Meta’s antitrust win, Salesforce’s deal closure, and iPhone’s popularity in China
Every weekday, CNBC Investment Club with Jim Cramer publishes Homestretch, an actionable afternoon update just in time for the final hour of trading on Wall Street. Markets: Stocks extended their recent declines on Tuesday as megacap tech fell behind on concerns about valuations in the AI trade. The S&P 500 completed its fourth straight session of losses, on track for its worst losing streak since August. Club shares of Amazon and Microsoft weighed on the market, losing 4% and 2.7% respectively in the afternoon. Club, which held Nvidia’s 1.5% decline, did not support sentiment as it headed into its highly anticipated earnings report on Wednesday evening. There was also a busy trade day at the club. We bought more Home Depot on the post-earnings slump, and sold half our Disney shares last week after a disappointing quarter. Later in the session, we made a big profit on Eli Lilly and strengthened our Nike position. The club also launched a position at Procter & Gamble, the consumer force behind household brands such as Tide, Crest and Gillette. Deal completed: Salesforce completed its $8.3 billion acquisition of AI-powered data management company Informatica ahead of schedule. The companies were aiming to complete it at the beginning of next year. “The market didn’t pay much attention to this deal when it was announced in May,” Jeff Marks, the club’s director of portfolio analysis, said Tuesday afternoon, recalling that Salesforce shares fell on reports of the deal and the announcement a few days later. Marks added that the early completion of the acquisition is “a good sign of confidence in the integration, where Salesforce expects the deal to add to non-GAAP operating margin and non-GAAP earnings per share a year faster than initially believed.” Despite these positive developments, Marks said Salesforce is still a “show me” story. Salesforce has yet to convince investors that AI does not threaten the software giant’s core business, which operates using an armchair-based model. The stock lost more than 1.5% in Tuesday’s trading. Big win: Meta Platforms scored a big win in a landmark antitrust lawsuit filed against the Federal Trade Commission on Tuesday afternoon. The federal judge ruled that the FTC had not proven its claims that Meta had a monopoly on social networks or that the company should not have been allowed to acquire Instagram and WhatsApp in 2012 and 2014, respectively. The agency, which wanted these two units to be disposed of, argued that there were no large applications such as Facebook and Instagram. But the judge said there are plenty of competitors, citing TikTok and YouTube, and argued that the social media landscape has changed radically since those Meta acquisitions were made more than a decade ago. Shares of club name Meta turned positive late Tuesday. The positive Meta ruling comes 10 weeks after Alphabet’s Google avoided the harshest penalties in an antitrust case it lost last year. Good news: iPhone sales in China rose in October, according to the latest data from Counterpoint Research, with Apple’s dominance of the country’s smartphone market reaching one in every four phones sold. Apple last reached this milestone in 2022. Overall, sales of Apple’s flagship device in China rose 37% last month compared to the previous year. Analysts at Counterpoint pointed out that demand for the iPhone 17 is strong, especially due to market share gains. According to Counterpoint, all three models of the iPhone 17 outperformed the iPhone 16 models in sales, posting mid-to-high double-digit percentage growth over the previous year. The base model of iPhone 17 continued to grow the fastest. Apple shares rose slightly on Tuesday. Jim Cramer has been teasing the new iPhones since their September launch. He has previously described its debut as “huge” and argued that Apple’s latest devices are “more affordable” than past versions. The club continues its long-held “own, don’t trade” thesis on Apple shares. Next up: TJX owner Club will report quarterly earnings Wednesday morning, along with other retailers like Target and Lowe’s. Next, Nvidia and Palo Alto Networks, both Club names, will report their results after market close on Wednesday. Investors will also receive minutes from the October Fed meeting on Wednesday at 14:00 ET. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing the trading alert before executing the trade. 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