Stock . Steve grasso i dont think so. Bespoke, paul hickey was on. He said a great thing about seasonality, the Second Quarter is a bit tough it gets better going into yearend i think if you are a netflix bull, this really hits you in the gut, but longer term i think you can stay long. Thats looking at the glass half full, isnt it . 2. 7 i mean 2. 7 million. It is a terrible number. Versus 5 million, the first drop in u. S. Paid subscribers ever. Thats the key. You could you could argue, you could argue that, okay, fine, wall street got ahead of itself and was expecting 5 million, they came in at 2. 7 million international, but it is the loss in the u. S. When you are facing competition and you have raised prices, that really calls the whole story into question. I dont think it is international. What i was upset with was in april theyre the ones that came out and gave us the 5 million number. Right. It should have come from their guidance, was completely wrong in april how do they not have a gut feel on that number to dress the window down even more . I think it is about International Growth it is not about domestic for me. It is about international. Well, but the domestic matters because you have competition coming in domestic and they raised prices here, right . Thats what investors are concerned about. And the u. S. Market is slowing on a relative basis in growth. It is obviously a fantastic company, great story but when you have metrics that are so sky high like this and you have a miss like this, it is not like, oh, all of a sudden it is cheap, right . Right. It is still in the stratosphere for me. You know, you always wonder and for years ive been wondering, all right, when does it finally catch up to them. Right. When does all of the spending and the growth catch up to them, that they dont actually make enough money to warrant this kind of valuation. I dont know if this is the time i certainly wouldnt short it here, but i would let it i would let it settle for a while. I just want to bring up one point jim cramer made that i think is so important. He said you really shouldnt trade anything before you hear the Conference Call. Theres so much color to be had on this. We will see what they we will see what they say, but to jump in right here with half the information, i dont know, you got to be i would love to see if they have a good as long as for that big of a shortfall at this point. Well, what he is saying, all right, in april they said that theyre i think talking about a decent quarter this current quarter. Right. Do they have more credibility now than in april . Or less. I dont know. And context was weak in the Second Quarter in q3 you got Stranger Things season three, 41 Million Viewers in first five days you have orange is the new black, money heist, a lot of good stuff happening in the back half of the year hopefully they can rebound, but theres no way to sugar coat this it was a complete disaster, a complete wlif. Right. How bad is friends, losing that. Does anyone have netflix . I do not. I did not subscribe to netflix. Do you watch a lot of friends on netflix or the office . No. My kids do. It is another generation. Im sure theyre watching other things as well when you look at the numbers, it is above 50, close to 60 looking for their own content, not friends. Right. My biggest concern as an investor would be the fact they put through the price increases. We saw the big drop in total users. The question with all of the competition coming forward in the back half of the year and going into next year, will we see netflixs ability to raise price Going Forward curtailed . To me thats the most shocking thing, right . To be fair, earlier this week i had said i was bullish on netflix and said, listen, youre not going to cut it. Netflix is one of the last things you cut off in a recession or in a downturn in the economy. It turns out i was wrong so for me ive got to question the whole thing, and their entire Business Model has been spend a ton of money to get those subscribers. If you dont have that growth, wall street is not going to give you a break on spending money. Or if you cant raise price. Right. On a slowing growth user base like the u. S. , then what yes, thats a problem if you cant raise price, you have big issues, especially with what theyre spending on content right now. Right. I mean the Free Cash Flow burn is still an issue fortunately, they reaffirmed it will be just negative 3. 5 billion and it didnt get worse because last quarter it was 3 billion, then tipped up to 3. 5 billion. I was a little concerned it might tick up even higher. They did reaffirm it is going to stay where it is at. But, yes, it is an issue if they cant increase the price. We have seen it before, seen them increase price, saw the stock tumble, we saw the seasonality of the Second Quarter being weak. Have we seen a decline in u. S. Paid subscribers . No. We have never seen that big a whiff on the numbers but i believe what karen said, listen to the call and see the message. But the outstanding question to karens point of the valuation is, you know, it is a growth stock it is certainly priced for growth if were not seeing that in u. S. Subscribers at this point, then what yes, valuation though has been astronomical, and thats a problem. But i should say that has never been a problem before. So it depends on what degree you start to see the problem. Thats exactly the problem with the high flyers it dont just happen to netflix, but as soon as the growth slows and thats what theyre getting credit for we have seen it with many other companies. As soon as that slow the story deteriorates and different buyers are to come in and it is not cheap, to karens point. What metrics are you going to use . It is a slowing Growth Company based on this quarter, based on not hearing the call. So they are talking about a little bit of potential pull forward. First quarter they added 9. 6 million subscribers which was a blockbuster quarter. 2. 7 million this last quarter, so maybe there was a bit of pull forward and maybe this quarter isnt as bad as the headline number leads you to believe. I dont know. Theyre the ones as grasso said, theyre the ones that came out with the guidance. Right. Should have said, there was pull forward on the first quarter, Second Quarter will be down three, and it is a miss but not as big you have to wonder what happened. What happened what happened in april and end of the quarter. It could be the most interesting call in netflix history. Right now, today, this could be the most interesting call. The flip side, disney, i would have bet against that one. That one is still up 30 yeartodate. That the stock would have fallen by now . Come back to earth. But it stands the reason when you look at the complex, it stands to the positioning of it. You look at ebay, you look at netflix and the crowded names that are dropping the most. You dont think netflix is crowded . Yes, it is crowded. People underweight in ibm had to chase it, people underweight in disney had to chase it because they were waiting for it to break out on the range and it is holding. Lets bring in fast money friend gene munster for more reaction what do you make of this big miss how would you explain 2. 7 million versus 5 expected . They probably pulled 1. 4 million from the december quarter but it capture the significance of the miss. They should have accounted for it in their miss, they should have said four instead of five. I have listened to your commentary i dont like to pile on when things are negative, but i want to try to have a most clear view of what is going on and what has happened even if you account for a pull forward they didnt give proper guidance for, this is negative this i think we will look back at this quarter as one of the pivotal moments in the netflix story. I think what the key insight here is that the content lineup that they had in the june quarter just simply didnt get the job done we can talk about whats coming in terms of competition, but ultimately that is the tip of the spear at this story. When you put a layer on top of that content and things are going to get more difficult. When you layer on top of that, the valuation and i want to enumerate that, 52 times next years earnings and it is on the lower stock price, compare it to apple at 15 skrjust as a point f reference, and then you add the debt piece which we have not talked about, i think it is between 10 and 12 billion in debt i think you can see why this quarter is not necessarily the breakdown for the future, but we will look back at this quarter as the best days of netflix are behind it. Thats what you believe, weve seen the best days of netflix, theyre over . I think we have they may have an anomaly quarter, but when you put the factors together in terms of the pricing you have talked about, in terms of the debt, the valuation, upcoming competition, what their content roadmap looks like, yeah, i just as much as i love the company, i just think it is going to be it is the best days unfortunately are in fact behind it. How concerned are you that netflixs ability to raise price is severely curtailed at this point given the competition on the horizon . It is definitely curtailed. The competition, like you said, it is not about the pricing piece, it is not about what happened as much in the june quarter about as much as what is coming u we are talking about four major new competitors coming in the next year, and so i think it will impact pricing. Of course, we know the model we have talked about it here today, is that you have to keep the subs going to keep funding the content to paying off the debt it is wonderful when it is working, but if it starts to backtrack my one question going into the interview tonight, i think thats how they referred to it, is that guidance is theyre sending a message theyre going to step right back up to normalcy i understandthey have a good start for the month of july, but even if they are able to step back up to that, call it 6. 5 to 7 million range, which is consistent with the average number of subs theyve added over the last four years, 6 1 2, even if theyre able to step up to it, i dont think it will be sustainable. Gene, when you look back i agree with you, it is a terrible number when you look back on it, how much did game of thrones have to do with this . And with the stock down now 12 , at what point is it a buy even if the best days are behind it at what point does it collapse enough for you to buy it dont have good answer on game of thrones. It had an impact, but they knew that that was coming in terms of where would i buy it probably around that 15 multiple, so a ways down from where were at. All right gene, grade the quarter, please. Oh. Im going to give it a cminus. Oh. I struggled and i wanted to give it thought about dplus, because if you missed back in elementary school, if you come up with 46 short of perfect, that to me is a d. But they did grow subs so i wanted to give them some credit for that so to answer your question, melissa, cminus. All right, gene let us know what you think of the interview, as they call it gene munster of luke spencer lets dive into the charts on netflix. Mark newton is at the plasma what does the chart look like right now . Down 12. 5 . Yes lets look at the technicals to put it in perspective. Almost 45 from the Closing Price today, a big drop, obviously 2. 7 versus 5 expected. When you look at the longer term chart it is interesting because the stock really had gone nowhere over the last six months so obviously lagging other faang stock like facebook and amazon todays move will put it under the entire range going back to the beginning of the year it it will open potentially tomorrow morning under 320, which on a weekly close with two days left likely will send it down even further in the days to come. When you look at the longer term picture, this is interesting because the stock has really beginning what i view as a longer term consolidation triangle so getting down here 275 is really the area i would Pay Attention and look to buy on dips if it is under 322 by friday, my thinking is that it is going to show further losses to come. Obviously it is going to be big volume most likely tomorrow, undercutting all of these former weekly and monthly lows. Thats certainly a negative technically and that joins what were thinking on the fundamental side whether it is anomaly or not you have to Pay Attention when you see a big gap down on heavy volume ibm on the other hand up 1 . It had a big move after hours here take a look at how this looks after hours, and the stock up 33 . Everybody looks at the short term longer term though, it is really important to notice this stock has been really in a longer term down trend since 2015. Right up there zoo is an area i would want to sell into this and short it, if not selling rallies on what i own. I dont really like the structure here if anything, this is still one to consider selling into strength very much a longer term laggard. Ibm though in the near term, you know, it really has to get up above the former highs which would help it get up to 150. Above 150, then you might take a look but, you know, bottom line is netflix is one i would be wanting to buy in the weeks ahead, getting down under 280, down to the 270 level. Ibm on the other hand is one i would want to look to sell into on further strength in the weeks ahead. Mark, thank you mark newton at the plasma. Lets do would you rather. Buy ibm on weakness or sell into strength thats a fantastic, a really hard one you know what, i would rather sell ibm into strive i will tell you why. One, i think ibms quarter was good nothing wrong with that quarter but they havent had a lot of big expectations for ibm red hat was probably better than what they were expecting so it was kind of a showme story. They showed you. I think you have a better chance i would rather sell that than netflix, the story is broken here, and as mark was saying these things are great on the way up, right . It is a nice, virtuous circle on the way up, but when that reverpss it r reverses it is a big problem. Same question to you, mark. I would buy the dip on netflix. They are subscriber misses, Second Quarter of 18 buy the dips has worked for netflix. I think the longterm thesis is intact. Even with the competition coming i do. Streaming is not a winnertakeall space. Theres room for several companies to succeed and they have first advantage who else has 250 million subscribers. Karen in. Im in bks short i would rather short ibm the risk of being short, it absolutely becomes a darling ala netflix. We have seen darlings that are no longer a darling and how painful it could be. It makes me absolutely ibm shorter. Coming up, much more on netflix throughout the show as the streaming giant gears up for Conference Call or interview in less than an hour. Plus, testifying on capitol hill calling Facebooks Libra dangerous. She will be here to explain how big a threat it is to the crypto universe live in town square here in new york city, much more fast money right after this. Welcome back to fast money weve got an earnings alert on United Rentals, dropping in the after hour sessions. To kate rogers at headquarters. You said it United Rentals taking a dive in after hours trade. They beat on the top and bottom lines for q2 but trimmed the outlook from the high end of full Year Revenue Guidance ceo said the company was pleased with general rental and specialty segments for the quarter and added that the outlook for the second half of 2019 remains positive for both in the field he added the guidance changes respect a thrower than expected pace for blueline integration. The buyout is supposed to help boost the companys presence in north america as well as what he called historically bad weather in key regions in the quarter. The Conference Call kicks off at 11 00 a. M. Eastern, and key things will be commentary on customer sent men along with the seasonal headwinds like the one he mentioned, and more commentary on the blueline integration and what may have held it up it is up around 20 year to day and trading down 24 from highs hit on september 20th and had a rough 2018 and isamong the top ten worst performers in the industrials over the past 12 months. Melissa, back over to you. Kate, thanks. Kate rogers at headquarters. Lets trade this, karen . Yes sadly, painfully i am long uri. I love this company, think the Management Team is fantastic i dont love citing weather. I think bad weather is not a one off, but it is the way it will be the thing that stuck out to me a little bit and it is not a huge deal, but the thing i didnt like, they talked about it being slightly less than they had given before in their outlook, but their Free Cash Flow actually will be a little bit higher while it sounds great, the reason is because theyre going to pull back a tiny bit on their cap ex i like when theyre feeling good about spending, and so when they see the returns on that cap ex so it is not a huge amount of money. On the Balance Sheet theyre getting toward the lower end of the leverage they feel comfortable having i would rather see them be a little more aggressive it is not expensive here post market, it is not expensive at all, but as a bellwether for how companies are feeling about the economy and the future of spending money. Sure. I dont love it. It is the signaling factor, right . We had housing stocks today which were not that great, right . Now you have a company in the industry saying, you know what we dont feel as great about the industry as we did maybe six months ago it is that signaling effect. Now, down at 110, this stock traded between 110 and 140 roughly. I think down at 110 it is probably a good risk reward. 122 now. 122 so another ten bucks, thats where bk likes it. And technical is up, so karen gave you a great fundamental backdrop, but it is triple topee from february, april and now recently right around where it fell from has been resistance to the name it does not look like it is about to break out any time soon. But more broadly in terms of the mosaic we have seen so far from industrials, we have gotten the initial one basf, we got a warning from fastenall which cited tariffs and higher raw materials. We have this we have csx which was a horrible loser in todays session. Absolutely. What does that mosaic paint in terms of the industrial picture in. It paints a slowing economy i will add in more european car sales were not that great today, so we have ford and gm coming next week. It paints what karen has been concerned about and talking about, is you have this stagnation in the economy because people are uncertain they dont know what to do. What is it unlikely to result in powell cutting basis rates 50 instead of 25. And that solves everything. Some of it is priced into the market, dont you think. Some of it. 25 maybe, but you dont know it changes i think the market right now is not worried about granularity in stock specific names it is worried about the macro. We have earnings, well worry about that as we enter the later in july, we will worry about powell. Getting to ebay, lets get to aditi roy in San Francisco with the details. Hi, melissa we have been monitoring the calls as well. At one point the stocks were up 7 in after hours trading. Were going to go straight to the guidance numbers you know, both q3 and fullyear guidance came in a bit light but fullyear eps guidance was above estimates. Another key metric analysts are watching, gross merchandise volume or the sum of all of the sales on the platform came in at 22. 68 billion. That is a slight miss over the 23. 04 billion the street had modelled now, the company has been in the middle of a Strategic Review after activist investors Elliott Management and Starboard Value took stakes in the company the online retailer has announced it has taken two actions to strengthen its portfolio. Ebay says it reached an agreement with pay model to bring the inventory on to one of the largest marketplaces in india. Secondly, they reached an agreement to sell its flash sale german brands for friends. It is reviewing the role and value of stubhubs and classifieds to determine the best path forward for shareholders we have a bit of reaction from rbcs mark mahaney he says expectations were low so the bar was low so theres a bit of relief rally on the stock he adds on the mention of the rollin value on stub hubs and classifieds it might be a positive steps towards unlocking value. Back to you guys. Thanks, aditi roy in San Francisco. What do you make of ebay, mark not a big fan of ebay they are in a very competitive space. The online marketplace, theres growing competition coming from the likes of facebook and google not a big fan. I mean it is really more of a turnaround story where theyre focused on cutting costs and things of that sort. So if youre a business, where do you go to sell your product, to ebay or amazon . The breakup of the company, thats kind of interesting. Right i mean ebay is not expensive on its own and i love there are some very big ideo sin crating events that could happen here. The company is saying, were looking at it. Maybe the activists came out and said, here is our agenda, were going to take over the board unless you do these things they said, fine, well do these things i like it here i think the risk reward is interesting. I think stubhub and it could get big prices on long. I will do what you did to me on long. I look at ebay and im kbreimpre the stock can perform and survive but how much is without sub hub and classified on the up 39 yeartodate can you get back to old highs . I dont think you need to get back to old highs. What are you playing for if you buy straight out the equity . I wouldnt be surprised to see it at 50 bucks that wouldnt surprise me. Okay. Still ahead, we are all over the big after hours movers check out ibm, losing some steam. Netflix plunges more than 12 at this point we will bring you the latest details from the reports plus, Facebooks Libra in the hot said for second day in a row. Di mirrors was there to testify. She will tell us the moment that had the whole crypto universe talking. First on business worldwide, first on business worldwide, much stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent, this im so proud of you dad. [man] i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. uplifting music da welcome back to fast money the House Financial Services committee wrapping up day two of its hearings on facebooks new cryptocurrency project libra next guest coming to her hot off her testimony. Here is what she told lawmakers moments ago. Were seeing a wave of interest in cryptocurrencies and countless imitators, which borrow some features of but are decidedly not cryptocurrencies libra is not a cryptocurrency. I urge you to view bitcoin as open Public Networks that enable innovation and growth and treat libra and its future imitators and there will be many in the context of the facts. Private efforts led by corporations holding billions of dollars of the publics money. Joining us now is coin shares chief Strategy Officer meltem demirors. Great to have you on thanks for joining us. How big of a threat would libra be is it dangerous . I dont think the question is, is it dangerous per se i think really today what you saw in the house, led by chairwoman waters who did an exceptional job, was lawmakers are trying to understand what is libra. Nobody really understands. Libra would like to be cryptocurrency that is how facebook is styling this but the facts are that libra holds assets, including u. S. Dollars and government securities, and is holding the publics funds so i think the first step really today was figuring out what is this and what does that mean for how we go about figuring out what to do with libra. And you explained it very well to the house today, meltem, in terms of what it is and how it differs from bitcoin. You make the point that it is different in part because facebook is a closed network, facebook is a multibillion dollar corporation, facebook will have tremendous opportunity because of libra, but also tremendous responsibility. What is your what is your take as a bitcoin expert on whether or not this could be, you know, systemically important, systemically dangerous down the road . Absolutely. I think at the end of the day really what the question here is, is cryptocurrencies are not going away it has been ten years since the Bitcoin Network launched the Bitcoin Network is worth a lot of money you are showing the bitcoin ticker every day almost so investors are looking at it. Cryptocurrencies are here to stay the question really is, is what do we do with cryptocurrencies which are one thing that is separate and distinct and what is libra and what should we do with it. I think the big concern of everyone in this hearing today was really the facts that facebook has such tremendous size and such a massive impact on the Digital Economy were talking about 2. 7 billion users. Thats a lot of influence and a lot of power, so there are questions about systemic risks, there are questions about anticompetitiveness, there are questions about who this consortium is and how it is selected, and thats really what lawmakers were trying to unt untangle. I mean facebook in many ways is sort of centralized versus the effort to decentralize, right, when it comes to bitcoin and block chain. But putting that aside, meltem, what are the chances that you think that congress will actually confuse the issues and want to regulate cryptocurrencies at large . So i do think there is a misunderstanding that cryptocurrency is not regulated. The Bitcoin Network is not regulated. It is the technology but the businesses that are built on top of bitcoin are regulated. I should say increase regulation i know there are antimoney laundering, know your customer provisions and all of that on bitcoin, but in terms of ramping up to the growth and acceptance and use of bitcoin may get i dont think it is going to happen no one saw cryptocurrencies as being libra and Everyone Wants financial innovation in speaking about the unbanked which, by the way, are not a body shield and it is not just a technology problem, but Everyone Wants to facilitate more innovation to enable, quote, unquote, the Digital Economy to grow through things like cryptocurrencies nobody is arguing with that. I think what were trying to determine is how do we make the United States a place where innovators continue to bed businesses and how do we create a regime, a Regulatory Regime that reduces the burden on small startups and firms and allows them to compete with really large corporations who have great lobbyists, expensive lawyers and large war chests. Meltem, it is bk. Great to see you. Hey, bk. Hey im curious. We both travel around the world to a lot of different events i always find that other countries are way ahead of the u. S. When it comes to regulatory clarity, lets call it after being in washington, after talking to congress, do you feel thats changing . Are we going to start to see some more regulatory clarity or maybe some coordination globally i certainly think after the hearing we had yesterday in the senate and today in the house, lawmakers are very aware that the u. S. Needs to remain competitive, that regulatory clarity is tantamount. There are a number of efforts under way including the token tax onomy act which congressman davis is leading with members of the house. We have congressman mchenry who is very focused on these topics. I think it is too early to say whether new regulation will be applied. I think well see the formation of a committee to focus on the issue of cryptocurrencies and possibly a separate pardon, a subcommittee or special group to focus on the issue of libra which is distinct and separate i do think for lawmakers though american competitiveness is a primary concern and, again, theres a reason the Libra Association chose to go to switzerland. It is regulatory clarity and easier sort of process in terms of doing something innovative, and they want that to happen here in america. So im cautiously optimistic but, you know, ten years into this i think a lot of us are still waiting for clarity. But im hopeful that todays efforts helped push things forward and that it created some of the muchneeded political momentum to get it going. Meltem demirors of coin share. Thank you for joining us. Thank you. I think she is very optimistic. More optimistic than me listen, i will tell you right now, asia is eating the u. S. s lunch. Theyre so far ahead of us im afraid the u. S. May have already lost the race. We still have a chance, but it is very concerning to me this is where finance is going this is the new technology we talk about netflix and how that changed cable this is happening in finance today, and the u. S. Is the center of finance. Were sitting in new york. This is what new york does, and we should take the lead in it. How about for facebook . Two days of hearings, david marcus getting grilled basically. Yes. Is this turning into, you know, maybe it is not worth it i mean from a shareholders standpoint, do you question now . It has never been the reason ive been in this stock. Sure. I think could it be a reason to get out of the stock because you think so much is built into the price already no, i dont think so this will die down theres always a frenzy around them their max poster child appeal is during their hearings on the hill were finished with that. For now. For now, right. All right it is a tough seed to be in. We want to get a check on the earnings as we head to break netflix is down sharply after a big subscriber miss. Ibms gains, well bring you the latest in the quarter. Goldman sachs downgraded today we will tell you what the we will tell you what the traders arn, investors with solutions. Because the possibilities of life and investing are greater much more fast money still ahead. Welcome back to fast money we have an earnings alert on ibm moving in the after hours session. Lets get to josh lipton with the details. Hey, josh. I just caught up with mose and he covers the name he points to cloud and Cognitive Software division, the newer technologies, cloud and analytics, saying up about 4 . On the other hand he notes the margin improvement is coming from less important areas of the company, he says so Global Financing Services it is why netnet he called it a mixed quarter and why he maintains a hold on the name ibms Jim Kavanaugh is on the call he talked about the red hat ak which igs i acquisition, ibms big bet on the cloud take a listen. This acquisition is an important milestone for ibm and one that will significantly impact the cloud landscape it is clear that the next chapter of cloud will be about shifting missioncritical work to the cloud and optimizing everything from supply chains to core Banking Systems and, remember, melissa, on august 2nd ibm will provide updated guidance reflecting the contribution of red hat. Back to you. Thank you, josh josh lipton in San Francisco where do you stand on ibm, mark . I would be selling this thing, repositioning the money into either microsoft or amazon or salesforce. I think if you want to be in the cloud theres a better way to do it than by owning ibm. It is a dinosaur it has been in a down trend since 2012 it hasnt done anything. Management over promises, under delivers so it is one im staying away from. Im counting my winnings from the would you rather i mean we sold it short at the beginning of the show, it is down. People are selling into the strength in after hours. Exactly bk is going home. Microsoft is set to report earnings tomorrow. One option trader seeing pain ahead. Mike khouw is in San Francisco with the details hey, mike. Yeah, looking at the pictures i feel like i could almost reach out and touch josh we must be close to one another. Looking at microsoft, we are seeing an implied move of 3 1 2 percent kind of in line with the 2. 9 microsoft has averaged over the last eight quarters. While call volume out paced put volume, the trade that stuck out was a purchase of the july 26, 136 strike puts, a roll up from the 131s, over 3,500 of those traded for 2. 12 the buyer of those puts is making a bet microsoft could fall below the 136 strike by a little over the two bucks, which is the premium they spent here, a decline of about 3 . It could indeed be a hedge against somebody with a long position in the stock. Obviously over the last eight quarters the stock has rallied up steve grasso . This is a stock that has done everything. But you mentioned positioning at the top of the show. It is positioning, and i would not be a buyer of it at these levels it has been a perfect stock. I cant say anything negative about it other than the technicals yeartodate it is butting up against hard corrie cyst answere versus buying it here and having it collapse at mike khouw said and be down. Karen. It feels every time it comes up value stock 30 own it i think it is pretty much fairly valued right now. Are you worried buying into earnings, are you worried they can come in line with Great Expectations going into the quarter, coming into line and the stock sells off . No, im really not overly concerned about that at all. I mean when i look at mike, what i see is they have a very, very unique value prop when it comes to the cloud they have a hybrid cloud offering. Which is good for all of those businesses who over the last decade or so invested heavily in the internal i. T. Infrastructure and theyre not automatically getting rid of that and moving to the cloud they really bridged the gap and have a unique value prop there. I have a broader rotation question and maybe i will pose it to bk since i gave him a tough one at the beginning. Im red rhee. You seem to be ready. In your prime now. Pick your poison, am i right . No, no, just in netflix it is obvious that people are selling the stock. A lot of people are selling the stock might be wanting to invest in technology, so where does the money rotate into . Thats an interesting thats an interesting question. Is it in a name you know, it actually could be microsoft as participate of a mega name that our friend dan nathan has come up with. If you look at microsoft, what is attractive about it is that kind of steady up trend here very little volatility in this environment you could see a lot of people kind of park cash there i would say on this on this particular trade not to get all options action on us, but we talk about protecting your portfolio when the volatility is low. This trade that mike pointed out to me is the perfect trade if you are long microsoft, protect yourself. If you want to get all options action, check out the show at 5 30 p. M. Eastern type or tweet us. Still ahead, netflix plunging after a big subscriber miss. We will tell you what to watch out for when fast money returns. Options action is sponsored by think or swim sponsored by think or swim sponsoreand answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with Td Ameritrade. D by Td Ameritrade welcome back to fast money Retail Stocks taking a hit today after Goldman Sachs came out with a bearish call on a number of specialty names thats our call of the day ralph lauren, levis, all sinking after the bell they expect it to continue for wholesale apparel brand. Can the retail wreck continue here it was an interesting piece this wholesale pressure mass been around for a while. Right. Anything like a macys, you know, that has been crushed. I dont know if it is already in it i dont own ralph lauren i own capry which is not so hole sale lead. I do only that, i will continue to own that. I think their customer is fine i own target, which was also one of the names. Right. They do like. I like those two i also own foot locker, which is not something they would like. They dont want you to be the in between. Right but the valuation of that is so cheap that i just absolutely cant sell it. So, i mean, if theres a whole sale pressure, then those outlets that sell the goods on the companies behalf may be getting crushed, mark. How do you interpret the call and where would you go yes, i mean if you think about it where do all of the polo shirts and all of the levis go with nobody buys them at macys and kohls. Tj max, baby. Tj max is the play here we love that one and own it. Off price is something that can work when the economy is good. It can work when the economy is bad, and consumers love the Treasure Hunt experience they love it i love the tj max myself is it home goods, you go in both and get the pot pourri. You can get it. And all throw in ross stores, theyre up yeartodate. Whatever hurts the complex helps these guys as well. Go ahead, karen. Tanger outlet, so anything mall receipted. Mall related, bad outeConference Call kicks off in abt n minutes time for netflix. We will tell you what to expect when fast money returns. Prevagen is the number one pharmacist recommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Welcome back to fast. We are minutes away from netflix Conference Call as the stock sinks after hours. Lets get to Julia Boorstin with more on what to expect julia, we should preface it is not a Conference Call typical of the average company. Thats right. This is a video call, reed ha hastings and asking questions curated either emailed or tweeted in analysts right now are moaning in on what is behind netflixs dramatic disappointment in subscriber additions, 2. 7 million versus the 5 million they projected to have they lost subscribers in the u. S. Analyst Victor Anthony explaining the shortfall, quote, the content slate wasnt as row best in the Second Quarter and that, coupled with the price increases, drove the subscriber weakness we would take that given the upcoming competition will be another negative factor that the stock will face. Rbcs marc mahaney noting while the Second Quarter has historically been the lowest in terms of subscriber additions, it is the first time the company has seen a decline in year over year in terms of this quarter. Mahaney saying, quote, the open question now is whether netflix has less Pricing Power than bulls like us assumed. On that video call which starts in a few minutes, mahaney and other analysts are looking to understand the impact of the price increases earlier this year and some other key questions, including how much more netflix needs to spend on originals to lure subscribers over with big hits, what kind of impact does hastings expect from new competition launching in the next year. We have to see if this quarter turns out to be an Inflection Point for netflix or a blip on the companys radar. Meteorologist au. Thank you, Julia Boorstin what would you ask on the call, grasso what is your number one question you want to see when theyre going to get to what their margins will look like, what the Free Cash Flow will look like, how much theyre investing in and really what this decline how much of it did they not know in april, what was there such a big gap between what they forecast in april and a couple of months later. How is there such a dras tig miss they knew what the competition would be like. They knew what the slate would be like. Right. And they knew senasonality wa not at their back but a headwind i want to know how did they miss it, whiff it so atrociously. And what degree of confidence do they have in forecasting third quarter. Exactly. They believed they were going to hit all of these things and nothing was unexpected they knew the content slate was week and the price was there how did they miss so badly. Thats exactly the problem you have here. Again, the story starts to break down because you dont have the growth anymore and now you have the company who put out these numbers and they just i mean it is a 46 miss it is not like they missed it by 5 or 10 , which would actually be a large amount, too you know, to me still i think it is a no touch. Yes i mean i would want to know exactly what happened. I would want an explanation as to why they missed so badly. But i think most importantly, how confident are they that the quality of their back half slate of content in the second half of the year is really going to help them to get back on top and really drive that subscriber growth theyve been experiencing over the course of the last avel ar lot of questions. Conference call is four minutes away up next, final trades. Stay tuned to get a free pan from Granite Stone sponsored by interactive brokers, integrate it Investment Management with lower cost and higher returns time for the final trade tepper sticking with what works. Abbott labs, another beater race quarter, the stocks breaking out and killing it with the freestyle libre glucose monitor. Bk. What weve seen from the early season, things are not as good as expected buy for protection. Karen. I still like the company though but im nervous about the u. S. Economy, so my s p puts are my favorite thing i have right now. Stay long, s p puts. Wow, that speaks volumes. Grasso. I look at this and you see the fed is dovish and you see bitcoin is having a little bit of trouble i go gdx you have a bufrnch of investors tail wind to my mission is simple, to make you money im here to level the Playing Field for all investors. Theres always a bull market somewhere and i promise to help you find it. Mad money starts now hey, im cramer. Welcome to mad money. Welcome to cramerica other people want to make friends, im just trying to save you some money my job is to entertain, educate and teach you. Socall me or tweet m me jimcramer. I hope the fed is watching the right companies here after not so hot day where the dow lost 116, the s p declined 6. 5 and the