behind that. quickly on american express, they had their earnings out. a little miss on the revenue line, the stock is down 2.5% the guidance was fine. more analysis on that coming up. and tomorrow morning as well that does it for "closing bell." thanks for tuning in >> have a good night, everyone "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. we start off with netflix reporting earnings moments ago the streaming giant under pressure after missing revenue we'll have full team coverage as we gear up for the conference call which starts in about an hour julia boorstin is working to get reaction gene munster is in los angeles and the chart master is here to give us instant reaction on the stock move we'll check in with the team but right now we'll start with guy netflix is up 50% from december lows and we're giving back just a little, not too much.

>> the international subgrowth is ridiculously growth it's been strong for quite some time it's been pretty consistent moving from the lower left to the upper right in terms of international subgrowth. you've got to admire that. but it's not unlike last quarter where you had a very strong quarter after a stock that's rallied a significant amount and then it sold off i think that's what you're going to see here. i'm actually surprised it's not down more than it is now, will this be a bellwether, sort of it all goes well or poorly when netflix reported last quarter, you had the knee-jerk higher and then within a few weeks the market followed. i think you might see very similar in the weeks to come. >> what is striking is that the stock, as we mentioned at the top, is up 50% from the lows and it's only down 2.8%. >> this is an amazing show by the stock. very resilient, especially a stock that in absolute terms moves 6% or 7% every time they

report i'll leave it to the technical guys and just tell you this stock was as overbought going into these numbers as we'd seen. there's two other times when the stock had an rsi over 80 and you then corrected 15% to 20%. it hasn't been a disaster but just tells you this stock tends to get ahead of itself as someone who's been critical about this company of the valuation, i have to say if you're disappointed on slightly lower bottom line because they're spending more and spending costs are up, the whole reason this stock seems to be doing what it's doing, they're spending tons of money on content and people believe they're competing and don't care about short-term >> and obviously, tim, you cannot poo-poo the fact -- let's just say they have 60 million u.s. subs here they're raising prices 15% you do the math and that's an incremental $1 billion that drops to that bottom line so

that is the most important thing that happened to this company this week. we're going to know in three months if they have churned because of that price index and that's part of the bear story. if you're a bull, you're hopeful that they're able to raise prices like this it's all incremental, drops to the bottom line, helps them offset that negative free cash flow they have from that content spend. >> so is there an operating margin that they could actually reach, right even though they may get there, they very well may, just on valuation i couldn't own it. it's too expensive when we don't know what impact there will be from considerable competition that is really only -- it hasn't even really begun yet. >> can i ask a question on valuation. what i think is interesting about this company is relative to itself, it's actually cheaper than it's ever been because they're earning out of it. so does that matter to you on a delta 2 evaluation that was awful when you look at stocks? >> it matters just because it was something more astronomical

at a prior point it gives me not much of a fundamental floor. they're moving along in the right direction. i have every turn th last several years, they have done things that i was surprised. the one was moving to content. i thought no way could they become a movie content behemoth. >> look at bird box. less than a hollywood movie. they have gotten $45 million -- >> what did you call it? >> bird box. >> with a blindfold on. >> there there's a clip does this refresh your memory? >> i have no idea what bird box is. >> that's less than the price of a hollywood movie. >> if you're a bear on the notion they spent on original content, that original content makes up less than 10% of their entire catalog the big thing about 2019

excluding the price increase is disney has already told you they're taking their best content off of it. time warner is going to do the same thing so you have all these streaming systems. over the next year they're going to be more reliant on that spend to keep people there that's when you may see churn start to ramp up, especially when there's other competing services that people are spending $14 or $15 a month for. >> do you think they'll gain some traction? >> that's the bear story it's one of the things i cling to every once in a while when i conceive of a short idea in it, but they seem to work through it. >> yeah, they work through it and might work through it again. again, you said it, the stock 20 from 250 to 350 pretty much in a straight line over a month this quarter was good, we acknowledged the subgrowth they were rewarded for that price add on tuesday, so that manifested itself in the stock now you're coming down to brass tacks. the brass tacks is negative $3 billion cash flow, at some point the market cares

i love the netflix story they're starting to mention competition. they're talking about it now what does it mean? you could have a 50% correction in the stock, you've seen it before from 250 to 350. >> and the story is still alive administrator and the story is still alive. >> the interesting thing, when they mention competition, it's not just the cable providers and other streaming services, they said we compete with and lose to fortnite more than hbo so the competition is a much wider net than the other streaming services or other channels out there. it's just competition for the eyeballs there so you're getting it from the video game sector as well. >> yeah, we see that also in facebook and whatever. they're losing screen time. >> right. >> to fortnite as well i can't help to think that fortnite three months from now will not have the impact. >> there will be something else. >> haven't we suggested that disney or cbs or even apple, someone should be buying an ea or a take 2 or someone we don't

know about tencent has been doing this but the media companies, this is content, interactive sports. >> remember pokemon go, that was this huge thing two or three years ago. they just raised $250 million the other day. they're going to basically launch a new multi-player game on harry potter. the same nerds who were netflixing and whatever are playing harry potter games and you only have two eyeballs, right? it's serious competition and they're seriously funded. >> you know -- >> guy, defend the nerds right now. >> thursday night is when i go home and put my hat on and play harry potter with my friends, it's brilliant when i say 50% correction, let me be clear. it's a 50% correction of the move we've seen from 250 to 350, which dan nathan gets you $300. >> what are some outstanding questions that you all have this quarter? >> the questions i have are fresh update on when will you be

cash flow positive we thought 2018 -- we were guided 2018 was the year the burn was over. does this tell you that they feel more pressure i think they do. they have to compete more on content. >> let's bring in gene munster gene, what did you make of the quarter and what is this change in how they report subs? >> so i haven't got through the detail on the mechanics of the change, but the net of this is they beat the sub number by 15%. the initial take was they slightly missed it but they actually did exceed it that's an important part is they're continuing to add subs the bigger questions related to the call tonight, i think somewhat related to tim's question too, but just around the pricing and separately the content spend, i was in los angeles yesterday and met with a couple of executives from the industry that are working closely with apple and separately netflix and amazon,

all the players. they talked about the content spend is effectively going to double for doing these productions, this original content in the next two years. i think those type of elements need to be teased out in the call. >> okay. what are some of the other remaining questions that you have, gene, about this quarter what is striking to me and we were discussing this on the desk is the stock reaction. for the past ten quarters the average move on the back of earnings has been plus or minus 8% or so this is a relatively muted move with a stock that's up 50% from its lows going into the print. >> i think that people who are optimistic about the netflix story, i'm less optimistic longer term about it but i think those people should feel good about down just 2% or 3% it still trades at an 85 times earnings multiple. i know earnings isn't the key here amazon trades at 65 times so

this is measurably more expensive than amazon. what that means is you need to continue to have some substantial upside if you would have seen these numbers before they came out, i would have bet the stock would be down a little more than they are right now so people who are supportive should be supported. >> when apple changed the way helper doing things, stock went from 210 to 140, 145 should netflix be punished similarly? >> right now i think that a lot of people are still, present company included, trying to figure out exactly what the mechanics of this change were. and so that reaction may ultimately be coming in the case of apple, the reason why the reaction was so swift, it was just a very easy thing. it was relative quick to get your head around it. i think this case might be a little bit different but i think it does speak to a difference in the way investors view a story like apple versus

these higher growth stories. i think that they're much more lenient on negative news when it comes to stories like amazon or netflix. >> how do you figure out how to value something like this? >> so you cannot look at an earnings ratio because there's really no historical justification. i think what investors need to do is think about how disruptive can these companies be think about other areas that they can change. i think if you look at the fang stocks, several of them, if you think about amazon, apple, google, they will all change the world dramatically, so it's easier to build faces for higher multiples for those stocks, even though apple has been penalized. in the case of netflix, they're not going to change the world again. their business model is not going to be different. i struggle with the question about how to value netflix while i think they're doing a lot of good in terms of capturing broadcast eyeballs, i do not think this company should have an outsized multiple given

they probably aren't going to make a dramatic change to our lives in the next decade. >> gene, you said you were not extremely positive on the netflix story going forward. i'm wondering whatever the reason may be, are you seeing signs of that appear are there cracks in the story that you're seeing in this quarterly report >> there's two things. first is impressive price increase the speed of the price increase was a little faster than happened it was just under two years and most people think it would be two to three years that's coming from a sign of strength so i understand why people are optimistic. every time you take a step forward like that, it sets the bar higher apple in 2017 raised the pricing and that became a near term, six, nine months positive impact on the stock but created a higher par for the future. even though there is pricing leverage with netflix, i think that bar got higher. that's one piece the second is this competition is going to be more impactful in

the next two years if we think about cbs, disney, prime, apple, all these, people will have multiple subscriptions, i want to be clear about that the issue isn't whether they have multiple subscriptions, the issue is more competition can have a negative impact on the multiple as investors think about different options. the fortnite comment really jumped out at me i think that's another x factor that impacts our longer term the company needs to navigate that shift in terms of content for the younger audience. >> what's your gradene, gene >> we're going to give it a "b." for this kind of multiple stock you needed to do more to earn a higher grade. >> gene munster, thank you, good to see you. let's get instant reaction to netflix' earnings chart master carter is over at the plasma. >> you talked on the key word, melissa, it's muted. this is a high beta stock, beta

of 1.5 times the market. you see here 341, it started at 337, so it's a big old unch. let's look at where levels that matter are for the stock and what bulls and bears have been anticipating what i wanted to anticipate of course is its all-time high. the implied move was going to be about 8% that would have taken you into the high 300s, but we know that's not what's going to happen tomorrow. what really is happening, and, tim, you referred to it, we have an overbought condition. whether you use a price oscilla oscillator, if you look at the next chart, you can do simple trend work netflix is stopping, it will turn out, quite precisely at this downtrend line where it has stopped so a little poke above but what is going to happen tomorrow is that the stock will start to vacillate and/or work lower at that trend line so a rally to an inherently difficult level. the news is out and we're seeing what's happening post market

the bet is netflix has run out of gas and now it's neither bullish or bearish it belongs here and it's likely to trade in a range and do nothing. >> carter, why don't you come on over she shelby will bring a chair over. >> it's late in the "a" block. i didn't know that we had time for him. >> there is time >> so if netflix hangs in there, because i think the knock on this rally is that we've come too far too fast, but if netflix is able to hang in there, does that change how you think of the rebound off the december lows. >> for equities in general >> maybe tech in particular. >> the issue is when you have a sharp rebound, think the only way you get that, it's predicated on a sharp sell it's elemental so which is the primary data point and the secondary. is the rebound primary or the sell-off primary primary data point is the sell-off and the secondary sell-off is the ricochet now, at this point do you start

to make the bet that a lot of the moves, whether it's bac yesterday or netflix today, that whatever potential did exist has been exploited clearly there was potential down in the lows in december. now, money has exploited that potential. i think a great deal of the potential has been exploited >> along those lines, you were talking earlier today and mentioned taiwan semi. taiwan semi had bad news the sector didn't sell off again on that same bad news. morgan stanley had a terrible quarter. the banks overall didn't sell off and actually held in it wasn't an excuse for investors give back the gains that they made in the financials week to date is that a good sign? >> yes the answer is yes, it's a good sign, but what is it predicated on i think it's predicated on the fact that they think, they being traders, investors, machines, think there will be some accord between the united states and chinese, which i'm not all that optimistic about, and think this fed has turned dovish from being hawkish. >> it's simpler than that.

when you think about the market collapsing in december, it's investors being panicked with one month left or two weeks left to be kind of have their performance. then when you think about early january, you have all year to make your performance. so you're a bit more risk averse in mid-december than you would be in early january. that's the way i see it. >> really quick here, i think this is about an economy we were very, very concerned about in december and the data points were telling you that. we've had banks -- look, record earnings out of these banks. listen to the airlines telling you business bookings are up businesses don't send people out to the other side of the world or the other side of the country if they're worried or if their business is poor i think the airlines and the banks gave everybody a sense of confidence that they overreacted about the economy at least in the month of december for sure. >> carter will hang out until later on in the show. still ahead, we'll have more on a disappointing quarter for netflix. what it means for the market. plus, a wild day for docks the dow soaring on reports the

u.s. could ease china tariffs but quickly falling. the traders will tell you how to trade the whiplash. home depot and lowe's both under pressure we'll tell you why wall street is getting nervous about these two stocks we're live from times square in new york city. much more "fast money" right after this and saying, "really?" so capital one is building something completely new. capital one cafes. inviting places with people here to help you, not sell you. and savings and checking accounts with no fees or minimums. because that's how it should be. you can open one from right here or anywhere in 5 minutes. seriously, 5 minutes... this is banking reimagined. what's in your wallet? with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month.

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welcome back to "fast money. talk with a buzz kill for the home improvement stocks. low's and home depot both

getting hurt after they think disapointing forecasts could spill over to these retailers. could there be pain ahead? >> well, it's not good sherwin-williams data isn't good i do want to point out home depot doesn't sell sherwin-williams but they do sell behr, they do sell painting they aren't seeing that in their paint business there was the jpmorgan piece out today where they lowered home depot slightly from 205 to 203 >> not much. >> so that's not a big deal. i like home depot. i used to like lowe's more given how far home depot has come in, the differential between the two is -- home depot should have a premium multiple it trades at just a tad under 17 times earnings i don't know what's going to happen with housing, but i like this i like also that they're spending a lot of money. so these are earnings post

spend. and i think that they have done a good job in the past allocating resources to spend and having a good return on that. >> maybe what sherwin-williams said was not all bad because they said they saw a rebound happening december into january. home depot and lowe's report at the end of the january so they do have time to capture part of that rebound. >> i don't think there's any mystery that the housing market is struggling on a couple of different fronts some home depot and lowe's to me are in a very solid position in terms of they are not overstored the floor space is significantly lower than other big box stores. they live in a different world home depot's progress in pro and in the money they spend as karen points out into technology and embedded logistics and procurement, this company is in a very good position. >> this is an interesting conversation it reminds me of us talking about u.p.s. and fedex last night. not that there are similarities between what they are, but what

they mean possibly to extrapolate a little bit one of the things from the price action, last night we were all in agreement that the bounce in u.p.s. and fedex has been just pitiful relative to how much they sold off. i think you can make the same case for home depot here it's kind of really disappointing, down 20% from last year's highs. to me these are the names that you want to focus on when we start selling off again, they may lead to the downside. >> home depot is a retailer. retailers have gotten bludgeoned home depot gets caught up in that maelstrom of things >> for more on home depot and where the stock is heading go to tradingnation.cnbc.com i'm melissa lee. here's what else is coming up on "fast. >> fomo, the fear of missing out. >> and that might be exactly

what's driving this market rally. but don't be scared. a top technician will tell you how to catch the run plus -- the facebook haters are at it again. but could this week's "time" magazine's cover be a gn tsihe worst is over? we will explain. much more "fast money" after this

welcome back to "fast money. the dow officially out of a correction after a wild day for the markets and conflicting reports on the trade war sparking wall street whiplash. bob pisani is at the new york stock exchange to break it all down bob, what a roller coaster today. >> and it's still not clear what's going on. the s&p rose more than 20 points late in the day on reports the u.s. is considering lifting tariffs on chinese imports to give beijing a reason to make deeper concessions in ongoing trade talks between the two countries. treasury secretary steve mnuchin proposed lifting all or some of the tariffs. this is according to "the wall street journal" which reported on this in the middle of the day

today, citing people close to the matter the goal is to push forward trade talks and get china's support for longer term reform u.s. trade representative robert lighthizer, is resisting the idea worried it could be considered a sign of weakness. stocks came off their highs shortly thereafter, as our white house correspondent, eamon javers, said sources told him there was no talk of lifting tariffs now. so even before the middle of the day, stocks were drifting higher that's the key story right now the markets have a new fear, i'm calling it fomo, fear of missing out on the rally this time first and most importantly, the fear that earnings growth would go to zero in 2019 has largely abated earnings expectations are indeed lower, but most are still expecting gains in the mid-single digits. you see 6.1% today second, the market is considerably cheaper than a few months ago even with a 10% rally, the s&p

is trading 15 times 2019 earnings that's at the low end of the historic range and well below the roughly 17 to 18 level we were at during the highs of last year finally, there is fomo, fear of missing out with the s&p unexpectedly up 5% almost in the first half of the month, fund managers are again underperforming. those fund managers, remember, underperformed last year in the down market. now the opposite has happened and they can't afford to underperform in an up market, getting dragged back in. back to you, melissa. >> all right, bob, thank you bob pisani from the new york stock exchange given all this trade talk back and forth, this truly safe to buy these dips and what do you make of this notion that there is fomo at this early stage in the year >> i think there is. >> i think there absolutely is. >> to me if woegt another 20 points on the s&p, and we're right at the level where it's supposed to sell off at the 50-day, but if you get through this, most people will say oh,

boy, i thought we were going to correct right here the last three or four days we've been grinding up against that for four or five days this is a positive and constructive sign. banks, airlines telling you the economy is not so bad. that's fomo. >> to me, today highlights it. the number one thing out there is trade it is by far and away the most important thing. because if we do get a trade deal, we have confidence resuming among ceos who are willing to spend, and that's what's been weighing down the markets. that's more important than the fed. >> with the s&p 500 up nearly 12% from the december lows, our next guest has the ultimate trades to catch up on this rally. let's head back to the plasma where carter worth is. >> let's look at the s&p and then a few catch-up trades the symmetry is what's so remarkable if you were just to look at the low there at christmas, look at this move here and where we were at that point, it is literally the same number of days down and

same number of days up what is obvious is we are back to a very difficult level. you'll see this in many chart presentations and in that sense it's obvious to all, but it is what it is a rally to a level where considerable overhead supply comes into play. people who bought poorly, who suffered a lot and nowhave the chance to recoup losses and get their money back not only is there memory from above, there's memory from below. whoever nailed it at the bottom, when you have quick gains like that, they itch to take those gains. let's move to another chart and see what we can look at from here let me clear these what you're going to see is a line as i drew it. an inherently difficult level. could you press higher yes. but every level from here is hard fought. i think this is as good a point to harvest gains as any. if i drew a line over the past year, now we get into where there is all of this, a year of

supply not likely to work higher with ease in fact the higher it goes, the more vulnerable it is to profit taking and then finally what we have is just how steep, and i've tried to change the scale here a little bit, and where the overhead supply on a very immediate basis comes into play. so moving forward, take a look at a few individual securities constellation brands is down 30% to 40% at this point constellation versus the s&p has throwback potential. another instance of this, take a look at industrial, united technologies again, plotted versus the s&p. here i think you're going to get convergence, one versus the other. whether they both go up but utx

goes up more, either way utx being the choice finally take a look at fedex an extreme situation here too, meaning there's a lot of beta in this stock you see that it overshoots we think this is an undershoot just as there was to some extent mean reversion this way, the bet is there's going to be a bit of mean reversion this way. there are a lot of others but these are as good as any. >> carter, come back over. this could be the first time in "fast money" history where i've asked the same guest over twice in one show. i'm just going to let dan ask you a question about fedex because he was just poo-pooing that stock >> so one of the things that struck me about that whole presentation is how precise those support and resistance levels have been last year was a very range-bound year then when they broke, they

broke. all these stocks that you have, there's enclosuclear sailing ifs reason to go back up back to those breakdown levels you may get those 10% levels but is that it is that as good as it gets >> that gets back to the issue have equities been topping the better part of a year? they have. equities peaked a yoreear ago in january. even though the s&p made highs in september and october, the financials never made a high. >> it was all maga. >> semis never made a high. >> materials never made a high staples. basically what you had was a thinning market, bifurcation that was resolved as you know. there was not synchronized global growth. what there was all within about 72 hours,ic wi iequities are hi, crude oil is $79 a barrel and rates are at 330 out of nowhere, equities plunge 20%. oil drops from $79 to $42 and ten-year money goes from 3.20 to

2.52 is that a good reset or is that a major hit that ultimately foreshadows other things to come >> i don't know. can i ask you a different question these are such fundamental questions. >> they're charts. those are simultaneous -- this never happened before. >> so you have this level and it gets back to 2650. how much of the money is worried about getting back to that level, has that as a peg, that was their cost basis, something. how much of the buying down at the bottom cares about that level? >> a ton of it so there's only two kinds of buying there's machine buying and people who don't look at machines or are doing it on their own, as a mutual fund manager or individual retail investor supply overhead is a very powerful principle and has been in effect for hundreds of years. if you buy something at 30 and they give you 50, most people say that's the great sin, they give it up when they should stay

because it could go a lot more why give up bank of america? you'd stay with it, right? when you return to that level, the emotions get involved. they want to book it or the people who watch bank of america literally destroy them and think they have to sell their home and my god, i got my money back. it's the definition of likely to be hard fought from here a lot of people and a lot of machines are very cognizant of cost basis administrator carter, thank you. which of the three catch-up trades do you like >> can i do my own >> sure, that's great. >> is this a game? we played trade it or fade it which i think i figured out and i faded exxon mole i sa mobile now it's pushing towards 71. they report on february 1st. oil seems to have found some sort of a bottom here. if the dollar will continue to potentially weaken, you should

see continued strength the commodities, maybe you see exxonmobil continue to rally into earnings so that's my catch-up trade. >> what is yours >> fedex and constellation are names i've been buying i was a little early on fedex. dan talked about its underperformance look, what outperformed today? transports look at the iyt. if you're getting some sense of confidence, that's a balance sheet, that's a company i believe in on constellation, they're still best in class. this company is very cheap relative to itself >> all right. let's check on our big earnings mover this hour netflix near after hour lows american press is down 2% or so. we'll bring you all the headlines moving these stocks. plus facebook under fire, gracing the cover of "time" magazine so why did the stock close the erod traders have some clues. much more "fast" still ahead by people? uh... correct! you don't have to choose, 'cause, uh... oh!

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welcome back to "fast money. we've got an earnings alert. american express falling after hours. let's get to deidre in san francisco with more. >> on one hand amex is seeing higher card members spending and borrowing speaking to the strength of the consumer but seeing higher provisions and expenses which are weighing on shares in extended trade on the analyst call, he's optimistic on the year ahead but also alluding to some of the macro uncertainties.

>> our growth was broad based among consumers and businesses and it was well balanced across geographies and business lines while there are mixed signals in the political and economic environment, based on what we see in the business, we are starting 2019 from a position of strength >> one of the biggest mixed political and economic signals ahead, the u.s./china relationship i thought it was interesting that squeri noted amex is the first foreign company with approval to process domestic transactions he said it has the potential to give amex first mover advantage. progress has been very slow. now china/u.s. trade tensions could further lengthen that timeline even if they get first mover advantage against visa and mastercard, it will have to contend with ali pay and tencent's we chat pay.

>> deidre, thank you karen, what did you make of this quarter and this 2% decline? >> i mean it's fine. the stocks had a nice run back until very recently. it's fine. it's not expensive i'm just -- i don't know, i'm sort of lukewarm on it the macro pressures, talk about how expensive it is to gain customers and then of course you have a little bit of credit particula tick-up. >> we all know who you're not lukewarm on, jamie dimon. >> i love jamie dimon. >> kind of rhetorical. i was listening to what he said about their quarter. their loss provisions did go up. he said their moloan book is gog up but expenses are going down amex said their expenses went up >> i still love jamie dimon. >> it's not about that love affair my point is they're having the loss provisions go up and expenses go up and the stock is

being punished we're talking about precise, technical levels look where the stock got rejected at, $100. that was a huge support level last year. >> amex is increasing their loan growth, so loans outstanding were up 13% year on year so the question is do you want that exposure in your portfolio or do you want exposure with mastercard or visa. >> which i have. mastercard is like a 30 multiple, right? it's a totally different -- this is a 12, 13. >> but is your question asking would you want to be concerned if credit is turning. >> yes. >> this is a company to be more aggressive and this is where many have failed before them so whether they will or not. they just guided 8% to 10% revenue growth in 2019 those are solid numbers relative to what they had guided. i think that's a reaffirmation but you're right look at the life insurance trade. anything that's got extra credit exposure and extra leverage was destroyed and in fact

underperforms. >> quick, would you rather >> it means i have to pick between two different companies and melissa lee -- i'm just give the rules. >> axp or v, visa? >> i would say v and ma for the reasons tim cited. american express at 12 times, the credit risk is priced into the multiple, but i think credit is turning so i'd rather be in the transaction. netflix lower after reporting earnings the conference call is about to kick off. plus facebook soaring more than 20% off its december lows and there is one under-the-radar indicator that could signal the t is behind it we'll explain when "fast money" returns.

welcome back facebook on the cover of "time" magazine for all the wrong reasons. tim cook an early facebook backer, roger mcna me calling for regulation the stock is up higher 13% so far this year. is this a case of the magazine cover indicator signaling that the worst may actually be over for facebook dan. >> the last time we were focused on a magazine cover for facebook was back in september 2012 where barons said is it worth $15 and the answer was no. the main reason why you're staying away from facebook is fear of federal regulation, then

you're probably thinking about it wrong when you think about the fact that the government is partially shut down right now and with no end in sight and all the other problems they have, they're probably not going to get around to facebook any time soon. >> karen >> it's funny to me. "time" magazine has so many times called the wrong thing, the housing boom at the very, very top, the internet bubble. it's such an old school kind of medium to give this message. so there were a few points that were interesting, but i think it's starting to stop trading down on the same bad news over and over. >> right although we should put that 13% move in context, because we learned yesterday that the average stock is up 13%. >> and you were incredulous. >> because it seems crazy. but so is facebook. >> well, i think in facebook's case, though, look, we know that they have the weight of the world in terms of regulation and also i think it's more really the perception among the users that's to me what i worry about. i worry about a company that

can't tell you how to value the cost to improve their business that's what worries me again, i don't think this company is going out of business i think they have an enormously profitable business. but i think the multiple until proven otherwise is a function of the quality of the management and the sense of corporate governance risk. >> traded up basically to where the stock was after mr. zuckerberg testified in march in front of senate. that's where it should stop. that's where i think it will stop i think as we approach earnings, to tim's point, i think it's going to roll over an head back down. >> one trader thinks the worst could be behind facebook dan, why don't you tell us what you saw. >> sure, mel there's some interesting options action today in facebook call volume was two times that of puts. it's called risk reversal where a trader sells a money put, buys it out of the money call and they're creating a bullish structure. the trade in particular was a march expiration when facebook was trading at $147. the trader sold 2,000 of the

march 1, 125 puts and used the proceeds to finance the purchase of 2,000 of the march 1 70 calls. that makes money on march expiration above 170 worst is the stock is 125 or lower. so what's really interesting to me about this trade structure is there's this huge wide range, about 30%, where on march expiration there's no gain or loss these are the sorts of trades that you might put on if you're trying to just get away from some slippage of an entry price after a 13% rally like mel just said about it. so let's just go to the chart real quickly here and think about some of these levels here. obviously that was the high from last summer. the high has been in a very, very steady downtrend. it's gone right back up to some interesting support here right near 150 bucks so just like guy said, expectations are getting high into the print they report on january 30th. the options market right now is

implying about a $12 move in either direction between now and february 1st that's a pretty decent-size move but at some point i think it's really important to remember that at one point last year, earnings expectations for 2019 were supposed to grow like 20% right now expectations are for them to be flat over year on a 24% revenue growth that's the expectations. to me at some point sentiment might be bad enough in this one. >> for more options action check out the show tomorrow 5:30 eastern. we are ten minutes away from the netflix earnings call. that stock is down around 4% we'll tell you what you can expect. plus, jim cramer says a number of market darlings look cheap into their reports find out which names he would be yi athbungt e top of the hour. much more "fast" still ahead (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game.

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people are watching certain netflix shows and movies, including 80 million households who watched "bird box" and 40 million who watched two new series in their first four weeks. we can expect to hear plenty of questions about what those numbers mean for netflix' growth going forward. here are three things to watch for on the upcoming earnings call first, the impact of the price hike netflix announced tuesday we can expect analysts to ask questions about whether there's any concern it could slow conversion from free trials or drive current subscribers to drop the service and how frequently price hikes are coming considering the last one was 15 months ago. second, the competitive landscape. hastings talks in his letter to shareholders about competition saying they compete more with video game fortnite than hbo he said their focus is not on disney plus or amazon, but rather on improving their content. with disney plus and at&t's streaming services launching this year plus another streaming service from nbc universal launching next year, hastings

could be pressed on not just competition f viewers and subscription dollars but those media giants continuing to pull back their content from netflix. third, content spending. hastings hasn't given any guidance on how much the company plans to spend on content this year after spending as much as $8 billion last year it would make sense that netflix would be spending more this year the question is just how much more melissa, back over to you. >> julia, thank you. julia boorstin in los angeles. a lot of questions going into this presentation. i think the spend is going to be a huge one because we haven't heard anything about that. so they're hiking prices are they going to be spending more >> and negative $3 billion free cash flow is the problem competition is obviously -- and i'll say this. gene munster, who was on before, gave the grade a "b" and that's fine now the important verbal portion of the exam takes place and they better not flag that because that could take it down. >> was that another portion of the exercise >> sort of like that. >> i was thinking like --

>> i think reed hastings has proven over the years to be pretty adept at handling wall street and their questions the truth is right now, though, is really that move. it's that move from 260 to 353 so i can't imagine, though, there's anything they're going to be able to describe in the call that's going to make it go back up, you know, and make its way towards 400 in the next juuple of weeks. i st don't see it. up next, final trades. mom and dad got a new car. it's not theirs, it's mine. the rx350l with three rows for up to seven passengers. lease the 2019 rx350 for $449 a month for 36 months. experience amazing at your lexus dealer. with a $500,000 life insurance policy. how much do you think it cost him?

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it is final trade time let's go around the horn tim seymour. >> another correct point, emerging market, eem has broken safe low above the 100 day i've been layering in. stay there. >> karen. >> fedex, i own it from higher, i like it. it really has not bounced back significantly. i think when they released mid-december it was as bad as it could be i think it will come up better than that. >> here's a stock that already caught up, it was netflix. guy has been all over this the last couple of weeks thinking you're going to have a move back here but i would not chase it. i think you'll see it back to his level, 300. >> dan -- i'm sorry, guy >> she's like "bird box" on her

brain. >> cbs we had an upgrade today. moffitt nathanson, we have him on from time to time you know what, valuation is compelling char sam >> that does it until tomorrow "mad money" starts right now 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 make friends. i'm just trying to make you some money. my job is not just to entertain, but to educate so call me at 1-800-743-cnbc too cheap. i just keep hearing this market is too cheap, that it's a coiled spring ready to explode higher on any good news, light reports that w