PayPal Rejection, Chip Selloff, and Netflix’s Low Bar

Grant Calloway

So, uh, we had that brief, shiny moment yesterday where everyone thought the semiconductor trade was back to the races because of those ASML booking numbers, but man, the tape this morning is colder than a January morning in Chicago. Dow futures are pointing down 281 points, S&P is off about three-quarters of a percent, and Nasdaq futures are, well, they're taking a real beating, down 559 points. VIX is up over eight percent, sitting right around 17.04. It-it-it is a complete risk-off pivot before we even hear the opening bell. And, you know, the big catalyst here is that Stripe bid for PayPal we talked about yesterday. PayPal's board didn't even let the paint dry on that $60.50 all-cash offer from Stripe and Advent. They officially rejected it as "inadequate." Now, on the floor, we always say the first bid is just, uh, it's just bait. It's meant to test the water, see if the board is desperate. And PayPal's board, led by Enrique Lores, basically just said, "not today." It validates what Andrew Jeffrey at William Blair was saying, that Lores wasn't going to roll over for a cheap price. Even Michael Burry's model has fair value on PayPal closer to 75 or 80 bucks, so sixty-fifty was never going to clear the hurdle. They've got 439 million active accounts. You don't just hand that over at a discount because you had a couple of rough quarters. And then overnight, Asia just threw a bucket of ice water on the tech sector. SK Hynix slid six percent in Tokyo, and that is just ripping through the U.S. pre-market chipmakers. Micron is down over four percent, AMD is sliding near four percent, and Seagate is getting walloped, down over five percent. It's a classic hangover. One day you're buying the future, the next day you're looking at the actual inventory and, uh, and you start to sweat.

Grant Calloway

But, you know, it's not all red on the screen. We're seeing this massive, defensive rotation. Old-economy value is actually holding up the bottom of the tape. UnitedHealth is up over seven percent to 451, and JB Hunt is jumping seven percent on some really strong transport sentiment. Even Verizon is out there making moves, showing they're serious about discipline, cutting five hundred corporate roles and shutting down 274 retail stores. They're trimming the fat, which is what you want to see when the macro starts to look a little shaky. And speaking of keeping track of these moving parts, if you're trying to digest all this corporate shuffling and overnight global data before the bell rings, you don't need to drown in fifty different newsletters. Go check out jellypod.com. You can actually set up a customized, highly focused audio digest that's built specifically around your personal portfolio holdings. It's a clean way to get the noise filtered out before you have to make a decision. Now, looking at the macro calendar, we've got a dual catalyst hitting at 8:30 AM. June Retail Sales and the Philly Fed. The street is expecting that Philly Fed number to surge to 41.40 from its previous 10.3. If that manufacturing print comes in hot, it might just give the market enough backbone to offset whatever consumer fatigue we might see in the retail data. But the real heavyweight fight today happens after the close. Netflix. The stock is down 21 percent so far in 2026, trading at just under twenty times forward earnings. Now, for Netflix, that is dirt cheap. Historically, their five-year average is over 32 times. The bears are out there saying the easy money is gone. The password-sharing crackdowns? Fully priced in. Even though they logged 97 billion hours of watch time in the first half of the year, their co-CEO Greg Peters had that warning that "not all hours are equal." And they're launching this short-form publisher content on August 3rd, which to me looks like a very defensive play to try and claw back eyeballs from TikTok and YouTube. But I don't know, I look at the valuation here and I think the bears are getting a bit ahead of themselves. Jessica Reif Ehrlich over at BofA has a buy rating with a 125 target, and I think she's onto something. When expectations are this low, and the multiple is this compressed, any decent update on their three-billion-dollar ad-revenue target is going to trigger a massive short-squeeze. They don't need a miracle tonight; they just need to prove they aren't dying. Alright, the floor is opening up in a few minutes, let's see how the tape handles this open. Talk soon.