SOTS 2nd Hour: CoreWeave IPO, Lulu’s Consumer Warning, Trump vs. Big Law 3/28/25

SPEAKER_1 (0:00)

Are you still quoting 30-year-old movies? Have you said, cool beans in the past 90 days? Do you think Discover isn't widely accepted? If this sounds like you, you're stuck in the past. Discover is accepted at 99 percent of places that take credit cards nationwide. And every time you make a purchase with your card, you automatically earn cash back. Welcome to the now. It pays to Discover. Learn more at discover.com/creditcardbased on the February 2024 Nelson Report.

SPEAKER_2 (0:28)

At Capella University, learning the right skills could make a difference. That's why our business programs teach you relevant skills you can take from the course room to the workplace. A different future is closer than you think with Capella University.

Carl Quintanilla (0:51)

Good Friday morning, welcome to Squawk on the Street. I'm Carl Quintanilla, alongside David Faber, Courtney Reagan here at Post 9 of the New York Stock Exchange. Important day as we watch the CoreWeave IPO. In the meantime, trying to juggle that with some inflation data as the S&Ps struggling a bit to hold on to gains for the week.

Courtney Reagan (1:07)

Busy Friday, good to be here. Thank you all for joining us. We are 30 minutes into this trading session. Here are three movers that we're watching. Shears of Lululemon dropping, trading below 300 for the first time since November. Now a slew of analysts downgrades and price cuts following the company's latest earnings and outlook. We'll break all of that down this hour. And of all the 24 hours for shares of App11, after short seller Muddy Waters raised concerns over the company's ad technology, claiming they're breaking Google and Apple's App Store rules. Keep an eye on the foreign autos. Adding to yesterday's losses as investors continue to work through the cost of President Trump's new auto tariffs on vehicles made outside of the US. Though Barclays upgrading Ferrari to buy this morning and calling the stock quote a safe haven. Interesting for a Ferrari. Carl?

Carl Quintanilla (1:54)

Got that PCA data this morning. Let's get some U-Mish as well. Back to Rick Santelli. Hey Rick. Yes.

Rick Santelli (2:00)

Now these are University of Michigan, Carl. These are the final numbers for March. We had the mid-month numbers and there has been some movement. We've gone from 59, 57.9 to 57 on the headline. That remains the weakest confidence headline number since NOVA of 22 If we look at the current conditions, it moved from 63.5 up to 63.8. Still remains the weakest since NOVA of 24 Now, if we look at expectations, moves from 54.2 to 52.6. That would be the weakest going back to, wow, July of 22 Now, here's where it gets interesting. The last look on inflation really ramped up. The one year hit 4.9, moved up again to 5%.

5%. That equals where it was in NOVA of 22 You have to go to July of 22 to find a higher rate of inflation. Finally, 5 to 10-year inflation. Our last look, it jumped up to 3.9. It jumped again to 4.1. Equals where we were, get this, in Feb of 93 to find a higher number. You are in August of 92 Now, these numbers are squishy inflation numbers. They are based on surveys. And the market really isn't moving much on interest rates yet. Remember that these numbers were somewhat expected based on the mid-month read. But definitely something to pay very close attention to. Remember, 10 years closed at 4.25 last week. So, they are still at 4.29, up 4 basis points. But they are down 7 on the day. David, back to you.

David Faber (3:36)

All right, Rick Santelli, thank you. Let's turn our focus now to a very important IPO we've been talking about for a couple of days. It has priced at $40 a share. I'm talking about CoreWeave, of course. A provider of Compute, essentially, in the form of really the latest NVIDIA chips and what they're able to do in terms of putting all this stuff in a data center, who then have clients amongst, obviously, the largest companies in the country, with the best credit ratings as well, led by Microsoft, which represented as much as 62% of the company's revenues in 2024 The raise here, about a billion and a half dollars. It did come well below what was the expected range. Remember, it was 47 to 55, downsized in size to 37 and a half million shares. Down in price as well to 40 But still, the largest tech IPO we've seen in the US at least since 2021

I outlined on Wednesday some of the key questions around the company, of course. The depreciation schedule in terms of those GPUs, its enormous capex needs, its very large debt load. But the other big question is simply about demand. And these continued concerns as to whether that demand for compute will ever slow from Microsoft's, the Metas, the Alphabets, the open AIs of the world. And that continues to be a question, obviously, in an interview earlier on CNBC, the company's CEO said they see no let up in demand. And frankly, I continue to hear that from any number of the companies that are their customers, including open AI, which just put out a new image generator yesterday, Courtney, and fried a lot of GPUs in the process, and needs endless amounts of compute. That said, there's still this sort of other question as to what the lifespan is of a GPU, whether they're depreciating them properly, and what that really would look like for cash flow if that changed significantly. If, for example, Hopper, as Jensen Wong recently said, was worthless in a couple of years, that might impact what things look like as well.