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tv   Fast Money  CNBC  October 18, 2021 5:00pm-6:00pm EDT

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that it's something to watch. >> the slow creep up in yields with tech still doing well on days that happens is notable there was a time anytime the yield moved up, tech would get -- >> it's alwaysa little oversimplified in terms of that relationship. >> nasdaq up 0.85% today we are out of time on "closing bell." thank you for watching "fast money" starts right now. live from the nasdaq markets overlooking new york city's times square, this is "fast money. i'm melissa lee. tonight on "fast," disney gets dinged falling 3% on growth concerns for disney plus. we will break down how the traders are playing the streaming news. zillow plunging 9% we will tell you why zillow is taking a home buying halt. later, shares of amc in rally mode we spotted unusual options activity we will break down the option. the biotech breakdown.
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feeling a little bit under the weather again today. the index you falling 2%, down 7.5% over the past month compared to a 1% gain for the broader markets. if you are the biotech trade, should you brace for more sick days ahead or healthy gains on the horizon? guy, in the underperformance persisted for the year, down 13% for the year with the s&p 500 close to record highs. >> so, obviously, that's a little bit different than the ibb. the biggest thing is innla at about 1.2% of the holdings in that name. it's extraordinarily diversified. many names we rarely talk about, i go to the ibb. that's now heavily weighted the other way. moderna, amgen and gilead makes up 20% of the index. to answer your question, each one of the three stocks that i mention vd their own specific story. i think moderna might have finally sort of maybe found its
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way through. obviously, that downgrade a few months ago didn't help then the merck news. a lot of things weighing against moderna, found its footing today. amgen sticks out to me like a sore thumb. >> this is trading at levels we last saw in the spring of 2020 i think ibb, if you believe in amgen, which i do, and oh, by the way, if gilead can get out of its own way, i think the ibb is interesting at these levels. >> ibb is less than 3% at that point and the difference between the two, of course, is ibb is market cap weighted. so you have the big heavyweights hold downing that index. but we highlighted the sbi because it gives equal weight to a lot of the holdings and, karen, if you wanted to play beta in biotech, that's where you would go because there is sort of a smaller companies in general. >> right they are smaller companies and so a lot of them, you know, have a very important product they are working on, area they are working on
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to me they have a lot more upside and a lot more risk, and so, you know we, see what happens when you have a failed phase 3 trial or the data doesn't come out, i think today there was one determinetological product down 40% so for me i have never been comfortable taking the specific bets i don't have any exposure to the group right now except for sort of on the spectrum big cap pharma, which hasn't traded particularly well the last couple of weeks i thought it would have with rates rising and the pe multiples being relatively low t they seem to be at the moment susceptible to a downward trend, which is unfortunate i think that's where the value is ultimately, they will be the acquirers of many in the biotech space. >> you have to understand these stories and understand clinical trials and different drug, you
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know, outcomes and things like that in a world in which, you know, tech is probably the easiest trade to make or financials or things that are very straightforward, do you think that has something do with the low investor sentiment surrounding it this group? >> it could. the stocks are so specific, like you said, relative to their individual stories that it's hard to have a great handle on every single one i feel like when we talk about the space, we often talk about the etfs, ibb for for example i think as a diversified play, ibb, the etf i think about, i think it's a reasonable entry point here you could be a little bit early. if you look at the chart it doesn't look great it failed at that february high. it broke the 200-day moving average. it has a don't amount of vaccine exposure, 15% of the ibb in two stocks, you know, moderna and biontech, up a lot, obviously. i would look to 145 to 150 as
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support there. i said this a couple of weeks ago when we talked about biotech. it's a great way to get diversified exposure to a number of companies that are extremely innovative i think every the next number of years you are going to see massive change in mow hlecular medicine and other areas being diversified exposure versus betting on one company is critical alumna, they are the global leader in dna sequencing with a company like that we get he exposure through a fund of morphomatic plays. >> people believe in medicine and science. at the same time, we have seen leaps and bounds made in science and in medicine in the past year or two years and what have we see in this etf? nothing. pain for investors >> well, we have seen some miracles in science and certainly in medicine and covid has had a chance to look just how sophisticated and
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revolutionary some of these drug companies be we are talking about the difference between an xbi and ibb. ibb are companies that have great balance sheets, are big companies, and i don't think are terribly risky in terms of at least their business models. i think in the xbi it's very different. and so those are companies that not only seemingly have an insatiable appetite for capital at a time when a lot of growth capital companies and a lot of high multiple companies peaked in february, i think this story falls under that category. a lot of these companies are not profitable, not close to profitable, nor will be. i think this is the deep end of the pool as everyone outlined, that's why an etf strategy for the layperson is something that makes a lot of sense but again i think drug pricing overhang, fda dynamics, capital raises, high-risk asset class is why at least the ibb, although down 13% on a one-year basis, a
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little bit of an outperforms, is a better place to play and i think you have a case where overall as an asset class investors have shunned higher-risk assets and although the market has run, we have seen a change in character. think about what spacs have done think about what some of the e.d. technologies have done. it hasn't been agood ride ther either. >> i understand the difference that we're making between ibb and xbi. even if you look at the one-year performance in ibb, it's severely underperformed. if you go xbi or bb, and i understand there is a difference, biotech as a collective as underperformed the broader market when thebroader market has hit record highs. in your view, is there opportunity even given this underperformance in the larger vehicle? >> yeah, it's interesting you mentioned xbi equal weighted and i mentioned -- when i say top holding you are talking about
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1.2% they are either side of 0.8 and 1.2% names we don't talk about. by definition, it's going to get smoothed out even if you have one that knocks the cover often the ball, the smoothing mechanism of the entire thing i don't think gives you enough bang for your buck. in terms of the ibb, to jeff's point, you are getting comfortable with effectively a handful of names i mentioned three. he mentioned biontech. i get it you know, i do think it's interesting here because, quite frankly, you know, i think moderna might have bottomed out. i think amgen is extraordinarily val yunel and cheap at these levels in terms of valuations. if gilead would stop going lower for a day, i think you will get value in ibb. our next guest - >> could i add one thing >> yeah, yeah, karen, go ahead. >> sorry some part of the biotech, the smaller biotech space, used to be sort of the gambling part, right, huge risk, huge rewards, and i think that kind of money has actually migrated to other areas.
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so that would have been the marginal buyer here. i think they are gone now. in meme stocks or bitcoin or somewhere else >> that's an interesting point the next success talking about the skid games let's bring in gerald homes, manager director of health care equities at oppenheimer. jared, what's with the underperformance snshlgts i think you guys nailed it so many facets and reasons for the underperformance i look at it very sim policically. you touched on many of the points earlier so many asset classes and industry groups are trade to go close to all-time highs. the tech trade, consumer discretionary trade, trurn to normal trade, interest trade, crypto trade, energy trade, working so perfectly, it seems day by day so you have, you know, a high-risk group or a theoretically high-risk group like buyiotech in no man's land
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when you look at it in that construct, and now we are sort of faced with what do we do from here and there is not a clear cut answer as to when the right time is to get in. but i think we are closer now than we have been, but this drawdown has been incredibly significant. >> even when you take a look at the ibb, which is what the traders on the panel tonight would like to focus on because just the weighting of it, the holdings, et cetera, et cetera, when you look at the largest components here, do you see these components are near bottom can you say that there is leadership in this group that is ready to turn around, to quote/unquote rescue this etf? >> no. there is no leadership in larger cap biotech and farm that as evidenced by many of these long-term charts amgen, gilead. gilead has been flat for five years. exclude moderna and biontech, which have, obviously, been in the same stocks the past couple of years, you are not left with anything pfizer, you know, 20 years of,
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you know, if you look at -- pull up that chart, it hasn't moved in two decades and so you're left with large cap pharma and large-cap biotech by are not leaders at all. the long-term perspeformance, doesn't leave a lot to be desired, especially for portfolio managers that can own anything f they don't like the first layer of this group, the large cap names in the group, it's a low probability that they want to peek under the hood and pick stocks that are smaller >> you mentioned moderna and pfizer i think maybe our viewers might want to dig into this a little bit more obviously, so much attention on the vaccine and what that means for these stocks you think about a moderna where probably the vaccine is a lot more important versus a more diversified play like pfizer, at that point given the relative moves in the stocks and the rand scape going forward for the vaccine and just the industry in general, where do you think you'd rather be in terms of the two different styles of those companies right now?
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>> well, it's a difficult one. it's, obviously, you are dealing with two stocks that have, in my estimation at least, two, you know, very disparate investor basis. one is momentum and retail driven in moderna and fire departments more health care dedicated. but i have been a disbeliever in the moderna valuation in many respects for a while so i think by default i would rather own fire departments. y dev gone 18 months with a res release or some other piece of news flow from for moderna i think the market wants simplicity we see it all around us and in tech and you guys mentioned crypto and consumer. there is a simplicity factor to moderna makes it athtractive stylistically, having a valuation framework and some sort of ability to look at numbers that make any sort of sense, pfizer. i do understand why some investors continue to gravitate
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towards moderna. >> if you are a viewer looking at ibb and thinking, you know what it doesn't sound like the prospects are very good, what do you tell that person in terms of where this etf, where its components could be in, say, six months to a year >> well, i think so much of that depends on what the risk appetite is. when you look at what investors like today and are they going to stick with the theemts that have been working as large cap tech continues to lead, will we wet this reopening trade in perpetuity that has been many people's trading ideas for the better part of a year. is energy going to continue to work i think you really have to look at the outside influences when you look at whether large cap biotech is going to work when we look at the long-term, you know, even two, three, four-year charts of these companies, none of them look particularly great so it's actdifficult to tell whs going on here. to me it's more of a defensive trade. it's a very low p.e. group i like that. i think that the prospects are still positive
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there is r&d efforts being made every day. there is further consolidation which is going to shore up pipelines. so, yes, at some point the group makes sense. but i understand, you know, why investors are reticent i like the xbi more because i think most of the research and development that's getting the sort of the key focus is happening at these smaller companies. >> jared, great to get your perspective. appreciate it. jared homes. tough to be a biotech analyst these case, tim. when you get an analyst who says you have to look at all the other factors in the market to determine whether or not your group is going higher, that's tough when you're a fundamental analyst. >> yeah. six months ago i would have loolgd at the chart on the ibb and said it's been one of the best long-term charts going. i think you run into, again, i know we're trying to xbi or ibb it i think you have a case where you've got big cap names that
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all have issues growing their top line so look at amgen they have got declining businesses in asthma, cancer and the goal is to extend the duration of the drugs. so i think, you know, in the case of gilead, you have hep c, hiv drugs the story is tomorrow's savior, there is a lot of concern about m&a, chasing the next shiny object some companies need to find growth even though the balance sheets are okay. a news alert out of the s.e.c. let's get to bob pisani who has the details. >> the staff of the s.e.c. has released a long awaited report that focuses on the meme strong craze that speaked in january, particularly the trading around gamestop what caused allthat volatility the report examined institutional accounts that had significant short interest in gamestop and concluded that while short covering was a
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factor, it was a small fraction of the overall buying volume the staff concluded it was positive sentiment, not short covering, that sustained the weeks' long price appreciation in gamestop. they rejected other possible explanations for the price rise, including naked short selling and a so-called gamma squeeze. what, if anything, should be done about all this? the report is long on facts, but short on recommendations for example, the report noted that some brokers, particularly robinhood, experienced margin calls from the clearing house when gamestop's price spiked up. the office suggests shortening the settlement cycle, two days so one day or perhaps less the report also urged the commissioners to consider whether game-like features in trading apps may lead investors to trade more than they would otherwise. on payment for order flow, the report noted that the wholesalesers who executed the orders did so internally and so
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their trades were less viz lk to the wider market short sales, improved reporting of short sales would allow regulators to better track what happens when short sales do occur. investors expecting imminent action from the s.e.c. it's likely to be disappointed this is a staff report that outlines the facts but contains very general recommendations of what the s.e.c. commissioners might do now, melissa, tomorrow 9:35 a.m. eastern time we will have gary gensler on, the chair of the s.e.c., to discuss the findings. for example, people are commenting was there manipulation involved? it does say the report gary gensler has had talking points for month on payment for order flow, gamification of trading. was there harm because of that trading and was payment for order flow part of that harm the report doesn't skocome to a particular conclusions on that i think what we will have here, they will have the report sent to the commission.
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the commission commissioners are going to dab what, if any, rules they might want to enact around it. >> does this make any sense for you to go to $483 a share and say it's just simply the retail buying frenzy that sent it higher and a small fraction was short selling or short covering? >> i think there is probably something clear that could come out of this that will help the general public for example, we need greater clarification on short sales and who is short and maybe much more disclosure on that they seem to believe that a sort of frenzy occurred, essentially. they called it a strong buying sentiment that actually moved things forward i think the bigger concern here is chair gensler has had four or five talking points for months, including payment for order flow and gamification of trading. those are standard comments he makes every time saying we need to look into this. the staff report has had an opportunity to draw a connection and say, payment for order flow was part of the problem and it
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doesn't really conclude that it also doesn't conclude, it points out gamification exists, but doesn't draw a line between what happened in gamestop and gamification of trading and make a clear connection, for example. i think that's going to be the criticism of the report and i think the the s.e.c. probably would say that's not the purpose of this. these reports are really fact-finding missions. they are historical statements of what happened it's going to be up to other people to sort of draw regulatory conclusions and w whether we need rules and things like that, that's the jobs of the commissioners. we will get a comment from him tomorrow about where he is going next with this. >> thank you, bob. bob pisani. karen, what do you make of that and having -- if you're a short seller and you have to report more to the s.e.c., that's not good >> well, it makes sense to me though, right? do you have to disclose on the long side. i know the basis was do you own votes and can you have some say on the outcome, where if you're
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short, you don't have any votes. but i think in the markets it's fair to expect short sellers to disclose their position. i don't know when. do we have that same limit of 5% i am not sure. but that seems to be something that would be very worthwhile. in terms of the short, though, i mean, if you think about great shorts like great squeezes, rather, like porsche/vw, up and down within four days, i can't believe we are still here with a stock in gamestop, whatever it is, i don't know, 180 some-odd today, that's amazing. that's more amazing to me, actually >> right and we have seen that time and time again with the meme stocks. people jump to say this is a flash in pant and here we are. we are still talking about them and the stocks are still elevated jeff, i am curious what your thoughts are on the s.e.c.'s findings i mean, the things we thought were a part of the mechanics of that move hightory 438 end up not to be a part of the mechanics of the move to 483
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>> yeah, i think ultimately you are not going to get some neat story wrapped up in a bow that's what everybody wants it to be. getting to be these reports that, hopefully, continue to push the envelope, whether it's quick he settlement, more transparency this isn't going to be fast moving i think that's stating the obvious. relative to the short sales, i think it was more of the notion of naked short selling and all these things behind the scenes that galvanized this frenzy of buying versus the reality of those things actually taking place or at least taking place to the extent that would actually move the stock it way that it did. i can buy that argument. if i look at gamestop now, again stating the obvious, it looks stuck to me. i mean, it hasn't moved in about a year to karen's point, it's impressive that it held the price level so far what's the catalyst for that next move higher i am not sure. the streaming wars rage on as disney and netflix make headlines today.
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our next guest is breaking down disney's dilemma as well as netflix inking higher. first, zillow dropping the traders on neighborhood watch next don't go anywhere. more "fast money" right after this the cloud would give us more flexibility, but we lose control. ♪ ♪ ♪ should i stay or should i go? ♪ and we need insights across our data silos, but how? ♪ if i go there will be trouble ♪ ♪ ♪ wait, we can stay and go. hpe greenlake is the platform that brings the cloud to us. ♪ should i stay or should i go now? ♪ ♪ ♪ [swords clashing]
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welcome back to "fast money. zillow falling hard today. the stock having the worst day since last november as the company temporarily halts its home buying business diana olick has the details. >> zillow is blaming supply chain issues and a labor shortage i feel like that's all we ever talk about they say that's why the pause, making it more difficult to renovate the homes that they are big. zillow's coo said in a release, we have not been exempt from these marketing capacity issues and we have an operational backlog for renovations and closings pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory buyers like zillow offer homeowners cash to buy direct. the strategy being that homeowners would rather not go through the tedious task of the putting the house on the market
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and paying a commission. they sell it, hopefully, at a profit stocks like open door not reacting much. the ceo of redfin told me they have had supply chain issues for years as well and it sometimes limits the number or types of homes they can purchase, but that they are, quote, wide open for business, he said. and the spokesman for open door says they, too, are still open for business melissa. >> all right thank you. karen, it sounds like a scattered shower issue zillow issue. >> it's curious the others aren't having the same issue i guess we will take them at their word there was that negative publicity a few weeks ago about them buying a bunch of houses and sort of marmarking it up. a supply chain issue i remember when they went into this business. i thought that is a big change to an asset heavy business
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their timing was great it's been a great business for them i understand why the stock is down today it should be assuming that what the problem is, is what they say it is. that could be. i believe them but it's a little curious that others don't have the same problem. >> yeah. guy, what are your thoughts on this >> well, "wall street journal" heard on the street, they pretty much said it's a zillow specific thing. they said poor planning on their part the other thing i take away, go back to the earnings release in august, i think, i mean, the price targets i saw post-earnings between 125 to 195. you have to see a lot of analysts ratchet those price targets down which means they are behind the curve the move to the downside is probably not over. i think you can round trip the entire move from last august when it was the $65 stock to where we are now i think you can see that final ten bucks or so to the downside. >> all right we are just getting parted on "f started on "fast money." here's what's coming up next. >> a streamer slugfest
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disney and netflix back in the ring as the streaming wars rage on the traders are binging this trade next. plus, the future of bitcoin, or futures to be exact the first bitcoin futures etf launching tomorrow so what's next for the crypto craze? you're watching "fast money" live from e sdthnaaq market site in times square. we are back right after this
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today saying it's expected to be the slowest quarter for newest subscriber growth in their coverage universe since the pandemic began this comes as we gear up for netflix earnings tomorrow after the bell shares up ahead of that report so is there trouble brewing in the streaming world? let's bring in rich green field, the co-founder of light shed partners i don't want to ask you a competitor's research report the point here is a broad one, that is that there is not enough content to fuel the growth we have seen for disney plus. would you agree with that, that the cadence of content is too slow to power the growth to which the multiple must, you know, where the multiple makes sense? >> look, we put out a piece earlier today that basically spoke to just that, that essentially disney's losing time spent. so they have grown subscribers they have done an incredible job. what the team at disney has done over the last two years, two years since the launch of disney
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plus, is incredible. consumers have a love of the disney brand they love marvel they love "star wars." there has been a voracious appetite to sign up. but signing up is different than using. and i think the reality is there isn't enough new high-profile content on disney plus they have really tapped into sort of the meat of their -- you know, they really captured their, you know, their market very, very quickly far faster than anyone expected. the question is now how do you keep growing you know, obviously, hulu had good growth, too the question is, disney, unlike other services, certainly unlike netflix, doesn't have the diversity of consent, meaning they have all the marvel fans now, all the "star wars" fans. how do you keep growing? you look at a show like only murderers in the building on hulu and is a great piece of content. why is it not on disney plus trying to build a diversified service is really hard when you are very much sort of siloed into the content verticals that disney is. and then on top of that,
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melissa, i think sort of the decision that the management team made is they weren't going to use their new theatrical films anymore to drive the streaming service. they close to go back to movie theaters unlike putting them directly on disney plus the way hbo is doing this year, disney decided to go back to theaters starting with "shang-chi" back in september. so the fourth quarter is light content-wise so it's not terribly surprising that disney is seeing a slowdown, especially as competition is growing pretty significantly all around them. >> richard, it's karen thanks for being on. when you look at the landscape of streaming, is there any landscape left to grab, and who out there like a paramount plus, you know, do they have a chance or peacock or some of the ones that are smaller? >> look, i say it's early days remember, you have, karen, you have 75 million people paying
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for linear television bundles, whether that's through comcast or charter or directv. there is still 75 million homes that are paying for that, you know, usage is, obviously, outside of sort of the nfl has come down dramatically so as you think about wallet share shifting away from linear legacy cable bundles to all these streaming services, there is a tremendous amount of runway, not to mention look at what's happening overseas in terms of the global opportunity. yes, it's being built out quickly in europe and latin american, but asia still very, very early days. markets like india very much beginning. so i think there is a huge runway i mean, netflix is the biggest of all of them with over 200 million subscribers. i don't think there is any reason why netflix can't be triple the size of where they are over time. in terms of the other upstarts, it really comes down to focus. we just were talking about disney balancing their theatrical business, so their legacy
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theatrical business, with disney plus they put "dancing with the stars" on abc. they put only murders on hulu. like choosing what content goes where is a problem that every single legacy media company has. so when you look at whether we're talking about paramount plus or discovery plus or talking about peacock, it's all about decisions. the management teams have the assets the amount of content at their disposal it's just a matter of whether they want to put all of their -- everything they have into streaming and go, you know, quote/unquote all in, or whether they are trying to balance sort of do some streaming but keep their legacy businesses by -- so that push and pull is very, very hard and like netflix doesn't think about that amazon doesn't think about that. apple doesn't think about that at all >> rich, thank you good to see you. rich green field. tim. never thought about the problem that way it is a difficult thing to balance. where do you put which content
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>> well, i agree with that i think we have priced in the decline of legacy tv and all of the networks, abc, espn, and whatnot. so great point by rich, as sauls. and if you look at netflix, what they don't think about is profitability. they have never really, you know, has always been a cash story. hasn't been profitable and so far it's been working i just simply say look at disney versus netflix as a trade. it's been a remarkably pair trade in terms of volume disney outperformed by 56%, netflix by 50% go back two and a half years netflix outperformed disney by 25% the last three months. i think that probably continues a bit here no one cares about their profitability and i think we priced in the covid pull forward. >> yeah. how do we set up -- quickly, going into earnings tomorrow for netflix? >> i think for netflix probably not great, to be honest with
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you. that's a tremendous run. i think the clever thing is probably take money off the table. that's coming from somebody that thinks netflix is probably -- in terms of disney, you know, the flip side of the disney coin, i think it was september 23rd jpmorgan of all people added it to their focus list with a $220 price target goes to show two sides of every market i think disney actually in the mid 160s if it gets there will get interesting again. cramer is taking the other side of today's disney downgrade. why jim is sticking by this stock. ine up for the newsletter. all the information to sign up on the screen. coming up, the day we've been waiting for the first bitcoin futures etf set to launch tomorrow more on that next when "fast money" returns
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welcome back to "fast money. bitcoin holding above the $61,000 mark as the market gears up for the launch of the first bitcoin futures etf tomorrow does this launch clear the way for more names to enter the field? kate rooney has more on that >> proshares may be the first to market but probably won't be the last there are a group of similar
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futures-based bitcoin etfs waiting in the wings and they could go live by the end of the year tomorrow's debut from proshares. it will hold bitcoin future contracts on we have invesco, vaeck and valkyrie as well on the watch list they have the slight advantage as the first mover it may be a couple of days or weeks. that leaves those other names to c compete on fees potentially or brand awareness. the other big name, grayscale bitcoin trust. the world's largest bitcoin fund with about 3.5% of all global bitcoin supply in that fund. it's been the main on-ramp for investors like cathie wood, for example, to get exposure to crypto grayscale confirming today it plans to convert that fund to a spot etf eventually and ceo michael telling "squawk box" this morning that he expects competitive pressure going forward in they stand ready to reduce fees. one other thing analysts are watching, the grayscale
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discount it used to be a premium. it's been trading at a discount, 15% discount to the price of bitcoin since earlier this year. that's blamed on a six-month lockup period of initial investments in that fund holders aren't able to redeem shares and react to bitcoin's market price in real time. the traders in some cases are buying grayscale, betting the spread would collapse in it is approved as an etf and they are using it as sort of a way to buy bitcoin at a discount. mentalis a. >> thank you. karen, we actually have talked about this in the past, that tis count i wonder what your thoughts are. seems like it would have to trade if it's going to be an etf reflective of the price. >> right this is the kind of thing we talk about, actually the discount, right. i mean, in prior, right, in its prior life before there were other products, it had that premium when bitcoin was in a frenzy and, you know, people would pay over, which i never
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quite understood but i don't know how easy it is going to be for them to convert. but at the discount here, it's practically as wide as it's been, i think 21 or 22 is as wide as it's been. i think it was 18 today. kate mentioned people buying that can you short of the future against it and see if that spread narrows that would seem to be not a super risky bet. you would have to hang on to your gbtc for a while. i think this size of this discount is interesting. >> yeah. jeff >> yeah, i mean, i think that's something investors need to pay attention to in terms of the tracking areas associated with only of these things that are actually owning the cryptocurrency i think that's super important if you look at the past year, bitcoin up over 300%, gray scal up less than 200%. so there is going to be a massive difference when you're not actually holding bitcoin that's important it there will be less of a difference in a futures etf, for
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example. still you are not owning bitcoin. that's important to know it's not going to track the spot price. the holy grail is an etf that invests directly in bitcoin. i think this is a step in that direction, but we are not there yet, and the timing is uncertain. so in terms. narrowing of that discount, the timing is uncertain there, too. coming up, short seller taking aim against a tech giant accusing the company of financial engineering. deilwh wrerntas ene tu
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macy's topping the tape today and soaring. 17.5%. you remember that days ago activist investor took a stake in macy's urging it to spin off the e-commerce unit. the unit of sacks is preparing for an ipo roughly triple pegged this year. i don't know how you figure out a valuation of a company of a unit that is so tightly connected to the parent company. >> yeah, i don't know how you figure out where it happens to sales that are done in the store and then go online for returns or vice versa. i am not, i guess, i can us a
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the sachs model. macy's has dealt i wonder where that goes i think it stays with the sort of old line company. all of that having been said, what a year for macy's i don't own it, but clearly -- maybe jana knew that sachs was considering this ipo good for them. >> 17.5% today i mean, it's gone up at least a few times on the same news day what do you do with the stock? do you hold it >> well, i mean, look again at the 15% short interest and imagine what you're feeling now if you are short, as we talked about earlier in the show. i just think that there is an argument here that, first of all, this is generating free cash flow. it's got intrinsic value with real estate. the sachs benchmark is extraordinary when you think sachs was taken private for about a billion and a half they spun off the e-commerce unit and got an investment, you know, last year from inside
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partners for a $2 billion valuation. when they had $1 billion in sales. two times sales. now they are talking about $6 billion for that same unit. i don't know where sales are, but let's call it, you know, five times sales and so start to impute that upon the e-commerce business at macy's, which is going to be 43% soon you know, the numbers get very interesting and the short interest gets very nervous. >> shares of ibm under pressure today on some comments made by short seller jim chanos right here on cnbc >> what's so fascinating about ibm to us, it's a good example what i teach my class here at wisconsin today about the idea of sometimes the greatest scams are hiding right in plain sight through the use of pro-forma accounting what i wanted to point out to your listeners or viewers is that, you know, ibm is supposed to learn almost $11 this year. for the trailing 12 months they
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have earned less than $9 but the really fascinating thing from our perspective, if you look at ibm's operating earnings and add their ip royalty stream and tax it at a normal 21%, the actual earnings are $6 >> ibm responded firing back telling cnbc in part, ibm never gave an $11 expectation. you can read the statement on cnbc pro guy, we talked a long time about financial engineering in the context of ibm >> and the fact that, well, i mean, if in fact that is what's going on, they did a miserable job because the stocks been at an eight-year down trend we have broken that. but with that said, obviously, it has been an underperformer on a tape that has been magnificent in a company that has not been able to sort of turn things around despite a huge acquisition, obviously, in the
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form of red hat, which you have to wonder at some point does that start to pay dividends. jim chanos does extraordinary work i am sure he is watching now when he puts something out here like this, he is not being glib and he, obviously, did the work to support it. this earnings release this wednesday is going to be as fas mating an ibm release probably in the last ten years based on what jim just said. >> jeff, what one of the greatest scams, some of the great exist scams are hiding in plain sight. that's strong words. how do you feel about ibm? >> very strong words the most interesting thing about ibm to me is that it's actually not cheap. financial engineering or not if you look through history, as expensive as it's been since 2008 they have lost market share across all segments. it's been a tough business shockingly to me, the valuation is not more attractive just given how the stock's performed recently
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it's still a tough story overall. coming up, a killer weekend for amc. how options players are playing this one as they slade the box office this weekend. we are back right after this [uplifting music playing] ♪ i had a dream that someday ♪ ♪ i would just fly, fly away ♪
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a strong weekend surge thanks in part of halloween kills. slaying at the box office. cnbc's parent company comcast owns universal guess would made a trip to the movies no time to tie this weekend. really enjoyed his movie time. this is a picture of a bar by the way. somen usual options activity on amc was spotted. mike joins us to break it down. >> well, a lot of activity i am not sure how unusual it is. amc was the fourth most active single stock option today. and i say that bearing in mind that actually it's usually in the top ten. it is a very popular stock option trading up there with names like apple, even though it's less than 0.001 the size of that
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company. over 50,000 were trading hands for about $1.71 on average t most of this flow was retail the rally that we are seeing in the shares could continue through week's end betting that the stock will be above 44.70 by friday. >> thank you tune into the full show friday 5:30 p.m. eastern time do not miss the first interview with amc chairman and ceo adam aron tomorrow 2:15 p.m. on cnbc. up next, final trades. ♪ ♪ ♪ ♪
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final trade is sponsored by interactive brokers. the professionals' gateway to the world markets. time for the final trade tim. >> i think it takes out that 3650 high. >> karen >> yes, if you have been waiting to buy bitcoin, wait again tomorrow may be a really big by the rumor. >> have a look at prude edges
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here i think the cyclical tone in the market continues 14 analysts covering it, two buy ratings, breaking out you have an eight-month range i think it goes higher. >> guy >> biogen from june until now, ahead of earnings on wednesday >> see you ♪ my mission is simple to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends, i'm just trying to make you some money my job isn't just to entertain you but to educate and teach you. call me at 1-800-743-cnbc or tweet me @jimcramer. can everything go up at the same time like last week short answer, no

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