 60 percent off their high back overview frank i really found his comments on the labor market fascinating aurora said that you know the company's employees had been leaving to join startups six months ago especially because it is located here in the bay area but he said no more that has changed now they're kind of asking wait do i really want to make that move what do you think is behind that is it sort of security companies having an easier time the sell-off in the public and private markets of newer growth companies it's such a fascinating dynamic yeah you know i just think the entire sector when it comes to tech and cloud is really kind of in flux right now i was actually speaking to a pe firm they said there's a lot of companies that are reaching a moment with he called capitulation is that they're gonna have to accept that their companies are not as valuable as they once were and they can't spend as much money as they once did so that may also be slowing some of the moves from employees from going from publicly traded companies that are generally more stable to private companies that may be in some kind of flux where they may need an injection of private equity funds or may get bought out altogether capitulation that's an interesting way of putting it we're going to talk more about this later on in the show frank thank you so much and we every day almost we do again have news about elon musk this time business insider detailing an allegation of sexual assault against the billionaire founder of tesla and spacex julia borsten joins us with more on that story julia well deirdre elon musk responding on twitter to allegations of sexual misconduct a reported business insider claims that musk spacex paid 250 000 in severance in 2018 to a flight attendant who accused him of sexual misconduct cnbc has reached out to spacex for comment but has not received any response musk responding on twitter saying quote no it was clear that their only goal was a hit piece to interfere with the twitter acquisition the story was written before they even talked to me also tweeting quote they begin they began brewing attacks of all kind as soon as the twitter acquisition was announced in my 30-year career including the entire me too era there's nothing to report but as soon as i say i intend to restore free speech to twitter and vote republican suddenly there is musk also calling the quote wild accusations saying they are utterly untrue now twitter had no comment on the allegations but this isn't the first time that issues of harassment have been raised with respect to musk's companies just this past december six women each filed separate lawsuits against tesla alleging the electric vehicle company fostered a cultural of sexual harassment some of the women alleging that they were removed from their work stations after reporting this behavior however musk was not implicated personally in those allegations now as to whether all of this impacts must twitter take over offer truest analysts use of squality telling us that this is all quote likely to add yet more distraction to an already messy situation with twitter dee yeah distraction on top of distraction on top of distraction he wants us to be called uh elongate right julia thank you very much for laying out those details we're gonna stick with musk tesla losing its place as a top holding in kathy woods arc innovation etf taking the top spot that would be roku you see it on your board there kathy woods been picking up shares all year the streamer now making up about 8.4 percent of the fund worth more than 716 million dollars she is not alone 79 of analysts have a buy on the stock with an average target of around 161 dollars for roku that is tesla meantime is still the fund's number two holding falling more than 35 on the year helping drag arc down around 55 percent in 2022 uh carl we do follow her holdings very closely it has been a rough year but we talk about this often still seeing a decent amount of inflows uh it's for arc yeah absolutely that's one interesting part of it as for tesla i think it was jonas from morgan stanley yesterday dee that asked whether or not first time tesla owners would enter the arena at 500 he that wasn't his forecast but it was his question especially if we do get a material miss on deliveries because of china in q2 tesla now 662 will take you back to last august we'll take a break here one green spot in tech this week is fintech a firm is up almost 70 percent since may 12. you got names
like robin hood and nerd wallet not far behind that said all three names of course still 70 or more off their highs of the year talk about some more opportunities in tech when we continue down down 240. half past the hour and uh two hours into today's trade welcome back to tech check i'm carl kingston here with deardrobosa nasdaq is lower and hovering down almost one percent losing all of the gains of the morning an argument to buy growth and the more speculative areas of the market in a moment but first let's get a news update with our sema modi hey seema carl good morning shares of raw stores are heading to their biggest one day percentage plunge since 1993 and a two-year low with a loss of around 22 percent today it's the latest retailer to warn that rising prices are slamming consumer demand for discretionary products take a look at deer down 12 percent session low sales for its most recent quarter came in below estimates as farmers experience higher input costs due to higher fertilizer prices supply chain issues have resulted in partially completed machines and foot locker is up around 2 percent but well off its morning high it's profits top forecast and it expects to hit the top end of its sales and profit outlook for the year deja back to you seema thank you so much and a pretty large intraday swing today as we've been talking about the dow has swung 500 points peak to trough let's get a look at what is leading these moves christina interesting to see what's working and what isn't in tech today some of the more speculative names getting a big mega caps mixed yeah yeah i'm going to get into that and it's also the nasdaq just within your hour we are seeing a swing it was in positive territory and now falling almost one percent the exchange is also still almost 30 percent off its 52 week high the stocks having the biggest point impact on the downside that would be tesla nvidia raw stores and costco it's really about the retail trade today and that's what's dragging the nasdaq chinese tech is poised for a weekly gain and still trying to hang on to those gains for the last four weeks jd.com is up uh just about almost three percent and then you have iq up look at that over 44 percent and pin to a duo up almost 11 on the week and there's a slew of beaten down fintech names having somewhat of a positive week i had to pull one down because it actually went into the red that was a lemonade but you can see nerd wallet and a firm still climbing higher nerd up off 70 from its 52-week high and the big question you guys have been talking about in the show where should investors go shopping much of big tech like meta amazon microsoft alphabet they've dropped more than the broad market average but like your guest was on just maybe about 20 minutes ago morningstar research is arguing these names are still high growth stocks evaluations closer to value stock so definitely a pick over there nonetheless here we are today at the nasdaq the seventh week of weekly declines the longest losing streak in 21 years chris christina thank you it's perfect set up for our next guest who says that the current high interest rate environment isn't a negative for all growth stocks pointing to small and mid cap names as protection hedges he's increased his positions in block twilio mongodb during the sell-off joining us now is jacob asset management chairman and ceo ryan jacob uh ryan it's great to have you with us today i was reading your note and am i reading this correctly you are seeing some of the best values in busted spacks which ones well first off see your earlier point um you know given the fact that we're 13 14 15 months into uh this real tech bear market where a lot of those smaller speculative names and a lot of these specs are the ones that took a majority of the damage and then only until november did it start to infect the rest of the market and then really only in the last four or five weeks have we seen that kind of move up to the larger cap names and a lot of ways if we are in a bottoming process which we think we are we'll look back in a lot of ways this will be kind of a textbook kind of bear market the way it plays out as for the spax obviously we saw a lot of companies come public last year that really had only not much more than a business plan but uh through that mix there were actually a few companies that we think are legitimate uh long-term buys here okay which ones are those ryan and how do you determine which ones are from that spac wreckage uh there's a handful uh two that stand out uh probably the largest is cvent this is a company that we owned back in uh 2015-16 was acquired taken private by vista they came out in a spac format last year uh you may ask you know for a company that's that mature they lead the event management space technology um they were hurt obviously during covid there weren't a lot of live events they had to transition to a hybrid model for the events that they were hosting and then a virtual model and uh and the results were so poor they really didn't have that traditional ipl ipo route to go they had to give these longer forecasts or allowed during specs to show people as the economy went back to normal that their results you know should benefit and we're starting to see that already ryan the the elon musk twitter process has been confusing to a lot of people but you've been uh pretty nimble in in managing it so far in this process talk about what your playbook's been well twitter's been a large position for us for a while we've always felt that it's been underappreciated and undervalued uh given their uh global reach as a social media company obviously they've been unsuccessful in kind of figuring out exactly how to monetize the subscriber base well and uh so then when elon musk made the investment we thought that was uh an interesting move and then when we did think that there was a decent chance he would end up trying to acquire the company and then once that happened the stock went over 50 um you know we basically felt the risk reward wasn't that positive given there could be some bumps along the way and and quite frankly also because we saw some you know looking as an opportunity to redeploy i think now that the stock is back into the mid 30s um it's really uh at this point the risk reward is skewing the other way we still have a little twitter position we're actually considering adding to it uh we do think the deal will eventually go through even if it comes in at a smaller discount to the 5420. right but you're not betting on a drawn-out legal process uh there could be i mean but we're talking months not years so uh you know it's still you know this is going to be in essence and all cash deal we would expect a fairly quick close once um you know we get through some of these legal issues uh you know it's always a possibility i think it's well more than discounted in where the stock is today i'm not sure the stock would fall a whole lot from current levels maybe another 10 or 20 percent even if elon were to walk away ryan when you look at some of them more beaten down speculative smaller mid cap names do you like them because you think that they might be able to get close to or reach previous peaks or do you think that they're attractive as m a targets really both but when you look at the larger cap names and why we're focusing and we have the lowest exposure in our history right now to large cap tech the big reason why small and medium cap tech looks interesting to us here is we do expect interest rates to rise we've gone through this period of really uh you know at least 12 years of relentlessly lower interest rates which has boosted all of large cap tech and boosted multiples they're the ones most at risk to seeing that compression the small mid cap type of names that we favor they're growing 20 30 40 a year they're not going to be as affected by interest rates so i think when a lot of people look at uh higher interest rates being bad for all growth stocks stocks longer date and looking at it in terms of being longer dated assets i think they're missing the the vast difference between the large and mega cap part of the tech market and the small mid cap space are you talking about profitable growth tech then ryan give us some names here yeah well i mean it's you know some of the names you mentioned we've been adding to uh you know like a square or a twilio uh they're probably more in the mid cap at this point but you know valuations have come down tremendously here and these are companies that are extremely well positioned continue to gain market share these are next generation technologies that obviously got a boost during the covet period but are still even coming out of kovitz still able to put up 20 30 40 type growth and uh you know to expect to get these companies uh at you know maybe they shouldn't be at 15 or 20 times revenue but we would argue they shouldn't be at three or four times revenue either in the case of a twilio ryan jacob thanks for being with us today talk to you again soon thank you speaking of some by calls on growth names emj capital's eric jackson telling the judge on overtime yesterday that we've reached a growth bottom and it's time to buy he likes twilio along with upstart farfetch open door and carvana jp morgan this morning highlights salesforce as quote too cheap to ignore pointing to consistent revenue gains and upbeat free cash flow guidance as growth drivers and city like snowflake says you're getting a bit big discount at this level versus its other hyper growth peers the street trying to parse who's going to be a winner here d i thought crm was interesting at the open today it was the best performing dow component and we're going to see how much of the it enterprise stack gets compressed into fewer vendors certainly crm would be seen as a survivor it's a good point although also you know we brought this up earlier in the week is that is enterprise software the next sort of shoe to drop now we have all of these companies especially in the startup space pulling back on spending on marketing maybe software is next so that is something to look out for in terms of snowflake carl it's interesting we're going to talk about this later but the gap in stock-based compensation to its valuation and its future earnings is something to consider for investors we're going to look at that in the context of doordash's latest move and a few other companies what you need to be aware of as we head to break though a reminder that this month cnbc celebrates asian american and pacific islander heritage here's destination wealth management's michael yoshikami my heritage really has taught me how important it is uh to really be focused on uh results to really be focused on trying to do the best i possibly can do every single day and i think that that contributes greatly to the success i've had in the business world there's a tremendous population of investors that are looking for help and they're many times are looking for help from folks that can really understand their culture and their background so i think there's tremendous opportunity for asian americans to continue to advance in the financial services world welcome back to tech check if you've been watching the mega caps this week you're probably wondering what has happened to apple the stock is on pace for its worst month since 2020. now
heading for eight straight weeks of declines our apple reporter steve kovac has more on this really terrible week yeah d apple's off almost 25 from those january highs when it was at that three trillion dollar market cap and the last two weeks alone just brutal for apple down about 12 percent analysts still searching for the bottom but remaining optimistic web bush's dan eyes had a note out this morning saying iphone demand is holding up better than expected despite the supply chain and coveted shutdowns in china that we've been hearing about but good news for apple given what we heard about demand from retailers this week meanwhile uh reports yesterday about apple's board got a demo of this new headset we've been hearing about for a while and that's a sign that it's about to reveal it this would be apple's first major product since the apple watch over seven years ago apple has been working on this for the better part of a decade and now we're gonna finally see what this thing is here's how we know it works based on all these reports it's a mixed reality device meaning it can do both augmented reality and virtual reality it has these cameras on the outside that kind of pulls in the real world so you can see it on the screen in front of your face and then puts those digital images in the real world in front of you and then you can kind of ramp it up to full virtual reality experiences it's also said to be using a version of the m1 chip that's been powering macs for the last couple years meaning it will work independently from the iphone and at first it's likely could be more about entertainment gaming and video think of it like an ipad on your face content consumption not creation or work and by the way apple declined to comment on these latest reports but just me watching apple for the last dozen years or so my best guess is we'll get a reveal of this thing uh in the fall with the iphone event and a launch in early 23. and by the way we know there are going to be rivals coming soon uh facebook slash meta has been teasing a similar mixed reality headset that's going to launch this fall mark zuckerberg actually just gave a demo of it a couple days ago and we could have a new platform war brewing between meta and apple guys back to you it's going to be fascinating steve you know and as you point out it's been so long since we've seen a new product category it's they're always met with a ton of skepticism right about the watch or services about the use case or about whether it's going to be large enough to move the needle yeah and that's right and if you remember when the watch launched seven years ago everyone it tried to do too much it tried to be like an iphone on your wrist and they learned right away that hey this isn't gonna work we need to dial it back make it more focused no more running apps on on your wrist and i can see that kind of happening with this they might have to test it out in the wild a little bit before we really figure out what this thing's going to do and keep in mind there's like carl there's a longer term vision here to eventually replace the iphone with glasses that look more like these warby parkers i'm wearing we love those warby parkers uh steve thank you turning now to doordash the company approving the repurchase of up to 400 million dollars worth of shares in a new filing saying that they are looking to offset dilution stemming from their employee stock compensation program this move comes as top tech names ramp up their stock grants for employees that's according to protocol microsoft increasing the grants by 25 percent for select workers amazon looking to spend 6 billion on stock grants this quarter alone apple has also been giving six-figure retention grants to top engineers uh carl so certainly a buy-back helps with some of that dilution helps to offset it i thought this was so interesting because um it never occurred to me that we might see a growth company especially in the gig economy space which traditionally has been so unprofitable start to return money back to shareholders it always raises the question is this money well spent the fact is is that doordash has free cash flow something that uber for example has not had though expects to have this year they also have a sizable cash pile so they can do this and it's not like they're trying to sort of get more they are getting more market share but they've been kind of so easily able to win that from the other players that this maybe puts them in a position to do this yeah it's such a delicate balance because on the one hand this might be seen and certainly was seen as a welcome move earlier in the session but at what point d does the market say oh what about the growth or at least what about the market share that you were trying to get from rivals and obviously in a market that's going to remain competitive and at some point relatively strong yeah and you know there's other players out there to consolidate right you have grubhub you have just eat takeaway that may sell off that stake um but maybe and i have a feeling that tony shoe doesn't think that is one worth buying so it is interesting i was looking at some other companies in the space that could potentially do this you got to look at an airbnb which had free cash flow of more than a billion dollars last quarter no more than nine billion dollars in cash and cash equivalent so this is something that could continue on that note too you always have to think about stock-based compensation when you look at a stock's valuation because just because it has come down it's seen that compression doesn't always mean that it's time to buy barons pointing out some stocks this morning that are not as cheap as they look thanks to those high levels of stock based compensation which as we've been talking about do dilute shareholder value the names that they identify include lyft cloud stocks like snowflake crowdstrike zscaler as well as e-commerce players shopify and paypal carl d it has been a tough ride for fang and over the last month as everybody knows check out amazon down almost twice as much as apple and netflix while city takes its name off the focus list today kramer suggested maybe the bottom here what does that mean relative to other retailers we're going to break down the outlook when we return in a moment todd it's a bike that costs about two thousand dollars not only that each month you pay a monthly subscription fee to ride your two thousand dollar bike and best of all it's stationary and they charge you about three hundred dollars to set it up so it's a two thousand dollar bike that you pay to use and pay to set up that doesn't go anywhere what's a business like that got check on peloton today courtesy of house minority leader mccarthy there saying out loud what investors have been repeatedly asking themselves in the mirror lately stock once traded above 162 today 14-10 shares down about 85 percent in just the last year s p did hold this morning at 38.60 tech check is back in a moment we are closing out the week with a look at amazon and today's edition of overvalued or undervalued on the bear side rbc points out that despite naming the company as one of their favorites at the start of the year amazon stands out with the most outsized risk for the back half of 2022 and for good reason take a look at free cash flow yield over the last five years trending in the completely opposite direction versus its mega cap peers as margins have been squeezed not quite the case from microsoft or alphabet where obviously cash flow has remained strong not everyone though thinks this will be the case for long credit suisse leading the bulls here arguing that amazon can return to historic levels of capacity by 24 and city does agree despite taking it off their focus list for the near term still calling it one of their top picks in the internet sector d uh it's going to be a real push and pull because there are things about amazon that are unique but to what degree are they dragged down by the forces that take down giants like walmart for example and target yeah it's a great point and you know amazon has always invested all or most of its earnings back into the company so if you think it can still innovate create then maybe it is undervalued meanwhile the nasdaq is down about one percent on pace for losses this week of about four and a half percent tech check is back in just a moment [Music] one more thing before we go a lot has happened since musk made his bid for twitter he recently said his purchase is on hold but how did we even get here our great digital team put together a piece detailing the timeline here's a peek twitter often referred to as society's de facto digital town square can soon claim one of its most prolific users and vocal critics as its new outspoken owner elon musk uh welcome i'm glad to see you too the world's richest man has publicly flirted with tying the knot with twitter as far back as 2017 and he started purchasing twitter shares in january so what led to the tesla ceo brokering a roughly 44 billion dollar bio deal to snap up the social giant in just three weeks let's tear down the timeline and fill in the blank twitter spaces you can watch that entire piece um on our show twitter go follow us at cmbc tech check in the show page as well cnbc.com tech check carl this piece may be 10 20 minutes by the time it's over that's good stuff have a good weekend everybody let's get to the judge
2022-05-24 15:25
