tv Tech Check CNBC May 14, 2021 11:00am-12:01pm EDT
of states are ending, that program is a requirement >> so suggesting they force the states to continue or recruit states that will administer the benefits the dol saying that they have received that memo morgan, back to you. >> rahel solomon, thank you. major averages are higher poised to end the week down. that's going to do it for "squawk on the street. "techcheck" starts now ♪ good friday morning. welcome to "techcheck. i'm carl quintanilla with jon fortt and deirdre bosa coming up this hour, disney falling short on subs. the stock does follow suit why that slowing in streaming is a concern. plus, two sharing economy stocks getting a nice boost in today's session. we'll dive into doordash and
talk with the ceo of airbnb this hour finally coinbase ticking higher takes doge with it more on elon and crypto later this hour. >> yeah. let's talk about some of that. let's start with the future, the mask off trade those airbnb shares now rising after a drop in the open after investors turn bullish on the pent up travel demand as vacationers get back out there doordash close to erasing the month's losses up 19% right now. loyal dash pass subs bouncing out the return to the restaurants and the driver supply, keeping that stock well in the green this morning. and disney, down today on a miss, suggesting more people are heading outside for their fun, but disney parks are outside, so maybe we'll see a rebound there sooner with masks off. i know we're going to talk disney a moment, so deirdre, you have to think about doordash because what a reaction here it's interesting, they had some tunnel and attributed this to
stimulus the stimulus had people ordering in more but also left drivers, the dashers, perhaps less eager to go out there and make a buck. doordash has told us most of the drivers only drive about four hours in -- four hours in a week something really short and so it's really interesting how the levers get pulled here they need a lot of people driving to make this work. >> yeah. and doordash proving it can efficiently pull the levers but you know, carl and jon, it was thought that both airbnb and doordash couldn't win in a year like this because, one, airbnb is a reopening trade, and doordash is more of a pandemic stay-at-home trade it turns out that we can do things like unmask, get out and travel while still ordering food, watching marvel shows and perhaps this raises the prospect
it doesn't have to be one or the other. the reopening trade and the stay-at-home trade can work because some of the trends that have been accelerated over the last year, they're not just trends but habits that have formed and here to stay post-pandemic. >> yeah. airbnb up almost 3%. that's certainly what you would take away from gross bookings up 52 year on year, 3 billion above the street estimates their guidance, of course, this event coming up on the 24th, most comprehensive upgrade to the service in 12 years, so jon, it's going to be fascinating to see what chesky says in a few min minutes. >> it will, indeed like we said, you talk about the trades and yes, there's some truth in aggregate but there are strategic things that all of these companies are trying to do beneath the surface, and a lot of it has to do with core assets, with doordash. they're trying to build out this subscriber habit we see them not quite there on getting more people to order
from pharmacy as opposed to food, but that's a key metric to track. airbnb trying to keep those super hosts because the experience is so much of where the value is, right. >> yeah. they proved their brand power as well airbnb recovering so much faster than the rest of the travel industry and as we've talked about before, doordash showing a level of profitability, you know, in some ways better than its competitors like uber eats and getting that supply back online when some of the other names in the gig economy are having more trouble doing that we are going to be discussing all of this, all of those names throughout the hour and get to coinbase too let's dig in deeper on disney. a miss on subs and revenue driving the stock down this morning. julia boorstin has a breakdown julia, good morning. >> well, deirdre, the disney added 9 million new subscribers rather than the 14 million that analysts expected. ceo telling me that disney plus growth picked up in the last month of the quarter stressing
that streaming and direct to consumer is disney's top priority and they're on track for their long-term goals. >> we've added 30 million new households to disney plus just in the first six months of the year so we're extremely bullish. this quarter's numbers were exactly as we projected internally no disappointment here i think if you want to look at the actual rate of net adds, we've added more in the last month than we have in the prior two months in terms of households >> chapek announcing after simultaneously releasing movies in theaters and on disney plus for an extra fee, they will give two films an exclusive 45-day theatrical release in august and september. >> we're hopeful that by the end of summer more and more consumers will feel free, particularly with the cdc guidelines today about relieving
the constraint on masks, that that will give us the ability to go ahead and return toa shortened window but at least an exclusive window where we can continue to build those disney franchises the way we have in the past and continue to fuel the growth not only for our theatrical business but most importantly to our disney plus business >> it's unclear how much disney plans to give films that exclusive window in a fully post-covid world but does sound like they're going to do whatever it takes to build the subscriber business. a lot of commentary about how they expect the subscriber numbers to grow as they add more content, so similar to netflix, the idea that content growth is going to drive user growth. >> julia, there's talk about direct to consumer here, maybe some concern about the growth in the one quarter. i wonder how much talk there is from disney, maybe among analysts, about whether they're going to flesh out direct to consumer as an idea, like amazon has done you have the bar codes from
prime that you can scan and whole foods, things like that. when are they going to bridge the direct to consumer relationship into parks to drive traffic, maybe differentiate on pricing? there's so much they could do and are they doing it? >> yes i actually think they are, jon this is the direction they've been moving in for a while disney is unique from so many other media companies because they already had the direct to consumer relationship thanks to the parks long before. disney already had e-mail addresses, had people buying tickets directly from them they already knew how to transact directly with consumers. i think what's interesting with the parks is that, you know, they've moved away from the wristbands that they had in disney world designed to get people around the parks faster and with fewer lines and now they're going to be launching this new genie app that's going to be all about using data to make sure people have a better experience in the parks. i think that disney is going to
try to make all of that seamless you go to the parks and subscribe to disney plus, you can access all the content through disney and this idea that disney doesn't have to go through middlemen anymore and not relying on the tv bundle, the cable tv bundle, which is something that chapek alluded to they wanted to own that relationship directly. >> you know, we love to kick around release dates, julia, and the science that is the new window whether it's cruella, jungle cruise, black widow, what are they telling you what they think cinema attendance will be like >> i think it's fascinating the movie until the end of august will be available for disney plus subscribers for a $30 fee and available in theaters. i think to me that indicates they think that some people, maybe people with kids who are not yet vaccinated, people with kids will be a little bit more reluctant about going to
theaters but by the end of the summer, once you've had far more vaccinations, then they think they're going to be able to really maximize an exclusive theatrical window. disney is unique for many of the other studios in that it dominated the moviegoing business precovid. now they will be able to wait until they think there's going to be a movie going audience and drive people to theaters they have a marvel movie coming out and a ryan reynolds comedy and that's going to be an important test of how big demand is for theatrical only >> great insight with chapek especially thanks i'm going to stick with disney and bring in needham's laura martin you got a hold on disney, but here's -- here's the part that i wonder about is disney more compelling longer term if you believe they're going to be able to stitch together the disney plus data that they've got, plus the park's stuff and somehow create
more insight, drive more business, and higher value through that direct relationship >> right i think you're hitting on the asset that most investors miss, which is the direct relationship to consumers they've always had connections to their consumers through the parks and now they have 159 subscriber e-mails and relationships from their dtc business so they're going to try to bring you into the disney fold when your kids are 4 and not let you or your kids out of that relationship until you die essentially. so they are trying to find your -- they're going to have your consumer data and drive revenue from that over decades >> what you're describing is the fly wheel that another company, amazon, has been so successful in creating. if that's true then, why the hold aren't they going to continue to add more to this ecosystem, get more of our dollars and data >> yep i just am -- i think the
streaming service is costing them a lot more money in the near term and this is a company that used to trade on eps, and it doesn't trade on eps anymore. call me an old dog with new tricks the streaming assets are wonderful and they have long-term value in their data, but, you know, i would like to see eps growth as those parks open what's so funny is we're all talking about streaming today which is fantastic, but let's recall the ceo here ran the parks for over a decade so i am confident that the parks will do fantastic once they're allowed to open reg ga torrey and go back to full capacity. >> good point. we are all talking disney plus there is discussion around parks, something i'm not hearing a ton about is sports. as sports return to a normal cadence where is espn and espn plus positioned? could this be a bright spot? do you think that they are able to make big strides in the space especially as they get the ufc contract and more live sports
moves to streaming >> the first quarter linear networks, which is primary espn, really saved them $2.8 billion of ebitda up 15% year over year. a lot of their free cash flow on the positive side coming from this empire is the linear networks already as you said, the second quarter last year all live sports were essentially off so the numbers get really big really fast as we go into second, third and fourth calendar quarter of this year for disney because all their sports is going to be back being played and viewing up, so we're waiting for venues to open in the real world >> laura, finally, i know cruises are, you know, comparatively a small part of the business, but it does seem to be the epicenter of everything political regarding vaccine passports and testing and cdc scrutiny i mean, cruises were an issue pre-covid. we had our episodes.
i wonder how you think they're going to manage it and what their biggest concerns are >> i don't think cruises is going to be the last thing to come back. i think it will come back after -- it will come back after theaters, but i think, again, this is about touch points to the disney ecosystem we talk about like the cable bundle or the streaming bundle you know, bundling in cruises is just another form of consumer immersion in the disney cult let's call it, so i expect that super fans to take advantage of the cruises, but it's a narrow group of people, meaning you don't need a million people, you don't have room for a million people a year to do cruises. it's the tip of the spear for the most avid disney super fans and it's a great touch point for those fans, but i don't think it drives the empire's upside value here >> all right laura martin, thank you, with a hold, but might be the happiest hold on earth. >> magic. it only feels like a million people on cruises. not actually that many
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let's get a gut check on snowflake. goldman takes it to a buy. price target 275, where it was trading a month after the ipo. says they're positioned to benefit from the shift in data and the cloud since we are in the early innings, the innings analogy again, of a cloud adoption shares jumping nearly, let's see, about 8% this morning, taking it back above the 200 level. deirdre? >> jon, airbnb shares are up today about 3% its latest results providing more evidence its model and brand is recovering much faster than the rest of the travel industry average daily rates rose more than 30% in the first quarter compared to double-digit declines from the hotels and just 8% growth from expedia. revenue also growing again while the otas are still far below
pre-covid levels supply or listings remains a key question, as demand is expected to surge back and that's where we started with ceo brian chesky are they ready for a major summer rebound >> yes, we absolutely do the key is we have 4 million hosts, 5.6 million listings and, you know, our hosts we've been working to get them ready, but one of the other things we've done is launched a feature called flexible dates. what this allows us to do is to point demand to where we've available supply so we will have i think more than enough listing hosts for the coming travel rebound in the coming months >> if travel comes back to cities, is there risk of glut in non-urban areas. i noticed in your report you have expanded the supply out side of cities, but net net it stayed consistent? >> yeah. i don't think -- i think a couple trends are going to be very positive for us as restrictions lift, more people are going to cross the border and more people are going to go to cities but i don't
think that's going to be a pure replacement for all the people trapped in the vacation destinations what we're seeing is huge spikes in searches and demand in airbnb and this is going to be a travel rebound anything hike we've seen before i don't think we've ever seen -- we've never seen travel being taken away from the majority of people for the whole year and a large amount of discretionary money and in surveys i've read including ones commissioned, weight the activity you miss the most, most say travel. you will see more urban travel but i don't think so it's going to be business travel. i think it's more leisure travel and we're really strong in that area. >> i wonder what makes you so confident? i know you have good visibility but what if demand exceeds your expectations what if you see more urban bookings versus rural? what makes you confident especially when your competitors are working very, very hard to build up their supply?
>> again, if we see a huge spike in urban demand, they will be great for our host and cities. they've been hurting over the last year. we are seeing more and more demand coming to the urban area for longer term stage. >> you sound extremely positive on your outlook for the summer in the first half of this year, but you were somewhat conservative on your guidance for the back half of the year, pointing to limited visibility why is that the case what makes you think that the rebound could stall or gives you hesitation when it comes to predicting the second half of the year >> we're to the. i'm very confident about the second half of the year. i think this will be a travel rebound like anything we've seen before i've been doing this 13 years in airbnb and never have we seen anything quite like this the amount of people that are interested in traveling. all this was before a few hours ago when the head of cdc said that nowif you're vaccinated you can resume activities that you were doing before the
pandemic i think one of those activities that i'm sure people come to mind right before memorial day is travel. we are very confident and we're going to be prepared for whatever the demand is >> you guys broke out longer term stays this quarter, those over 28 days, and they now make up a quarter of all nights booked in q1 does that trend continue as economies reopen >> it probably does. i mean what will happen is there might be some rebalancing as cross-border increases, and urban increases and more people travel that could rebalance a little bit because you're going to see more growth in short term and over the long run, over the course of a number of years, i thinks the trend to increasingly people staying at airbnb for long-term stays as defined by 28 days or longer increases the reason it increases is because increasingly fewer and fewer people are being tethered to one city to live and work as people become more flexible, more and more people decide that
staying in airbnb is actually a great option for a week at a time, a month at a time or a few months at a time. >> if long term continues and it goes up, what opportunity does that open up for airbnb as ways to monetize the platform >> i mean, the market for living is much larger than the market for traveling, there's no question most of us, you know, travel for a portion of the year. i think number one most of our market size we describe to investors primarily focused on travel which is already one of the biggest industries in the world is by some measures between 5% of global gdp or even larger as how you size it. if you add another category of living and traveling and living start to blur,i think airbnb i beneficiary. >> have you seen the same kind of recovery in experiences that you have seen in home bookings what are you looking to, as an indication, that this business is working or isn't?
>> it's absolutely working one of the things i will point out is statistically guests are more satisfied with experience in airbnb than homes people leave a five-star experience this product has been on hold. last year we paused the entire product because obviously during a pandemic it's really hard to gather let alone with other strangers. i remain bullish over the long term. >> are you seeing any evidence of cross-border travel returning yet? >> we are starting to. where we see restrictions open up we are seeing the beginnings of emerging growth of cross border i think the next few weeks and months are going to be important. i heard antidotes of people being at airports an it's the most crowded they've seen in a long time people are getting back on planes and as they get vaccinated they will be crossing borders and memorial day will be
a threshold and after memorial day you will see more cross-border when that's going to be hard for me to predict but we will see the data probably before others. >> interesting what about business travel any evidence of that returning and i know you said before that it's going to return in a very different way. what are some of the early signs if you're seeing any >> i mean, again, at risk of predicting the future and being wrong, i don't think business travel as we know it is coming back to levels that they were before the pandemic. the simple reason why the bar to get on a mplane to go to a meeting is higher. this is not the end of business travel a change of business travel. to a longer length of stay business travel and more group business travel because you're going to have a lot of people working remotely but need to go back to headquarters. >> i know that you guys cut a lot of your marketing expenses over the last year and get a lot of traffic organically but as you see greater competition from
the otas are you considering upping your marketing spend once again or still the same outlook there? >> i think we're pretty different than our competitors and we have a different approach to marketing airbnb we're one brand we're not like a house of brands that brand driving traffic to airbnb more than 90% is unpaid direct we've approximately the same traffic as 1eshg9s, but we spent 50% less on marketing. i think we will permanently be more efficient. >> carl and jon, i think one of the most interesting things that he talked about was that trend of longer term stays, could airbnb eventually go beyond travel and become a property company? what kind of opportunities does that open up opportunities in insurance he isn't really answer that.
it is an interesting question for longer term investors. does that addressable market expand in a major way? carl >> yeah. especially when bookings or a good share of bookings are for more than 28 days. you're essentially in a bit 6 of a property management business what a great interview on an impressive quarter despite what the stock has done since the ipo. when we come back, dogecoin getting a boost this morning from, who else, elon musk. we'll break down that and talk coinbase earnings. watch unity, upgrade this morning to outperform says the current level is an attractive entry point for investors looking for a high growth software stock and the shares are up 6% or better. "techcheck" is back in three minutes.
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nasdaq flirting with a 2% again. we'll see if we get there later today. some of the pandemic winners that saw drops this week turning around zoom up 6% names like okta and doccusign nearly 4%. let's get ba to rahel solomon. >> good morning. allowing maritime traffic on the mississippi risker that will start to alleviate a backup of dozens of vessels and 1,000 barges the movement was stopped between tennessee and arkansas it has determined it is safe to travel under that bridge as repairs continue. the positive effects of government stimulus checks appear to be fading. u.s. retail sales unchanged in april. a small increase had been expected the stagnant sales in april a big contrast from march when they soared almost 11% new york representative elise stefanik all smiles. house republicans voted to put her in the leadership post that had been held by the now ousted liz cheney
cheney, of course, has been very critical of president trump's claim that election was stolen from him stefaniak, meantime has been supporting him >> i believe that voters determine the leader of the republican party and president trump is the leader they look to i support president trump. votingers support president trump. he is an important voice in our republican party and we look forward to working with him. >> and you are now up to date. deirdre, i'll send it back to you. take a look at coinbase getting a nice boost as revenue tripled in its first quarter since going public kate rooney, not just coinbase up this morning, dogecoin too. >> that's right. dogecoin getting a boost, but this was a huge quarter for coinbase you had revenue about growth, a boost in user growth and coinbase says it's on track to deliver similar or better results in its current quarter deirdre, you mentioned it, one of the biggest headlines coinbase is going to start letting clients trade that
crypto currency dogecoin it was the first topic on the earnings call. brian armstrong says dogecoin will be up and running in six to eight weeks and talked about looking to add assets faster but didn't give details why that would take two months. part of the need for speed is competition. a lot of new fin tech players in the market offering crypto trading for free, analysts fear that could put pressure on coinbase's margins the ceo told me it's great everybody wants to get into crypto but means they need to move faster. she says they could have done more trading volume if they had those assets on their platform, referring to dogecoin there. revenue came in at 1.8 billion profit for coinbase, $771 million. that increased more than 20 x from a year earlier and coinbase saw growth in subscription and services revenue coinbase results are still very closely linked to the
performance of crypto. roughly 94% of net revenue still comes from transaction fees. the company benefitting from the bull market in q1. executives did strike a sort of cautionary tone and talked about volatility we mentioned dogecoin. coinbase is not the only thing boosting those prices today. elon musk, after calling it a hustle on "snl" last weekend, this morning said he is, quote, working with doj developers to improve transaction efficiency and calls it potentially promising. back to you. >> the sec had a headache before dealing with elon musk when it comes to tesla stock, but right now there doesn't seem to be anything moving crypto up or down more than elon musk and then crypto is moving coinbase i mean, how many different things, how many different financial equities or financial instruments are tied to the
whims of elon musk right now >> it is sort of a russian doll influence of a tweet going to dogecoin or bitcoin. bitcoin is regulated by the ftc. not the same if you had musk tweeting he was going to take tesla private. it's different cftc is in charge of looking after bitcoin. dogecoin is under a certain regulatory structure but this market is still relatively new i don't think they've figured out how to police that and you have influencers and ceos tweeting about it. it's not just elon musk but people on reddit and twitter they don't disclose how much they really have at stake. some of the ceos might have more skin in the game than we realize. >> and kate, how are investors responding to that timeline that you mentioned up to two months to add dogecoin? i mean, coinbase has to be nimble but they have to do their
due diligence. the reason they received the valuation they did at their ipo they're seeing the gold standard exchange these things may take time we can't forget that dogecoin is still a meme coin and created initially as a joke even if it is being taken more seriously? >> a lot could happen in two months we've seen dogecoin rise almost 10,000% this year. you don't know where it will be in two months. i see what happened that there's reports they're under investigation and they have taken pride in being the more regulated gold standard and that has been a big part of valuation story. that is coinbase's appeal the compliant version of any crypto exchanges. they leaned into that narrative they want to be compliant and the regulatory structure and framework they used to approve coins relies on regulations. they have to make sure they are complaint. they took xrp off the platform for that reason.
they would rather be slow here than immediately launch dogecoin although seemed they had a little bit of fomo on the earnings call. missed out on the big run up. >> your point about the competitors is such a good one piper when they initiated coin today, had an overweight they make the point that share, the market share, of overall crypto market cap has gone from 5 to 11 in just a few years and what is obviously a market growing 8x who has what amount of share versus their peers. >> absolutely. absolutely they have seen -- you saw the rise 11% of the crypto market is now custodied at coinbase. they are growing their share people seem to bewilling at least right now to pay some of those higher fees at coinbase to trade there and they do certain forms of banking and other sides of the business. the big thing people are watching is the percent of revenue that comes from just transaction fees that's their bread and butter.
other others like robinhood coming in offering this for free she said they're not looking to compete on fees and trying to be sort of the first mover. she really tried to sort of shift the narrative from oh, there's coming in and going to be some margin pressure similar to what we saw in the brokerage industry but that seems to be a big risk >> kate, thanks. our kate rooney. coming up, a closer look at doordash's results and why that stock is up 21% this morning plus, a group of former uber execs. we will explain. "techcheck" back in two.
we set a theme to focus on up masking going a level deeper on that, this earnings season for gig and flex economy stocks, supply a shortage of drivers costing uber and lyft $250 million in incentives and an abundance of hosts giving airbnb an edge over competitors and the doordash stock pop we're seeing could be related to the resolution of its driver supply issue. doordash saying they're getting drivers back, carl, and that issue where the typical dasher
for them works four hours a week, you know, we heard from rahel solomon earlier that the effects of stimulus are fading in a way that's good for doordash, right, because one of the effects of stimulus they were seeing is that some of their gig workers weren't as eager to work. that combined with the subscription ecosystem they seem to be building may be giving them some value that investors are seeing here. >> it's definitely a pivot point this morning, jon. i'm looking at the upgrade out of wells today they went from -- they went to overweight and they say that beat was large enough to offset the rotation to value that has afflicted growth stocks so far year to date so if dash is going to be a poster child for anything, you might want to see it be something that at least reinforces confidence in growth. >> yeah. what's remarkable to me is that doordash is already commanding a much higher valuation than uber. 15 times price to sales versus 8
times for uber and it's really seen as the company that is able to resolve some of the issues. we've heard them speak about the driver shortage, spending money, might have to spend more money doordash kind of showed us they put the money in, did hit their bottom line the past quarter but resolved the issue, that they have their dasher supply back up and running by the end of q1 they didn't talk a lot about concern for the rest of the year of course, on that profitability metric, right, even if you want to take adjusted ebitda profitability they're getting there much quicker they are now number one in terms of food delivery market share, convenience delivery market share and now pick-up or takeout. so they are -- they have found a way to take market share and also do it in a more profitable manner >> kcarl, here's the next shoe t drop, the impact, if there is one, of this pricing change that
they've done with restaurants. they're giving restaurants more options versus doordash taking 30%. you pick how much marketing you want and pay less, pay more. if restaurants like that more than they like the offerings from some competitors, maybe doordash widens its lead here and supply of restaurants. we'll see. jury is out. >> yeah. speaking of restaurants, a group of former uber executives have launched their own virtual kitchen start-up which is a direct challenge obviously to travis call nick's effort. kate rogers has more on that good morning. >> hey, carl good morning to you. vc money is flowing into money in the ghost and virtual kitchen space which could be a $1 trillion global market by 2030 virtual kitchen co rebranded as all day kitchens the company announcing a $20 million series beat funding round bringing funding to $37.5 million. it's revealed that doordash ceo
tony xu and eric wu participated in the latest round led by founders fund. ceo ken chong, a former uber eats alum says the capital will fuel its expansion into chicago, the first location outside of the bay area, with its network of satellite kitchens that host 46 brands today. they offer a one-stop shop to drive training, cooking and distribution for digital delivery take a listen. >> there's no cost to get started up front a lot of our restaurant partners like that and they made money on the first order to the last order. it's really thinking about how do we build this for a sustainable long-term future because that's clearly where the industry is headed >> it's not just startups getting into the virtual kitchen business big restaurant chains are too. denny's rolling out two concepts for burgers and sandwiches calls the burger den and meltdown and brinker international, parent company of chili's launching
just wings most recently chick-fil-a announcing its virtual delivery concept little blue brand, selling wings, salads and more in nashville thafl debut next year. we need to get through ongoing shortageses of chicken, sauces and more this could be an answer of labor shortages. dedrashgs dra, over to you. >> perhaps habits many are expecting to stick post-pandemic. we will keep ordering in thank you for that. up next the winners and losers in streaming and what to make of disney's miss on subs. that's next. watch peloton. the stock down about 2%. this morning it's changed directions and now up 1.5% following that recall and this year it's down about 40%. we are back in just a moment
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plenty of analyst action with calls on three movers we've been talking about dash upgraded at truist and wells fargo. price targets of 185 and 170 saying the positive outlook the company guided to is too good to pass up. it was even better yesterday wells likes airbnb and says that stock could reach the $200 mark after its own [ inaudible ] and then piper initiated coinbase
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welcome back it is great do see you again. >> hey, great to see you when can we get back in the studio i'm ready. >> yes, we're going to do that soon i know lizard has done a lot of work, actually a beautiful report on digital subs, streaming, churn, and basically where we're all going to settle out in the number of services we subscribe to is there a way to sum it up in a line or two? >> yeah, look, we are no doubt heading to a subscription-based economy. we all take in so many different subscriptions. we may not keep all of them, but there's no doubt, carl, we will be taking on more of them. the gist of what we found in some of the work we've been doing is these can be very attractive business models they are perhaps not as attractive as softwares and service companies and the valuations reflect that. the companies are trading 15, 17 times and the digital companies are trading at eight times really, when you come down to it, those that produce the best scale, and that means internationally at this point, carl, will be the winners as
opposed to some of the ones that are smaller and really having a hard time gathering customers at a fair price but there's no doubt, carl, this space is hot and people are really reorienting their business models around the subscription first approach. you can see it in the markets today. >> right now, we know that subs are driven by content and content is expensive, and expense is pressure margins how much will be a worry in the quarters to come as they keep trying to outdo each other >> look, that is exactly the point, and this is where scale begats scale and capital begats that scale so when you see with some of the truly global players, the ability to amortize this content across so many different audience sets really is a competitive advantage. frankly, the biggest companies stand to be at an advantage because they can accumulatetha content. i think you will see some moderation on some of these ip
packages that will go for sale, whether it is sports or entertainment, but overall because the sub skrscription, ih churn can come down at a reasonable level the economics start to kick off. the best companies in the work we've done, carl, they're keeping 70% of their customers in a given year. that means they're also losing 30% of their customers over the year whereas the ones in the middle or bottom of the pack are losing almost half of their customers. so more content creates less churn and more economic opportunity for those subscription-based companies. >> yes that's good news for content creators dennis, we have breaking news. i have to cut it a bit short today but we'll talk more in the days to come. >> lie forward to it in person ♪thksca it nourishes and strengthens my joints for the long term.
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with perks from- - [crowd] grubhub. now, that blang news some developments on dark side, the group behind the cologne pipe like hack eamon javers has it for us. >> jon, yesterday we saw president biden suggest that the u.s. government would respond to dark side. today i can tell you we're seeing reports something very bad from dark side's perspective is happening to darng side
two cybersecurity consulting firms giving records in the last half hour. mandiant say they see dark web posts claiming dark side lost access to its infrastructure, including blog, payment and servers and will be closing their service. they also say posts claim decrypters will be provided for companies that have not yet paid that is if you have been hacked by dark side, this report is allegedly you may be getting out for free as a result the cybersecurity firm intel 471 is reporting that posts claim darkside has promised to compensate outstanding financial obligations to criminal affiliates by may 23rd posts claim that funds from darkside cryptocurrency wallet allegedly have been ex filtrated. that means their wallets were full and now they're not intel 471 reporting that the cryptocurrency mixing service bitmix is reportedly inaccessible this week bitmix is a mixing service that's important to hackers
online because it allows them to mix their cryptocurrency in its useful allegedly in the laundering of cryptocurrency proceeds from criminal activity on the web that's significant if that service is now no longer available to the hackers all of this based on reports from the dark web, you have to bear all of this with a grain of salt in the sense all of these people are criminals, all posting anonymously on the dark web. they tend to lie, but clearly something is going on with darkside right now no indication if the u.s. government is behind all of this, but we saw the promise from president biden yesterday, jon. >> yeah, makes me wonder if this is true, does it mean that darkside has been busted or does it mean darkside is trying to look like it's been busted in order to clean everything up and get out of this. >> right. >> i guess that's the question, eamon, quickly. >> yeah, exactly the right question we do expect that these guys will skitter and then maybe try to reconstitute under some other brand in some other format, but for right now it looks like a disruptive event.
>> eamon, thank you for that a couple of interesting swirling developments, eamon javers, as we continue to watch. not just the prospects for darkside, but the recovery of the colonial pipeline. a busy week. best two-day gain for the dow since march 8th. have a good weekend. let's get to "the half". carl, thanks welcome to "the halftime report." i'm scott wapner, front and center this friday, why one watcher says the bottom is for one part of your portfolio we'll debate the call and discuss where your money goes for now. joining me, shannon s shannon, , the head of investment strategy. rich sapperstein, one of barron's top 100 financial advisers pete najarian is here. great to see everybody let's go to the wall you heard carl say the best twda