an extraordinary amount of two-way action today you had the nasdaq down 2.5% and 20% of all stocks in the new york stock exchange at a 52-week high something has to give. seems like a very high emotion and high friction environment right now. >> tech, big sellers today, down 2.5% by the close. dow also down 0.1% we're out of time. "fast money" is now. >> i'm melissa lee this is "fast money. today's lineup, guy, kim, karen and dan. tonight we're charting the sell-off tech stocks crashing back to earth and we'll dive in to see if there's trouble ahead. new developments in the wake of that massive hack attack on the nation's largest petroleum pipeline one analyst calling it a fully preventable failure. he'll tell us which companies have the best technologies to prevent something like this from happening again. we are all over the afterhours action, shares of

roblox and simon property. we start with a blood bath for tech nasdaq plunging 2.5% the selling widespread across technology and intensifying into the close and the nasdaq finishing at session lows and it wasn't just the high flyers. the tech titans are seeing massive losses, facebook, amazon, alphabet, losing a combined $700 billion in market capitalization today alone that is more than one berkshire hathaway wiped out in a session. does today's sell-off send a warning shot to investors? guy, was this it >> i would think so, but again, mel, you know this i've thought this for some time. the things that concern me that started on friday, i mean i know you talked about it, extraordinarily disappointing jobs number. 10-year yields trade down to 1.47 or so the reversal in yields on friday were a bit of a warning sign and

the move again today, i think sort of amplifies that and puts an explanation point i think yields are the key russell down 2.5% in line with the nasdaq that made an all-time high on march 15th that can't get out of its way right now. there are a lot of warning signs. look at the technicals, munster double top in amazon avenue talked about that and the fact that apple couldn't make a new all-time high was alarming as well. there are a lot of things to be concerned about. this has happened so many times over the last year you wonder if it's a day thing or if this is the beginning of something i believe this is the beginning of something. >> that's the thing. we have seen this time and time again and before you know it tech get a bid here's what's different, you mentioned yields, yields reversed on friday but didn't go higher you would think that yields would have had to go a lot higher for this bevy of tech

stocks to close at session lows. netflix, tesla, twitter, the nasdaq 100, the russell, tlt closing at or near session lows, tim. do you think this is a one-day thing or feel like something different? >> it's not a one day thing because it hasn't been a one-day thing. semis peaked in mid-february and semis have underperformed the s&p by 13% since that time qqqs underperformed the s&p by 9% over the last 60 days and you're getting at important levels on the charts chris is going to talk about it and i'll leave that to him layer in what were some of the things that were the volatility points last week and remember the vix when we did our midday call, and we have a call at 12:30 the vix spiked but massively spiked into the close. the vix again back above the 50 for the first time since i think march 5th or 6th the most important thing which we focussed on last week may be

inflation and rates and the fed. i think this is part of it and interest rates as they relate to taxation and capital gains tax and where, again, we're going to be funding some of these deficits is why mega cap tech and high multiple stocks that don't necessarily make money but have gone up two or three times are in the eye of the storm. i think that that's not a one-day event. in fact, this has been going on for a few weeks. i think actually today felt very, very ugly. you look at a trade desk, some of these digital advertising stocks, these were massive moves but not small companies and that's concerning. >> speaking of digital advertising, layer in the downgrade of facebook and alphabet from citigroup to a neutral, they're worried about the growth in digital advertising in the future, any company leveraged to digital advertising they're concerned about. these are value names and they got hit with a downgrade that questions the growth of their

business >> yeah, although looking at the note, which was an interesting piece, i hear some of what they're saying which is we might see acceleration in the near term, but then it will decline, maybe the growth rate will decline say, but they left the price target for alphabet and facebook i think unchanged but did take it to a neutral when we get in markets like these where things trade down in inti gers is interesting to me on my buy list is facebook when you back out the cash we're looking at 21 times earnings, so that to me is value and i'm optimistic on advertising growth continuing he may be right that at the end of this year and next year it slows but this is for another day. i'm looking to buy some facebook i think part of what happened today, tim is right, this isn't a one-day thing because this isn't the first day today. this is just the acceleration. to me it's an acceleration of the reopen trade because you saw

a lot of things that are reopened that did okay or better than okay and the sort of out of high flyer into the low p/e multiples did okay for me the one thing i did today beside make a buy list was i covered some igv when you feel like this is the thing i most like in my portfolio, i feel like all right, it's done what i hoped it would do, i got to cover some, i think it very well could trade down more tomorrow i'll probably cover more we have a lot of things get really compressed, not to cheap. the high flyers aren't cheap but they are down substantially. >> the rotation into lower valuation is a good point, dan, and we saw that weave in the technology sector and my poster child for low valuation technology is ibm and finished up a half a percent. >> we talked about ibm, oracle, cisco last week and dell trading really near multiyear highs. definitely 52-week highs relative to some of the more new

technology friends here. you can rotate all you want. these guys have beentalking about this there's been a rotation at a high valuation tech that's been going on for months and months and the s&p 500 and the dow jones industrial average have masked that massive underperformance i will give you an example karen was talking about the end of the work-from-home trade or reopening trade. zoom closed down 51% from the all-time highs made just a couple months ago or a few months ago this stock still has an $85 billion market cap it trades at 22 times sales. so, you know, there's no amount of like, you know, i mean valuations didn't matter on the way down, they may not matter on the way up, may not matter on the way down there is room for these things to go. if you want to rotate into mega tech, look at apple after this year, we have a couple more quarters of double digit revenue

and sales growth, fiscal y year '22 they will grow revenue in sales low single digits paying above a market multiple, 24 times for that. service is growing out mid 20s, making up nearly 20% of their total sales in that last quarter but i would tell you that last two quarters are pretty fairly unique if apple is going to deal with decelerating growth, what the heck are you paying 24 times sales because about a year and a half ago people were struggling paying 13 times earnings to me, the valuation thing only matters, you know, after the fact here and i think we may start seeing it in other sectors very soon. >> valuation is in the eye of the beholder guy, i'm wondering, as we saw the popularity of etfs like in ark, these thematic etfs that invest in the same things and trading lower, are we seeing the sort of impact of selling of

those on the underlying issues because they all own -- >> that's 100% >> the nasdaq 100 basically. >> yeah. i apologize for jumping in 100% the market participants don't talk about it when everything is going higher, you never hear that being uttered, the fact that all these stocks are getting dragged up by the etfs when things start going down then you start hearing how the etf is affecting the underlying stocks it works both ways i know you know that and we talk about that all the time. the sun also sets and you see it there. tim is 100% right. this didn't just start today it started probably at the peak when we heard about the chip shortage however many months ago that was i should have been more specific, the s&p 500 effectively made an all-time high today within two handles of its prior all-time high, probably made last week. my point is the s&p clearly hasn't cared and for today it is starting to. we'll see if there's follow

through. a number of things to be concerned about today and i think we sort of illustrated many of them >> let's get a technical take on today's sell-off joining us, christopher. what did you make today? >> well a couple things here i think it's important to emphasize this doesn't look like rotation none of these stories are new. i think when you look at the f.a.a.n.g. stocks and big tech stocks, these didn't peak a week ago or six weeks ago most relative to the s&p peaked last summer. bring up amazon, for example, amazon has made no price progress in ten months it made 52-week price lows, against a backdrop of what people perceive to be strong earnings we always pay attention when things don't go up when they're supposed to and you see it with the amazon, you see it with the apple and the microsoft and the netflix. these are stocks that haven't made any relative dollars in almost a year now. that's a long time for leaders hint hint maybe not leaders here

anymore. if you look at this in terms of broader tech, the second chart is just tech relative to the s&p, the bottom panel. these are 52 week relative price lows for the sector, first time in about nine years tech has made 52-week relative lows versus the s&p the character of the leadership backdrop continues to change this is not a one or two-week story. this has been going on for months we came up with this table we've been showing clients i think there's the perception out there that the inputs driving this market have not changed, yields still remain stable, the fed hasn't moved, the earnings have been exceptional, but what has changed is the market's interpretation of all of those different things we say we get tnervous when the market doesn't respond to the same set of news flow like it has in the past. of that list the market is telling us something on the list

is wrong i would look to the yield component. i think it's interesting tim touched on it, when you look at the response to bond yields after friday's miss you had a 700,000 miss in payrolls and bond yields closed flat. we brought along the copper versus gold chart. this has always been a good tell on yields. copper/gold higher ten minutes to drive yields higher with it we think they catch up and means higher yields. the other place where you see this is financials financials relative to the s&p made multiyear highs last week despite bond yields having come in so when you look at the things that people perceive have not changed, i think the market is telling us that yields will change higher yields, not great for growth, not great for tech, much better for financials, materials, industrials that is what the leadership fabric of this market looks like i think we should take note. >> when you say higher yields,

chris, what in your view is it retesting the prior recent high or how high are we talking about? >> we've been saying we're going to see a two handle on u.s. 10s this year. i want you to think about this differently. this is the first time in my career i can remember u.s. yields going lower and european yields not following them or not getting there first. german yields have not gone down, french yields have not gone down. swiss yields have not gone down. french yields went positive for the first time in a couple years. the move in the european yields is another one of those subtle pieces of information that says, u.s. yields higher. >> chris, great to have you. thank you. >> thank you. >> chris verrone cramer was on "squawk on the street" this morning talking about the wall street bets crowd and how they're hopped up on the tesla of the world and all of that stuff when they should be hopped up on alcoa, which is up 30 something percent in one

month, tim i mean this is a mental readjustment in terms of how we regard the market leadership if we are to say technology is no -- the biggest component but not leadership in this market. >> if you think about reflation trades and the dynamics, a normalized 10-year, 175 or 210 or 240, is ultimately a sign of a healthier economy. we know what the gdp numbers are going to be and this is a comeback so what everybody said and chris highlighted the fact we went to 146 intraday on friday and the low on the 10, moved 15 in a seemingly economic headwind environment over the last couple days it's not. but yes, the reddit crowd, whether they're rotating or not, i have no idea what draws them i don't. gamestop when i look at the high multiple tech names, i think that there's -- markets are having a healthy response to what they should do. look at the move higher in rates

and banks and weaker in dollar and what it's doing to commodities prices 10% spike in iran ore futures. china, we talked about copper at all-time highs those are the stocks the folks should be playing in, with high short interest too, some of them some of the resource names -- gold has started to take part in this if you think there are stocks that can move with major betas, gold miners and junior miners, aluminum, alcoa, steel, copper, all these names are moving and i think they're going higher. >> breaking news we wasn't to get to the fda is authorizing pfizer's covid vaccine for emergency use in adolescent. another cohort of the population approved for use of the vaccine which is obviously very good news in terms of the reopening, very good news, karen, in terms of reopening schools fully and getting people back into the workforce, particularly women, who have not joined the workforce, rejoined the

workforce in the same manner and speed which men have primarily because they're the primary caregivers >> yes i mean if you're home with kids doing zoom school and no help and trying to work yourself, that's a disaster. so i mean any way you can clear the kids out of the house great so that you can go back to work, that's great thing obviously we want everybody to feel protected and to be able to go out. i think this is just more of the reopen trade sort of another piece of data to support the reopen trade i believe we're going to see higher rates and the rotation out of stocks with super high multiples, but also that they happen to be pandemic trades, right. work from home trades. so i think that will continue and that favors the low p/e multiple ones and things like guy and tim have all been on, you know, the steel, copper,

alcoa. i think that's been the right place so far and i think it will continue to be >> pfizer we're seeing the afterhours session tick higher up 0.7%. guy, this is another population that could be getting the shot in the time frame which pfizer has the patents, even if they are waived eventually by the administration >> yeah. it's wonderful news without question i mean but in -- through our lens, pfizer if you think about it, topped out around 44 many months ago, just as sort of the initial good news. one thing i wanted to mention because i think it's important we're going to debate increasing minimum wage in this country, but i think what you saw on friday speaks to today cmg announced they'll raise their minimum wage to $15 an hour in june think about that the market is doing it for the poptitions why? because you got to get people back to work and incentivize people there's your wage inflation. listen, i know it's anecdotal,

but it's going to happen more often and that's why i think rates probably went higher on friday and why i think they will continue to go higher in the weeks to come. >> cpi will be interesting this week. coming up after actions to tell you about, roblox and simon property we're breaking down the numbers and trades there pipeline problems. one top cyber security analyst says the colonial pipeline hack was preventable. the two names that could stop a future attack when "fast mon" tus.ey rement plan with voya, keeps us moving forward. hey, kevin! hey, guys! they have customized solutions to help our family's special needs... giving us confidence in our future... ...and in kevin's. voya. well planned. well invested. well protected. so you're finally supporting his rock star dream... because you know you have a plan to pay it off. buy now, pay later, with plan it. one of the many things you can expect when you're with amex.

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welcome back to "fast money. earnings alerts on roblox and simon property group both on the move in the afterhours courtney reagan standing by with the latest we kick things off with josh lipton on roblox >> remember heading into this the stock was down 10% in may, 20% from its all-time high but sharply higher here in the afterhours q1 results loss of 46 cents, revenue up 140% to 387 million not clear whether that's comparable to estimates. bookings up to 652 million

average daily active users the company says up 79% to 42.1 million. interesting comments from the company's cfo saying they must continue to innovate and remain focused on building great technology to make progress on our key growth vectors and what are those vectors? primary he says international expansion and expanding the age demographic of our users and that is one question investors have of this company, kind of a reach in traction they can get with that older demo the conference call for this one is scheduled for tomorrow morning. melissa, back to you. >> thanks. josh lipton. dan, should we concerned about the pull forward here in this company's business? >> yeah. especially when you think about the demographic you should probably be more concerned with the fact that it's approaching a market cap similar to that of ea right here up 10% or so in the aftermarkets it's just below the 40 billion roblox's sales are growing faster, they have a similar sort of gross margin as many in the

industry in the mid 70s, growing 25 to 30% a year most of the industry is not growing that much. to me, is it a potential takeover candidate possibly with that sort of growth and that sort of potential as you kind of go up the demographics it's still very expensive trading, 16, 17 times sales on a 2, $2.2 billion number it's a pretty meaty target for somebody. move on to simon property group moving lower in the afterhours off results the call is under way. courtney reagan has the latest >> hi, so the mall operator beating at street's expectations for earnings and revenue and working to catch up to its pre-pandemic levels. total net operating income is down 8.4% year over year simon property group is increasing its earnings guidance range, though that accounts largely for this pretty big first quarter beat occupancy stands at just under 91% for its u.s. malls and

outlets with its base rent of slightly 0.6% to $56 per square foot ceo david simon notes increasing shopper traffic, retailer sales and momentum shares have been on either side of the flat line afterhours, down about 1% now. the company has gained over 118% in the last year and it was up about 1.5% today on the ongoing call damvid simo called out significant improvement of operations, but notes international operation continues to be impacted by restrictions and closures. mall rent collection is back to pre-pandemic levels for the most part noting around 98% also, noting higher retail sales in march this year compared to march 2019 so pre-pandemic, of course mr. simon says the brands that the mall operator owns and its

partnership with authentic brands group and the spark business, including forever 21, for example, v out performed revenue expectations he also talked about what's going on with jc penney too. melissa, back to you. >> thanks. courtney reagan. karen, for the reopening trade, would you rather retail reits or retail? >> retail reits or retail? i guess i would rather go with retail that's a very tough would you rather, though i think what was happening in reits was happening anyway obviously the pandemic just accelerated it beyond with warp speed in that i think that will still happen after the reopen happens. people go to the mall, they do that a bunch of times, and then they go back to a slower pace of going to the mall. but i do think that retailers that reinvent themselves and have a great e-commerce business, they can hang on to that customer even if the reit can't. >> yeah.

tim, it's amazing you hear the stats of how far simon has come in the past year particularly the stock price. >> amazing >> yeah. especially also rents at 98% of precovid and that in the first quarter, still had some pretty heavy covid headwinds at 95% collection relative to where they were in a pre-covid something has to give. a lot of these, think of the restructuring at gap and l brands and macy's where they don't own their property, which is a lot of these guys, something has to given that was part of the retail story and part of the driver for the outperformance of a lot of these frankly broken companies i don't think they can both celebrate in the same way here i think look, the trends around mall properties are what they are. nice to see everybody get back and i don't want to wish ill will on simon property i would love to see people in malls, but that's not what they were doing beforehand and i think dtc is the story for retail and where a lot of these

retailers were forced to get to fast. >> pre-covid just quickly was the death of the mall, how can post-covid, all of a sudden the malls are via the mall such a turn? >> remarkable. it's so counterintuitive in terms of simon property, $142 stock before the world changed and now it's up to 127 and you look at some of these metrics, it's like nothing has changed. to tim's point i would agree with karen and in the would you rather, i would rather be in the retailers as opposed to reits but push back on myself and say look at dollar g en which traded to the prior high in october and seemingly failed there's so means cross-currents here i think the retailers are still the winners and have to start looking at some of these charts as well because some of the patterns are scary. >> we have a lot more ahead here on "fast money." here's what's coming up next a massive hack attack shutting down america's largest petroleum pipeline

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. welcome back to "fast money. we are following new developments on the massive cyber attack that took down america's largest petroleum pipeline let's get to eamon jaber who has the latest. >> very strange day because we had the attacking group called darkside come out and post a statement on the dark web saying they sort of had regret about the way this attack unfolded and promised to change their ways in

the future no indication whether that means they're not going to try to continue to charge the ransom here or not, but they did seem to express a little bit of remorse. i talked to a cyber security expert we caught up with him in tel aviv this afternoon and he thinks that what happened here this attacking group may have bitten off more than it could chew here's what he said. >> we believe that what just happened to them, it's not good for their business because they want to keep operating, they want to stay quiet, under the radar, and create as much damage as they can to collect money and when this type of incident becomes so, you know, in the spotlight, this is really not good for their business. >> so it's a little too hot for the bad guys here in this case and they may have some regrets now about what they did, but clearly this is going to continue to play out as the pipeline company is trying to get online by the end of the week we'll see if they can hit that timeline

at the white house, officials briefed reporters in the briefing room about this earlier today. they're very careful, though, not to say they were giving any advice to colonial pipeline whether or not they should pay the ransom or not. they seemingly left it up to the company entirely that's different than what we've heard from the u.s. government in the past where the advice from the fbi has always been don't pay these ransoms because if you do that you're going to make a market for ransoms and encourage these guys to go after another company and another company and another company and they're going to do that with your financial resources this time around, though, folks at the white house saying look, we get it, we know these companies are in a tough position and they've got to make a decision for themselves. hands off approach here from the u.s. government and maybe some regrets on the part of the hackers here never seen anything quite like that >> remorse from the part of the hackers is not something that happens often. just a question, the implication of what your expert said implies that the hackers did not know they were targeting the pipeline, that because this was

an attack on unsecured end points that perhaps there was a wide net cast and this is what they ended up getting? >> yeah. i think it's actually a little bit more nuanced than that i think the people who conducted the attack probably knew what they were targeting, but because this is ransom ware as a service, right, that could be different people executing the attack than the people who created the malware and issued that statement what you have here is with this darkside group, think of them like a -- the evil twin of a silicon valley start-up. they're developing the software and then selling it to customers. their customers are other criminal gangs who then go out and use that software and attack various targets. what you may have is a disagreement between the software developer and the software developer's customer, all of whom are criminal gangsters and might have different thoughts about whether this was the right thing to do or not >> thanks for clarifying.

>> our next guest says this hack was a preventable failure and looking at two cyber security stocks best positioned to handle this attack. joining us is andrew, senior tech analyst at da davidson. great to get your take on things specifically, the two companies that you think will benefit the most you're looking at them benefitting because of the specific kind of attack that this was on the colonial pipeline >> yeah. hi, melissa. thanks for having me on again. the two stocks i'm recommending off this attack are palo alto and crowdstrike. eamon is right in his explanation of the type of attack it was. this was not a nation state attack the malware was developed by darkside, executed by their partners, yet the damage and the destabilization, you know, that this attack created was on par with the nation state capabilities the second thing that's different about this attack is that the level of sophistication of this group is pretty frightening. sadly, there does not seem to be any sort of repercussions for conducting attacks like this

the question is how do organizations stop attacks like this they have to develop best in class -- or deploy best in class plo platforms from the likes of palo alto or cloud strike it's the only way to stop an attack like this before the damage is done both palo alto and cloudstrike have best in class platforms that could have stopped this attack and also prevented the data once inside. >> typically how many months after an attacker or years after an attack like this do you actually see a crowdstrike or palo alto gain business? do you see it in the earnings results a quarter after or two quarters after do we see that kind of relationship or no >> well,i think you can go bac to a number of the historical tactics. solarwinds attack happened in december certainly palo alto and crowdstrike didn't see a

near-term impact to their january quarter results but contributes to the pipeline build for both those companies we'll see them reporting results for the april quarter in a few weeks and both are actually, you know, seeing significantly better demand trends than they've seen last year at tis time in part driven by these attacks. this most recent ransomware attack adds to the pipeline for both companies >> andrew, i know the catalyst is never an acquisition target, but to me, looking at a name like z which you cover, but crowdstrike, they have a relationship with google any of these companies, anywhere from 30 to $50 billion, you get deals done, does it make sense for one of these huge tech companies to bolt on a name like you mentioned, a crowdstrike >> absolutely. so crowdstrike is really more than just an end point security event they're bolting on they have developed their own

platform i wouldn't say it's as extensive as palo alto palo alto is the most comprehensive platform but crowdstrike has 19 modules, i think at the time of the ipo they had 10, so they're covering a vast majority of the threat vectors that a hacking group could exploit. they can cover your end point and they do -- it's a cloud centric solution, so they can analyze trillions of threat indicators in a matter of seconds up in their database so i think absolutely it is. i wouldn't call it a bolt on per se, but it's reallyaugments th platform of every vendor out there with the exception of palo altoto i think palo alto has a fantastic portfolio covering network, end point and cloud. >> andrew, great to speak with you. thank you. >> thank you tim, what do you make of the names theoretically it seems like their pipelines are goosed because of this, but they fall into this high multiple sort of vortex when the markets don't

like >> yeah. this is exactly our previous conversation because crowdstrike, they have about 9% of the $10 billion end point market fantastic. in fact, a couple analysts compare them to a younger version of palo alto great stuff, but not cheap so this is an environment where i think those multiples -- if we were having this conversation a year ago, off to the races again, they just reported the numbers very good, 45% revenue growth, not a stock i'm going to chase even though, you know, i would like to say -- i have been a found of crowdstrike i don't need to be a fan right now in this marketplace even on this headline. >> 48. dan, where do you stand on cyber? >> i think that this one, an attack on a pipeline, is pretty interesting. think about how much worse it can get. the israelis executed ap attack on a nuclear plant in iran there's so many other like points of contact where we can have some serious disruption here this is like -- this is the black swan

this is mr. robot sort of stuff, right, guy to me there's always -- always going to be demand for services whether it 25 or 30 times sales. i don't think it's a bolt-on acquisition for any of these, maybe palo alto. not descalar or crowdstrike at these valuations. coming up, the cannabis craze heating up, inc.ing a $2 billion deal today kim rivers straight ahead. dogecoin can take you to the moon literally what out-of-this-world's trade is headed next straight ahead on "fast money. . so we get to work. we mend, fighting for every person in every neighborhood; we, the coming of the common good. so dare to care, to be hope-sided. we're never divided, when we live to give, we always live united.

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deposit, plan and pay with easy tools from chase. simplicity feels good. chase. make more of what's yours. welcome back to "fast money. let's take a look at tonight's buzzskill. dogecoin plunging. elon musk calling it a hustle on "saturday night live" but tweeted spacex is launching satellite doge one to the moon next year and the mission will be paid for in dogecoin. short seller who tweets under wall street cynic blasting the tweet saying spacex is a government contractor and we have no idea who is benefitting from higher doge prices. he says anonymous position in

doge may be a security issue is it hyperbole or do you think he has a point >> i think he does have a point. i would say noted short seller he does other things in the markets and a pretty smart commentator here listen, it's kind of a bunch of silliness when you think about all that's gone on around this when he's doing serious things with spacex. to me, it's kind of like shrug emoji. why bother i think the point about who owns this thing and why do you keep pumping it, is a serious question and just doesn't seem to be something that a serious entrepreneur or serious -- somebody who is a national security contractor would want to mess around with. >> unless the point is that you can get the crowds to embrace anything that is regarded as a currency and threaten fiat currencies like the u.s. dollar. that seems like the ultimate, i don't know, joke sort of, if one

wants to call that a joke, karen. the ultimate point to make. >> yeah. i guess. that doesn't -- that seems like really playing with fire, though, right. i don't know rocket fuel, i guess, no pun intended i don't know how much thought he gives it, to be honest i feel like he's just having fun and just can't believe that people react the way they do and that dogecoin is here. who knows. the whole dogecoin -- i just -- i don't know what to make of the whole thing. i don't know >> yeah. >> i don't have a good explanation. >> no one has a good explanation for this. coming up next, we're talking to trueleaf ceo kim rivers about the company's acquisition of harvest health and what it means for the cannabis space why our traders are hitting the pause buttons heading toin earnings much more "fast money" after this

welcome back it is not too late to register for cnbc's healthy return summit join leaders from pfizer, eli lilly the cdc and more sign up at cnbc.com/healthy returns. there's a mega merger happening in the marijuana market. trulieve buying harvest health

for more than $2 billion in an all stock deal the biggest u.s. cannabis transaction to date. joining us in a "fast money" exclusive is kim rivers. welcome back to the show >> happy to see you as well. >> can you walk us through the deal making in the u.s.? should we think of it more as a land grab right now. you're not necessarily achieving scale because things are siloed state by state until it's federally legal. >> i would not characterize it as a land grab trulieve, if you're familiar with our company and the foundations upon which we're built, we're certainly -- we are focused on scale within the markets that we exist in while many companies in 2019 and 2020 specifically went very wide, yet shallow, we chose to focus on core markets and going deep in the core markets this transaction is more of that strategy being executed across regional hubs. what we see in terms of the future in landscape of cannabis

it is going to be very important to be strategically located across the country but to have, again, depth and scale in those markets. we are somewhat limited in certain markets in terms of the scale we can achieve however there are markets where scale is possible for example, in florida, where we have approximately 50% of the market share, we have over 2 million square feet to grow and 82 stores opened in that market, in pennsylvania harvest has a sizable footprint and pennsylvania is an important market for trulieve as well. when you shift to the southwest market, arizona, harvest is the premier player in the arizona market with significant cultivation and dispensaries they have 18 licensed dispense rarelies in that important market that shifted to recreational while i agree from a national perspective you can't achieve scale yet, on a combined platform, it is important to go

ahead and get scale and deep penetration and relationships with customers across the specific markets in the u.s. >> kim, it's tim congrats on this deal and i know this is the kind of a deal you've been looking at for a long time. as an investor, i see that your stock historically had traded somewhat cheap to your other call them high cap peers in the space. i'm curious why not use some cash on this deal for a company that's so profitable, you've generated a lot of free cash flow and at a time when we all believe that at least much of the industry is going to be to rerate, i'm just curious about that approach. i think the valuation of harvest was healthy and there's nothing wrong with that. i just think that if anything, now that you are in a few states the rerating of your stock is part of the story here around this transaction >> sure. tim, i think that as we know, [ inaudible ] is very important for this industry, particularly around the fact that, you know,

it is difficult to achieve, you know, market rate financial terms because of our limitations at the federal level along with our tax rate which we talked about with you all look, we plan to use that cash to invest in these markets and to make sure that they are, you know, turned on as much as possible so that we can continue to generate returns like we have in the past, right you're talking about with this combination creating the most profitable cannabis company in the world and that return on investment is very important and something we're very focused on. when you look at the price of the deal i think it's important to note that harvest had an incredibly strong q1, which is just the beginning for them in terms of their continued profitability. they had 30% ebitda margins, tripled their ebitda from q4, significant beat on revenue, and so we've been working with them behind the scenes and doing [ inaudible ] for over five months now so we're very, very comfortable with their position

and certainly are very excited for our shareholders with respect to the future that this combined transaction brings. >> always good to see you. thanks for keeping us posted. tim, what did you make of the deal here and do you think there's more deal making to come in the sector? >> well, i'm very excited. i'm a shareholder so i'm long the stock. i think it's to the combined entity this is a case where you've seen a lot of deals where one plus one didn't equal three, like 1.3, and this is a deal where it is worth more. i think the m&a in the industry is going bananas i think consolation -- look i think the top five or six players, top ten players are looking to get bigger and i think they have more access to capital than they've ever had and i think the industry, which has pulled back, you know, 20 to 30, 40% in the last few months, the fundamentals are never better no, i think this is just the beginning. coming up, electronics arts

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report after the bell. let's get to mike who has the options setup. mike >> yeah. so the options market right now implying a move of about .6% more than the 3.3% or so that company has averaged over the last eight quarters. foot volume exceeded the average by more than seven times and all of that was really the result of the june 140 put spread over 6500 traded for about $3 buyers of that are betting that electronic arts is going to fall below the 140 strike price by $3 or so that they paid this is a trade that tony happened to outline on options action last week people may want to take a look at that if they want to understand better. >> i'm sure many people have that recorded and will scan for that thank you. mike that's why you have to watch the full show every friday at 5:30 including this friday up next your time trade. i'm searching for info on options trading, and look, it feels like i'm just wasting time.

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final trades tim? >> barrick gold. >> dan. >> seller xlf. >> karen >> yes, facebook trade down

tomorrow i'm a buyer. >> guy >> cyber securities space, mel fireeye into a meeting this thursday you guys are succinct. thank you for watching "fast money. see you tomorrow at 5:00 do not go anywhere "mad money" with jim cramer 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 want to make friends, i'm just trying to make you some money my job is not just to entertain, it's to teach, put days like today into context because i know you need it call me or tweet me @jimcramer forget no country for old men.