HAPPY FRIDAY TO THE STREET

Washington just lit a match under cannabis stocks.

President Donald Trump is expected to sign an executive order as soon as Monday to reclassify marijuana, potentially moving it out of the most restrictive federal category.

If finalized, the shift could unlock lower taxes, broader capital access, and a long-awaited regulatory reset for an industry that’s spent years in the penalty box.

  • 🟥 | US stocks fell as investors continued to rotate out of AI-heavy tech to value, despite the DJIA reaching another intraday record.

  • 📈 | One Notable Gainer: But cannabis stocks like Tilray Brands $TLRY ( ▲ 44.13% ) and Canopy Growth $CGC ( ▲ 53.98% ) ripped higher on the aforementioned report.

  • 📉 | One Notable Decliner: Fermi $FRMI ( ▼ 33.84% ) shares plunged after the energy developer lost a $150M funding deal tied to its Matador power grid project.

— Brooks & Cas

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MARKET SNAPSHOT

All Stock Heatmap. Credit: Finviz

Market Movers

LULULEMON, COSTCO, BROADCOM

Lululemon $LULU ( ▲ 9.6% ) CEO Calvin McDonald announced his departure.

Costco $COST ( ▼ 0.0% ) topped fiscal Q1 earnings and revenue estimates.

Broadcom $AVGO ( ▼ 11.43% ) beat earnings expectations, but not AI valuation concerns.

Allegiant Travel $ALGT ( ▲ 2.02% ) gained after Deutsche Bank upgraded the stock to Buy.

RH $RH ( ▲ 5.68% ) reported mixed Q3 results, but met revenue expectations.

To monitor hot stocks in real time, check out The Street Feed.

Tomorrow's Trade Idea, Today

FROM MARKET DARLING TO DRAMA MAGNET

A Selloff Brings Netflix Back to Earth

Netflix $NFLX ( ▲ 1.17% ) has gone from market darling to drama magnet in a hurry.

Shares this week have seen their worst multi-day slide in more than a year, as investors digest the possibility of a major acquisition involving Warner Bros. Discovery $WBD ( ▲ 1.66% ). The stock is still up more than 7% in 2025, but the recent pullback has dragged it to its lowest level since spring.

But Barron’s argues that reaction may now be overdone, and investors could have an appealing opportunity to buy the dip.

Why the Deal May Matter Less Than Feared

The worry is simple: cost and complexity. Buying Warner’s streaming and studio assets would require taking on a large debt load and navigating a messy regulatory and competitive backdrop. Add in political noise and the threat of a bidding war, and investors have stepped back.

However, Barron’s believes the selloff has taken much of the froth out of the valuation and shifted the risk-reward back in Netflix’s favor. Where some see a potential overpay for legacy assets, others see a strategic upgrade. Warner’s deep library of global franchises could strengthen Netflix’s content and reinforce its lead in scale.

Meanwhile, Morgan Stanley $MS ( ▼ 1.04% ) estimates the deal would have only a modest impact on earnings in the near term, followed by meaningful upside as synergies kick in.

The Setup Heading Into 2026

Importantly, Netflix does not need this deal to win. Even without Warner, Netflix’s core engine remains intact. Subscriber growth, pricing power, advertising, and live sports are still moving in the right direction. Rivals like Paramount $PSKY ( ▼ 2.69% ) face far higher stakes if consolidation fails.

Nevertheless, the recent wobble has reset expectations. Netflix now trades at a far lower earnings multiple than it did earlier this year, despite stronger long-term margin prospects. Management is targeting significant profitability gains by the end of the decade.

Whether the Warner deal closes or collapses, Barron’s maintains, Netflix exits this saga with options. Either it adds iconic IP at scale, or it keeps its balance sheet cleaner and continues executing on a strong standalone path.

Are you bullish or bearish on Netflix (NFLX) over the next 12 months?

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OVERHEARD ON THE STREET

Stocktwits: Coinbase $COIN ( ▼ 0.58% ) could unveil prediction markets with Kalshi next week.

CNBC: Rising food inflation is pushing restaurant diners toward smaller orders, with appetizer sales jumping more than 30% annually.

TechCrunch: Google $GOOGL ( ▼ 1.01% ) rolled out a headphone feature enabling real-time translations while expanding Gemini-powered capabilities across its Translate app.

Reuters: Intel $INTC ( ▼ 4.3% ) tested chipmaking tools from China-linked ACM Research units targeted by US sanctions despite scrutiny over alleged China ties.

Axios: The House passed the bipartisan INVEST Act, advancing private market capital formation and easing venture fund restrictions as it moved to the Senate.

THURSDAY’S POLL RESULTS

Which type of stocks do you think will outperform in 2026?

▇▇▇▇▇ 🦤 Small Caps

▇▇▇▇ 🐘 Large Caps

And, in response, you said:

  • 🦤 Bullish — “The thesis for small caps holds some 'water'; however, there may be other 'unknowns' lurking in the investment shadows that might capsize that 'boat'.”

Reply

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