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Vista and Elliot buy Citrix, Tesla stock surges, BlackBerry to sell patent assets

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Yahoo Finance's Julie Hyman and Brian Sozzi discuss Vista and Elliot buying Citrix in an estimated $16.5 billion deal, Credit Suisse upgrading Tesla to outperform from neutral, and BlackBerry selling its non-core patent assets.

Video Transcript

[MUSIC PLAYING]

JULIE HYMAN: Well, setting up for the open on this Monday morning, which also happens to be the last day of the month. And there's a saying in the markets-- as goes January, so goes the rest of the year. And January hasn't gone well, as we've talked about.

BRIAN SOZZI: Nope.

JULIE HYMAN: The Dow is off by about 4% this month, the S&P off 7%, the NASDAQ off 12% this month. And it looks like it is going to be the worst performance for the NASDAQ in a January ever. 9.9% was the other worst January for it. That was back in 2009. So not great I think is the better way to paraphrase it.

As we talked about earlier, we've got Goldman Sachs saying things could get worse before they get better. We got Mike Wilson saying the current fair value for the S&P 500 is 4,000, which would, obviously, leave more downside. All of that said, it is a mixed picture this morning. NASDAQ futures are actually in the green at the moment. But Sozz, as you said earlier, in these markets, just because futures point one way doesn't tell you much about how a session is going to go. So let's take--

[BELL RINGING]

--the Opening Bell here this morning. We'll see how things go. We've got Shell ringing the Opening Bell this morning, getting rid of its dual share structure. So it is marking that change for the company.

As we do have stocks open up here this morning, we're coming off of-- as you can see, that's Friday's close for the NASDAQ-- coming off of a big increase in the NASDAQ on Friday. We did see a little bit of follow through here this morning in the futures. We'll see what happens once it opens up. Yes, it's up just a third of 1%. So we'll see how that ends up going.

Let's talk about some big movers here this morning. And we got to start with a big deal-- $16 and 1/2 billion including debt, $13 billion not including debt. That's how much Vista Equity partners and Elliot Investment Management are paying for Citrix Systems, which is a virtualization software company.

And the shares are down 3 and 1/2%, a little bit unusual here, Sozz. $104 is the per-share price. It's a 30% premium to where the stock closed back in early December before reports of a possible deal started to materialize. So interesting here that we're seeing the stock pull back.

BRIAN SOZZI: The only thing I care about in this deal, Julie, is the word "software," "software," because this is another thread in this narrative we're building here that perhaps the selloff in software stocks we have seen year-to-date really across the board, perhaps it has been overdone if you're getting an Elliott and a Vista to step in here pay top dollar, $6 and 1/2 billion to buy a software company and get that company's recurring revenues. ServiceNow, big quarter out of them last week, bullish outlook from them.

You had Snowflake CEO Frank Slootman come on with us a couple of weeks ago, really said, hey, I don't understand this stock selloff here in software. And I know these guys are talking their books, but still, the fundamentals of these businesses appear to be strong. I got a good note out of Dan Ives previewing some of these software notes, some of these software earnings out this week, saying that investors may be starting to kick the tires on some of these stocks that have been beaten up.

JULIE HYMAN: I mean, it looks like it's going to be a record month for software deal announcements, Sozz. So to your point, there's a lot of people seeing value in the corporate world, in their competitors. Of course, Microsoft buying Activision is a big part of that as well. But there was value of software transactions, software M&A in 2021 was $674 billion. That was a record as well. So that also tells you-- well, I mean, but that was also even when--

BRIAN SOZZI: Hey.

JULIE HYMAN: --values were going higher.

BRIAN SOZZI: Hey, this ain't my first rodeo. I've seen these games before, Julie. It's how it goes. It's all cycles.

JULIE HYMAN: True. Definitely all cycles. So we'll see what ends up happening. Let's talk about Tesla, shall we, because the stock is getting an upgrade this morning. Credit Suisse upgrading the stock to the equivalent of a buy, basically saying that because it's gotten punished, as we talked about earlier-- it's down 20% this year thus far-- that it is looking more attractive now. Dan Levy as the analyst on this over at Credit Suisse. And they've been neutral on the stock since April of 2020, Sozz.

BRIAN SOZZI: Yeah, big Dan Levy just coming out here saying, quote, "Tesla checks all the boxes for him." So clearly he's very excited about this Tesla after some weakness on the company's quarter a couple of weeks ago. At least to him, where Levy stands, he still sees Tesla remaining in the lead. And I understand this call. It does make sense.

But that's where I would take a little issue here with Levy. I mean, I see what Ford is doing. I see what GM is doing, Toyota. The Chinese electric vehicle makers, they are finally putting out credible vehicles, credible news to expand their capacity. A lot of these very large companies, companies that are larger than Tesla are coming for Tesla's market share position. And really, I think this is the first year we might start to see some of that market share position that Tesla has enjoyed the past few years in EVs really start to take a hit.

JULIE HYMAN: Yeah, I guess then the question becomes, is the market for EVs large enough that Tesla, even if it doesn't have as large a market share, can still prosper, right? Certainly when the company came out and said it wasn't going to come out with any new models this year, that also challenges some of the assumptions about the company. But should also mention Levy's price target, by the way, which is $1,025. That is where he sees this stock going, which would be a 20% increase from Friday's close and, obviously, making up a lot of the lost ground that we have seen for Tesla thus far this year.

Finally, on the movers front, I want to talk about Blackberry, which has become sort of a meme stock here. And the company announced it is selling its legacy patent portfolio. Now, its legacy patent portfolio is one of something of value at Blackberry, that it has held onto and continued to make money from. It is selling them for $600 million to a company called Catapult IP Innovations.

Back in December, an analyst at RBC said if it was selling this patent portfolio for less than about a billion that it would have a material impact on the stock. And by my math, $600 million is less than $1 billion. So I guess that explains why Blackberry shares are not doing so hot this morning, Sozz.

BRIAN SOZZI: Yeah, this is disappointing, Julie. Really, I would say for the better part of a year, we have seen Blackberry, I think, been-- they have been very out front saying they have been shopping these patent or this patent portfolio here. And to that analyst's point, I think the Street was looking for well over $1 billion for whatever is actually in this portfolio.

So now, one, now this portfolio is no longer inside of Blackberry, what does that leave them? Essentially a business that provides software to cars. And also, I also believe cybersecurity here. So it's tough. I mean, Blackberry sold about an $8 stock here. Not a lot of enthusiasm.

JULIE HYMAN: Yeah, definitely not, although we'll see if it starts getting mentioned on Reddit boards and if that gives any fuel to the stock, as we have seen.

BRIAN SOZZI: I hope the new owner brings back-- I hope they bring back phones, Julie. I hope the new owner takes these patent portfolio and comes out with a true iPhone rival. I, for one, would be open to trying the next level Blackberry. Count me in.

JULIE HYMAN: Do you still miss the keyboard?

BRIAN SOZZI: Yes, I do. Yes, I do. It always broke. But still, I didn't care. I was able to close my eyes and just do and send messages. I miss that. I really do.

JULIE HYMAN: But you needed both thumbs. You needed both thumbs. That was one-- that was one-- I don't know, wasn't great about it.

BRIAN SOZZI: Loved that phone.

JULIE HYMAN: All right.