Afternoon. Plus the business of back to school, rapidly approaching that time of year again, some School Districts heading back maybe later this week, next week, and this fall students, parents and teachers are facing a wave of issues including inflation and Artificial Intelligence. Were going to take a dive into some of those issues over the next few days. Kelly, take it away. Its more complicated going back to school than it used to be were also getting more complicated trading where the markets continue to be unpressue nasdaq once again the underperformer down 101 at the moment some huge earnings moves to mention. Roblox is plummeting 21 today, its back below 30 a share, missed on the top and bottom lines, wider loss than expected. We will have more on that in just a moment. Carvana also lower by 3 , we had this 0800 run up this year each with todays pull back, still one of the most incredible runs weve seen of 42 a share. More on the chart in just a little while. And as tyler mentioned, a huge deal in the media and gaming space, penn entertainment rebranding Online Sports book to espn bet, paying up for the rights and hoping to bring the betting brand to millions nor people lets get details from contessa brewer. Kelly, penns ceo jay snowden believes the Strategic Alliance with espn can get the interactive segment to between half a billion to a billions dollars in adjusted eatbitda. Right now they are not licensed in new york and they think getting this deal could pave the way for that snowden said on the call he thinks the power of the espn brand is so great that his applications to regulators would be looked upon favorably in fact, the industry insiders i spoke with think this could be good for sports gambling overall because being embraced by disney, by espn, you know, this stellar brand in the sports world normalizes gambling. On the call they clarified that november is the target for relaunching this app, smack dab in the middle of the nfl season. In the meantime because of marketing costs ramping up penn is unlikely to hit profitability in the last half of the year and thats a change from what we heard from predictions from the Company Previously the strategy with a media partner is something, though, that penn really believes in, that they believed in it with barstool but that deal didnt work out barstool is a different beast than espn. Jay snowden really believes in this particular strategy but with this elevated partner i will be speaking with penn entertainments ceo jay snowden later today alongside crijim crr on mad money. There are so many different questions i have about this, but one of them is to ask what do we think espns fortune will be with launching this espn bet i mean, its such a yes, draftkings was down today but it is such a saturated space. Curious how big they think this could get. Jay snowden was asked on the call today are you late to the party . Youve done this. Right. Youre doing this now more than five years after overturned to allow states to legalize gambling. He said i dont think thats the case at all. We were accused of being late to the party when they bought barstool, they got younger gamblers out of that they think they can retain those younger gamblers and be exposed to not older gamblers, but just gamblers in general. Then the question, are the people who are using espn, who are inclined to gamble, arent they already betting again, he said, no, he doesnt think so if they have 300 million followers on social all together he thinks there is a real opportunity hire and not just with legalizing in more space but in more exposure and retaining those better, plus and we have heard this from draftkings, we heard it this morning from fanduel parent flutter, we heard it from caesars they said product matters. When they relaunch the tech stack, when theyre making news of these player and ingame parlays they are getting more engagement and more money from the people betting on the app and penn is pointing out they just brought their tech inhouse. Interesting. I like to watch sports, okay, i watch a lot of espn. I will tell you the thing that will infuriate me here is if the sports broadcast becomes secondary to the game blng product on air in other words, that at every juncture i am confronted by an opportunity to place an ingame prop bet will Aaron Rodgers next pass be caught or dropped by randall cobb or whatever that will just ruin the experience for me. I hope they dont do that. Im not in charge of that, tyler. A Different Office . But i do think that they know theyre walk ago fine line in fact, they were quick to point out today about responsible gambling, that espn has already been working in conjunction with penn to try to make sure that their responsible gaming initiatives are front and center so how do you use espn personalities in a way that is still responsible and respectful and keeps it out of the hands of underaged sports enthusiasts yeah. I mean, my point he had tore yall liesing here is that espn and the sports broadcasts need to be a sports broadcast, not a betting broadcast. Im sure theyre listening. I hope they are. Listen, i agree, for what its worth that makes at least two of us. Theres two two for purity in sports lets continue to gnaw on this, get angry, get infuriated. Riled up. For more on the deal lets bring in Barton Crockett with rosenblatt securities and david katz covers penn and the gambling stocks at jefferies why does espn choose penn and not a half dozen others that might be just as good or bad look, i think its the brand. I think what we are looking at is a battle of the brands. So all of the bigger players in Sports Betting online in this country are big brands that arent going to play second fiddle easily to espn, fanduel, draftkings, well established, the casinos, emgm. Then you get down to barstool and you can get rid of barstool with espn and it makes sense i think what disney is eyeing is the future of culture and Media Consumption and i think what theyre seeing is that the new generation is going to find Sports Betting additive to the experience and they want to lean into it and have their brand front and center we just saw the opposite with fox, their fox bet kind of deal, you know, was unwound and part of that i think was, you know, attention. I think that the partner didnt want to make fox bet the preeminent brand, they wanted to lean into fanduel. So, you know, here they have a partner thats small enough that they will let espn lead and i think disney likes that. Disney likes the idea that they will be the undisputed senior partner in this deal. David, let me turn to you. Why do you think this is good for penn what do they get out of it and answer what barton just talked about why penn and why did disney choose them over fanduel or caesars or whomever . Well, part of the answer, tyler, is that those other entities are all set, you know, with their enterprise and have been at it for quite some time the way weve looked at Sports Betting from the beginning is the requirements are market entry, a brand, content and technology right . And so espn, you know, clearly is bringing you a brand, penn brings them market entry, given the distribution that they have around states and across the u. S. The questions that we have, that were discussed on the call this morning, are around the technology platform. We know that penn acquired the score media for 2 billion and that tech platform is being rolled out now across the u. S. And, you know, we will we will see how well it performs. The content as contessa was talking about earlier, the parlays and the end game has been winning and i think that thats one of the questions investors are asking as discussed on the call this morning, is how well will penn and this new app be able to deliver content that engages and retains players over time. But you can see part of it, but part is still to come, tiler i am curious, barton, in what tyler mentioned earlier which is does espn risk alienating its core viewer at this point or how do you expect them to integrate this experience in the coming years . Look, i think that generation alley its changing, right it was kryptonite 20 years ago to be associated with gambling, now its becoming kryptonite not to have some ties into that, it has to be part of your media offering you know, the survey data is pretty clear, the Younger Generation wants gamification, they want some access to this. So i think what disney has done is theyre actually leaning into the future of how people want to consume sports and engage with it very handson kind of experience that i think they will be able to provide with this deal, that the other Media Company sports players may not be able to do because they are not going to be the leading brand, they might be a funnel but they are not going to be the leading brand for the experience. David, why does espn have to own the betting platform and how are the economics of that business in other words, they benefit from Sports Betting broadly speaking, parlays, whatever, more engagement, more interest in their broadcasts. Is the model for espn a better model than the current espn business model, and if not, why not just say, hey, we dont need like its a totally different line of business economically does it make sense for them to own it yeah, and i think it would be interesting to have barton weigh in on that, you know, for the depth of their business model, but presumably they are in it to make money, lfrt, and i think whats been proven so far by the others, draftkings and fanduel in particular, is that its possible to make money and i think that that was a discussion point earlier on in the evolution of this business in the u. S. Was anyone ever going to turn a profit at this moment what were seeing is companies are turning a profit my presumption is that espn is in it to make money. Yeah. Barton, very quick final question here, does this deal make it more likely that eventually disney spins off espn it could. It could you could see deeper integration with better. I dont think iger is there today, but this kind of lays a path to go there if he changes his mind it just occurred to me that you have an integrated Sports Betting and sports franchise that could be very easily cleaved off at high enterprise value from the Parent Company disney which is kind of in a different business these days. Barton crockett and david, thank you very much. We appreciate it lets get over now to a different gaming space, the big results in the video game market where roblox is peaking more than 20 after a wider than estimated loss the shares are up 1 and sony seeing disappointment with ps 5 sales, shares down 7 . Steve kovach is here to help us make sense of it. I guess if you tried to pick one it would be we went through this really tough 18 months in the video gaming world, tough compared to the pandemic when we were all stuck inside. Sure. Kids playing more video games. We saw hyper growth from roblox, they opipod in the thick of th pandemic there were supply chain issues, the supply has caught up to demand take two, same thing as roblox, huge boost during the pandemic what we saw from roblox, though, is they had to spend a ton of money, guys, in order to maintain all the new users they were getting during the pandemic, thats infrastructure costs, hiring new people, theyre starting to dial that back, i spoke to the companys cfo about this on the results. What theyre projecting here and this was a huge discussion point on the Earnings Call this morning, you guys are spending so much, margins arent great, you know, losses continue. Theyre saying its going to get better next year, were spending what we need to spend now to keep up with all the demand that we had, all the personnel we need to maintain, thats going to ease back into next year. Thats the story around roblox with play station, catching up to supply, there is a bonus story in the sony thing, i will divert from video games, they make the cameras for so many of these smartphones we use, especially apple and warned the image censoring theyre not going to see smartphone demand pick up until next year. Thats an interesting warning sign for apple, samsung, all the other mobile players take two this is a fun one because even though theyre reaffirming their guidances, middle and guidance for the current quarter, fouryear guidance, theyre guiding already towards 2025 because if you wanted to listen to the ceo squawk on the street today he hinted that a new video game will come out in fiscal 2025, calendar 2024 that is the most profitable Entertainment Property in history. Wow they are going to have the next version of it coming soon that is going to be huge catalyst. Maybe better than a 1. 5 catalyst it should be. Its a few years out. Theyre saying they did, for example, i have the numbers here, they did a little over 5 billion in net bookings in their fiscal 2023. Theyre saying thats going to go up to 8 billion in fiscal 2025 most likely not just because of eta but other games. Fiscal 2025 which is literally calendar 24. Calendar 24. You can look at starting second half of calendar next year. July. Exactly they just started their not to mention hanging over the space is microsoft activision how does the Acquisition Price look in retrospect. Too expensive thats been the story for such a long time because they made that offer for activision right before we saw what happened in the market. The weakness. Got it. Exactly look, i mean, he was on our air earlier today saying this is good for the industry, the activision deal, he is an independent student, its good for ea if and when the deal gets buttoned up expect to see more m a chatter to get it through. Electronic arts, take two it could be great for us. Steve, good to be with you. Coming up, chinas challenges continue, a deepening slowdown in the worlds second largest economic power raising fears of deflags all this as reports emerge that the white house is planning to restrict u. S. Investments in china even more. Plus, we will get some Technical Support for some of those headlines and earnings movers, were seeing across the market today. Power lunch will be right back im still fired up pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. The citi custom cash℠ card automatically adjusts to earn you more cash back in your top eligible spend category. Hi. You dont have to keep tabs on rotating categories. This is the only rotating i care about. Or activate anything to earn. Your cash back automatically adjusts for you. Can i get a cucumber water . Earn 5 cash back that automatically adjusts to your top eligible spend category, up to 500 spent each billing cycle with the citi custom cash℠ card. I love it. [voice vibrating] the white house expected to put more pressure on u. S. Investments on china with an official executive order later this afternoon the plans are reportedly aimed at preventing u. S. Capital from helping develop technology that would support chinas military modernization, but this couldnt come at a worse time for chinas economy which is showing signs of a deepening slowdown. Lets get insight from dennis uncovic, his firm works with u. S. Companies that do business in china welcome back lets talk about the chinese economy and how much distress it is in right now. It looks like it is in deflation, which is never really a good sign at all. Im not sure its quite there yet, tyler, but last year, 2022, the chinese economy grew, you believe the statistics, at about 3 this year the economy is growing really even less than that, and, in fact, in q2, which we have just finished, the gdp grew 0. 8 i really wonder if thats even a real statistic. Lets talk a little bit about this potential executive order what would it do and how would it likely affect american businesses that want to do business in china, but certainly dont want to do anything to damage American National security interests we have a law called cffius what it did was prevented inn found investment that we thought would hurt the u. S now biden has expanded the cffius to make sure if you are outbound, if you are an investor or company that its going to be much more difficult for you to do that. The question is why. I think the close line what is militarily application and what is not is whats driving this. I think the three areas of the Biden Administration will look at, semiconductors, which as you know theyve already done, secondly quantum computing but then the hot topic today is ai is ai, and so this would be an extension or has it already been put in place about that kind of outbound investment, because cffius when i think of it is can a Foreign Company come in and buy a port operation in the united states, or Something Like that. Is it already in place, this outbound restriction that for cffius great question. In short, as far as semiconductors go, the Biden Administration a year ago started to put this this outbound in effect whats happening now, tyler, is that i think the Biden Administration is going to essentially make cffius not just inbound but outbound and thats a real change. Is the Biden Administration tougher on china than the Trump Administration honestly, i see very little difference between the Trump Administration and the Biden Administration in dealing with china. In a certain respect i think biden might be slightly tougher, but the you remember the tariffs that trump put on in 2018 right. Theyre still there and i dont think the Biden Administration is going to remove them. Lastly, dennis, i was just wondering this mostly sounds like it will affect private equity and Venture Capital firms. Have they been actively trying to push back against this . Or are they just going to look else elsewhere . And how much of the