IPO market, Disney exec. talks AI: Asking for a Trend

It's not exactly summer just yet, but the markets (^DJI, ^IXIC, ^GSPC) are celebrating after all three of the major indexes closed Monday in the green. Asking for a Trend Host Josh Lipton gives viewers a look back on some of the day's biggest market stories.

EquityZen Head of Market Insight Brianne Lynch joins the show to talk about the trends seen in the IPO market so far this year.

Disney President of Global Advertising Rita Ferro sits down with Yahoo Finance's Rachelle Akuffo and Brian Sozzi at the Cannes Lions International Festival of Creativity in France, to talk about the media giant is utilizing AI in advertising across its streaming platforms. For more of Yahoo Finance's coverage of Cannes Lions International Festival of Creativity, click here

This post was written by Luke Carberry Mogan.

Video transcript

Hello and welcome to asking for a trend.

I'm Josh flip in for the next half hour.

We're going to be breaking down the trends of today.

That a move stocks tomorrow.

There's a lot to keep track of, so we're focusing on what you need to know to get ahead of the curve.

Here are some of the trends we're going to be diving into the NASDAQ and S and P 500 notching fresh record highs and gains of more than 1% on the day.

And as stocks move higher and higher, we're seeing Wall Street banks raise their UN targets.

Three Already just in the last day, we're going to take a deeper dive into the day's market action and bring you the trading takeaways.

Of course, one of the drivers of the rally big tech.

We're looking at how the sector is the backbone of the markets move this year, and the waiting in the S and P 501 investor telling us there is more up side ahead.

They were just in the early innings of this.

A I driven bull market and artificial intelligence is one of the key topics of conversation at the Cannes Lions Festival of Creativity.

We're going to hear from Disney's top advertising executive on how the technology is transforming the business, plus the latest on the company's streaming efforts.

After a challenging couple of years for initial public offerings, the IP O market is heating back up.

But our next guest says that a IIT and Fintech are the most popular industries among IP O investors.

For more, we're bringing in Brian Lynch equities and head of Market inside Brian.

It is good to see you.

So, uh, maybe we'll start kind of high level Brianne, Just get your take on that US IP O market.

You would think, Brian, you listen.

I mean the stock markets working the economy is decent, right?

Inflation is moderating.

It should be a good time to go public, right?

Yeah, absolutely.

All of the key macro indicators suggest that now would be a good time.

But we've really seen fewer IP OS this year than many people were hoping for.

And the companies that we have seen go public are larger players, so they're raising more capital.

Um, you know, versus smaller IP OS.

Um and you know, it's been a mixed bag.

In terms of the outcomes, we've seen strong first day performance for a lot of these IP OS like at Tempest last week, right rubric estera all treated well on that first day of training.

But when we zoom out a bit, the overall IP O performance has been mixed.

Renaissances IP O ETF is trading slightly down on the year, So it hasn't been this mass call to other companies to join the market.

And frankly, the strongest private companies have access to both liquidity and capital in the private markets and they just don't need to IP O. Yeah, that that's actually interesting because you've been covering, you know, this space for a long time.

And I I was interested to get your take on that Just, you know, in terms of how the capital markets have sort of evolved and developed Brianna A Are there more companies just simply staying private for longer now?

Yeah, absolutely.

And we're seeing that has been the case over the past 10 years, and it's certainly continuing to be the case.

There's now about 4000 publicly traded companies.

That's down from 8000 about 10 years ago.

So when you look at the universe or the investable universe, for a typical investor, there's half as many opportunities.

And that's because of the abundance of capital that has been available in the private markets over the past 1020 years.

So companies are growing to be much larger unicorns deck of corns really leaders in their market by the time that they do go public.

And it really raises the question of how much upside is left for these public investors.

And we've seen more institutional investors tapping the private market, seeing the opportunity there and then our platform really trying to get more retail investors similar access as well, having having said all that, Brianna, are there any companies right now, um, that are on your radar that you think could take the public market plunge this year?

Yeah, One of the names that's been in the news, I think, is an interesting one to watch.

It kind of checks.

A lot of the boxes that I think companies will need to show is StubHub.

Uh, they're rumoured to be eyeing an IP O this summer.

This is a company that was founded in 2000 So a 24 year old company?

Certainly not a young company, Uh, but they've generated 1.4 billion in revenue in the past year.

EBITA positive with 350 million EBITA.

And this is a brand that consumers recognise.

It's a business model that they can understand.

So I think that will be an interesting one to watch.

Um, but zooming out from an industry perspective, A. I is all the rage in both the public and private market.

So I think the names that will get a lot of investor interest are those that have an A I component.

And since a lot of these a i companies are still young, it's probably the infrastructure players or the chip providers who are going to be the next, uh to exit.

That is interesting brand.

We talked so much about a I in the show and for good reason.

There's so much excitement from investors.

I'm wondering just how much pressure you think companies now feel like.

Well, if we're gonna go public, we better have some a i story to tell.

We better have some a I magic.

We can, you know, Sprinkle on the S one.

That's absolutely right.

I think any company that is going to go public in the next 6 1218 months is going to weave a I into their narrative one way or the other.

So it's really for investors to decide if that's a key business driver for them or a key part of you know what the future upside might be versus just kind of capitalising on the buzz that's happening in the market right now.

Brand always good to have you on the show.

Thanks so much for taking the time to chat.

Thank you and coming up.

We're sending it out to the 2024 Can lines International Festival of Creativity to hear from Disney's president of global advertising.

We're asking for a trend on the other side, the S and P 500 notching its 30th record close of the year.

The NASDAQ, keeping the streak alive with its sixth consecutive record, close for more on the market takeaways.

Let's get to finance his very own Josh Schafer, Joshua Josh, so we have more record highs for the S and P 500 the NASDAQ, and we also have more bullish call calls on how high the S and P 500 can go this year.

So this is from the past couple of days we had ever core IS out with the most bullish target on the street.

Now at 6000, up from 4750.

So you can see a flip there.

Really, From Julian Emanuel, we have Goldman Sachs boosting their year end target to 50,600 from 5200 earlier this afternoon, after these two, we had City follow and Citi now went up from 5100.

A trend to 5603 is a trend.

We have a trend and people feel better overall right about where the index is headed large Part of that is due to sort of the mega cap exceptionalism, those Big Six stocks the Microsoft, the apples, the NVIDIA of the world that we talk about and how well those have perform.

But another interesting thing that now that we're at record highs, we talk a lot about stocks being expensive, right?

So the price to earnings ratio forward.

We're looking at the forward PE of the S and P 500 here above 20 That's what strategists would call expensive.

We've been there for 100 43 days.

And what the big takeaway from this chart for me is is yes, you can talk to your financial advisor right now, and they might tell you stocks are expensive.

Stocks can be expensive for a long time.

We were at this level for almost two years back at the end of covid in that post panem bubble.

And then we were at that level for more than two years.

Over 700 days when you go back to The.com bubble.

So my big takeaway from this chart being essentially yes, you can look at a lot of sentiment indicators that are gonna tell us we are stretched.

They're gonna tell us stocks are expensive, but that doesn't mean that the S and P 500 is gonna fall.

10% times can continue.

Good times can continue and they can continue for longer than we expect.

And that is why I think we're seeing some strategists come out and still be bullish.

Even after all the gains we've had concentration, concentration in the market goes with winners and everybody else is lagging.

Is that right.

We're here when you look at the mag the mag seven contributions for this year to the S and P 500.

Again, those big tech stocks over two thirds of the gains have just been from those tech stocks.

But when you look at the fundamentals, this is from Goldman Sachs, and they point out, this is earnings revision.

So upward revisions to earnings over the last year.

We're looking at five stocks here Microsoft, NVIDIA, Amazon, Google, Meta 38% and the S and P 500 is flat.

And the rest of the S and P 500 is down.

So if we know that earnings are the key driver for stocks in the long run, this number would tell me those should be the stocks that are rallying, right?

So I think from that sense, you can sort of say, maybe a fundamentally backed rally.

Yeah, I was.

I thought it was interesting, Jo, like if you were gonna channel your inner bowl and you would say If I believe you know, the economy is in decent shape and I'm gonna say, OK, I think it's gonna I think it's gonna continue.

Then you could make the case well.

If that's my thesis, then I would think, OK, there's a lot of potential catch up.

That's just gonna a catch up.

Josh.

That is one of Goldman's scenarios.

So Goldman says 5600, right?

That's right here in purple.

But if you look at yellow, that would be 5900.

That's a catch up scenario, so that would mean big tech doesn't keep outperforming to an extended level.

But the rest of the stocks can come with a strong economy now.

You could also have the big tech exceptions, and we just talk about continue more a I.

We're talking about more earning speeds that gets you above 6000.

And this is a growing case some analysts are seeing because we know Apple NVIDIA.

Those companies are continuing to surprise, right?

Really, I should probably just highlight NVIDIA there, and video is surprising a lot, and that's driving things up.

Also important to highlight.

Within this, there's the catch down scenario, right?

So when we rely on big tech this much, if big tech disappoints, it could get us down here and to your point to the economy.

Josh.

If the economy me disappoints.

Then, of course, that might lead to lower earnings than we expect as well.

I give you the Jo the third Josh Shafer point.

Our final takeaway is simple.

It's the biggest thing to watch tomorrow.

It's a slow week of economic data.

Tomorrow we have retail sales.

We're looking for that number to come in at 0.3%.

It was flat last month, and I think the key thing to really just focus on there is it was flat last month.

Are we seeing the start of a trend, or is that trend reversing in retail sales?

Pick back up because, as you can see, we haven't had a lot of months in the last couple of years where we fall consecutively.

So if we're worried about that consumer, that's gonna be a key number.

We we just I mean, basically, we we we've wrapped up earnings, right?

I mean, what what do you think?

Kind of some.

I mean, there was a lot of data points, a lot of conference calls.

Everybody's trying to get their head around.

American consumer.

What What's the Josh Schafer take?

It seems I I'll tell you what the consensus is right.

Instead of my take, I'll rely on the people I talked to.

But it seems like the economists largely feel like we are slowing down, but not entering a slow down cooling, not crashing, cooling, not crashing.

So we'll look for signs of that tomorrow.

I think about 0.3%.

That's not impressive, but it's not bad and it's not negative.

Take it.

Thank you, Joshua Moving on.

McCann Lions International Festival of Creativity Getting underway and no surprise Artificial intelligence is front and centre.

Earlier today, our very own Brian Sazi and Rochelle Lao sat down with Rita Farrow, Disney's president of global advertising.

Here's that conversation.

Joining us out here today is Rita Frow, Disney's president of Global Advertising here in Beautiful Ca.

So obviously we have this gorgeous backdrop, a lot, a lot of nature here.

But another thing that's always on people's minds is a I and a lot of people are wondering How is Disney using a I How are they implementing it for sort of the next iteration?

Uh, well, thank you for having me here, by the way.

You're absolutely right.

This is stunningly beautiful.

I mean, Who wouldn't want to be here talking to you guys?

Um, we've been using a I a lot in our advertising technology stack around our algorithms and how we're optimising yield across our tech stack.

We have been exploring and we're really working there.

There's a lot of meetings actually, this very week on this topic to talk about what are the processes optimisation that we can really leverage around the use of a I really around creative and managing the volume of creative.

We go through 40,000 pieces of creative today, a day around our platform.

And when we think about the scale of what we have to actually deliver over the course of time, in terms of growth and streaming, we really need to automate that process.

And there's been so many vendors who have come to us with great opportunities of how we can do that.

Um, we're talking to a lot of those in that area also around advertising innovation.

So think about shopp ball interactivity, uh, everything we're doing in that space as well and so super excited about what it will be for our business.

Um, but I still think it's very early days.

Blow some minds.

Uh, for Rita, you mentioned innovation, you know, for consumers and investors out there, if we're having this conversation a year or two from now, how might Disney look and feel differently because of a I yes, I think it's going to be much more.

You know, we talk a lot about our streaming platform today, and I think you will see a transition to an immersive platform where streaming will underpin the basic core of the reason people come there.

But you'll also think about how you interact on your social platforms.

How Gamification comes into that shopping comes into that experience all within one advertising experience.

Um, think about as well, you know, I. I use the example of sports because it's the easiest and as we imagine, and we further digitise our sports business.

We've talked a lot about ESPN flagship in the last couple of months, but you can imagine a world where a sports fan will come to ESPN and they'll be able to do everything in one platform.

Their sports betting opportunity through ESPN bet they'll be able to create their fantasy experience there.

They'll be able to do shopping interactivity, simulcast watch, short form share content.

And so it's really a migration of streaming will become a much more immersive platform or gaming and how that will participate as part of a full experience and surrounding fans with the content and how they use and use it today, which today they are using it across many devices.

But bringing that all together across one experience will be really important.

There's been some murmurs here on the ground at Cannes about Amazon ad prices and their They have a lot of inventory, and they're bringing out a prices on streaming.

How impactful is that to to Disney's business?

I think the entire marketplace.

Right now.

What you saw in 2023 was 40% growth in C TV capacity across the year, Q 1 60% growth across the C TV environment and so scale matters.

Performance matters, your technology and capabilities to deliver outcomes matters.

We've created interoperability across the marketplace with so people can plan by and measure across our full technology stack with any platform or vendor they want to use.

We're in a really good place, right?

Some companies are great at technology.

Some companies are great at storytelling.

Some companies are great at innovation.

We're great at all three, and that's where the magic happens.

And so we're very excited about our position.

We're seeing that in the performance of the upfront, Um, and where people are coming first.

And so we're very excited about where we're gonna be able to do with clients.

I do think, by the way, there's no question it's created an excess of supply in the marketplace.

For a marketer, you have to figure out, Where am I going to spend my dollars?

What's the right partner to do that with?

And I think that's where the combination of creativity and technology really needs to really deliver on the outcomes.

And you talked about sports there.

We don't want to talk about the sports streaming platform that we're seeing here, obviously, with the Warner Brothers, Discovery and Fox.

A lot of people wondering what that's going to look like.

The discussions that you're having pre launch about what that's going to look like, So venue, which is that platform is a partnership between US Warner Brothers and Fox, and it is a digital MVPD.

So think of Hulu live another way to access sports content.

We knew that there were a bunch of people who never had a a cable subscription who are big sports fans.

And so we wanted to give them a product that was price right that allows them to access 50 to 60% of the sports available in the marketplace in one place.

And so that's what that product is.

It will be part of everything I bring to clients.

So as a partner, we have 60 partners.

For example, in college football, all of those partners, as part of their ESPN college football experience, will have every position that they buy delivered across our full suite of products, including venue.

Much has been made about the demise of of linear TV networks.

And look, it's structurally.

It's an it's a it's a hurting business, Um, because of the move to streaming.

But this is a presidential election year.

How What's the ad outlook for linear?

Because what during political years, usually this is usually a pretty big time, right?

That's right.

I mean, political years tend to have a spec not only on the on the national side, but on our stations as well, And so what we have seen is you're absolutely right.

There is a consistent decline in linear.

I will say broadcast has seen a much more stable decline than our cable networks.

And and part of that is just the volume of that content that sits within, you know, streaming platforms.

But you know, our broadcast network has a significant amount of sports and has a significant amount of news, which is live and a significant amount of live programming that keeps it relevant.

And so there is audience decline.

And and so the advertising decline on those platforms is in line with that, um, in a in a political year and and as you know, we have one of the, uh, debates coming up, and so we're very excited about being able to bring that to audiences.

But ultimately, in a political year, you see more advertising.

It depends on what's going on from issues, advertising and what markets.

If there are secondary races, things like that, and so it's still a little early.

So then, being that obviously, this is going to be a big boon for advertisers.

A lot of a lot of eyes and a lot of different on a lot of different platforms.

How do you see Disney competing with Amazon when it comes to the direct to consumer experience?

And really, how are you managing that that ad spend?

Yeah, I mean, Disney competes with Amazon, Google and everybody else.

And so you know, to me, the big the big share is still YouTube, right?

Like you, you just have to look at their earnings every quarter.

I think we we have done an extraordinary job because we have scale and we have premium storytelling and brands that everyone recognises.

And, you know, part of the streaming environment is really discoverability and finding and engagement and all of all of those things that feed into what the opportunity is.

We have a scale and premium content.

We have sports and entertainment programme.

We have a combination of the three of the best platforms in the market.

We actually moved Hulu on to Disney Plus and we saw a rise not only in the consumption of time spent on the Disney plus, but also Hulu as a stand alone experience.

And Hulu live is a big portion of that where you can actually get your full.

What would be your normal cable subscription experience within a Hulu environment?

Um, we announced recently the the integration of Warner Brothers Discovery is part of a bundle offering to the consumer.

And so I think you every every platform has their I would say advantage if you will, in terms of how you talk to customers.

I think the fact that Hulu and Disney have been in the market a long time with an advertising business, we understand the advertising environment.

We understand how clients wanna talk to us and and how they want their their partnerships to look like across our platform.

I think sports continues to be a massive driver of opportunity, not only within our linear businesses, but in streaming.

And how we bring that all together to market is really a differentiator that I don't think anyone competes with us On the presence of NVIDIA in the S and P 500 forecast to grow the A I darling potentially outshining others in the generational computing cycles.

Yahoo Finance's Julie Hyman joins me now with a closer look.

Julie.

Thanks, Josh.

Well, this comes to us from Julian Emanuel's upgrade of his forecast for the S and P 500 to 6000.

It is a treasure trove of charts, but I did pick this one, which actually comes via ever, Cos. Semiconductor analyst Mark Lape.

So basically, Mark looked at meetings of various dominant companies in their various generational compute cycles.

What does that mean?

Well, he looked at what he called the mini computer era, when DEC had a waiting of about 1% in the S and P 500 the Nokia with the feature phone era.

And it's waiting about 2% in 2000 when it reached its peak waiting in the S and P 500.

Uh, Microsoft during its first era of dominance in 2007, the PC era.

Then Microsoft was about 3% of the S and P 500 apple.

Of course, the smartphone era there in 2015 Apple, um, accounted about 4%.

And then you fast forward to today.

And what Lopez puts at the other sort of compute generational computing cycles again the smartphone era sort of the newer wave of the smartphone era, the data centre and server server era, which he says Microsoft is benefiting from and then the A I and parallel processing era.

So what does all of this mean?

You notice these bars all going up during these various generational computing cycles as these companies accounted for more and more of the S and P 500.

So Lopes extrapolates for NVIDIA.

If we continue to see this upward trajectory would be as much as 15% of the S and P 500 as it continues to climb in its market cap.

I mean, this makes sense given some of the forecast.

We've heard Josh for what the market cap of NVIDIA could eventually get to, and we've already seen it, um, sort of vying with the top three here.

All right, Julie Hyman.

Thank you.

Appreciate it.

That is a wrap on today's asking for trend.

Be sure to come back tomorrow at 4:30 p.m. Eastern.

For all the latest market moving stories affecting your wallet, have a great night