seeks for inflation in the economy. >> you are keeping track of all of it for us a final check on netflix, falling below $100 million that's going to do it for us "tech check" starts now. >> welcome let's start with what else, netflix. shares are crushed this morning, on track for their worst loss in about a decade the core business model is called into question subscribers are leaving with increased competition. and it's dragging down the entire media sector.

a shift in how investors view the streaming business what about disney, roku, spotify, and, yes, alphabet and amazon as well and the crackdown on password sharing, will it be enough >> i know you subscribe to many of these services. do you think this is an inflection point where we will see a shift away from ad-free streaming? >> i don't know. i think a comedian said it best. why don't they bundle together and we will call it cable tv he said it in mid january. think about that when netflix built the streaming business, and it did they were a dvd by mail company.

they went streaming and built the model, but one of few who have gotten it right said they were not adapting and adopting like some of the later entrants into the game. hbo max, paramount plus, peacock, espn plus i am probably leaving a fut out. -- few out the dollar total for the middle class family seems to be getting extreme and netflix seems to be the loser. >> i think we should have a drinking game on this show, how many times we say bundle in this hour you have apples, amazons what they have hit upon is a bundle people feel like they are getting free content because they are paying for prime or apple one or iphone and suddenly

netflix is not as palatable. $20 at the high end for streaming content? and it is content versus cost equation who is winning on both of those. what is the number of streaming services we are all willing to pay for? that will be part of the drinking game. >> i was blown away by netflix saying in addition to the 220 million subscribers they have to the service, there is an additional 100 million households watching netflix for free that for years they said they were not worried about. now they will be cracking down and figuring out how to get those 100 million people spend money. this makes peacock, cnbc's sister company seem smart.

disney is rushing in they haven't launched theirs yet, but will by the end of this year i guess we will find out if this is too late for netflix to get in with the ad-support >> i do love the peacock plug. wall street says sell. that's a rare double downgrade the analysts say too long for a quote, show me story i am not going to bury you because everybody got it wrong people had 600, 650 stock targets and now we have a stock in the mid 200s. what happened with netflix the company -- or at least the

stock -- has imploded since its october 31st high. >> thank you for having me what happened is the company pulled a narrative to the street which given the data we could see made sense that was this company was adding mid 20 million per year targetsing a total addressable market of 800 million households with growth per year what happened in 2020 bumped it up to 36 million because of the pandemic and then it would be back to normal after a slightly weaker point in 2021. that was their narrative the problem was they should have known that was wrong we couldn't because we couldn't see the growths, couldn't see where it was churning, where it

was not. we couldn't see that, but they could, and they told that story. so either they didn't understand that business or they were hiding something from us but neither looks good for the company. >> i want to go into this. i have been doing this 25 years and i have never seen a company with co-ceos do well two men in charge has never worked if somebody has an example that worked, send it in on twitter. i am happy to report it. are you suggesting that reed hastings knowingly hid something from wall street analysts? >> i have no idea. it just seems they should have been able to tell the difference the difference between hitting the end of your growth and an

aberration card. and if that's the case, why couldn't they have seen that right now they are basically conceding on their call last night, virtually every bear story that has been on the stock for the last two years >> i'm curious, just to look ahead for this company -- they admitted what went wrong, what went wrong this quarter. going forward, the expectation that netflix was going to lose 207 million, but does netflix need to buy a company to quickly ramp up an ad business and get the product out there? >> obviously i have supported

models with something in 3 billion in ad revenue. the problem with netflix doing that is they have high penetration in these height ad value markets, the u.s., uk. the markets where you can really make money, very high penetration. if you believe the combined numbers with the password sharing, virtually 100%. if they have that, then their ad-supporting model will likely cannibalize the rest and markets like asia and areas where countries are not as wealthy, they are not very good ad models. i don't see that as a savior for this company hopefully it can reaccelerate growth a couple points but this is not going to put

them back on the trajectory that they were talking about with an 800 million total addressable market >> at the top of the show i joked about bundles, that what saved cable companies was bundles. and the size of these tech companies. how about that any optimism about netflix getting into other spaces, virtual reality? maybe not today, but future outlook? >> they are all possible, all different forms of entertainment. but the problem is they are expensive. getting into gaming in a way that is meaning null, not mobile games in a are basically marketing for your tv shows, which is what they have mostly done to date, that's expensive

electronic arts spent a lot of money on the games, getting into virtual reality is very expensive as we can see with what meta is investing is it going to be something that cannot only reinvigorate growth, but it also has to reinvigorate growth while reinvigorating margins. >> if i have owned the stock less than four years i probably lost money on that investment in netflix. maybe i bought it late last year and am down 50 or 60%. what do i do do i hold on and hope, sell and take my loss, or buy more thinking this is the bottom? >> calling bottoms and tops is extremely difficult. i know it's sort of my job but i don't have that level of precision. that said, there are no

catalysts to the story the company was quite clear that their methods to accelerate growth weren't going to come until 2025 -- 2024 so you are looking at margins being flat this year and next. the company was clear about that with growth being similarly weak this year and next is it possible that they were overly conservative in q 2 and it ended up being better on the back of stranger things? possible but everybody thought that on the 2.5 million guide on q1 with x ukraine and russia shut off they were at 1.5 million so it doesn't look like it, and seasonally it doesn't look like it either.

>> maybe they have some tricks up their streaming sleeves, come up with some great hits or house of cards we have seen stranger things thank you. julia? >> how did netflix manage to get to this point where it has lost over a third of its market cap in one day worthless than $100 billion. what does this mean for the competition? matthew ball was former head of strategy for amazon studio before you were the metaverse expert you were the expert in the streaming world. how do you think these numbers may reflect on netflix's competition? do you think we will see them all report sub numbers this quarter? >> i think we can tell there is

some slowing to growth the tail winds lasted longer than anticipated we went back to the second quarter of 2020 and said it would be light q three and q four was huge and even 2021 even as disney lightened. as a strategist and former competitor to netflix, recommendations, scale, all of those matter but ultimately this is a content game i think consumers and analysts are right to say netflix's content has not met the mark of peers. >> you wrote a lot about this. awards and content money being spent. what do you make of these high

profile deals they have made, and also the fact they don't have a lot of that ip, characters and franchises that have proven so valuable to rivals such as disney plus >> they don't have the intellectual property. as we saw last year there were a number of high profile attempts. cowboy bebop, another signature release, was canceled within 30 days in ten years we will still be rewatching the first $200 million season that's capitalized investment. but when they spend money on jupiter leg siacy and it's cance within 30 days, it's out the

door it's lack of capitalization and poor investment for today. >> i was reading one of your essays last night. you were talking about backlog of content, how that keeps down the churn and keeps customers on the platform netflix has lost a considerable amount of that to some of the competitors. is that another direction netflix starts to go in? beefing up again on content, licensing, if people want to give it back to them >> i think most third party estimates show netflix have outstanding churn, roughly 2.5 to 8% per month. disney at 4. it's hard for the churn to get much lower the problem is 2.5% on their

subscribers is still significant. if growth slows you will see persistent decline we know what solves growth, high quality tv 800 million china homes, and former warner media such as joseph tyler it is new content. that's where it's scarce >> netflix built the business and succeeded wildly even with today's move i don't want to slam them too much but that said, let's slam them a bit. did they ruin their own model with this binging aspect the thing i think hbo max has done very well is they have created appointment tv if i want to watch "the flight

attendant" it rolls out once a week, but it leaves that white lotus. if i want to watch the entire season of one show in one drunken day, i can do it and then cancel. do they need to rethink this bingeing idea? >> i think they have already started doing that one of their most successful titles ever last year, they did that in three consecutive fridays. they said stranger things are coming in batches, "grace and frankie" coming in batches they are testing this. they wi they will flex to what seems to be right i think they will go to a weekly model. >> they are investing in games, live event experiences, charging

attendance for these events and consumer products. how will these three new business lines help netflix and will they make a move into metaverse? >> it's important to recognize that franchises are recognized in fan dom star wars started in 1977 when we went to the movies ten times in a summer. but it became an institution by kids in the basement or backyard swinging a stick imagining they are darth vader. this is essential to solving their franchise problem. whether or not they can make the full pivot into a more game-centric business, that's a decade long transformation. >> wow

amazing to think about how much work is left to be done with netflix shares down 36%. matthew ball, thank you for joining us today >> thank you let's take a look at another pandemic fad that may be hitting a wall food delivery. just eat take away is exploring a sale of grubhub barely a year after buying the company they say they are exploring a t strategic partner on top of that the stock is up 2.5% total orders last quarter were down 1% year over year on deck here on "tech check. netflix. that stock is down about 35% we will bring you everything you need to know going forward

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netflix is dragging down the nasdaq today as netflix takes a beating. mike >> the nasdaq may be holding up better than expected it is not an across the board decline. it is enabling nasdaq to maintain what some see as a hopeful setup. it bottomed where it had to, around these levels. 14,000 is what you want to see hang tough that is what is going on back to a year ago you are seeing essentially it has underperformed, but managed to gather strength

this low here mid march, the ten-year treasury yield was 3.1% today it's 2.8 something and the index is up. the nasdaq is more than the inverse of the ten-year treasury yield. i think you would sagan mo modest -- say again, modestly encouraging. >> mike, thanks very much. it's been a heck of a 2022 are you looking to make money? who isn't? check out some of citigroup's top picks today. those are the names. you can get the reasons and more on them.

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welcome back to "tech check" everybody. hope you are having a great wednesday wherever you are it's good to have you on semiconductor stocks are doing okay they continue to outperform, all of the acronyms. what about the biggest decliner in the nasdaq. anybody have a guess a company called netflix stock down 35.5% it has lost $40 billion in

market cap today we will talk more about netflix coming up and their strategy, but first a news update. we have existing home sales falling less than expected in march, but that's due in part to a downward provision in february a median price hit just over $375,000 sales are still down 10% from last year. and strong sales growth. and baker hughes is trimming its losses, down about 7%. it was a big earnings miss despite oil prices speaking of which the world needs to invest another $1.3 trillion in the next eight years

to avoid shortages this according to jp morgan. they say they will outpace supply about 20% renewable energy sources will not be able to replace oil and natural gas for years to come. that's an important issue people talk a lot about right now, julia. back to you. >> absolutely. as we watch netflix shares tanking and the cost of the business, don't forget the giant check the network has been dishing out to hollywood did netflix overpay? here is matthew who is also a former editor of the hollywood reporter matt, i have been reading your

newsletter and articles on this topic. what was netflix's failure, spending too much or can it point to competition as being the real problem >> i think both are a fok tore for the past ten years netflix has operated that spending, spending, spending will lead to scale, scale, scale. they are the industry leader with subscribers around the world. but it has come at a big cost. they are expected to spend about $19 billion on content and keep in mind they don't air sports so that is going to creators around the world and those who have been extremely expensive. >> they say they don't see an opportunity in sports and live news they do see how doing an ad-supported business could make

sense. aren't they going to have to spend a lot to get the tools they need for an ad-supported business >> how will they implement it? it is not that easy and you have to be prepared to share information with your advertisers. and netflix secret has been it hoards data. it doesn't share that when it doesn't suit their interest. they will have to be a bit more transparent. >> i am paying $5 for apple, $5 for peacock, $7 for hulu who all have great content as a user i am paying near $20 for netflix at this point. as a user i don't know they are paying more for some of this

content. what is going on behind the scenes when these streaming networks are competing for the content? for these big box videos, big box movies, series, that is allowing other companies to say we will take it at a cost and take some money off the deal >> these streaming wars have led to increased cost for the actual product. you hear about building wars all of the time. typically those are among the streaming services, hbo max, apple, amazon, the major ones trying to get to scale and become the three, possibly four, global streaming platforms that survive this era of streaming wars it has come at a big cost. to get that major movie, to get the $200 million movie, you have to put up the money and do it in

advance. what you are doing is often buying out these talented people from what they would get on the back end you are paying more up front than if you were a traditional studio that does a back end model where you share in the box office >> look into your crystal ball as we look at other streamer stocks plummeting, dragged down by netflix's move lower. what will we see from the rest of the media business? will we see similar trends or do you think companies like disney and warner media are at an advantage because they didn't fall into this bing bus-- binge business model so consumers decide to cut the cord, if you will >> i think the balance of power will shift netflix was so big and these

others have something netflix doesn't, decades of ip and valuable franchises. netflix has paid through the nose to compete and try to create, but if you are disney, you can spend lesson content and be propped up by the franchises. i think the market may start to value that a little more i am not going to say they will shoot up, but i think they will weather the storm better than a company like netflix >> it will be trog to see how the other subscriber services come in this quarter matt, thank you. the netflix disaster, remember back in january bill ackman tweeted he was buying up netflix and reportedly gobbling up about 3.1 billion shares.

let's do a little math this is based on some assumptions we know on the days he was buying. when he said he was buying, netflix was averaging better than $75 a share, so it would have cost him about $1.6 billion on netflix now that stake, assuming he stills owns it would be worth about $735 million right now for paper loss of over 400 million in a couple months again, these are rough assumptions based on the time frames, from his tweets, filings, maybe he sold it before today. but if not, this could be an expensive trade for ackman and his investors on netflix switching gears, bitcoin well off its all time highs.

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it is fair to say the crypto ecosystem has been put to the test this year that didn't slow down silver gate after they beat the street. joining us now is the ceo. you can smile. you had blowout numbers, big growth in silver gate network and customer growth as well. to what do you attribute success and how interested still are your clients in crypto >> i appreciate that our customers are still very engaged in this eco system one of the things about silvergate and the exchange network, we are the regulated on ramp and off-ramp from the traditional system into and out

of ecosystem we are institutionally focused we have institutional investors, many of whom trade the as set. many like to trade the volatility however, when trading volumes are muted, as they were in the first quarter, oftentimes that leads to slowdowns in the business having said that, our customers are still very engaged as you pointed out, we added over 100 additional clients in the first quarter and now stand at just over 1500 clients. >> in 1869 we had that prominent moment where the western railroads and eastern railroads had the golden spike and brought the two sides together it feels like, as an outsider looking in, that we are at that

moment you are a federal reserve member bank is this right now the time when big banks, finance, old school wall street type stuff, and crypto have their golden spike moment >> it's an interesting analogy we actually started looking at this space back in 2013. we opened our first account for a customer in the bitcoin space. this was before all of the other tokens we opened our first account for a customer in january of 2014. we have been doing this for eight years. we have been anticipating the broader financial market to pay attention to this. you are absolutely right it does feel like now is the time i think we have gone -- we have made a shift from where a couple of years ago people kind of scratched their heads if you were looking at bitcoin and the broader crypto currency system

now i think people may be scratching your head if you are not paying attention to it >> people are paying attention to bitcoin, but i think there is question about the regulatory challenges ahead especially with what you bought from meta, which was dm why is a stable coin so essential for your future? >> i appreciate that question. so you can think about a stable coin as a tokenized dollar those of us who have smart phones are already used to transacting with digitalized value, often a credit card or attached to an app on our phone. but the settlement of that happens after the fact it can take days, in fact, for

an actual payment to move from my bank account to yours, even though it might feel like it's instant. those days that it's taking, that's essentially an extension of credit until such time as it settles. the beauty of a stable coin is that it's instant settlement because the tokenized value moves across the internet in realtime 24/7. it is something, from the regulatory standpoint we take seriously. we have, as i mentioned, been banking this system for the past eight years. we are bangking all of the stabe coins used in the united states. they use our network and capabilities to minute and burn the tokens 24 hours a day, seven

days a week. we believe the regulatory environment is such that regulatories want to see this inside the banking system and not outside of it. that's what gives us confidence in launching a stable coin hopefully by the end of the year >> that was going to be my question, alan you are smiling today, but you have a lot of work ahead of you. anything you can tell us about that launch and what partners you might be working with and what you picked up from meta and if some of those deals are still in place >> sure. we are not at a point where we can announce any potential partners yet it's important to note what we acquired was the dm protocol itself and the proprietary regulatory elements that sit on top of that that give us confidence that we can issue a stable coin in a regulatory,

compliant, safe and sound manner satisfying all of the regulatory requirements surrounding money laundering, et cetera. the dm protocol was purpose built for payments where we see the opportunity here is using a stable coin for commerce where the existing coins are primarily being used in the crypto coin system for trading, et cetera. our focus is on using this for payments so the technology has already been tested. it is in a premium net phase we were working with the dm group last year prior to purchasing the assets. we are confident in its ability to serve this use. we just have a little more work to do this year, working with

our regulator, as well as with the future market. >> the market is doing a little work for you the stock is up 7% so solid take. thanks for coming on "tech check. >> thank you you can get more content like this by watching crypto world available on cnbc.com daily. alright, so...cordless headphones, you can watch movies through your phone? and y'all got electric cars? yeah. the future is crunk! (laughs) anything else you wanna know? is the hype too much? am i ready? i can't tell you everything. but if you want to make history,

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let's get a gut check on ibm, as netflix fall, ibm is surging after it beat on the top and bottom lines their $14.2 billion beat expectations thanks to a 14% increase in cloud revenue. after a tech sell-off shares have turned positive year to date check out that stock up 7.5% right now. don't miss ceo arvind krishna breaking it down at 3:00 p.m. eastern in a cnbc exclusive you

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welcome back we're actually going to take a step out of netflix for a bit and do a dive into another faang name and that is alphabet and it's all for today's edition of undervalued or overvalued? on the undervalued side, the bulls would say like rosen plat securities if they see youtube

holding its own against the rise of a tiktok maintaining their user base better than rivals like meta ask with an ad-supported business model no one is worried about subscribers plunging like a netflix, but the bears on alphabet would say google is facing some of the same woes as reed hastings after all increasing competition as the pandemic boost fades the good news for the bulls, alphabet holding up a little bit today unlike meta, facebook which is down 8% here's the key question, guy, will youtube's model different from netflix as it is prove to be the right one and will disney, hbo, discovery, you name it soak up some of the watch time joanna >> it's funny. i have been thinking a lot about the youtube-netflix conversation and that's what i don't pay for

and i use a lot. i tell you, i have kids and youtube is definitely becoming much more popular with the kids in my house, at least, versus netflix. maybe i go to netflix to watch coco melon, but imram i really paying their 20 to watch coco melon? i don't think so, not in the long term. youtube, very sticky for younger users. i hear you on the tiktok, but it's still a different type of content, and they've done some work also on youtube to compete with tiktok. they rolled out shorts and i'm not sure that people are fully using that are immersed in it, but they have made some efforts. >> we'll have to see what youtube numbers and alphabet break out in this quarter's earnings and of course, i just want to point out, just to bring it back to netflix one last time that it was one of the top companies in the s&p by market capitalization and now it ranks 87th if you want more tech check on

the go follow and subscribe to the podcast wherever you download pcaodsts. tech check is back in just a moment wealth is breaking ground on your biggest project yet. worth is giving the people who build it a solid foundation. wealth is shutting down the office for mike's retirement party. worth is giving the employee who spent half his life with you, the party of a lifetime. ♪ ♪ wealth is watching your business grow. worth is watching your employees grow with it. ♪ ♪

>> all right let's wrap it up with one more thing and this is dare i say, random, but interesting. the biggest ceo package of last year goes to trade desk jeff green. he's been an awarded an incredible $835 million package if and there's an if, the stock can hit a number of targets that may not be hit there's eight of them and if they do he'd become one of the highest-paid ceos and she may be asking what is trade desk? it's an l.a.-based firm with a market cap of $30 million. so green has work to do to get the green, but no doubt one man not worried about inflation. >> there are so many places i can take this, but i have an idea because of the date, it's 4/20 i suggest green gives $420 million to elon musk today he'd have to write that check today for his twitter fund, what

do you think, brian? >> he's got to hit those targets first. >> you've got to hit those targets first, but today is a good day for him to maybe hit those targets. >> but remember, netflix might need to buy some ad tech, so you have to wonder if there's some sort of purchase or acquisition there as we continue to follow this netflix story now "the halftime report" starts over to you guys julia, thanks. welcome to the "halftime report." a nightmare on wall street netflix shares plunging 50 million in a single day and in a major plot twist, one of our committee members is buying that stock today even as others run for the exits and we'll discuss and debate with the investment committee. joining me for the hour today, kari firestone, liz young, joe teranova and pete najarian co-founder of