>> david, morgan, you have a good weekend, too. see you on monday. welcome to "squawk alley." it is a summer friday so you're not seeing huge swings, but a lot of interesting narratives at work mainly whether or not the netflix categorizes growth, cyclicals and value. >> i tell you i'm skeptical, though netflix lost their gains for july, but it is still up nicely. this market, to me, seemed to be saying investors seem to be saying that we expect the rich to get richer in the nasdaq and the s&p 500. the big tech stocks, or just looking at the market itself versus what is happening on main street

netflix, as the richest is the streaming world, still expected to get richer than many of it's competitors, academy i think we have to put this earnings report into context >> at the same time, john, i wonder if net flix is a pretender of what is to come it has been one of the great work from home, stay at home plays, and we have earnings coming up. really this week you have seen some names take a breather zoom is down more than 10% this week these have been some of the really outstanding performer this is year and they're taking a leg down so as with netflix it showed gains came earlier this year. could they really keep up that momentum

i think investors are taking stock of that right now. >> that is a fair point, but i think how much of the trends that we have seen are going to stick? zoom has given up some, but it is not a ton i know that i have changed so much of my work and productivity patterns around some of the trends, i don't think that i'm going to switch back on a lot of this stuff i think zoom is a fine example and i know that we'll talk more about that this hour >> you're right, john, and it's not just the choices that you're making, but the choices that our bosses are making. i'm thinking of some announcement this is week of major companies saying our workers are not coming back for the duration of the year, right? that is going to have an impact

on how much of these habits stick. >> yes, these trends may be here to stay, but these valuations are getting frothy and going back to zoom perhaps the next question is where is the business going. does it go beyond video conferencing this week zoom saying they're getting into the hardware game is that a game changer for this company? so i just think the valuations will be questioned i agree. is here to stay, some of the trends, but now they have to justify them >> i saw that little video conferencing machine and they had widespread cameras i'm still thinking about it for now, from the video conferencing, so content, let's

get to julia with a closer look at netflix's quarter >>they are down about 5% this morning after they reported the biggest earnings miss and they forecasted the addition of 2.5 million in the third quarter that is the weakest forecast in four years, but they stressed their confidence over the next decade particularly when it comes to international growth. he also praised ability to get production restarted around the world saying they will have enough continent. >> we want so many hits that you can go hit to hit to hit and never have to think about any of the other services we want to be like your primary, your best friend, the one you turn to. of course occasionally there is

ham hamilton and you'll go somewhere else for a film, but we want to just always please you >> and a content chief is being promoted along with hastings this is a true sign of net flix netflix being a catalyst saying they see subdued subscriber growth and in the first half of the year and investor interest in netflix as a stay at home winner we counted four analysts lowering price targets and five raising their price targets. this is where analysts are still largely bullish. >> what should we make of this move to make ted co-ceo and reid

hastings saying he will stick around for another decade. if he goes to executive chairman, does it really matter who is ceo >> look, last night he did say he was going to stick around for a decade i think that was because sometimes when you bring on a coc co-ceo and founder, had could be that he was planning a an exit. i think he has a huge amount of power and a huge amount of power in hollywood he is the one deciding what the content is on this platform. it is no longer a dvd by mail company. it is creating and licensing original content now as both of these men think about what future of the company looks like it does make sense to

elevate someone from a contact background it is really just a sign of the times. >> i love that the company talked about competition, but it was interesting who they pulled out. what did that tell you about who they are looking a in the landscape of streaming giants right now. >> i was truck by name checking tick took tiktok in particular they say we may be dominant, but look, there are still opportunities for start ups to grow and gain market share and change the way that people consume content. i think tiktok is considered a new format in the way that people are sharing and consuming content. and to your question about qu

quibbi netflix is more for your living room, but it just has not taken off the way that many others hoped. and not drawing the attention of hastings, at least not today. >> even if the albanian army can't pay attention, but we can't quit them out. >> certainly not >> all right, let's drill down on more of the stay at home stock that's are continuing to get a lot of investor attention. joining us now, founder and managing partner at full cycle happy friday morning, good to see you. >> good morning. good to see you again, thank you for having me. >> one of your top picks is goom and -- zoom we were just talking about hoch of the ascendance is hype

where do you think their value really lies going forward? >> we all know that zoom changed the world, right we have every ceo of every company in the world has -- is shifting their travel budget because now we know we can stay home and conduct our business and i don't see that changing any time soon. we know that we can advance most tran tra transactions without face to face interactions. i think they will do a good job building a mote by creating a closed eco system. we all know how important these

communications will be in life. >> where do you view their competitive advantaitive advant but they captured some kind of lightning in a bottle. how will that translate into hardware >> so yes, we had video conferencing for a long time skype dropped the ball they made it seamless. and as long as they stay ahead of the curve and tighten the breadth of this eco system, they will stay in it. and i'm sure they will just raise the white flag and make an offering so you know they're here to

stay >> these valuations, you think there could be interest for a purchase >> everyone is playing with f funny money at this point. i don't know if you're young enough or old enough to have been there around the first dot com crash, the traders were all first time retail investors and that is happening again. and acquisitions are happening all of the time. it is basically free funny money. >> i was watching it up close reporting in silicon valley at the end of 99 and the beginning of 2000. tell me how you see the trends unfolding in this pandemic as we hope to come out of it and it's impact on different classes of stocks just in the last hour we were talking to the chief operating

officer of shopify it is a company that turned the model on it's head on a way that ebay hoped to long ago but did not succeed in where do you see opportunity and innovation pushing forward >> so interesting, i'm not going to talk about the tough we talk about like zoom and the airline industries, but i thought i would point out a few we, sometn like athleisure companies. we have all seen people running around, clunking around our calls, so business afire has changed. so like the group that owns lane bryant and ann taylor. they will have a hard time with

changing 76% of our country has gained up to 16 pounds once -- and we're still scared to go to the gym and we're not going to go to the gym, but what we will do when we convert part of our home into a gym is jenny craig, they will all see a resurgence when you see two thirds of the nation trying to lose weight. it is making the stocks look small. >> go ahead and finish your thought, blue apron, that would be quite a come back at this point. >> they were at the brink, and the covid situation has brought them back and they have a lot of cash on reserves and a chance to

pivot. and you know i think that if they capitalize on the weight lost tress that is going to come, they will do a great job if they associate themselves with it. always looking into the future >> thank you for having me >> when we come back, we'll talk about what is next for airlines in the midst of this stock slump, and a pretty tough couple weeks. some of the big earnings next week from united, american, and sohwt ene meac introducing stocks by the slice from fidelity.

now you can trade stocks and etfs for any amount you choose instead of buying by the share. all with no commissions. stocks by the slice from fidelity. get your slice today.

stocks by the slice from fidelity. save without even leaving your house. just keep your phone and switch to xfinity mobile. you can get it by ordering a free sim card online. once you activate, you only have to pay for the data you need, starting at just $15 a month. there are no term contracts, no activation fees, and no credit check on the first two lines. get a $50 prepaid card when you switch. 5g is now included with all new data options. switch and save hundreds. xfinity mobile.

united, american, and southwest all set to report next week as the stocks look to rebound in 2020. good morning >> good morning. >> so is there any good news on the horizon for these stocks we watched the moves that united is trying to make with the pilots union trying to get flexibility, is that hope snfl. >> yes it has been so much bad news for the past four or five months that just having these little

wins is pretty amazing to me at this point but yeah, you know, you don't want to furlough people if you don't have to, obviously, but the industry is going to be about half the side at the end of this year than it was at the beginning of the year so you have to size the airline correctly. but it takes about a year to bring a pilot back from furlough so to the extent that you can bring the pilots that are turning 65, if you can keep the younger people on board, it is always last-in , first-out. and that, obviously, has with it a whole set of issues. and since we have something like 27,000 pilots, there seems to be

some flexibility to work with the unions to avoid furloughis for the next few months. >> you have a buy on american airlines and the sense of what i am hearing from them is let's fly let's get out there again. what you describe as turbulent conditions in the industry, why do you think that strategy will bear fru bare fruit what do you think is the range of tacts >> there is a few things in there. i think people really want to travel i think their governments are not letting them you see that here in the new york area. stuff is still closed. and in 22 states now you have to quarantine when you get here for 14 days. that makes it not a lot of fun i think that people want to go

places at this point and of course we have the whole issue of people who are not working and their personal balance sheet is being destroyed -- i view that as a separate issue i think there are people now who would travel if they could and i think it is very safe to travel on airplanes. that debate comes up every morning i feel like with you and jim kracramer the air on a plane is going vertical and airlines are doing everything they can to ensure that safety. the reason that we like american is that it is our contrarian idea they don't have to pay 100% of the debt back in the next decade, they only have to pay half of it back. maybe they're in a little better

position than people think and to theirpoint let's fly, they have not cu -- capacity and they restructured their hub so they preserve connecting traffic and the local traffic. they scaled down l.a., they're scaling down new york. you saw the deal they announced yesterday with jet blue that helped both airlines become more relevant in the northeast. so i think there is some -- there is sort of some hope as you know we were forecasting 400,000 per day. so it is clearly a little better than i expected welcome but we're still, to your point, we're still years away from 2018

levels i wonder, is it a signal they'll get more going to try to hear about? >> we talked about them being smaller at the end of the year and you still want to win the recovery, and that would include not keeping as many people on board. they are more relevant in the jork wear where they lost area in the last decade to delta and jet blue especially in the national markets where american was very strong out of jfk and they really gave that up and there are a lot of reasons why that happened. but i think the relevance that they can bring to both the leisure and the corporate customer over and through that

agreement is very helpful. i think the times could have been better just from the per perspective that two nights ago they said they would have to send notices to 15,000 people. but i think from a creativity perspective they will have to get creative if they want to attract passengers, even now, primarily because if you don't get revenue, it is a short business 06% of all tickets are booked within 90 days of travel and now people are waiting longer and longer to book because they don't want to get stuck in a situation where they're having to quarantine or where they get shut down or stranded.

these are all of the issues that i feel like governments have to work together to just, you know, open the air space open their countries, and maybe masks have to be a must. and you know let's just get on with our lives and learn to live with this horrible it has. >> construction is recoving, but retail and travel are facing longer term challenges is the calculus that further government aide, is that a [ laughter ] lift or not. >> do you mean the $30 billion beyond the second loan >> yes >> so you mean from october 1st to march 31st, right >> yes, yes. >> i don't know how to think about that any more. my view has been that there is not a lot of appetite in washington for more money for airlines but it is clear the industry is not going to recover between now

and the end of september and you're looking at we said the industry started with hundreds of thousands of people. that perceives the furloughs and the voluntary retirement when you think about 100,000 people without a job in pocket, right ahead of an election, you can see where the unions are being very aggressive with congress and asking for more money, and you can see where the administration might be willing to maybe not all of the way to march, but certainly until the end of the year or things get a little better. we need a vaccine, a treatment, or something to get our lives back, right? >> believe me, that would answer

a lot of questions we'll see what next week brings, it is always good to see you have a good weekend. >> thank you, have a good weekend. >> as we go to break, let's look at the worst stocks on the dow for the week including microsoft down 5%. amazon not part of the dow we'll be right back, stay with us

on the award-winning ww app, you can take a personal assessment to get a customized plan. the assessment takes into account the things that matter to you the most. i've lost 101 pounds. it's incredible. summer's on us. get your first three months free! hurry, offer ends july 20th. woi felt completely helpless.hed online. three months free! my entire career and business were in jeopardy. i called reputation defender.

vo: take control of your online reputation. get your free reputation report card at reputationdefender.com. find out your online reputation today and let the experts help you repair it. woman: they were able to restore my good name. vo: visit reputationdefender.com or call 1-877-866-8555.

european markets are set to close in junction a moment >> john, it looks like we're mixed across europe right now but still higher on the week for european equities as leaders meet for another round of stimulus talks in bustrussels on the rescue program that is still facing push back from four european states. often referred to as the frugal four stocks in focus, transportation after a earnings report showing they will post a smaller an expected loss. that stock is higher it was up 4% at the highs of the day. other auto related names are trading up as well british air ways remember the eu

did extend it's travel ban carl, back to you. >> thank you the s&p up here a little bit, let's get a news update. >> in a court hearing, not guilty pleas from the three white men accused in the murder of ahmad arbery. in texas, new cases are up nearly 1,000 percent the seven-day average up nearly 21%. officials and funeral homeowners are bringing in extra body bags and refrigerated trucks in case the situation increases. in florida, another hot spot,

the latest daily numbers just released showing more than 11,000 new cases and 1130 deaths that is the update for this hour >> after the break we'll talk with a former netflix executive. that stock down more than 6% this morning we're back in two minutes.

welcome back, shares are down on netflix. joining us now to talk through the results is the former netflix vp of original content thank you for being here

>> happy to talk about streaming. >> and changes at netflix. you worked with ted, the incoming co-coo. he is credited with turning netflix into a power player. why give him that promotion right now and will it change anything for the near term >> sure, i think reed spoke to it yesterday that he and ted had been partners for the last 20 years and obviously as you just said content is central to the success of netflix i think it makes sense to keep the leadership in place. it makes sense and great congratulations for hem for continuing to lead netflix into

the future >> he is going to stay for at least awhile, was there perhaps interest did they have to keep him there because he has been such a crucial part of his transformation >> i don't know. i would say why not now? i think it makes good sense. often when i seed media reports and confrontations, they mistake him for the ceo. i think consumers and the general public think of net flix as a content company anyway, but why not now. i this it makes since to continue to articulate the lip for the future >> has disney plus impressed you? have you been surprised at the momentum they have been able to spark and do you think the difficulties other police stations places like parks might

distract you >> i think they're having some challenging times, they own espn and it is challenging to run a sports network when there are no sports being played. so they're having challenging but absolutely i have been impressed. i think the response from consumers reinforce why they went into a direct to consumer model showing that brand resonates. people love pixar and marvel i think releasing hamilton was brilliant. i'm sure we'll also see the movie being made for disney plus in a different take on it. i think that created a real moment for them. i think the challenge, if i look at disney plus, the really tough part in my expertise is in the world of content

how do you keep people there what do you watch after a. hamilton, what is next they have a strong film library and they're building up their television offering, but that is theheartedest part to create a sustained streaming business which is what netflix accomplished in a very strong way into a.so hamilton is havinn incredible moment. >> the next day, because people were joking about being recommended the sound of music after "hamilton. on the flip side, what about

quibby i believe their positioning, that some were aware of, i'm not sure their awareness was great before they launched, either it was meant to be done on your phone when you're kmutzing and waiting in line. i know they articulate d that. but the challenge in story telling in telling a story in eight minute bites versus a world where we got more accustomed to serialized television, and if anything the world has now, since the pandemic, turned to i like something that takes up 12 hours of my time and transports me into another world i don't know that i only want eight minutes. so they had some challenging timing there is a lot of great short form out there and quibby was

trying to bring that short form content and consumers are not responding the way they hoped. >> i thought it was interesting how they did not mention quibby as a competitor, but they did mention tiktok do you think that tiktok meant for your phone, versus your living room with netflix, are they competitors could it take eyeballs away? >> we're all looking at competitors for your time, how are you spending your time any competitor taking your attention away from potentially a netflix, it is so addictive and there are moments, i have seen people trying to learn the dance so they can put up their

own tiktok that's six hours to learn a dance, and it consumes your time in a different way and if you're doing that you're not watching netflix or any other services. so i think it is more about time and how we're interacting with the internet in lots of different services nap is t and that is the competitor for your time. i was mentioning quibi to friends who don't really know what it is >> most people know what tiktok is the last thing i want to ask you is price increases some of the analysts this morning say they expect netflix to restart and rekmengs pricomme

increases next year. do you think net flix has the same pricing power it used to? >> i think the pricing power, as we see always in content, comes out of "do you have great content. how do you translate that into long term pricing power. disney plus took away their free trial at the end of june prior to the launch of hamilton. so they're not sure yet what the pricing power is because they didn't want to give it away free so your power comes in your ability to retain customers. every day you want to think i want to go back and watch something else that is the hardest challenge in streaming. that is what everyone and peadock this week, in addition to hbo max, everyone is fighting

the what is my pricing power and it has to do with retention and can you keep people on board does a consumer say i would totally pay that i want to keep this service in my life. so if anyone has that power, it's netflix or in our case, kids with content that your kids just want to watch over and over again thank you for being with us. >> the dow at a pretty narrow range today. the nasdaq looking at a possible downward trend for the week. the worst since june6t ckn a minute

on the award-winning ww app, you can take a personal assessment to get a customized plan. the assessment takes into account the things that matter to you the most. i've lost 101 pounds. it's incredible. summer's on us. get your first three months free! hurry, offer ends july 20th.

as the wealthy leave new york city, there is a surge in applications in suburban private schools. >> demand from wealthy families applications have more than doubled. normally they get about 25 applications in the spring and summer this summer they had 69. like many schools in the area they are now full. >> a school like ours we have 44 acres. we're able to have kids outside and take advantage of small student and fault ratios i think it is a quality of life and not something viewed as a

short period transmission. >> enrollment declines between 10 and 20% the average tuition is $50,000 per student. some schools could come under financial pressure some schools say they will open in the fall, new york city schools planning online options and in-person options. robert, thank you, keeping a close eye. in california a lot of these difficult decisions still being made coming up, why software companies need artificial intelligence to survive after the pandemic stay with us

(music) anncr: give customers access to precisely what they want, when they need it the most. with adyen, the payments platform that delivers convenience for all. adyen. business. not boundaries.

keep your eye on homebuilders today lennar and horton setting new 52 week highs we're back in a minute tara, did you know geico is now offering an extra 15% credit on car and motorcycle policies? >>wow...ok! that's 15% on top of what geico could already save you. so what are you waiting for? idina menzel to sing your own theme song? ♪ tara, tara, look at her go with a fresh cup of joe. ♪ gettin' down to work early! ♪ following her dreams into taxidermy! oh, it's...tax attorney.

♪ i read that wrong, oh yeeaaaah! geico. save an extra 15 percent when you switch by october 7th. ♪ give it up for tara!

welcome back our next guest is telling people to shift their time lines forward as covid-19 continues to change the way businesses operation. tom, good to see you >> good morning. >> good morning. p i want to talk about ai and how it fit sbos into this lands. there's been, for some people, a sense of controversy around c3.ai taking a ppp loan. did you get funds from the program and what was the thinking behind it >> i think if we think back to february and march, there was a massive economic dislocation i think we saw a massive contraction of gdp, massive contraction in equity markets. i think that many companies who

were, would have been their initial reaction would have been to cut staff and to cut staff very significantly i think the ppp program was put together and i think it was a pretty good idea to encourage companies to avoid layoffs at c3, we have not done employ more people today. we continue to hire people and the ppp program had an influenc on that as it had on many companies in avoiding layoffs and not encouraging to retain the personnel. that was the purpose of the program. that was the motivation of companies that took advantage of the program.

programs that were able to get funds and if you got more people than you did before, that suggests to me demand will be good moving forward. what kind of clients are you seeing to increase their use of ai or has their focus on the areas where they want to deploy it shifts at all >> after people began to recover from the shock, travel transportation or gas, utilitie and dramatic increase in the desire on the part of the ceo and the boards to engage in massive corporate scale digital transformation to ensure the

compa companies are well positioned to compete in the 21st century economy. as it relates to enabling technologies for digital transformation, they are in that spa space. we're seeing a dramatic increase in asia and europe at this point. >> tom, 30,000 feet, would you argue that the pandemic in aggregate has spurred more innovation faster or has it been sort of an interrupting factor where projects that would have happened been cancelled or delayed? >> i think it is spurring innovation in digital transformation writ large globally it's spurring innovation

i think a third area it will have a massive impact will be innovation to distance learning. when we have harvard, princeton, yale, illinois, michigan, vanderbilt, you name it forced to deliver all their learnings be it course work be it distance learning and we have the brightest people in the world now focused on this. i think the idea that we're not going to see net new technologies as important as say the mosaic browser for delivering learning to people across long distances, i think we'll see enormous breakthroughs there and it will have a more important impact on industry than it will on the education community. >> tom, good morning thanks for being with us

there's been plenty of funding in private markets for the right kind of companies that will either benefit or be able to withstand the pandemic why not turn to the private markets versus the ppp program when you've already had success raising hundreds of millions of dollars there in venture capital? >> i think we need to remember what it was like in march and april when this unfolded it was a highly uncertain situation and when we're seeing a recession. the availability of capital to private companies is drying up we have rates of unemployment

that rival the great depression, massive segments of the economy are closed and yet equity markets are historic highs we have never seen anything like this before. i suspect it's a result of monetary policy. something i don't understand i don't know how long they can -- this can sustain itself >> i hate to cut you off from this because it's a good thought. i'm hoping you can add to it the last time we had you on, you were, at least from my recollection, you were predicting this would hit the start up scene in silicon valley hard like the dot com bust did are you revising that based on monetary policy and programs like the ppp that have worked well for the companies that's been able to get it?

has that softened the blow and given chance for recovery? >> i'm not an expert in monetary policy i don't believe the government can spend trillions of dollars indefinitely sooner or later, somebody has to deliver sfervices, somebody has to manufacturer services and there has to be jobs i think before this is over, i think that, you know, that the laws of gravity will prevail i think we'll see a significant economic dislocation before this ends >> wow okay i understand then why you are being prepared and i hope our viewers will take note tom, always great to get you insights

carl >> always good to get tom's take thanks to you for your help during the hour. as we say on friday during earning system, not only is the eu summit over the weekend, we get congress deciding on stimulus next week along with microsoft and intel and ibm and coke let's get to sarah and the half. stocks on track for a split week the dow and s&p on track for gains. nasdaq looking at a negative week also, we've got a monster week ahead of earnings. we are all over it here on the halftime report naming names of what our traders like.