Hello and welcome to Market Domination. I'm Josh Lipton live from our New York headquarters. Just now to go now until the closing bell on stocks, they are falling as investors digest the flood of earnings and there's a big rotation out of tech. But first, we're diving into the latest in Disney's long awaited succession plan. Disney making it official. Company naming Josh D'Amaro, its next CEO taking over for Bob Iger later this year. D'Amaro oversees the parks and cruises business which has been a key profit driver for the entertainment giant. Joining me now got Matt Dolan, Morningstar senior equity analyst. Matt, it is great to see you. So let's just start with Josh D'Amaro. Matt, I mean you know this company backwards and forwards. So what did you think? Do you think Josh is the right guy? He's got the right resume, background, experience. Matt, this is a good fit.
Yeah. Well, thanks for having me, Josh. We do think that this is the right pick. It was pretty widely reported that Dana Walden and Josh D'Amaro were the front runners for this role. We think each of them had qualities they brought that actually the other didn't and either would have been fine choices. But we do think D'Amaro was the better choice for really one simple reason and that is experiences, which is where Josh D'Amaro has his experience, is the most important part of Disney. It drives most of the profit, closing in on 60% each year and it's a growth business as opposed to entertainment in general which is shrinking and if Disney needs to rely on entertainment it's in bigger trouble. Relying on experiences is where Disney is especially healthy. And not that they aren't both important, but with experiences being especially critical. If you had to pick one, which by the way, we do think one was the way to go as opposed to co-CEOs, Josh D'Amaro was the choice in our view.
The only there's some push back I've heard, Matt. I wouldn't even call it push back. I would just call it a point some folks are making is they'll say this, I'd love to get your take. They'll say, listen, Disney, they'll say, is first and foremost, it's a content company. It all starts with that very valuable sought after IP and they'll say D'Amaro, you know, he's an operator. He's a parks guy. What do you make of that? Is there any kind of tension there?
I don't know if tension is the word. It is really the exact reason why I said each of the candidates brought something that the other didn't because you're right, that's what Josh D'Amaro lacks a little bit as far as Disney being a content company first and foremost. Yes, the content starts everything, but Disney has a lot of that already established. And not that it doesn't need more, and not the other part of the business isn't important, and that's why neither of these candidates had maybe the entire package that one might want, and I don't think anyone does for a company like this, but Experiences is set up to grow with a lot established in place already. And that has to go right for Disney's stock to be successful. And again, don't get me wrong, streaming, especially as traditional television continues its transition is extremely important, but the profits come from experiences. Disney does already have a lot of IP established franchises that give it a good base. And continuing on the growth trajectory with what already Disney has in place with experiences is the most important thing for this company. And by the way, that's also why we thought it was really important that Dana Walden is staying on. She got a little bit, you know, bump in her title, a nice pay package, and she's staying. And it's really important for her to have her there because both of these businesses are important. But we thought choosing one was the best and either was going to have pros and cons.
And it looked like, Matt, D'Amaro takes over in March, so coming up fairly quickly. Is that sort of the rough timeline you imagined?
We had been thinking it was probably going to be later in the year. Bob Iger's contract goes through December 31st. In recent weeks, it was reported that he'd probably leave earlier than that. We knew that this announcement was coming. I didn't think it would happen this quickly. Seems like by the next earnings call, we will have a new CEO. So, that's not what I was expecting. But it did seem like they weren't going to wait till the end of the year. And it's been so long awaited, well established that the transition was coming this year. It's not something that really strikes me as something to put too much thought into. It'll be nice to just have it finished.
Matt, how much confidence do you have that this transition, this handoff, that it does go smoothly, Matt? Does it go as planned? Because as we know, of course, there's been issues in the past with Disney and succession. Do you think this time is different? And if so, how come, Matt?
Well, for one thing, this was it appears to be a much much more deliberate, thought out process as far as who would take this helm and the candidates that were concerned going into it. As far as whether it will go smoothly, our expectation is yes, it will. We think having the established people in place and leading the respective areas they do again with Dana Walden continuing to play such a prominent role on the creative and in the entertainment side of the house should help. But there is always risk with the transition being that these are internal candidates familiar with Disney with D'Amaro being so experienced and so critical to the success that experiences has which again is the top thing that we're looking for when we're looking for how this company performs each quarter and each year. It is something that I think should go smoothly. If you look at the stock, I mean, it's been largely basically rangebound over the past decade really. I mean, there's two periods of outperformance there.
What are the key areas of opportunity here now for D'Amaro? Matt, what do you think he focuses on?
Well, the way we're looking at it is experiences needs to continue growing while keeping margins high, but streaming also needs to be an area where you continue to get the high growth and continue to increase profitability. So, they've been doing that. As far as why Disney's been so bad as a stock performer over the past decade really. We've been in the midst of the decline of traditional pay television and Disney has been hit by that and this transition into streaming which for a long time wasn't profitable. Disney has performed actually much better than a lot of its peers in traditional media but it hasn't been immune and it's been getting past that. The nice thing for Disney, and unfortunately they now stop reporting this with detail, but linear networks on the entertainment side have gotten to the point where they're almost inconsequential to the overall results. And so that's a business that we know is going down to about nothing eventually. But Disney's largely passed how much that's going to hurt, which is why the detriment from having that business isn't going to be as noticeable anymore. It is a reason though why streaming needs to succeed. And then sports still has the sports segment largely ESPN still has a lot of exposure to traditional linear television and that business we're not looking to grow necessarily but it does need to stay stable and it's been doing that and it is a key for the company. But that's an area that for the industry is not an area of growth that Disney still has a lot of exposure to. But with the composition of its business being more growth oriented, we feel pretty comfortable that Disney is undervalued here. And it's not to say that the near-term won't face some headwinds largely from headlines or from maybe macro events. Yesterday they were talking about how in the US they've actually seen a little bit of dip in tourism to domestic parks. So short term that type of thing is a headwind and it's something that we've contemplated and is in our valuation but over the long term these are healthy growth businesses with a lot of those more dying businesses becoming much less part of this company. So we think the outlook should be a little bit more optimistic.
Matt, as always so good to have you on the show. Thank you.
Well, PepsiCo affirms its fiscal 2026 financial outlook as it dials in on delivering more value to consumers. Let's get to Yahoo Finance's executive editor, Brian Sozzi, who is joined by the company's CEO for more on the quarter. Sozzi.
All right, thanks so much, Josh. Ramon, good to see you here. You know, in digesting this quarter, I think at the core, what PepsiCo is trying to do is make things more affordable for consumers. Now, all I hear about is the economy is doing well, but take us inside that core PepsiCo shopper when they're out there buying beverages and snacks. How challenged are they right now?
Good. Hi, Brian. Thanks for hosting me today. We're trying to do much more than just affordability. I think we're trying to do a holistic investment in the business with affordability being one, but also we're innovating. We're trying to give consumers more choices in functional and higher density foods. We're trying to give them more functional beverages and we're trying to execute better. But to the point on the consumer, we're seeing still the consumer, you think about the middle lower income consumer quite stable, same as last quarter, but still very stretching their budgets trying to be choiceful and cautious on how they spend their money, especially discretionary categories. And we're trying to help consumers to stay in our categories, in our brands. And so we'll make surgical investments. We'll help consumers, certain consumers. We'll have help them with certain packs, certain brands to be able to afford us at the beginning of the month, at the end of the month. And with that, we'll grow the category and we'll grow our brand.
So Ramon, if I'm walking down, let's say, Walmart aisle, of course, a key output for you. You work closely with Walmart. Walk down that Walmart aisle at the end of the month. How much more I mean how much cheaper will Doritos be for me and is that those price adjustments is that in your guidance this year?
Obviously our guidance reflects this. We've been testing these investments for over 6 months in multiple markets across the US and we've seen the return on the decision. The amount of savings that the consumer will have versus the current product, it will depend. In some brands nothing, in some brands meaningful investments to make sure that we get elasticity right, we get the consumer back into our brands. It is one of the largest or the most important friction points in the category. We talk to consumers they're telling us we would buy more of your products only if they were more affordable. So that's the key insight. They're also telling us we would buy more if they had no artificials. That's why we launched Naked and we're seeing that there's consumers that were sitting at the fence of the category that they're coming in, moms that they're saying now I can give my favorites to my children because you have no artificial. So we're trying to play in multiple directions. Brian, I think this, I mean I see in the numbers that this will be successful investments for us that our foods business in North America will continue the positive trend that we've seen in the last few quarters and that we saw in December and we're seeing in January as well.
You brought this up on the earnings call and you really you seem to be tackling these GLP-1 issues. You and I have talked about this in the past before, but this is really the first quarter that you hopped in this earnings call. So this is how we're addressing GLP-1s. Take us through where you are testing this and does it go beyond just putting out more like single serve packs and portion control?
Yeah, it is a, I mean the way we're thinking about this is we assume that consumers will sequentially adopt more GLP-1 medication in their lives and either for real medical reasons or lifestyle reasons and obviously this creates an opportunity for us, an opportunity but it could be also a threat if we don't react. So we're leaning into action. We're leaning into, as you said, portion control for parts of the portfolio. We see that consumers are continuing to engage in our categories, but in smaller portions. They don't want to eat too much. They want their favorites at smaller portion. That is a key strategic bet for us. Multi-packs, assortment, and getting the right price point. Now there are many more things, right? There is hydration and I talk about hydration. Consumers need functional hydration. They want to drink more. Their body needs more liquids. I think we have tremendous platforms like Gatorade and Propel and we're leaning into those platforms to provide even more bespoke solutions for GLP-1 consumers. We know that consumers want more fiber because of the digestive, you know, not problems but they need more help with digestion. So we're providing whole grains. We're providing more fiber not only in our food business but also in our beverage business. We're leaning in with prebiotics obviously as you put there with Pepsi prebiotics and Poppi. We're providing holistic solutions, protein being one clear category where there's an increase in consumption and we're also providing, you know, with the relaunch of Muscle Milk but also in the snack business with Quaker we're providing more higher protein solutions. So it is a holistic response. We're approaching it as an opportunity for the company, but also with a sense of urgency that we need to adapt the portfolio to capture this opportunity ahead of other competitors that will also be leaning into those same spaces.
So, you have these new products, you're redesigning your supply chain, Ramon, you're looking for productivity. I see the new packaging behind you. You know, I'm an avid snacker myself. I see I know that packaging is different. Would you characterize this year as PepsiCo undergoing really one of the biggest reinventions of the past decade?
Yeah, Brian, we've been working on this for already some time, right? This is part of our 2030 strategy. We know we need to transform ourselves. The portfolio of today will not be the portfolio of the future. The way we serve our customers today will not be the way we serve them in the future. The way we use technology today will not be the way that we can do things, we really adopt technology. So these are all investments and strategies we've been working on for the last few years. Now we're seeing the output of those strategies and the work of a lot of our colleagues that have been really working very hard to innovate, working hard to rethink the supply chain, working hard to create the data platforms and the data use cases that now we can scale across the company and become much more intelligent, much more flexible, much more agile company and give our associates the opportunity to make better decisions all the time with real time information, much more granular information that I think will help us make better decisions, be a better company. So yes it is a transformation in multi vectors, it's a transformation we've been working on, it's a transformation that we'll be seeing the results this year but it's not only this year, it's '26, '27, '28. We're getting ready for a multi-decade of growth at the company and you know we're running this company for the long term. We've always been doing that and I think we'll see the benefits and you know we see it, our investors really, you know, kind of recognizing the work we're doing and buying our stock.
Ramon, one thing that was not on my bingo card was to see a Super Bowl ad from PepsiCo with a Coca-Cola white baronet and dare I say even a Coca-Cola. Now this is I have not seen this from PepsiCo in a while. Why are you, I mean you're taking the fight right to Coca-Cola. Why did you think you needed to pull this ad? I mean, I can't even believe I'm watching this right now on the screen. Ramon.
Yeah, good. Listen, there are two things we're trying to tell consumers on the day of Super Bowl. One is we've tested our Pepsi Zero with over 100,000 consumers in the Pepsi challenge and Pepsi Zero, it has superior taste. Now, we say it in a fun way, in a way that creates news for the category and I'm sure it will create consumer awareness and consumer behavior change. The second thing we're telling consumers on the day of Super Bowl is Lay's has been growing potatoes for almost 100 years with US farmers across the country. So we're celebrating our farmers. They're critical for our food. But then we're also telling consumers Lay's are the freshest potatoes they can be from the farm to your table in 72 hours and guaranteeing that. So those are two big insights. We want to be intentional, strategically intentional with our advertising. We're going to create new consumer behaviors and we're going to do it with fun. We're a fun category. So obviously we're going to do it with fun, engaging consumers and this is what we're about. We've been doing this for over 100 years. We'll continue to do it and our marketing teams are getting better every year.
I love you just explained that ad to me. You did not mention Coca-Cola. Ramon, I knew it was going to happen. I knew. Enjoy the big game. I will tell you I will be there with my Sabra hummus. Ramon, enjoy the big game. I'll talk to you soon, man.
Nice to talk to you, Brian. Thank you very much. Ciao, ciao. Josh, back to you.
All right, thank you, Sozzi. Coming up, we're tracking the market action heading into the closing bell. Some of the biggest moves we're watching on crypto. Bitcoin breaking below $75,000. What's behind that move? That's next.
Stocks are retreating from Monday's gains and a volatile start to February. Here with more on the market action, we got Jared Blickery. Jared.
Thank you. We're going to take a look at crypto and gold and silver. A couple of commodities as well. Here's Bitcoin. You can see the current price well below 75,000 at the lows of the day. In fact, it hit 73,000 and change right there. Just popped above 75,000. We'll get to a chart in a second. Just want to show you real quickly what gold is doing. It touched, I believe, yeah, the high was 5,008. So, punched right back above 5,000. It's still up 6.5%. Huge swings that we're seeing here. And I think the volatility that we're seeing since last Friday is almost unprecedented in the metals market. There's silver up 10% as well to 84.75. Let's not forget it was triple digits just a few days ago. But let's go to our crypto heat map and we can see this is a lot of red here. Bitcoin is actually doing better than a lot of these, down 4%, Ethereum down 5%, Solana down five as well. And let's check out the chart on Bitcoin because I've been making a big deal. I'm going to show you the three-year about the $75,000 dollar level. That has been my line in the sand. And to be sure, it hasn't really cracked yet. We saw a plunge below 70,000. Well, that would get me a little bit more concerned. But what I don't like about the last few days price action is that we came down, we had a low yesterday and then we kind of used 79, 80,000 as resistance and then we made a new low here. So, that's not what I wanted to see. I wanted to see a nice quick rise above 80,000. That would give me a lot of confidence in the bullish case. We start spending a lot of time below 75,000. My thesis is that could be a crypto winter scenario. But let me just show you the year-to-date real quickly on these crypto tokens. And I'm going to sort by performance. Actually, let me put it back to a market cap view. Bitcoin down 50%, Ethereum down 26%, Solana 22, Doge 16. So, you kind of get the picture there. Now, here's the futures view. So, look at that silver in the upper left. Despite all the volatility and selloff recently, still up 20%, gold up 15%. But let me bring it back to what we're seeing today. We've just seen a lot of volatile action. And I'm going to show you the 10-day in silver. And there we go. We got that $120 top, the big sell-off here, and we're just trying to make some sense of what's happening. Suffice to say, if you're in these markets, a lot of caution is warranted, and I'll send it back to you on that, Josh.
All right, Jared. Thank you. Well, Walmart joins the trillion dollar club as the retailer's market cap passes the $1 trillion milestone. We're looking at how it got here with Yahoo Finance's Brooke DiPalma. Brooke.
Well, certainly a momentous moment for Walmart, especially as new CEO Doug McMillon takes the helm effective earlier this week and now he's stepping into some pretty big opportunity. The company now surpassing that $1 trillion valuation. And just for some context here, Amazon, their current market cap is $2.56 trillion, whereas it's way ahead of Target, another big box retailer, which currently has a market cap of 48 billion. And so Walmart crossing this $1 trillion market cap, quite significant for the company, but it wasn't always supposed to go this way. Certainly former CEO Doug McMillon really worked over the past decade, over the past really 12 years under his helm to create once was just a physical store footprint, really move it into the future with e-commerce now a huge component for the company and that really boosted same source sales growth. If you take a look over the past decade, what we've seen is low to mid to even high single-digit same source sales growth consecutively for the big box retailer. And what has really gotten it there is faster delivery times. The company now says that it could reach roughly 93 to 95% of US households ultimately competing with Amazon there. And also Josh that low price point model continues to win for the company especially in this K-shaped economy. We've seen an influx of high-income consumers turn to Walmart especially post pandemic.
So what let's say I'm a viewer. I'm in Walmart right now. I'm invested. What's next for Walmart? What's on my radar?
Well, certainly it'll be interesting to see how exactly Walmart plans to compete and plans to ramp up really tech focus as it competes with Amazon. In December, the company relisted to the NASDAQ. So, it currently is trading on the NASDAQ. And what we know is that Walmart is really looking at tech and AI, even drone delivery as the next wave of the future to get in front of consumers that they choose to shop at Walmart effectively over Amazon. And that will really be a key component here. How exactly is Walmart gearing up and currently competing with the e-commerce giant? And how will they take this into the future to really make sure that their marketplace really ramps up and meets the current demand that consumers have for both delivery, convenience, and also fastness. They just want their doorstep right as soon as they get home from work.
All right, thank you Brooke. Appreciate it. Coming up, Congress breaks a stalemate over the shutdown. We've got the latest out of Washington.
The House passing a funding deal and bringing the government shutdown closer to an end. For more, we're bringing in now Yahoo Finance Washington correspondent Ben Werschkul. Ben.
