Is PLTR The Dumbest Stock We've Ever Seen?
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for anyone who's ever said, I think I can do better. So be invested in yourself, be invested in your business, be invested in better with Betterment. Get started at Betterment.com. A warm welcome to the Risk Reversal Podcast. Guy Adami, always joined by Dan Nathan. Exciting day underway here, Dan. Yeah, a lot going on. We're recording this right after the opening. Guy, are you getting used to saying the Risk Reversal Podcast? Because, you know, we made some changes in the last week. We have.

We have. It's sort of like when the year changes and you still write the prior year on your checks. Now, for people like me, I still write checks, obviously, for other people that does not apply. But yes, I am getting used to it. Wait, are you writing checks that your mouth is not backing up a little bit? I see what you did there. No, I really like what you did there. A little Wall Street, a little Bud Fox. Well done. Yeah.

I like our new format. It's, you know, we're streamlining things. We're doing the Rich Russell pod Monday through Friday. We're doing the tech stuff. We got the outlook on Monday with Liz Young Thomas from SoFi. And then Friday afternoons, it's going to be a longer form sort of conversation with a really great market strategist or market participant. So excited about that. So here we are, Guy, Thursday. It's right after the opening. A lot of single stock stuff to talk about here. Some of the

Still some big earnings. Amazon after the close today. We got the all-important jobs report tomorrow morning. That would be Friday morning. And we're going to talk a little bit about kind of the interest rate outlook, at least coming from Washington, and what they would like to do and how the new Treasury Secretary is thinking about that. Where do you want to start?

on the same stock front? Yeah, no, I think it's a good place to start. And what you try to do, obviously, is start to try to connect some dots. And I think the theme for this year, obviously, we're a month into this year, but what seems to be happening to me is in terms of companies, in terms of stocks,

It's not good enough just to come in with inline earnings or better than expected earnings and maybe disappointing guidance. The market is clearly punishing companies for doing that. And I think that speaks to, you know, it was a one-off for a while. Now it's a bit of a theme and it's across a swath of different industries that

I think that's something that's going to sort of take hold, not maybe for the rest of the year, but I think for the foreseeable future. And we're seeing it in names like Qualcomm, for example, which reported last night. I thought the quarter, if you look at it just on its own, was pretty good on the surface. But again...

the guidance probably sort of disappointed some people and Qualcomm specifically finds themselves in industries that aren't necessarily growing. And for Qualcomm, as you've said a number of times, it's the fact that they're so reliant on the handset business. Yeah. And so, you know, Apple is one of their biggest customers and Apple's handsets, at least in the U S and in China, they've really just flattened out. There's been no growth in iPhones year over year.

And I guess the China piece is a really big one. And, you know, China was down 11% guy year over year. And I think they have sales declines in China 11 of the last 12 years.

quarters or so. And one of the big pillars of the bull case for Apple was just access to this emerging middle class. We've heard that again and again over the last 10 years. And some of the reports suggest that outside of some of the major cities, they've just had no traction, right? And if you think of the concentration of wealth in Shanghai and Beijing and a couple other cities that are massive that

most of us have never even heard of, there's probably some nationalistic tendencies going on there. We know that they have a very weak economy. We know how much more expensive iPhones are compared to some of the lower-end Android models. And then the other thing is, it's like,

On the services, if that's really important, well, Apple intelligence is not in China. We know that the Chinese have super apps like WeChat, right? This deep seek announcement for this large language model that is performing better than a lot of some of the U.S. ones or European ones made here. I just see a lot of headwinds, Guy, for Apple in China, and that's being manifested, I think, in Qualcomm's results.

It's fascinating for me, at least, when you start to break things down. And all the talk last year and to a certain extent as we get into this year was around semiconductors and the importance of semiconductors to the market.

But if you were really look, you know, everything X NVIDIA for a lot of these names, Dan, they all topped out in June and July of last year, Qualcomm being on sort of the top of that list. So, yeah, it's an exciting area to be in, but it speaks to the have and the have nots. And if you're in the businesses that are sort of not declining, but sort of flatlining,

Stocks are being punished on the back of that. And by the way, Apple's not impervious to this either. Apple, which by the way, made its all time high, I think around December 26 or so around 260. I mean, since then it hasn't traded particularly well and it hasn't traded particularly well since their earnings release a week or so ago. Here's another name. And I think it's interesting. We're just talking about declines for Apple, obviously in China.

Look at this Tesla headline today. And the stock is down 3%. It's down nearly 10% on the year right now. And I'm just reading this from Bloomberg. Tesla sales plunge 59% in Germany to its lowest level in years. Listen to this guy, okay? They registered 1,277 cars last month.

in Germany. Think about that. France is down. UK is down. I guess France was down 63%, and 12% drop in UK. So let's just kind of thread the needle here a little bit. If US is threatening tariffs

on one of our biggest or many of our biggest allies, right, in the EU, you are likely to see, again, nationalistic tendencies towards the buying of big purchases, like it could be iPhones, but in this case, it's electric vehicles. So, you know, I just think that there's a lot of knock-on effects as we kind of try to digest some of the policy. You know, we spent a lot of time this week talking about what would be adversely affected if we had 25% tariffs on

the Canadians and the Mexicans are two biggest trading partners. Obviously, the China one is out there. I think they've threatened 10%. But when you see those sorts of drops in such a short period of time as the world is trying to digest what our trade policies are going to be, I think you have to take notice.

Yeah, I agree with that. And it's interesting because I think for a lot of people, they'd be like, okay, these tariff announcements or these sort of tape bombs, as we call them, out of this administration or any administration are now one or two day events. And it would appear that way on the surface, but

I think they're far more reaching than that. And I think the market is trying to figure out and connecting those dots. Okay, what does this all really mean? And you bring up Tesla correctly. I think they're clearly in the crosshairs, but there are other companies as well. I mean, you can go from industrials to material stocks to semiconductor stocks. And to your point,

to a name like Apple, which may find itself in the crosshairs of any U.S.-China sort of dust-up in terms of increased rhetoric. And I think it's far-reaching, and we're so quick to dismiss things and say, okay, not a big deal. The market's learned how to adjust. I don't necessarily know if that's the case. Maybe the broader market has.

But clearly for some of these individual names, not so much. Yeah. And again, here's one that I find really interesting because we've been trying to figure this out over the last few months since the election. You know, Tesla had that massive Tesla. I think it doubled right from the election to its highs. I think it went from like 220 as high as almost five hundred dollars. Now it's since come off over there. And we know that Elon Musk obviously was a huge supporter of Trump and spent what a

couple hundred million dollars over the course of the six months prior to the election. So he was obviously sitting in the catbird seat. But one of the things that you and I remarked on was just the turn on some of these major tech stocks and their CEOs. And again, a lot of them had good reasons to do so when you think about all the DOJ and the FTC investigations that just never stopped.

for some of our national champions. And then when you think about inauguration and how much these folks individually and their companies gave towards the inauguration fund, how many of them were there on the dais at the inauguration? The thing that strikes me is that when you think about Elon Musk and his proximity to Trump, and then you think about Meta, Mark Zuckerberg's turn, Jeff Bezos, Amazon's turn, Microsoft, Satya Nadella, Google, Sundar Pichai, I'm probably missing a couple of them,

Well, Sam Altman, I don't know if you mentioned that, but right? Yeah. They all have massively competing interests. They all actually face potential regulatory action in a current administration or some of the cases in the past one. And so there was a headline today that I find really interesting. This is Musk versus Reddit.

Reddit's not a name that we talk about a whole heck of a lot. You've seen the performance of that over the last year and a half. It's one of these kind of digital social properties that has been growing a great deal, new to the public markets. But here's the headline. Musk versus Reddit, a digital slowdown. This is The Verge reporting. As Reddit stock soars, Reddit finds itself clashing with one of the Internet's most influential voices, Elon Musk. The billionaire sparked...

a crackdown on Reddit communities after accusing users of making violent threats against his employees. In response, Reddit temporarily banned, this is some of the subreddits for 72 hours, and permanently shut down. Backslash, is Elon dead yet? Which again, we can all agree, that sort of stuff is not particularly helpful,

But again, there is a citizen who runs some of the most important companies in the world, X, XAI, SpaceX, Neuralink, Starlink, all these sorts of things, Tesla. Obviously, there's going to be winners and losers picked not exactly by regulators but by somebody who, again, has all those interests and a lot of competing interests from some of the biggest companies in our country.

Certainly appears that way. And I think more and more people are coming to that realization. And I think more and more people are starting to sound that alarm. And I think there's a shock around it. And how can one unelected person be in such a position of power? And I think, listen, I think the market's trying to figure that out as well. And it's interesting you mentioned the move in Tesla. Before the election, I think around Halloween or so, maybe a week or so before, you're talking about Tesla was a $200 stock and seemingly had gone nowhere for months.

To your point, it went from 200, I think it topped out about 488 or so post-election. And a lot of enthusiasm in and around that the whole month of December. If you're looking at the stock now, though, at 366, I mean, we've almost done a 50% retracement. If we were to get to 350, that's a 50% retracement of that move. And some of the bloom is off the rose. And then the question is, what is sort of the trajectory of this Musk-President Trump

relationship. At a certain point, one has to wonder if it's going to sort of go the other way. And if it were to go the other way, which historically has been the case with a lot of those types of relationships, what does it mean for those stocks? Specifically, what does it mean for Tesla? And I think that, to me, is one of the more fascinating sort of sub-narratives of the market this year. All right. You just used the term fascinated. I'm fascinated by this Amazon report that's coming out after the close for a whole host of reasons. Let me just lay it out.

and then I really would love to get your take, all right? So Amazon is trading very near all-time highs. I think it's like a percent, and it was made yesterday, okay? The stock has an implied move of 6.5% in either direction tomorrow after the print. I guess the most important metric...

is that AWS growth. Why is that important? Microsoft last week, Azure, disappointing. Okay. It's kind of like to your point, how you started this whole segment. It's like, it's not enough to just come in line and have inline guidance. Okay. Especially how some of these stocks are trading into the print. So,

Obviously, Azure was a big focus, came in line, stock sold off 6% the next day. Google, just the other day, it came in a little worse. Their cloud gross stock sold off 8% yesterday, and it's actually down again today. So AWS is going to be in focus. Now, here's a stock just like Google is up

a lot into the print over the last couple of weeks. Expectations are very high, but I think you're probably going to say this to me. Margins have been getting better. That's been a huge part of this Amazon story, not just as far as AWS, but across North American retail. We know that they have this growing ad business. We know that they're getting into original content. These are all really good themes, and it's been helping margins. I think gross margin was 46% last year, expected to be up 48% this year, expected to be above 50%.

next year. But guy, is AWS the most important thing as you're thinking about this? Because again, they're trying to grab a lot of this market share as it relates to the models, generative AI training models on AWS.

AWS is where they get their valuation, right? I mean, that's what everything is predicated on. But the flip side of that coin is a slowdown in AWS could be somewhat mitigated by this continued increase in margins. And I think that's what the market is trying to figure out. So when I look at Amazon, for example,

which was $160 stock this summer. You've been lower left, upper right ever since, meaning that this stock has basically been going higher in a very well-defined fashion. Now, along the way, you've seen some sell-offs. And oddly enough, some of those sell-offs have taken place post-earning. So if you're asking me, which you are, what I think is going to happen, I do think there's going to be a slow in AWS. I think the market's going to take note of that. I think margin expansion is probably going to be somewhat, I think,

mitigated or slowed, which means to me that 6.5% is probably to the downside. Not to suggest that this stock is over by any stretch because we've seen moves like this at least three or four times since August of last year. But I think if you're trying to game Amazon into this print, I think you take a little bit of money off the table and look for a better entry point.

Yeah. And I'll just make one other point because you've been really constructive on Meta for a very long time. And that stock is not too different into its print about a week and a half ago was up trading very near an all-time high. And they had better than expected numbers. They had better than expected guidance. And the stock...

kept on going. And so when I think about Amazon, and this also ties together with a theme that you've been talking about, look at me just kind of patting you on the back. You know why I'm doing that? Because you won't do it to yourself ever, whether it's on our podcast. Can't reach. Whether it's, okay, whether it's on Fast Money. Yeah, you got a bad shoulder from all those days playing football up there in Croton on the Hudson. So you can't reach. That's true. But you were talking about how Walmart has been using generative AI to increase the rate of sales in e-commerce.

So when we think about that with Amazon, might that be a story we start to hear more about? So they've been working on their own models. They have the cloud infrastructure to host those own models. They've been trying to infuse that into – and listen, they've been doing it for years with machine learning, the way they suggest products.

and services, you know what I mean, to their customers. So if that is a theme that starts to emerge and they start getting better profitability, better margins in some of those other businesses, I think that even if AWS is not growing a great deal, but they're getting the benefit within their own business, speak to that a little bit because that is a theme. Yeah. You're so right. I mean, you're right to bring that up, right? Is there basically implementation of everything that basically Facebook and Walmart have been able to do? Will that increase margins enough

to offset what I think could be slowing growth in AWS. And I think that's what the market is trying to figure out. Personally, I think Facebook is done probably better than anybody. And you're seeing it in the expansion of their margins, the last three quarters specifically. I think Walmart's been doing a great job. And one of the reasons it trades at the premium valuation that it does is on the back of that, they've done it really well where other companies haven't.

have not now. The comparison between Walmart and Target is not just sort of an implementation of AI. It's also a product mix thing. And basically Walmart wins to both ends. And that's the reason why Walmart trades at twice the valuation, probably more than twice the valuation of Target. And why, if you look at both stocks over the last three years, there's obviously winners and losers. But to answer your question specifically,

I don't know if you're going to see enough margin expansion in Amazon to offset what I think is going to be slowing growth in cloud, which I think the market will take its cues from. And I think we'll sell off on the backup again, not to say it's over, but

I don't think that's the case, but we have seen sell-offs at least three or four times since the summer in this continued uptrend. Yeah, and the last piece of that puzzle is CapEx and what they say up or down and how the market reacts to that because that was obviously the big driver. The last thing I'll just say, and you and I did this segment last week for our partner Betterment, and we were talking about the idea of dollar cost averaging. So, you know, for some of these stocks that have sold off after these results,

You know, the idea, you like the theme, you like the valuations, you like the fact that you had a little bit of a reset, you like the fact that expectations were high, but now after the sell-offs into Microsoft or Google, they become lower. You know, the idea of kind of dollar cost averaging, if we were to go into a period, you know what I mean, of difficulty, and it's not just the individual names...

You and I, we like the QQQ. Why? Those top 10 stocks make up 50% of the weight. If you want exposure there and you don't want to take the idiosyncratic risk of one of those names, that's a good way to kind of focus on getting exposure to that theme. So that's it. Guy, you want to take a short break and then we'll come back and we'll talk interest rates. We'll talk about the all-important jobs number tomorrow morning. When we come back, we will talk about the all-important jobs number and what it potentially could mean to interest rates

rates that the Trump administration clearly wants to lower. So stick around.

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Welcome back to the Risk Reversal Pod. You know, we spoke about tech, tech earnings, some of the movers, but now we got to talk about, as they say, the all-important jobs number, which comes out on Friday and what it potentially could mean

For interest rates, now, let's just sort of set this up. Ten-year yields in September were about 3.6%. The Fed started lowering rates and somewhat counterintuitively, ten-year yields went from about 3.6%, traded all the way up to, Dan,

about 4.8%, which by the way, has never happened before in history. As we're sitting here now, we've gotten below 4.5%. We're sort of mired in this sort of 4.4% to 4.45% or so area into this jobs number. President Trump has made it crystal clear that he thinks interest rates are too high. He's said it a number of times. When he talks about interest rates, he's clearly looking at longer dated rates.

The question is, does he or anybody else other than the market have control over said rates? And I think that's what people are trying to figure out here. You know, this is early in the administration. We know that Trump was putting a lot of pressure going back all the way to 2018 on Fed Chair Powell. He's the

chair that he actually nominated and put in place. And at the time, Powell was trying to normalize interest rates after a very long period of low interest rates. And he caught a lot of slack for that. What did they say? They were on autopilot, maybe every other meeting, raising 25 basis points and the like.

It all crescendoed or started to crescendo as the stock market sold off in Q4 of 2018. There was a little bit of a global growth scare. And Powell kind of showed his hand and kind of got a bit more dovish. And that turned the market around and probably appeased then President Trump. So now, Guy, he was putting some pressure into that last Fed meeting on Powell. But the fact that they pivoted.

to saying that they want the 10-year lower, to your point that you just made, without really focused on the Fed funds. How does that happen, in your opinion?

Well, for 10-year yields, again, this is just my opinion. This is not political. But for 10-year yields to go lower, it's a couple different things. Now, the bad thing would be the economy slowing in a meaningful way, which by definition means yields go lower. Slower growth means lower yields. The other side, and maybe the more encouraging side, would be the rest of the world runs to buy our debt and all these treasury auctions. In other words, when we sell our debt,

is viewed as favorable. And these auctions, instead of being sort of poor auctions or very good auctions, which theoretically could drive 10-year yields down. In other words, people still view the United States as the best neighborhood around. And there is basically a wave of people coming to buy all the treasury auctions. Those are the two scenarios. Now,

The first scenario is a bad scenario. For the slower growth, obviously the administration is not going to be happy with that. Maybe the second scenario is more likely. The problem, of course, is I don't think that's going to happen because we still have a huge debt problem. And what I've said for a while is

the market participants are gonna demand a higher rate of interest to buy our debt. So it comes down to supply and demand. So this administration can want lower yields in sort of the duration yields, 10 years and higher,

i just don't think they're going to get it that's my view now with that said we've seen a pretty significant drop in yields over the last few weeks which is i think the administration is probably happy about the question is how long is that going to last yeah so a couple things so you talk about the yield and the 10-year going from 4.8 to where it is right now 4.43 we've seen the u.s dollar index go from 110 to about 108. we've seen crude oil go from

82, 83, I think, you know, most recently down to 71, 72 or something like that. So if you think about then the jobs report tomorrow, we had 256,000 added back in December. So that was a bit of a hot number, right? So people were worried about inflation. But if we get to that 170 level or lower, right, so a cooling of the jobs market, all of those things are actually

not as inflationary as you might think. And maybe that's representative of where the 10-year yield is, right? So it's interesting to me that we have yields at, what, a two-month low or something like that. They've been very volatile. So I think it's probably not, you know, you can't say that, you know, we're seeing dramatically slowing growth because 4.8 represents down to 4.3 of that. You know what I mean? We're just seeing a cooling of some of those inflationary pressures.

So that all makes sense. You know, the S&P is very near those all-time highs. So into the print tomorrow morning, that's the employment print. We're expecting, like I said, 170,000 jobs added, 4.1% unemployment rate. That's kind of flat, right, month over month. So I'm looking at the implied movement, Guy, in the S&P for just tomorrow. Between now and Friday is closed, right? And I see less than a 1% move yesterday.

implied. How am I doing that? We have the SPY at 605. I'm taking the at-the-money straddle. The call premium plus the put premium cost about five and a quarter. If you just want to make an outright bullish bet or an outright bearish bet between now and Friday's close, that's costing you less than

A half a percent. Like, just think about that, right? So the idea of earning that out, if you have a view, is probably not too difficult. So thoughts on that complacency. You've mentioned all week long how the VIX has been melting. It's now below 16, which is probably very near some lows that we've seen over the last couple of months. What are you expecting for the print, and how do you expect the market to react?

Yeah, I expect more volatility. And as I said earlier in the show, I mean, we're seeing it in single stocks in terms of both up and down in terms of the vol that we've seen. And it's obviously has not manifested itself in the broader market yet. But I think you're right to bring up how important this unemployment rate is. And again, this is the first one under this new administration. So if it's a good number, they're probably going to take credit for it. If it's a bad number, they're going to blame it on the prior administration. And that's their prerogative to do. I mean,

Everybody does things like that. But it's going to be interesting going forward. I mean, a lot of government jobs, a lot of people are walking away from these government jobs, taking buyouts. A lot of people are going to be fired. We're reading it. That's not political. I mean, that's out there.

Almost by definition, I think you're going to start to see job losses that the market is not prepared for. Now, that might be good for yields. Yields might go lower on the back of that. But again, it gets back to what I said originally, or yields going down for the right reasons or the wrong reasons. And I think there's a lot for the market to digest here. But to answer your original question, do I think the market is pricing in vis-a-vis options the move that I expect?

Absolutely not. I think there's something to take advantage of. All right, guys. So we have a new name for the Risk Reversal Pod. Maybe we'll create some new segments. And one of the ones, just before we got out of here, maybe it's the dumbest stock I've ever seen. That could be a segment right now. And so...

Two days ago, Palantir, I think three trading days ago, gapped up 24%. It had a $236 billion market cap. We're looking at a company, and you mentioned this on Fast Money the other night, that maybe this year will do $4 billion in sales, right? It's an 83% gross margin company, but

at 65 times sales, this is the dumbest stock that I've ever seen. Okay. And so I need your 411 on this because expected earnings and sales growth about 30% this year trades at about 200 times earnings. And like I said, 65 times sales,

What sort of moat does this company have that some of these bigger players cannot get into? They have something called their AI platform. We know that the government, right, is a big part of that sales growth and that sort of thing. But at a $4 billion kind of run rate, there's no shortage of companies that might be able to kind of match the kind of platform that they have.

Okay. Compete on price. And we know the government is very sensitive to price. And I just think like, how does this stock maintain this sort of trajectory? Because today it's making new all-time highs, holding those 24% gains from two days ago. And now it's up six and a half percent. It's a meme stock. Wow.

Well, their founder and CEO, Alex Karp, has been telling the same story for the last, I don't know, three, four, five or so years. He's been hammering at home. For a long time, the market didn't want to listen to him or didn't believe him. And I think part of the problem was they were so reliant upon government contracts. And by the way, they were sort of, I don't want to say mired, but they attached themselves to a lot of SPACs.

in terms of, you know, there was sort of a quid pro quo. We'll help you with your SPAC, but you've got to become a customer type of thing. And when the whole SPAC market sort of blew up, it took Palantir with it, whether that was justified or not. Here we are now, the story that he's been telling is coming to fruition. The problem is, as you just said,

The valuations don't make any sense. So let's just say they do that $4 billion in revenue. And I'll add on the $5 billion or so they have in cash. So I'll round the whole thing up to $10 just for, as they say, shits and giggles. But you're still talking about a company that's trading north of 22 times cash.

It's revenue plus balance sheet, and that just doesn't make any sense to me. So good for them for telling a great story. Great for shareholders. I think bad for the market for bidding it up to levels that don't make a lot of sense. Yeah, you're being too generous to add that cash in there because if I was these guys, okay, $245 billion market cap right now, $5.2 billion in cash, no debt, I'd be selling stock there.

like it ain't nothing, you know, and raising a lot of cash. So, you know, we saw this, I guess, in the internet bubble, you know, some of these companies and Amazon in particular issued a convert like near the top and they put a lot of cash on their balance sheet. And that was really helpful during those lean days, you know, after the stock market burst. So, all right. So that's,

Is that a new segment? Like the dumbest stock I've ever seen? I don't know. Maybe it is. I think. I mean, for now it is. I mean, it's fun. I mean, we can come up with a catchier title, but it works today. All right, man. Well, we covered a lot of ground here. We will be back tomorrow morning on the Risk Reversal Pod. It'll be in your podcast store. All you got to do is go hit the subscribe button.

And there you go. We are speaking to Lori Calvacina, the head equity strategist at RBC Capital. That'll be a hot one. Guy, you and I are going to be on CNBC's Fast Money after the close, breaking down that Amazon print. So that's it, man. What else you got for me? That's it. Thanks for joining us. We will see you again on the Risk Reversal Podcast.