Target Plunges, Comcast to Spin Off Select Cable Networks, Nvidia Earnings Countdown 11/20/24

Carl Quintanilla (0:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Wednesday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures fairly steady on a big day for retail earnings, media and tech. As Nvidia reports tonight, one of the last AI catalysts of the year, Target with its biggest earnings miss in two years set to fall some 16%. Our road back's gonna start right there. Missing the mark, the stock plunges after posting its biggest earnings miss, as we said, since 2022

David Faber (0:40)

Plus our parent company, Comcast, is planning to spin off most of its cable networks. We'll give you the details. And investors are gearing up for those Nvidia earnings. The tech giant set to report after the bell.

Carl Quintanilla (0:54)

Let's begin with Target this morning tumbling in the pre-market after this Q3 miss. The company says results were hurt by consumers tightening their belts despite some price cuts. The costs of managing higher inventory levels also came into play. Retailer cuts their holiday quarter guide. This is Cornell on the earnings call just a few moments ago.

Brian Cornell (1:14)

While we aren't happy about the reduction in our outlook for the remainder of the year, we believe we're managing our business appropriately. And we're helping our team stay agile and ready to respond if we see our business accelerate. And our Q4 plan is focused on ending this year with an inventory position that will best position our business going into 2025 Importantly, we're still confident in our long-term strategy. Traffic growth shows that we're winning with our guests. And we're making the long-term investments that have delivered strong performance over decades.

Carl Quintanilla (1:48)

Jim, Target has now comped below Walmart for 36 months.

Jim Cramer (1:52)

Yeah, I think that there's a case to be made, as I did at the top of the show last night. There's three major retailers in this country.

There's Amazon, there's Walmart, there's Costco. And I think Walmart is taking share. No, Walmart is taking share. I think a lot of their share comes from the fact they got 60% grocery. They have very low price of grocery. You go there for grocery, you go buy everything else. And David, the question is relevance. Target has some good brands. Target has a Taylor Swift giant production for to start the Christmas season. But in the end, they don't have the horses.

David Faber (2:28)

You don't think so? The analysts right now seem to be focused on this margin, the miss on margins. And whether or not the company can be expected to sort of retrace that lost profitability or not. I guess that would be a key thing in how you evaluate the future for this company.

Jim Cramer (2:47)

Yeah, I think that's true. I mean, unfortunately, they have a shortened holiday season between Thanksgiving and Christmas. Fortunately, they had Beauty that was good. They still have their house brands that are doing well. But they lack a relevance that has to do with the fact that food got too expensive in this country. So the people gravitated toward Walmart because you got 60% of their food. Remember, only 20% of Target is grocery. So in an environment where, not to be too political, but where it's apparently, for instance, like the Democrats didn't understand inflation, I think that there's this element of retail that doesn't understand the importance of the grocery. And Target may be just not have the scale of Walmart to do grocery.

David Faber (3:31)

When they say unique challenges and cost pressures, what are they talking about?

Jim Cramer (3:34)

Well, I think they did have some important issues, but I think that when you go into Target, they got to do a rollback just like that Walmart did the rollback. They got to hurt the gross margins even more. It's not clear, by the way, the inventory number, what that really is, what does that mean, the position themselves. I don't know if they have access to inventory.

David Faber (3:53)

Well, they said they built up in part to prepare for a port strike.

Jim Cramer (3:56)

I don't want any inventory. Right? I mean, you want to create Christmas. They're doing good. They've got Christmas trees in. Apparently, that's working well. But the issue for me is price. America has rebelled against anything that hasn't cut price. And so Walmart rolls back thousands of different prices of things. And Carl, you know what? America just says, you know what? We went value. We've been hurt. 2019 to now, we've paid too much. Let me go buy $5 of good food by a good, that's the Walmart price five. That's the McDonald's price five. 10 is the go out price and that's Texas Roadhouse. And that's Chili's. There's a $5 food item and there's a $10 dine out. And if you don't meet those targets, they're not going to go to you. And it's really important because Costco can do it because they can jam the producers. They have no shame about going to any producer and say we will make something against you. It's only felt against Coca-Cola and Pepsi. And frankly, it's not existential. They can pull it off. They've got a giant buyback. If they're really confident, we'll know that they bought back a huge amount of stock today. But what we're looking at is Amazon with a fantastic offer for go to. You've got the bricks and mortar Walmart actually working as a distribution. Get it to your house in 45 minutes.