Cboe Global Markets (CBOE) shares fall after Morgan Stanley analysts downgrade the stock to Underweight.

Nu Holdings (NU) stock is in focus after Nubank reported revenue grew 40% in the first quarter.

Uber (UBER) offers $1 billion of exchangeable bonds, convertible into shares of Aurora Innovation (AUR), which may dilute existing shareholders' stakes.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

Video Transcript

00:00 Seana Smith

Now time for some of today's trending tickers. We're watching CBOE, NuBank, and Aurora. Um, let's get first of all to shares of CBOE. Global markets declining after Morgan Stanley double downgraded the stock. Analysts wrote that a greater than expected de-escalation between the US and China limits upsides for options volumes here at the company. So double downgrade, going to underweight from overweight here. Um, and the analyst saying that the company had benefited from the volatility that we have seen surrounding the tariffs, volatility, good for CBOE, good for options volumes. Tom Hayes still with me here. So interesting call here on the effect that more calm has in the markets, which for many investors is like, ah, thank goodness. But if your options, or if you rely on options for your business, maybe not as positive.

01:17 Tom Hayes

Yeah, when when volatility ticks up, you buy CBOE. That's a no-brainer. Uh, volatility huge crush in the last four weeks. Uh, so their revenues are going to be a little bit lighter. Double downgrade. It's a little aggressive. It's such a great business. It's got kind of a monopoly in the space. So I think long-term it's okay. I think short short-term, I actually like the sell-side call, which I don't say very often.

01:53 Seana Smith

Oh, interesting. Okay. Um, and then also we're looking at new holdings. That's the holding company for NuBank, um, and watching that stock. It's a Brazilian digital lender here. Um, and, uh, it posted a slight miss in its adjusted profit for the first quarter. The company did see strong revenue growth, 40% year over year during the quarter, but higher spending on new clients dragged on its profit. The shares were down before. Now they've turned higher by a little more than 1%. It's among the most valuable lenders in Latin America. Warren Buffett's Berkshire Hathaway is among its shareholders. That's usually Tom's mood music when he hears that kind of thing. Um, we've talked to the company before, and it really has seen big growth. We also recently talked to Mercado Libre, another fintech and e-commerce company that's big in Latin America. And the theme that they emphasize over and over again is just adoption. In other words, they're much, you know, they're not as far along as we are here in the US with everyone on devices, shopping, banking online. And so there's a lot of upside.

03:32 Tom Hayes

Yeah. Well, uh, I got rich investing in South American banks, is something no one's ever said. I I will say this. Look, they're growing customers. They've got a new technology. Buffett owns, like, a sliver. One of his underlings bought it. Uh, but as far as it goes, what you saw was their credit reserves went up in terms of expecting bad losses. And this is the same story over and over in Latin America. Brazil hasn't benefited from the international outperformance because of the political climate. So you really need to see a change in political regime. They're expanding into Columbia, that's weighing on costs. They're expanding into Mexico. So they have to invest a lot. This thing has been kind of dead money for years. Everyone said, well, Buffett bought it. It's going to be great. Well, Buffett didn't buy it. His underlings did. And, um, I it wouldn't surprise me if they do get the growth, if they get the momentum, if all the ingredients come together, uh, but it's not there yet. So for me, it's a pass.

05:00 Seana Smith

Okay. I mean, the stock hasn't, I don't know. I guess it has, it is, it had a big run-up, and now it hasn't.

05:18 Tom Hayes

That's why we're talking about it.

05:22 Seana Smith

Yeah, I guess so. Um, and let's talk about Uber offering a billion dollars of exchangeable notes tied to shares of self-driving truck company Aurora. Aurora was one of the first autonomous vehicle startups to go public, a listing it achieved in 2021. Uber was the company's, and is the company's, largest shareholder. Couldn't sell its shares for four years. Aurora is a really interesting company. We actually had the chance to talk to the CEO recently. Um, and to be clear, Aurora doesn't make the cars, the vehicles. It doesn't even make cars at all. Its software is for self-driving semi-trucks. And it actually is one of the first ones that actually has, um, trucks using its software on the roads in Texas. So that was a big milestone for the company. Uber still owns over 300 million shares of it, 23% of the stock. But what you get is, when you get a convertible offering, it can dilute the value for existing shareholders. But still, Aurora, kind of an intriguing, you know, we keep talking about Tesla, Waymo. I mean, this company, its software is already driving out there.

06:57 Tom Hayes

Well, I think this offering is just a way for Uber to raise a billion dollars of cash without selling the stock. Uh, and Aurora doesn't want them to dump a billion dollars of stock on the market. So, uh, this is a great way. It converts at a 10 to 15% up, uh, into Aurora stock. So that means that stock, or into cash, so that means that stock would be pulled away from Uber. So this is, you know, it's a way for them to monetize that position without destroying the market for Aurora and maintaining that partnership. So I think it's a smart move by Uber. I think Aurora likes it. And, uh, and it's a bet that this could be the future, because we we do need truck drivers, and we do need that logistics.

08:08 Seana Smith

Are you invested in any kind of autonomous driving? Is that a theme that you're into? I know you're more sort of more on the value side, so I don't know if this appeals to you.

08:23 Tom Hayes

Yeah. But I think the greatest international value in AI right now, and one of our largest positions, is called Alibaba. No one wants it. No one wants it. It's up, it's doubled off the lows. People are still not talking about it, because the Republican Senate and House are saying, we're going to de-list it again every two years. We're going to de-list it. So we own it in Hong Kong. They're going to report earnings tomorrow. Okay? You saw JD. Earnings are going to be good. This is the cheapest way to own AI in the world. Because not only are their models beating deep sea and beating open AI, but they're the largest cloud provider. And what they say to all these AI startups in China, every single one of them, we'll help you out. We'll give you a free sample. We will give you cloud computing, which you need and you can't afford. You will give us equity. So Alibaba is effectively an AI ETF in China. They own a piece of all the AI startups. So that's the way I'm playing it. So indirectly, I probably have a lot of autonomous driving, but I have it through something with a huge margin of safety, $80 billion of cash on the balance sheet, generating $20 billion of free cash flow, buying in stock like there's no tomorrow, and a leader in AI. So, oh, and by the way, they're the number one retailer to the middle class. So as the Chinese push consumption, they're a toll taker.

10:34 Seana Smith

That's a little bonus. That was an adept pivot, Tom Hayes. From autonomous driving. Alibaba, and the stock is up almost 60% over the last year, so not too shabby on that front either.

10:50 Tom Hayes

I'll try.  Related Videos

01:00

Oklo moves higher, American Eagle pulls guidance, Reddit surges

Yahoo Finance Video • 30 minutes ago 01:44

EToro Soars 42% After $620 Million Upsized IPO

Bloomberg • 48 minutes ago 02:51

Morgan Stanley's Slimmon Says He's More Cautious on Stocks

Bloomberg • 1 hour ago 03:09

ETF investors examine international exposure amid US volatility

Yahoo Finance Video • 1 hour ago

View Comments