Wall Street Unplugged
Episode: 969November 9, 2022

Disney’s CEO should be fired immediately


Midterm election results are still too close to call in many races, but it looks like a split government will be the final result. Daniel and I share our thoughts on whether Republicans or Democrats are the big winners… and how it will impact the markets. 

Crypto is crashing as FTX, one of the largest crypto exchanges, needs a bailout. I rant about how this is terrible news for the industry… and why regulation is a must.

And finally, Disney (DIS) reported pathetic earnings and the stock is down double digits. I explain why the company is losing billions… and why CEO Bob Chapek should be fired immediately.

Inside this episode:
  • Takeaways from the midterm elections [0:59]
  • A new leader for Republicans [5:35]
  • How a split government will impact the markets [8:20]
  • The FTX bailout is causing havoc in the crypto market [13:55]
  • Why we need crypto regulation… ASAP [18:55]
  • Why Disney’s CEO should be fired [28:00]

Wall Street Unplugged | 969

Disney’s CEO should be fired immediately

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: What’s going on out there? It’s November 9th. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where we break down the headlines and tell you what’s really moving these markets. Typical Wednesday, not too much going. Not too much going on. Is that right, Daniel? Daniel Creech, Wednesday’s Daniel Creech day. What’s going on, buddy? But-

Daniel Creech: That’s right. A lot is going on this day. Where do you want to start? We have a-

Frank Curzio: Holy cow.

Daniel Creech: We have a lot of good stuff, a lot of fun topics to talk about. This is good. I’d rather have not so much volatility at different times, but it’s always good to have great topics.

Frank Curzio: Ah.

Daniel Creech: We got politics, we got crypto. The Mouse, your favorite-

Frank Curzio: We got Disney. Yeah, let’s talk about Disney too, but-

Daniel Creech: Your favorite beating.

Frank Curzio: Listen, let’s start with the elections. Okay? If you would’ve told me yesterday or told I think 99% of people, that the House wouldn’t have been called by now, and we’re going into today when elections in the United States have to take a few days, even though in third world countries, they take a day to count votes, which still amazes me, I would’ve said you’re absolutely crazy. I think most people would’ve said you’re crazy, but we’re looking at a House where Republicans were supposed to gain 20 seats. This is from 20 to 30 seats.

Frank Curzio: Even Democratic polls, most of the polls to definitely over 20, maybe 30. They may gain two or three right now, but they still haven’t called it. It looks like the Republicans are going to win the House, but still much less than expected. And the Senate is still up in the air. But pretty big disappointment, especially in Pennsylvania, I would say this was a very, very big day for Democrats, because a lot of people were expecting a red wave. They did a good job here. They won a lot of these races. But what are your thoughts on it? How’s it going to impact markets?

Daniel Creech: Nothing’s really changed. You’re right, the polls were wrong again. The red wave did not happen. If you’re on the Democratic side, you have to be ecstatic about these results so far. If you’re on the Republican side, you’ve got to be a little nervous, however you don’t want to overlook the fact that at least it looks like you got one part of… You’ve got the House at least, so you can… I think the takeaway for markets is fine. The markets is the same as it was. Hey, you’re going to have a locked government, a split government, a lame duck session, whatever you want to refer to it as. I do agree with that being bullish for markets in general because it takes away some uncertainty.

Daniel Creech: The odds of something crazy happening on changing rules, regulations, taxes are very low. That’s positive for markets. I don’t think it’s going to make much of a difference overall other than taking away maybe something crazy that could happen before the next major election. But you’re right, hey, Dems got to be happy there. If you’re a Democrat or Democratic policies and such, life is… You’re ecstatic right now, so happy Wednesday to you, guys.

Frank Curzio: I mean, Pennsylvania they thought would flip. For me, it was just funny between Fetterman and Oz. I can’t believe both parties cannot get better candidates to run for Senate. I mean, we have a doctor who got paid by numerous companies to advertise products or their products on his shows, and didn’t disclose it. There’s so much. He’s not really a politician. And then we have Fetterman who unfortunately had a stroke. I’m very familiar with strokes. My father had a stroke. My dad had a stroke. His major ones, his ones aren’t that good. Clearly, it impacted him a lot. And we saw that, and he had coverage enough to go up for a debate. In that debate, he opened up the line and said, “Hi, good night, everybody.” He actually said in the same debate that he supports fracking and doesn’t support fracking.

Frank Curzio: You could see there’s clearly something wrong with him, and again, you feel bad about it, but this is a person that is a Senator now. And to see Oz being that other choice where no experience at all, it’s just we got to get better candidates, I think qualified candidates, here. Because I was just surprised, just seeing that and how much money went into those. I mean, you’re talking about probably a billion just in that race. Pennsylvania’s a big deal, and the Senate’s still up in the air. It’s still up in the air, but again, if it goes to runoff, Democrats have a history of winning those runoffs every single time in Georgia. It’s just whenever you see votes that are going to get counted later on, it’s Democrats all the time. So regardless, but I would be disappointed. A few takeaways here, though, from me is a big change here.

Frank Curzio: I mean, Democrats should never, ever have a live debate again, and even the Republicans shouldn’t. Because we’re seeing with Trump, you’re looking at these massive rallies. He did not help. Maybe he helped, maybe he helped more than expected but not enough. I don’t know. But you’re seeing these massive people, massive, massive, tens of thousands of people show up and you have so many of these candidates. I think it was 36 Senate contests into mid-October now. So before this, and there was only like 20 debates. And I lot of people are like, “No, I’m not debating.” And Fetterman actually went out there and did it once, and that almost cost him because if he didn’t, I think he would’ve won by a lot. But it almost cost him because everyone was like, “Wow.” He couldn’t really answer questions and stuff.

Frank Curzio: But this is the new world. We saw with Biden, Biden didn’t really campaign that much. Stayed home and Trump was everywhere at these massive rallies. It didn’t matter where-

Daniel Creech: So, you’re asking does it matter for debates and rallies, or are you-

Frank Curzio: I don’t think you’re going to see debates going forward. It makes no sense to have a debate. It used to be like, “Wow, I want to see this candidate. I want to see them debate. I want to see them argue. I want to see…” Charisma was a big deal. You don’t have to do that now. I mean, it was so divided, where everything is just Republican or Democrat. And Republicans can’t disagree with each other, Democrats are not allowed to disagree with each other, and it’s so divided that it’s crazy.

Frank Curzio: I would say while Democrats should definitely celebrate this victory, the negative for them is… I don’t know. I think they might keep the Senate. I don’t know yet. We’ll see. But these results, the one thing is it pushed DeSantis into God status. I mean, he destroyed Crist. Everyone in Florida won their elections. He was a guy that was just adamant with no woke, I don’t care who you are whatever. Lot of outside areas tried to destroy him. Everyone in Florida loves this guy. He is a God, because he protected our kids. And that’s what we look at. We wanted our kids to go to school and everyone said, “You got to stay home.” And they stayed home for six, nine months in these places all over the place. He didn’t do that.

Frank Curzio: The difficulty, I think for the Democrats, they want Trump to run because he’s easy to destroy; plus, you have a lot of moderate Republicans who aren’t crazy about him. They aren’t crazy about his personality, and you have a lot of independents that don’t like him. DeSantis is somebody that the entire party is going to rally around, because he supports most of their beliefs. I think that’s a much harder candidate to run against. And again, we’re talking two years and a lot could happen then. But right now, he couldn’t be on more of a high, especially in Florida and what we did here.

Frank Curzio: So I think, careful what you wish for, where it looks like Trump doesn’t have as much power as many thought. A lot of candidates, he went out there for Oz, he went out there for a lot of different people who didn’t win. But we’ll see, because I think even some Republicans are like, they’re not always going to support Trump, and they’re on edge. But I think every Republican is going to support DeSantis, and he’s the clear leader in the party. So, let’s see where that goes, but I would say you have to be really, really ecstatic if you are the Democrats. This wasn’t expected, and let’s see how it goes moving forward in terms of stocks.

Frank Curzio: I think gridlock is good because you’re going to see less spending, and that’s what you need. It’s the only way to bring down inflation. It’s not just inflation from everything going higher. You’re seeing companies, their margins are going higher. So it’s like there’s greed inflation type of thing that’s going on that’s not stopping. You’ve seen companies raise prices significantly, where their margins are up incredibly, a lot of these companies, they reported this quarter because they’re raising prices significantly. I don’t think that’s being factored into the CPI results that we’re going to see over the next few months.

Frank Curzio: They’re not just raising prices to cover the higher costs, that’s what I’m saying. They’re raising prices to cover those costs, and they’re raising prices even more and they’re getting them right now. So, let’s see how long that will take, but in terms of stocks, the red wave was seen as better. But the House is going to be divided, but when you’re only going to be divided by like two or three, it’s not too hard to persuade when you have that many people in the House. Just persuade a couple of votes to really get your agenda, and it’s very easy. It’s all about bribing and getting certain things and people saying no. It’s not that difficult.

Frank Curzio: It’s hard to persuade 20-30 people, but it’s not that difficult to persuade just a handful. So, it will be interesting to see. Politics are going to get much, much worse. It’s going to be even more divided going forward. You’re going to see lots of fights, lots of arguments, lots of shit. It’s going to get crazy now, but yeah, it is interesting. I just see how divided we are. It is crazy. But in terms of stocks, I don’t know if much changed. I don’t think much is going to change in terms of the Fed or what’s going to happen going forward. I don’t think it mattered who was in office. Yeah, it’s good to have a split government, where we’re not going to see crazy spending on certain agendas that don’t make sense sometimes.

Daniel Creech: Oh, we’re still going to see all that. Don’t get your hopes up.

Frank Curzio: Well, hopefully we don’t because-

Daniel Creech: We just won’t see anything crazy new, is the odds.

Frank Curzio: Yeah, well, crazy new. I mean, that’s a big difference. So-

Daniel Creech: Yeah, but spending is going to continue, like always. That’s what they-

Frank Curzio: I mean, hopefully we’re not going to an inflation reduction that has nothing to do with inflation, in some of these bills that are passing. I say this because, not to be partisan or whatever, but I just feel like we’re in a world today, Daniel, where… Yesterday, I said I was a Republican. And I bet you there’s Democrats listening to this cringing. I’m pretty sure I helped these people with their portfolios for 20 years. You shouldn’t be able to cringe just because my beliefs are a tiny bit different than yours. They’re not extreme. They’re not crazy.

Frank Curzio: They’re not, but I think capitalism’s been hurt here. I believe the harder we work, the more opportunities you can afford. I don’t believe in giving stuff to people just because of something that happened in the past.

Frank Curzio: I think you have to earn it. Even when you see platforms in the media, you can’t really… In the media, it’s getting to the point where even the top stars, the top athletes, they have to be careful what they say politically, because the people paying you have an agenda. And they’re running the media. They’re running these companies, and if you don’t support that, you could lose everything. I mean, Adidas just got rid of… Whatever his name is now.

Daniel Creech: Ye?

Frank Curzio: Yeah.

Daniel Creech: Kanye West.

Frank Curzio: And they just said their profits are going to get destroyed. And again, that’s a little extreme because he’s more of an extremist. I’m just saying where some people come out, and you can’t really come out and be yourself, because if you support the wrong thing here, you could lose a lot of the people and a lot of your followers on social media. So, it’s a crazy time right now, where we don’t want to debate. We don’t want to talk about-

Daniel Creech: You’re saying it’s just more-

Frank Curzio: More extreme than it’s ever been.

Daniel Creech: Okay, because it’s always been that way. You’ve always had the-

Frank Curzio: No, it hasn’t been when-

Daniel Creech: Oh, yeah. You’ve always been threatened to be kicked off, yes. Absolutely.

Frank Curzio: No. It hasn’t been that way.

Daniel Creech: You especially. Nothing’s new under the sun there.

Frank Curzio: It hasn’t been that way. It hasn’t been that way if you go-

Daniel Creech: I would disagree with that.

Frank Curzio: It hasn’t been that way, where if an actor says that he supports Republicans, he’s not going to get a job.

Daniel Creech: Bruce Willis got in trouble for that 10 years ago, saying that he was a Republican in Hollywood. I’m just saying.

Frank Curzio: It’s not as extreme as today with social media-

Daniel Creech: It’s always been around.

Frank Curzio: Blew up the last 10 years. I mean, social media, everyone’s on social media. It’s everything right now, the second it happens. All videos getting taken. It’s definitely not the same now than it was in the past. Where the point is-

Daniel Creech: I’m not saying it’s not amplified, I’m just saying that it’s nothing new there.

Frank Curzio: You have to really keep your mouth shut.

Daniel Creech: There’s always been that stuff.

Frank Curzio: If you’re an actor in Hollywood and you support Republicans, you need to keep your mouth shut if you want to continue to work.

Daniel Creech: But that’s always been the case.

Frank Curzio: I don’t think so. I don’t think it’s been the case, to the point where it’s that extreme right now, and maybe it’s been the case a little bit, but not to extreme. But we’ll agree to disagree. But it’s good for the Democrats. I don’t think it’s really going to impact stocks too much. I think you just got to focus on the Fed, the Fed’s not going to stop raising rates.

Frank Curzio: We’re still going to see inflation. We’ll get another inflationary indicator coming out. If the Fed is serious, which they’ve been, saying that hey, 2% is their target, we’re not going to see 2% until 2024, meaning that we’re not lowering rates until then. So, rates are going to be incredibly high. We’re already seeing the effects spill over, and I don’t think this changes much, but let’s see going forward. But I don’t know if you have any thoughts on it.

Daniel Creech: Nope. Nah, we can move on.

Frank Curzio: I love talking politics with you. I love it. Because Daniel is very, very passionate.

Daniel Creech: Well, I have a few things, but we need to move on.

Frank Curzio: We need to move on because-

Daniel Creech: We don’t disagree. I don’t think this is bad for capitalism. I do think capitalism is under attack, but I don’t think this is in any way, shape, or form, bad for capitalism. And I’ll say that because just from an economic standpoint, which is what I focus on mostly through politics, I think Governor DeSantis’ results show you that people just respected and flocked to the fact that he gave them the option to be open, to make a choice, to stay the economy, to continue working. And that is obviously paying huge dividends. So, I’m not saying it to put words in your mouth, I don’t think this is bad at all for capitalism. Not at all.

Daniel Creech: It’s always been under attack. It’s under attack more, just like you’re saying, with more extreme social media presences. I will say the argument is amped up, not only because some of President Biden’s friends are calling for nationalization of oil companies or oil assets. You couldn’t get more left than that. I do think it’s under attack, but I don’t think this is in any way bad for capitalism in general.

Frank Curzio: Yeah, and the perception of DeSantis, which they were trying to paint, we’re from Florida, live in Florida is that he didn’t say that you can’t wear a mask. He said it’s up to you to wear masks. He didn’t say that your kids have to go to school. He said it’s up to the parents if you want them to go to school. That’s what was huge. So, it wasn’t like, “Oh, we’re against this,” and he’s crazy. He’s like, “The parents need to make that choice, and that’s the parent’s choice.” And it worked out, and what a difference it’s made in Florida.

Frank Curzio: What a difference it’s made in Georgia, it was actually the first people, people don’t know this, Georgia was the first person to actually have their kids go back to school and stuff. But yeah, it is what it is. One positive that they can take with Republicans is definitely DeSantis in Florida, being the clear candidate here, I think. Let’s see. Let’s see what happens in terms of stock markets. We have to talk about this. I don’t think much is going to change, I don’t think this is going to result in stocks going higher or lower or anything.

Frank Curzio: Again, it’s all about the Fed here, and nothing crazy. No results. We’re going to have it looks like a split government, and we’ll see what happens with the Senate, which probably won’t be determined until next month. Let’s move on, because there is a lot to talk about. I want to go over FTX and crypto. We’ve been bullish on crypto. We saw that, and we said 20,000, a lot of money coming into it in terms of institutions, and now, we’re seeing it get wrecked where FTX, Sam Bankman-Fried, a very outspoken 30-year-old multi-billionaire going out there saying people are calling him the next Warren Buffett. He says he’s going to take over Goldman Sachs.

Frank Curzio: He’s the second leading donor in the Democratic Party, and he actually said, “I’m going to donate a billion dollars.” And then he pulled back. He’s just this arrogant kid that was actually seen as a savior, buying all these assets when they were down and saying, “This guy could be the next Warren Buffett or whatever,” I love when people say that. A 30-year-old. But the fact remains to me FTX, and you follow Twitter, and you were saying a lot of people were calling him out on this, I think this is a major surprise. This didn’t happen with FTX being bailed out, and as we know, FTX looks like they could be insolvent, and they’re having liquidity problems which came out of nowhere. FTX and Binance were the two companies actually purchasing a lot of cheap crypto assets at a very, very good time.

Frank Curzio: And FTX, I mean, if you look at the deals that they did, Daniel, it was huge. They acquired Ledger X in 2021. They also acquired Blockfolio. They took a 7.6% stake of Robinhood. In July, they also bought Voyager when it was in bankruptcy and took over their assets. They handed BlockFi $250 million dollars, reviving credit lifeline. I believe they signed a big deal with Scaramucci, which that’s a 12 or $10 billion fund, probably less than that with crypto getting nailed. And I’ve interviewed Scaramucci, but they partnered with FTX. It has a lot of legs, this thing. And I think it came as a huge surprise. I don’t think anyone saw it coming because this didn’t happen when crypto went from 65 to 20, and you saw all the lending blowup recently, Celsius and all that stuff.

Frank Curzio: To happen now in the last three months, we’re like, Bitcoin’s found the bottom. Went from 18 to 21, whatever, back and forth. But it was less volatile than the overall market, which was a huge positive. This is a big blow to crypto, I think. I really do. I mean, you’re looking at the second largest next to Binance, and now, Binance is going to purchase FTX assets? It’s not a done deal yet, but obviously, if they’re illiquid, they could purchase them for five cents on the dollar, which is going to be a great deal for them. They’re not leveraged. Binance is in a much, much better place.

Frank Curzio: It just again, you’re looking at one of the largest guys, a face of the brand here who’s been on front covers blowing up like this, and when I look at Galaxy Digital and Novogratz as well, Novogratz is like a God in the US markets. He knows everything within crypto. He came out about two and a half months ago and said, “Listen, a lot of liquidity. A lot of damage is already done.”

Frank Curzio: He didn’t see this coming. They have not a lot of exposure, 40, 50 million they’re probably going to lose on it, which is not a lot in the scheme of things for that company. But this was a very, very big surprise, and a lot of people didn’t see it coming, and I think we’re going to see the effects of this. I don’t think we’re done, where you’re going to see a lot of people come out and say that they had exposure to FTX and loans, and going through the books and stuff like that. And who knows what’s going to happen with Binance and this deal?

Daniel Creech: It remains to be seen. There’s so much speculation because we don’t have a whole lot of data to go off. And the due diligence is going on between Binance and FTX right now. What would be key to me is to your point, they’re not blowing up when crypto fell from 70-ish to 20-ish, or even below that. I think it dipped into 16 or 17 before stabilizing between 18 and 20. Then he starts doing all these deals, and what was interesting is that he starts bailing out, for lack of a better word, these companies, but not during their bankruptcy.

Daniel Creech: He stepped in as things were going down and continued to go down. I say all that because now, he’s having trouble. Something obviously triggered this event. Was it the recent deals he did, or was it past deals that are just now for some reason coming to light from the crash from 70 down to 20 and below? I don’t know. That is the big key to me here. We were disagreeing off camera. This sucks, because it is bad for the industry. Galaxy Digital tanked. I bought some more of that stock yesterday. When the crypto route was going, they came out with earnings. I mean, they were okay. There was some pockets to point to there, but nothing glamouring in the sight of a crypto crash.

Daniel Creech: So, that’s what I want to see. I want to see, hey, what actually blew up? We’re going to have to wait for time and all this. I think this is a black eye to the industry. I think that regulators are going to take this and run with it too far, like they always do. I’m worried from that sense, but in the big, big picture, this doesn’t change the big coins for me. This doesn’t change Bitcoin, Ethereum, it doesn’t change Binance to me at all. I would actually like to talk about how he’s handling it. I think it’s amazing. I don’t know if you disagree with that or the way he’s doing it, but this is just part of it. It sucks it’s volatile, but I don’t think this changes anything in the big picture for the big dogs.

Frank Curzio: I like CZ and how he’s handling it. We need regulation in this industry. When I look the crypto, this is where all the innovation is coming from. I’ve said that numerous times. I think it’s just a matter of time before we go to the metaverse. People really understand it, and I know you’re looking at Meta thinking, “Holy shit, they’re wasting money now that they’re cutting jobs in that division.”

Frank Curzio: But when you look at what the metaverse is and ownership of your content, creativity, people not working for the Roblox and the Fortnites, which is Epic and the Facebooks, and creating all this stuff, and Facebook owns it. This is your chance to own your own stuff, own creativity, build, sell stuff, and provide a better experience. Just through your phone, it’s like TikTok provides us a better experience. That’s what it’s going to be going forward, and there are great companies out there that are doing this, which are open source. Not closed, where Facebook and a lot of these other companies are, which is basically virtual platforms where money filters into them.

Frank Curzio: You’re looking at just in terms of regulation and having… A lot of people are familiar with Waze. That’s the app where, if you’re not familiar with it, you should because you could just put it on your phone and then it goes right to your car and everyone… Is this massive community, telling you where all the cops are and everything. And it’s great, it’s absolutely fantastic. So everyone’s together, and that’s DOW. So, you have everybody working together, and it’s like governance, where it’s not just decided by a board of directors who their best interest is to make as much money as possible. They don’t really give a shit about everybody else.

Frank Curzio: That’s a major change that’s coming. You’re looking at decentralization, where just eliminating the middleman, but you can’t be told to centralize because this is what happens. You need to know the numbers. The government needs to fucking come out already and regulate this industry. Because when you do, it’s going to explode. Because when you have shit like this, and it’s pissing me off that these 30-year-olds and these shitty guys are just… Now, the regular person is doubting crypto already and are nervous about it, and this adds to that. So, you said it’s not going to be a difference or a change. It is, to me, a major change.

Frank Curzio: It has a lot of people who are thinking about coming into crypto and allocating Bitcoin or Ethereum to their portfolio, which they’re going to have access to in their 401(k)s for the first time, saying, “Holy shit.” All I hear is seizures, a $3 billion seizure on Silk Road the other day. Now, we hear this blowing up. We just heard about all these other lenders blowing up. We can’t see the financials of a lot of these things. I mean, there are great companies that we’re talking to that are unbelievable, that are much more transparent, where I could look at the books, and that’s why I don’t invest in them. We need this available.

Frank Curzio: We need this system available in order for this industry to take off, because this is a massive industry. You have brilliant, brilliant minds in it. But it’s just when you have this arrogance and something works, and these people don’t know how to protect themselves, and they’re so leveraged through the roof where CZ and Binance, I mean, it puts them in a position where this is a token, these are utility tokens. Binance has the biggest utility features of a token. That’s the value of it. It’s not an equity token. So, Binance gets bought by Microsoft for $50 billion, you don’t get anything owning a Binance token. It just means more people may come to the platform and use it, but it’s based on the utility, where you could use it to reduce trading fees and they have hundreds and hundreds of ways you could use that token. That’s the value of it.

Frank Curzio: If you lose that value, these things are worthless. But we need to see the numbers behind this. We really do. The fact that we still can’t and something like this comes up where FTX, here’s a company that’s buying assets, Daniel, that’s going out right now in the past three, four, five months, even past year, buying assets. Guy’s on a front cover. It’s like, everything’s cool, being compared to Warren Buffett. Saying, “I’m going to buy Goldman Sachs,” and all this shit, this arrogant kid. When you’re out there acquiring assets and making deals with people; and now, you don’t have the liquidity within your token, where it’s very easy to just see a big run on it, and you’re not able to understand that. Your MIT grad that is probably brilliant when it comes to computers and systems, when it comes to Wall Street, they eat you.

Frank Curzio: You’ll be left naked on the street with a sock. They’ll take the sock from you. That’s Wall Street. So, whenever they see a little kink in the armor, that’s it, you’re done. But to see this happen right now, to me, it’s very disappointing. I think it’s going to discourage a lot more people going into Bitcoin, going into Ethereum, and this is where the innovation is taking place. Hopefully, the SEC comes out and does something because they’re always late to the party. They always do shit, they always punish the wrong people.

Frank Curzio: They’re financed by the major companies in the world. And it’s very, very frustrating that it’s been this long, it was a $3 trillion industry. It’s under a trillion now, and still you haven’t regulated this industry. What the hell is stopping you? What the hell are you waiting for? Why isn’t this happening? Can you answer that question for me? Why? Why won’t they regulate this industry? Why won’t they put a set of rules in place?

Daniel Creech: If I have to put on that hat and speculate, I just think that it’s because they don’t want to put it in a box yet. They want to still figure it out. I will push back some though. If you don’t buy Bitcoin or Ethereum based on this, okay. I don’t think that’s the big percentage of the people, really. And again, we have to wait to find out what’s on the details, but if this just is some mainstream media glamor guy that is a bad deal maker that made a bunch of deals, he went over leveraged, I mean, that happens.

Daniel Creech: The irony in crypto is it’s decentralization and all that, and I know it’s moving towards that way. It’s still controlled by a handful of big players, or whales as they call them in this space, just like money’s controlled by other… I mean, that’s odd. I know it’s going in that direction, but I got to push back. Like I said, he’s a deal maker. The mainstream media made him up to be a lot more successful than what he is.

Daniel Creech: It’s always been the case, you’ve never been able to look at anything and figure out a whole lot of transparency. I don’t know why a lot of leaders don’t step up and just start being transparent. CZ has taken to Twitter, the head of finance, saying they’re going to be more transparent on reserves and insurance things and all that. That’s great, but what’s waiting you? It’s just like the tax argument. If you’re a gazillionaire, and you’re always on the table like Warren Buffett, who I respect, saying he ought to pay more in taxes, what’s causing you from writing a check to the Treasury? Lead by example.

Daniel Creech: So again, I would just disagree on that. If the people out there that were thinking of buying Bitcoin or Ethereum and aren’t because of this, I would be shocked if that was a huge percentage of people, but I could be dead wrong.

Frank Curzio: So, you’re not surprised at this?

Daniel Creech: Oh, it’s a major leverage. It’s one of the largest exchanges. Of course, it surprises me. But again, I don’t think it’s the end of anything, no. Like I said, this is just a-

Frank Curzio: Well, no, it’s not the end of anything.

Daniel Creech: Rocket ship guy. This is just another-

Frank Curzio: Yeah, that’s not what I was saying either.

Daniel Creech: Basically snake oil salesman. I don’t want to say that yet, because I don’t know the details. So, we got to back off there, but obviously, the guy is not near as good at running his exchange or making deals as he was perceived to be, because he just blew up.

Frank Curzio: Yeah, it’s just the fact that you’re making deals that you are acquiring assets at a time where you really-

Daniel Creech: But that’s the-

Frank Curzio: I mean-

Daniel Creech: Mark Zuckerberg is a one and only decision to just blow billions and billions of dollars on the metaverse, stock drops.

Frank Curzio: That he has.

Daniel Creech: That’s what happens. I mean-

Frank Curzio: Billions that he has, though. We’re talking about a company that’s solvent now.

Daniel Creech: Right, but I’m just saying-

Frank Curzio: Facebook isn’t insolvent, they just… Maybe he pushed into Meta a little too far.

Daniel Creech: You’re a hedge fund manager. Anybody can blow up.

Frank Curzio: It’s a big difference.

Daniel Creech: I’m just saying, one guy making big decisions running it and then blows up is not anything new. That’s all I’m saying.

Frank Curzio: Yeah. I mean, we’ll agree to disagree on it.

Daniel Creech: Yeah. We can agree, yeah. We got a whole good theme of agreeing to disagree on this podcast.

Frank Curzio: Yeah, agreeing to disagree. But for me, it’s just, I mean, this was a surprise. It just for me, you need clarity here. And even the people that I talk to and the young entrepreneurs in the space, I tell them, I was like, “Just look, you have investors. These are people if you do right by them, they’re going to follow you in every endeavor and when you’re an entrepreneur, it’s not just one company. It’s two companies. You’re going to be always an entrepreneur, and these people will follow you forever and write you a check without even reading anything about you because you made them money in the past.

Frank Curzio: So, don’t ever screw them. And these people are bringing these individuals investors and also funds, and for me, when I see this especially with young companies, I’m like, “Just be transparent. Give away equity. You want these people to participate in your growth. You want that.” I mean, these people are supporting you from the beginning. These are people that you want to help. That’s how I always thought about it, and that’s how you should think about it. And I interviewed Hester Pierce, who is Commissioner of the Securities Exchange Commission on this podcast, and over a year ago, I think, probably a little over a year ago.

Frank Curzio: She was telling me, she’s for more regulation. They have to get smarter people in there to understand this, but it just keeps going and going and going. Well, you’re not seeing it and then all you have on CNBC is, “Let’s destroy.” Because half the story, whatever, let’s just destroy it. I think it’s definitely a setback. It’s a setback that didn’t need to happen, but again, I think Binance right now know that token is a steal. But they are in a position to buy amazing assets for dirt, dirt, dirt cheap, and that’s what they’re going to do. This isn’t a done deal, them buying FTX. But you have to look at what FTX has exposure to. I know Scaramucci and his fund, I’d like to see how much exposure’s there because I know he was getting wrecked already.

Frank Curzio: A lot of people getting wrecked in crypto, but there’s more exposure than what people know, and I’ll try to get someone on the podcast to go over this. Actually, I have Frank Holmes on tomorrow, which is going to be fantastic. He’s the CEO/chairman of HIVE Technologies. We’re going to be talking about crypto. He has a crypto conference coming up. An insider, speaks at a lot of these conferences and stuff. So, we’re going to break down this story as well, but I wanted to go one last thing here, to spend five minutes on this, is getting emails and stuff on Disney. Disney reported their results, and yeah, it was a disaster. It really was a disaster.

Frank Curzio: I think people are surprised how bad it was. Obviously, I’m not surprised. I don’t think Daniel, you’re surprised, but I don’t know if you want to chime in on Disney, if you like the quarter, but the stock’s getting hit today. New low, down to like I think 2015-’16 lows, and I’m going to tell you, you run into this problem with bears and bulls when things go higher and you’re a bull, you get even more bullish, and when things go lower, and you’re right, you get even more bearish. I’m not saying this because right or wrong, people lose money if you long Disney. I don’t like to see that. This isn’t about me patting myself on the back, because I was wrong with Bitcoin saying to buy it at $20,000 and it’s getting crushed right now.

Frank Curzio: But I will tell you that it’s not a buy here. If you think it’s cheap, it’s not cheap. It’s trading about 23, 24 times forward earnings, these earnings that I’ve watched closely keep pushing out year over year over year because there’s no way that they’re going to be getting money on their streaming. And Chapek, the thing why I am so aggressive with this, and even when it comes to Ford is, I hate CEOs that get up there and lie to you and paint you this picture that’s not real. And that’s what Ford has done, CEO, and that’s what Chapek has done. And he’s painting you this picture, and even now, he’s still, “Oh, we’re going to be profitable 2024. Looks good.” They missed on everything. They missed on parks. I mean, the losses are mounting, which tells you the more subscribers they add to their D2C profit and direct to consumer, their streaming business, the more money they lose.

Frank Curzio: Don’t look at the numbers. People always like, “Holy shit, it’s 100 million. It’s 150 million.” Now there’s actually headlines saying they surpassed Netflix as the leader, because they have more subscribers. It doesn’t matter how many subscribers, it matters how much they’re paying. The average revenue per user, and that continues to decline, meaning they’re signing up people for basically free, so this number fell to under $4, down 5%. So, $3.91 is average revenue per user for their streaming platform. Netflix is over $11.

Frank Curzio: Disney can’t show its best content, which is Marvel content, on their platform until it comes out in the theaters, which is frustrating because you had Netflix going out there with Stranger Things, Ozark, Cobra Kai, you could name hundreds of shows. Yet, you go home and say, “Holy shit, they just released a new season,” and you go binge, and you go watch it. So, you’re not seeing that. They have very little new content. They continue to spend more and more money into this, which they’re going to continue to lose. Now they’re telling you, “Don’t worry about subscribers, we’re going to try to get revenue.” How are they going to do it? Well, you have people leaving this platform because there’s not a lot of new content out other than a few Star Wars themes, and how are you going to solve this problem? Oh, we’re going to sell this platform that people don’t like paying for.

Frank Curzio: We’re going to raise our prices, and we’re going to throw ads all over the freaking thing. That’s their solution. I mean, are you kidding me? So there’s just no solution there. They need to get rid of the streaming business, because it’s going to drag. And now, the parks were a great business. Margins collapsed on the parks, Daniel. I mean, margins were absolutely horrible. It was 13% compared to 20%. They’re at full capacity right now. Other than Shanghai, which is closed-

Daniel Creech: I was going to say, here in the US, right?

Frank Curzio: And that’s China. Huh?

Daniel Creech: In the US?

Frank Curzio: In the US and many other places. In France as well, but they said they even bought the capacity. They already raised prices considerably. Now, you’re going into next year, into a recession where people are obviously cutting back. They can’t even pay their car loans right now. You’ve seen delinquencies go higher and higher. Are families going to travel that much? They going to have money to travel that much? I don’t think so. Next year, they’re going to be in much, much worse shape since the Fed’s not raising rates. So, that’s going to get hit significantly.

Frank Curzio: You’re not seeing much in theaters as well. I mean, where’s the growth going to come from? You just see the losses mounting up and the spending mounting up. They have to get rid of Chapek. I mean, here’s a guy that is hired and known as an operational guy, and I hear and I have people and whatever, and I’m not saying I’m an insider, whatever. But you hear a lot of people inside don’t really like this guy. I mean, you’re an operational guy. You don’t really understand the brand. You don’t understand what’s going on. You’re not charismatic. But all right, fine, you’re an operational guy.

Frank Curzio: Operations are terrible. You’re going to lose $4 billion on this platform, and you continue to spend. You’re going to spend another 30 billion? You’re generating what, $5 billion cashflow? I’m not even going to talk about the dividend. They’re never going to reinstate the dividend again. But they have massive debt. What really pisses me off Daniel, and I didn’t even want to go that much into this. What really pisses me off is the freaking analysts. All right? There’s 30 of them, and all of these guys are a bunch of freaking assholes. I’m sorry to say that.

Frank Curzio: I don’t like cursing. I promise, I’ll put money in a jar, whatever. But they’re assholes. Okay, you’re looking at guys that have no downgrades. I remember in January 2022, one company down, Barclay’s, downgraded them just to neutral. And it was a big deal. It was the first downgrade you saw in the stock in three years. I think there was one downgrade after that. We were looking at stock, what was the highs on it? What was it, 175, 180, whatever? It’s 80. No downgrades at all. They just keep lowering the estimates, lowering the estimates, lowering their target price from 220 to 180 to 150, now you’re seeing 120, 130, 110. You keep seeing lower, lower, lower.

Frank Curzio: They keep pushing these estimates out quarter after quarter, year after year. You were supposed to earn $8 this year, and that was the estimates that these analysts had. They’re going to earn $4, which is still 50% below what they were earning pre-COVID. And they just keep pushing it out. How are you not seeing downgrades? How do you go to Disney right now and say, “I’m going to buy this stock,” when obviously, the direct to consumer business is not doing good? You’re seeing a decline in margins in parks and recreation. Is that going to get any better? Do you think it’s going to get any better next year, when we’re going to hit a huge recession, where the Fed are going to continue to raise interest rates? And now, you have their debt, which I would be looking at it, because there’s a shot you could see their debt being downgraded, because this company’s filled with debt.

Frank Curzio: Higher rates are going to crush them. There’s not a lot of catalysts there. And I hate talking about this with Disney, and I don’t want to get bearish at the absolute bottom. But find me a catalyst to buy the stock, I can’t. And you can’t say it’s cheap, because it’s not. It’s expensive because earnings keep coming down, along with the price. So I mean, they got to do something. They need to license their content, do something. But seeing these numbers, man, it was painful. It was painful and I know people long this stock, even in 401(k)s and stuff like that.

Frank Curzio: But the numbers matter, guys. The numbers eventually matter, and everyone was focusing on 100 million subscribers, 150. Who cares if they have a billion subscribers if they’re not paying for the service? I mean, I’m sure, what do we have? Whatever, 12,000 subscribers or something, I’m not even sure how many subscribers we have. We’d have 300,000 subscribers if I decided to give all my research away for free. We wouldn’t have a business, and I could say, “Subscriber growth is up tremendously,” and then my stock goes higher.

Frank Curzio: But yet, at the end of the day, I can’t pay my bills, I can’t pay my employees. So, you’re going to see massive layoffs coming. There has to be more cost-cutting. They have to find a way to just get out of streaming, which they’re not going to do under Chapek, because he’s just been talking it up so much. I don’t know. I don’t see the catalyst. I think you’re going to see a lot of funds that were in this company start coming out of it, and for me, if you’re looking at target price, you’re lucky if this should be trading at 15 times what it earns. It’s trading at 22, 23, which puts a target around below 70. Unless they change things, and I just don’t see it, and again, a lot of people love Disney. But the numbers eventually matter. It took a while, but the numbers eventually matter.

Frank Curzio: I think you’re going to see the same thing with Ford. Ford’s going to be a single digit stock. The amount of money that they’re spending, they’re not going to see the demand for EVs that they’re expecting. They paint this whole picture, it’s all bullshit. Every other car company is warning, you’re seeing them come down a lot more than Ford and Ford just keeps this optimistic, “Demand’s through the roof, demand is through the roof.” These are people that pay $300 for their freaking cars, for EVs, just to lock them in that they’re not going to get for another year.

Frank Curzio: And prices are going to be raised considerably going into that. So, Ford’s another one I’d watch out for, but right now, Disney, for me, I’m not surprised by this quarter. Man, that was long. Sorry.

Daniel Creech: That’s all right. Well said. All I’ll say is it was a terrible quarter, I agree. And I don’t know if you caught it, but Jimmy, Jimmy Cramer was saying the same thing this morning, Frank. He was calling for the CEO to be fired.

Frank Curzio: Amazing, because he loves that guy, and he’s been on this stock for a long time. That’s the thing, which I don’t like. Because listen, I’m wrong on Bitcoin. I’m wrong. I said it, I’m wrong. I’m going to be wrong sometimes. We’re analysts, we’re going to be wrong. I got to bust my ass to do the research to try to get it right, you guys see that in our products. Cramer needs to come out and say, “I was wrong on Disney,” instead of just coming out and saying, “The CEO is an asshole.”

Daniel Creech: And to his credit, he did. I was-

Frank Curzio: Oh, he did say that? Good.

Daniel Creech: Half-listening, but he said he got it wrong.

Frank Curzio: Good, because I saw-

Daniel Creech: He didn’t cry this time, Jimmy Cramer.

Frank Curzio: No, because I saw the part. But I didn’t know. You have to apologize for something like that, because sometimes, you’re not going to get it right and it’s fine. And I think people understand it, but I think if you really want to have a following and be in this business 30 years like we’ve been, you have to go out there and say, “Listen, I busted my ass on this, but this is what I didn’t see,” and learn from it. You learn from your mistakes and you get to be a better analyst. But that’s what’s going to make you better, by focusing on those mistakes, because what did you get wrong? What are you seeing going forward? But yeah, he’s been on that bandwagon along with every analyst, and I watch everyone talk about Disney over and over and hedge funds, and I’m like, “These guys are such full of shit, they just don’t get it.”

Frank Curzio: They’re not looking at the numbers. It doesn’t work. It doesn’t work. They’re losing Hulu customers because you got to pay for Hulu. They’re losing their paid customers. Average revenue per user is going lower, which tells you that people don’t want to pay for that service. They don’t like it. They’re not seeing the content that they thought they would expect. They’re not going to watch it live, Dumbo 19 times.

Frank Curzio: They want to see new content and outside of Star Wars and a couple things like that, which, if you notice, Daniel, they don’t have any stars in these things because it costs a lot of money to put big names, and Netflix figured it out. Yes, they’ve gotten crushed and it’s been a big change, and less people are streaming these days, and there’s a lot more competition. But Disney, with this move right here and the fact they can’t put their best content on the platform; and now, you’re seeing decline in margins for the parks, the stock is probably going to go lower.

Frank Curzio: It needs to hit a bottom. You need some kind of catalyst, and people think it’s going to be bought. I don’t know how it would be bought with the amount of debt, and you’ve seen slower growth and constant losses. It doesn’t make sense for Apple, they have their own streaming platform. Microsoft, who can get into this business, I don’t know. I don’t think there’s anywhere to sell. I don’t know if they have to look at the structure, whether they would or not.

Frank Curzio: I don’t picture them doing anything like that, but I’m trying to find a catalyst for people led along and say, “Hey, this could happen,” and I rarely can’t find a catalyst on the positive and negative side of any stock. I don’t see a positive catalyst after this quarter, and let’s see what’s happened. All he’s saying is we’re going to be profitable by 2024, which you told us you were going to be profitable by 2023 and second half of 2022. That didn’t happen. Why should you believe anything this guy says going forward? So for Disney, be very, very careful. I think it comes down even further. I think we’ve covered that to death.

Daniel Creech: Run from the mouse, yep.

Frank Curzio: Yeah, I think there’s other much, much, much better players. If you like streaming, go into Netflix. They’re doing a lot better. Advertisers too, as well, which they’re going to be signing up, but that makes sense. Because I’m not going to cancel Netflix because I love their programming, and if I have to watch a few advertisements, I don’t mind.

Frank Curzio: There’s no way I’m watching advertisements on a Disney platform. There’s nothing on there that I’m really dying to watch, that you’re going to force me to watch commercials for now as well and actually raise my prices, which is crazy. So all right, we talked about a lot. Agreed, disagreed on different things. I’m sure we’ll get lots of emails, especially on the political side. But remember, we have to talk about this, and bottom line is, and I think Daniel and I both agree is, it’s not going to impact the portfolio of the markets going forward as long as there’s a split government, which it looks like it’s going to be.

Frank Curzio: Where it looks like the Republicans are going to gain the House, just not by a lot of seats. We’ll see with the Senate. It’s not going to be decided until December with the runoff in Georgia. But overall, lots to talk about, and I’ll be back tomorrow. Listen in. Great interview with Frank Holmes, and we’re going to really break down the FTX situation, because we really got to go into detail on that and see what the damage is, what’s going on, when are regulations coming, and Frank is an insider in this industry, so it should be a really, really good interview. Daniel?

Daniel Creech: Cheers.

Frank Curzio: Thanks so much for coming on.

Daniel Creech: daniel@curzioresearch.com. Happy Wednesday.

Frank Curzio: I think we’ll both get a lot of emails, frank@curzioresearch.com. You guys, I appreciate all the support. I’ll see you tomorrow. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio
Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 12 million times.

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