Transcripts For CNBC Squawk Alley 20240712

Investment, what do youd see as the future valuation for this business within mgm and if they dont get there do you plan to sell your stake . I tell you what on the first question i would not put a number on it but i would say with absolute certainty it is worth more than negative the Online Business is getting a negative in there. Im certain it is worth more than that and that is something that we looked at and considered when we were making this investment and you said your second question i have no idea. Were me in this for the long term and that means that well there r is all kinds of opportunities that may arise from here. And well consider everything. Finally are you looking at anything similar to this given all of the cash that you have . Were always looking at everything that is the fun thing about iac. We have the ability, the flexibility, and the time horizon to do anything that we want to do and were always active in the marketplace. Thank you, we appreciate you taking some time today thank you for having me good morning welcome to squawk alley. Carl and john have the day off markets mixed to start the week on prospects for a new stimulus bi bill it is set to take effect on october 15th kara switsher joins us now to weigh in good morning, thanks a lot. Lets say twitter could find the money or the backing to do such a deal. What happens do you think tiktok will thrive or will it go down like vine it has to be sold to twitter and the white house will have a lot of control over the process whether or not we like it. So you have to wonder if donald trump will weigh in. The same with amazon there is also the financial parts. Theyre linked with silver link. It seems unlikely. It seems like microsoft will be the company to get this. It is the easiest deal to do others might look at it like softbank which i think will not happen, but you might see other investors involved here. Micro soft or twitter, i think they have a lot of money to put to work in a very promising company. But kara, who do you think does the best job with it or does it matter there was an article talking about how the code is so important, right and alex stamos was on to talk about whether or not it will really matter if they are able to continue to momentum. Who do you think is the best combination in that sense . You think of a company like disney, but i think the people in the u. S. That have been running it have been doing a great job. Theyre not going to get the chance to do that. Theyre not going to get the chance to go hub lick. If they would get the security stuff in place, being independent would be the best solution do you think that is an option there has been talk about venture capital. Earlier backers getting together, do you think that is on the table its difficult to process it from the Security Point of view. So that, i think alex talked about that, and many others have and you have a security issue here and a creativity issue. I think the people that created this should be able to run it, but there are National Security concerns raised now and i dont think they can escape what has happened here. They have become a political toy for all of these people. A political football. Kara, i also want today get your take on we chat also. A ban could have further ranking implications for businesses. A top apple analyst said it could affect iphone sales by up to 30 do you think tim cooke is talking to the business or would apple give them a way to go around the app store to download the app . It is politically fraught President Trump says Something Different all of the time and you never know what he will pop off on there is no clear proof of any of this at this point. I think apple is so exposed in so many ways been china and as the tensions focusing on tiktok is small potatoes as far as i can see the exposure in china, and it is a Global Supply chain, and there is more serious things to worry about with china again as i said before here we a are discussing a social video app. Think about the conversation about real 5g. We also want your thoughts on amaz amazon there is talked to turn sears and Jcpenney Stores into fulfillment centers. This likely doesnt come as a surprise to you. What do you think it means for malls and other potential tenants that may see amazon, the company that has hurt their business overtime, move into their space. Well, thats the way life goes, right . Malls have been on the decline for a long time. Its not a new, fresh idea and we predicted, scot scott gallowwscott gallow w ay said why buy jcpenney when you could just buy the space amazon needs more and more spaces to fill its booming business that makes sense they dont have to buy jcpenney, they just have to get the space. What choice to malls have . The big retailers are not coming back, and there will be a lot of struggles as people move to online delivery more and more. Im glad you bring up hole foods. At the same time, amazon has been working to, you know, launch another grocery chain and in that wall street journal report said that amazon may be looking to jcpenny for that new kbros ri store it is a tough market, what do you think about it can it make moves further into the space . Sure, why not there will be a lot available. Jcpenney is interesting because they can buy the space or they can buy the relationship with a lot of clothing e taretailers. It has its pick and that is the thing. As they move into the space, there is a shortcut to going to where they were going anyway they can certainly own pieces of it and buy it for parts and that is what is going to happen here. Kara, do you think amazon can be successful on the grocery front . Have they proven that . It has taken them a very long time to make a dent. Jeff bezos is very patient. Groceries is an area they have shown they can do very well in it just because it is slow doesnt mean it will not be another category if is norm with another category and hard goods. They have mote after mote after mote in terms of delivery, convenience, price, data, this makes sense to get not one, fulfillment centers, bud business thats have some distress as you say, bezos is a patient man. He may see an opportunity here thank you for joining us this morning. Thank you bye. Talk to you soon, bye [announcer] if youve tried college but never finished, snhu lets you transfer up to 90 credits toward your bachelors degree. [woman] it doesnt matter how old you are, you can do it. You can finish. [announcer] finish your degree at snhu. Edu. Record amounts of capital pouring into the cannabis industry 11 companies raised more than 2. 6 billion in the last two years combined clear leaps, an International Cannabis company is expected to close later this year. I have the ceo of clever leafs joining us it is seemingly a different world, senator dashall lets talk about legalization federally. Im wondering about states desperate for revenues i dont think there is any question about it. We have seen a dramatic increase in utilization and especially as a result of covid. As a result of covid states have declared cannabis dispensaries as essential facilities. So it is yet another indication of the role that cannabis is playing across the country so youre seeing increased pressure to find ways of which to utilize cannabis and i think youll see more legalization kyle, over to you now, to your decision to go the back route, how will it change your approach in terms of running the business, if at all. I dont think anything changes from the day to day. I think being able to access the nasdaq is amazing. We are the First Company to export legal cannabis, but having that currency on exchance,exchancge i think we can speed up our specialization internationally hey, kyle, when you were on in december, you said that you were targeting Free Cash Flow bostive by mid this year where do those plans stand now you raised money in april now where does that stand . Were a little behind covid caused a little commercial interruption they stopped air cargo flights for columbia were a little behind the pace if we look back to our canopy contract we announced a very big opportunity. Working with us, one of the lowest cost producers in the world and hopefully that means great things for 2021. You mentioned more rationality coming in. You mentioned it a couple years after it was a gold rush the excitement over decriminal skbags and legalization across the country. Are we waiting for basics to be set in place for the industry to make good on those ambitions it seems like a lot has happened before it has become fully main stream and available everywhere. I think i have always taken a long term approach to this a lot of companies have missed sec filings. We wanted to make sure we did it right. I think were in the second inning of a nine inning baseball game we have not proven to the world, no one has seen a use federal legalization produced in columbia and portugal, now were seeing what they can do. We have to take advantage of you being with us to ask a question about the ongoing negotiations between senate republicans, the administration and the house. I know youre a private citizen with only the access that we have, but what is your tense to goat a deal potentially . I dont think there is a sense. Going to states, localities, hospitals, working people from just about every sector is you have to get a deal if you have to find a way to resolve your differences. Come to le to the table and compromise i appreciateboth of you joining us on this busy news day. Thank you. Youre welcome. Thank you and the ceo of Royal Caribbean joins us in a few minutes exclusively off of the fresh earnings cl. Al dont go anywhere, were back in two minutes. Come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. Weve just been finding a way to keep on pushing. A major gas explosion demolishing homes in baltimore one woman is reported dead, two others in serious condition. The tsa reporting more than 830,000 travelers went through their check points yesterday that is the most in nearly five months they also say more guns are are showing up in those check points they found 15 guns per million travelers and that is triple the rate of last july. And a government minister is resigning over last weeks deadly explosion that is our cnbc news update for this hour. Squawk alley continues after this bling ] [ beeping ] [ engine revs ] uh, you know theres a 30minute limit, right . Tell that to the rain. [ beeping ] for those who were born to ride, theres progressive. Coming into the bottom of the hour, the s p just below the flat line. This rotation once again coming out of our big high flying tooks. You see the dow is still up 200 points in that context lets get now it seema moody thank you, michael. Fresh off of the Earnings Call thank you for joining us today on cnbc. Thank you for having my back. Tough revenue, richard, but the market seems to be fix sates help us understand who is booking a cruise for next year who is it welco, richard . I think people are frustrated being at home and being isolated what were seeing, particularly is the people that know us, they know what we offer and theyre looking forward to being able to come back again next year. So i dont think that is a surprise and think i everybody is looking forward to seeing the industry come back into full operation. You also said that china, potentially australia, could see cruise line operations return. When will we see it return here in the u. S it makes up with majority of your revenue first it was july, then august, now october 31st are you confident that you will see your ships return to sea . I think we are seeing some movement in other countries. We have seen targeted up in germany. Looks like in mid august you will see some starting up in italy. We are hopeful that things will improve and that well see movement in australia and china. But every place is looking at it independently. And were learning were learning throughout this process. And we are very pleased with our blue ribbon panel. We are working with them to come up request what we think are the best protocols but one of the big determinants will be what is happening in the broad broader society. If they are locked down youre not going to see trcruising comn back were talking the time we know were out of service for awhile, is to is a time to learn and improve. When we do start to come back one of the points we made on the call is we dont expect it to be a light situation. Switch. It will be a dimmer, well learn more, and gradually biuild back up you raised more debt. You have about 4 billion in liquidity, where do discussions stand with the forecast government where do they stand with the trump add might be strags and are you willing to change where youre incorporated from liberia to the u. S. To increase the chance of getting Financial Relief were not having discussions about supporting the cruise industry we started with a strong Balance Sheet. We have take b a lot of steps to bring our costs under control if is a very pain profl access that we have gone through were doing that without relying on the u. S. Government were doing that on our own and i think that is the process that we would expect to continue. Are you confident that if sails resume that you can control the virus . What kind of experience does that look like for your customers . You know, i think that is a terrible time to not be able to sail, but it has given us the time to really talk to the experts. Im really in awe of this caliber of panel we have been looking at it very closely. Were learning a great deal and were not going to come back until were confident that we have the right protocols in place and yes, it will take awhile and yes we will learn at each stage as we go through the process. Now the cruise lines have special characteristics. There are reasons why it is more difficult to do this on a cruise ship the other thing is they have control over much of their environment than in so many other areas. So kre, i think we will be coming back. We will only do it if we can do it in the right way, and as i said it will be a slow, gradual return it will not be someone blowing the trumpets and all of the ships start out. Well start casuutiously probably with shorter cruises, with fewer people on board and as we learn and as the prevalence of the disease reduces well start to improve on that. Richard you mentioned you added to your liquidity, how long can that last you at this pace of cash push . Well, we have not specified a special date what we have been doing is we have very clear on what our monthly burn rate is were talking steps to constantly improve our liquidity. So i think it gives us a lot of difficulty for run way but were, you know, the old expression you can never be too rich, too thin, or too liquid. And that is what were trying to be cruise lines provide a lot of tourism dollars. How concerned are you about the economy in florida where youre sitting right now . I think everybody has to be concerned about the economy everywhere i do think that in the cruise industry it is such an important contributor. When we get back to work that will help the economy. And the other thing is we have seen this were in difficult times. The great reception of 2008. We have seen that the cruise industry does well it is a good vacation that people really want, and it is compa cheap. We have a Good Business model. Were dealing with an incredible crisis unprecedented proportions, but a lot of progress is being made to see us through it. There is one european cruise line. Yes, our own joint venture has started operating two, i think, 2. 5 weeks ago now it is operating with a joint venture. So far very successfully testing is likely to be a component of whatever we end up doing. We dont feel a need to say this is what were going to do on every piece. We want to get our whole act together we are using innovation. Testing is one another one that i was very pleased about is we recently announced our new program that is a totally new way of mustering. It eliminates large crowds of people and i think we will see more and more innovation like that when we start to come out with our protocols. Have you heard of robinhood the trading app . No. Okay, it is a popular trading app that is geared towards my len y millennials. Your stock is one of the most popular. Im story, i figure my job is running a cruise line. Ill leave it to you guys and the street and others to figure out how the shares should price themselves but i think im very opt misic about the future were making Real Progress on therapies. People are beginning to wear masks, and do a better job of isolating, and vaccines seem to be on the near who ri gone so im hospital mystic about the future richard, thank you very much. Thank you very much seema, thank you for bringing that interview to us. Keep your eyes on shares on pinterest this morning taking its price target up to 44 saying it koud be as high as 06 aneyre currently up 35 and chge dont go anywhere, were back in just a minute. Tmobile, we have more towers, more engineers, and more coverage than ever before. And now you can get an Awesome Network at an amazing price. Get four lines of unlimited for just 25 bucks a line with 5g access included. Thats right. Unlimited and nationwide 5g for just 25 dollars per line only at tmobile. Hey. [narrator] she takes two prescriptions. Kates son jack, takes one too. Kate works hard, and thought she had good insurance. But she still pays too much. Thats no good. So kate downloaded the goodrx app. Now she can compare prescription prices, to find the best discounts. She even beats her insurance price. Good for you kate, good for you. Goodrx, stop paying too much for your prescriptions. Download the free app today. Welcome back to squawk alley. Mike santelli, there is a few Different Things going on. Prospects for that stimulus bill what do you think will be driving . Or the next catalyst for these markets . What is going on in the markets today is a move away from the reliable big tech stocks you would think it is the kind of move that would indicate higher hopes for fiscal stimulus or some kind of acceleration in the economy. What really seems to be going on is a reallocation of portfolios as the s p gets within 1 of its old peek. It seems like people are assuming it is time for a move into those laggards. People are pointing to the fact that the forecast for earnings, for the Current Quarter and for 2021 have gone higher. Maybe that indicates that people think that the earnings come back story as oppos foes oppd to the big tech earnings, but i think it requires us to mention that some of these were a head fake in the past few months. Have to see if this develops into something more. And youre hearing more on that growth versus value trade people have beat on these earnings, but revenue in terms of revenue, betting expectations by about 1 , what does it tell you about the rotation and how durable it could be . I think it tells you that companies controlled everything they could in terms of their expensions and that the floor for earnings, the bottom for this period, was a little higher than people were fearing so you can build upon that if you think that things will even gradually improve from here. A call comes in from the s p but maybe that is a stop and think level, it stuns them back here as quickly as they could after the crash. Yeah, it has been a limited number they can go back over a decade at this point, right after the 2016 election you got a good year out of it or so. It is going pretty quickly after that to that point you have the nasdaq about 11 points below two record breaks. The highest levels since their inception back in 2006 among the big leaders in home construct artop e lid and Mohawk Industries squawk alley will be right back you say the customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g, everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad. Your wireless. Your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch and save up to 400 a year on your wireless bill. Plus, get 400 off when you preorder the new Samsung Galaxy note20 ultra 5g. Our next guest says that facebook might have involved twitter. It is an interesting situation, but it is funny. Microsoft, no stranger to antitrust cases, is the chosen buyer here of a business that does represent competition even if facebook doesnt buy tiktok, they have to be happy with the possibility that they may be bought out. I guess youre right, i had not thought of it that way if is a totally different situation than what we have seen before. But it is a strange world when facebook is rooting for micro it seems harder to imagine facebook or alphabet, or amazon doing a potentially larger acquisition, can you imagine . That is not that big and theyre having a really hard time with it i think if they do anything, they have to say they have to get rid of their problem, and google doesnt get to buy it theyre not that big or challenge or Something Like that but this quarantine has been for them what is really interesting is the idea that youre stashtting to see someone like President Trump use the idea of baping apps as a kind of trade barrier. What is really going on here is retaliation for what china has done, blocking facebook and dpoogle for decades now. Were seeing america get aggress in early trade right, they dont give access to our company so where does it end that is a key question it is clearly a deteriorating relationship yeah, i think were seeing a full on online trade war everything is phrased in terms of National Security but that kind of confusions matters. I think it is a question of who gets theirs. The other big question in my mind is whether or not europe, that frankly has been left behind and if they say why dont we just block google and facebook then the whole Global Internet is no longer that. It is sort of amazing that tick took, they are being acquired by a bigger player. Twitter, chatter over the weekend that that could be a possibility. What solution would make it the most interesting competitor to big attatech companies what do you think . I think that is our traditional idea that you have companies go at it themselves you know this whole idea that the way tech works is one or four or five companies, buying a company and making it work, that is a reversal of the way it used to be. A Company Gets Bought and they kind of take it easy they have the good life laid out for them history suggests, you know, show skype doing these days . There is xbox doing pretty well theyre one exception to the long story of microsoft. I like the old days, i think real competition and tech is better for us and the economy. This culture of everybody buys everybody in the last ten years, i think it has been damaging to american competitiveness it has shown in the fact that Chinese Companies are getting the jump on us here. Will it do anything what has happened anything to support the argument that the competition that the incumbents have as a ruvulnerai out there . You know how he. I dont want to say it is incredibly competitive, but there is always as a ruler in ability. The fact that they have been able to squash competitors, its not like theyre on the edge of things, but they could be beaten that is someone that can come up with something more interesting. But they have been left alone. That is the problem that antitrust people care about thats what i think. Alphabet with a trillion dollar bet tim, the prospect of a democratic administration, will that change anything i think it will its not like the Trump Administration has been sitting on their hands, but everything that the Trump Administration p . You would say, oh, they would never do that, but everything weve said they would never do that and then they do it i think they would probably be more aggressive, the targets might be different, the interest in protecting certain, you know, Union Interest would probably be stronger, things like that, but, yes, i think it will be an aggressive time. Not to say that its for sure i mean, sorry to go on this, but the Biden Administration does have a lot of tech people in it or the Biden Administration campaign, and, you know, will be a fight. So there will be an internal battle, but i suspect overall it will be rougher for the tech companies. You could make the argument that during their greatest period of growth when you could have had an opportunity to act was during the Obama Administration and obviously Nothing Happened i was in that administration. We did investigate google, but i would say we had a very charitable view of those companies. I mean, they were smaller, younger, they were the golden goose who were boosting the tech economy, everyone thought they were, you know, basically being run like charities and who would break up the red cross so, you know, it had like, you know, a very warm fuzzy feeling. Do no evil, right yeah, so that is that is the question some of that is still around, but there is, you know, as tech has sort of sucked up all the money in the economy a lot of sectors and Small Business not happy, a lot of pressure to do so. Professor, always appreciate your taking time thank you. Sure. Thanks the last tease of the hour is a mystery chart take a look at this, one of the biggest winners of the stay at home stock basket having doubled since the start of the year up more than 110 we will tell you who it is when the ceo joins us on the other side of this break stay with us the break it depicts shares of cloud fair which have more than doubled since the start of the year coming off a Strong Quarter that saw their customer count grow by over 60 year over year. Matthew prince is the cofounder and ceo. He joins us now. Good to see you today. A lot of trends working in your favor. One things from your earnings commentary that jumped out at me was that attacks that you had thwarted for existing customers in the quarter were up 37 which you termed as kind of like same store sales for you. Whats driving that increase in volume and should we be worried about the fact that its this busy. Two things that are driving it, one thing that is not particularly worrisome is amu amusing which is every year when school lets out we see a rise in attacks, basically bored kids at home launch cyber attacks. As were seeing more kids having to do homeschooling or working remotely, thats caused an uptick in attacks. Thats the less worrying of the two. The more concerning is that we are seeing an uptick in nation state sponsored attacks targeting both the Health Care Infrastructure and also election infrastructure and thats something that we do take seriously and cloud flare is very much on top of. You say you are on top of it, youre also seeing customers taking it serious enough to retain you how is it translating into your own numbers . I think we had an extremely Strong Quarter and thats driven both by the rise in attacks and also because of cloud flare making the work from home and remote Work Experience significantly better we had a Record Number of new customers, Record Number of customers who spent more than 100,000 a years for us, record of new revenue up 48 year over year what i was amazed by was that we continued to hire where a lot of other companies slowed down and so we had a Record Number of new hires, more than 250 hires, 40,000 applicants to satisfy those 250 hires which means we had an offer rate of 0. 6 . The talent were seeing sin credible and all of that is incredibly important as were one of the companies thats helping make sure the internet continues to work during these challenging times. Matthew, i wonder where those candidates are coming from have they spread out, especially since the stayathome orders and people have moved out of San Francisco and new york yeah, were seeing a really dramatic shift away from some of those high cost centers like San Francisco and london where we have large offices to lower cost, more high quality of life centers like austin, texas, which is rapidly becoming our largest office, lisbon, portugal which has been a very Successful Office for us. Thats helped us not only attract really great talent but also continue to get operating leverage across our business. Right matthew, we talked about how cloud flare has been one of the biggest beneficiaries of the stayathome orders but how are you thinking about this moment broadly . Do you push profitability further out in the future and become more opportunistic, for example, you saw earlier this year slack another good work from home play raise Additional Capital . What are you thinking in terms of that balance . Last quarter we raised some capital through a convertible offering and i think we wanted to right size our Balance Sheet, we have become a much Larger Company since going public and wanted to make sure that we had sufficient capital on our Balance Sheet for what we think are going to potentially be some really interesting opportunistic chances for us to either pick up talent through small tuck in acquisitions or other things that can continue to extend our platform so we think were very wellpositioned, we think that we are on our path toward profitability, we made it a very significant significant leverage in the last quarter in that direction and we are very bullish about how the business is going and are very proud of our role in making sure the internet works during these incredibly challenging times. Matthew, were showing your stock pulling back about 8. 5 today, down maybe 15 from the highs last year even though a great performer. It seems as if as weve been talking its been getting caught up in this theme of stay at home beneficiaries. What happens if there is more of a kind of broadbased back to work move, is there vulnerability there . You know, i think that the transition towards Digital Economy have accelerated through covid and because we have very much a subscriptionbased service where people sign up, pay in advance, were not usage based unlike some of our competitors, that means that we think that theres real durability to the revenue that were getting. I think some of the volatility thats in the market today is the fact that one of our largest vc investors this morning distributed a number of their shares, theyve been an investor in us for ten years and called us in advance to let us know they were going to do it and were proud of the return weve been able to generate for them i think its a great thing long term for us because it makes room for Public Market investors who want to invest with us for the next ten years and i hope it will generate an equally compelling return for them over that period of time. Matthew prince, thanks a lot for spending time with us and cloud falare. Thank you. Mike, thanks for that and thanks to you and david for joining us today and we look at the markets, the s p 500 has turned positive up about 10 points now lets go over to scott wapner for the half and, scott, as we look at these markets the nasdaq still under some pressure down 65 points, the Dow Jones Industrials up nearly 100. As we wait any developments on the stimulus front, scott, over to you im sure you will be talking this and much more. Im scott wapner. Front and center in hour the run to new highs and why market watchers say its time to change your strategy in works we will debate with our Investment Committee today joining me joe taranova, michael farr, ceo of far miller and tiffany mcgee, the ceo of momentum advisers Institutional Investment services group. Lets look at where stocks are currently trading, s p going for its longest winning streak since april, s p and dow are positive, dow is the big outperformer today,