Company and address investor concerns. The stock is down 30 since is ipo. And stake out digital ad fallout after democratic president ial candidate Elizabeth Warren posted a deliberately false ad on facebook. More on social medias role in separating fact from fiction. But first, to our top story. Wework is considering handing over control to softbank. Bloomberg has learned that the Japanese Investment bank is convinced they can turn around the once highflying startup. Wework is also weighing 5 billion Debt Financing led by jp morgan. To discuss, i am joined by my guests, ellen huet and michelle davis, and, ellen, let me start with you. I want to separate the different deals. First, softbank taking control. What can softbank do that the other coceos cannot do . Ellen this discussion going on between wework and softbank, it is, look, the outlook is not good. We like that you have two new coceos we are interested in , but doing more. And if they did take a larger stake in the Company Maybe that , could change the company, so i think the discussions on the table are about mid to longterm plans around profitability trying to get expenses under , control, all of the things that wework has been criticized for the last couple of months. Taylor michelle, if something if something comes down to the need for cash and if softbank were to come in and take control, do we know how much money they would invest, loan, put up, whatever the sort of term is here, to get wework to 2020 . Michelle all of that is pretty much still in flux, and it comes down to between the jp morgan debt package and the situation with softbank, who can get everything together quick enough for wework, because at the end of the day, what it needs is cash. On the jp morgan side we know , there are talks for a package that could be about 5 billion, and a lot of it is going to come down to how much softbank can pull together and if it can do that faster than what the banks are doing. Taylor so, ellen, you heard michelle mention that 5 billion deal from jp morgan. Is that a separate issue here, or are those two tied together . Ellen even though they are different plans, there could be some overlap, so it sounds like the board of directors and other people with influence are meeting this week. We do not know exactly when, but it sounds like discussions are ongoing, and we expect to hear more about it, maybe in the next few days. With things on the table, there are going to be decisions coming up. Taylor michelle, i want to show you a chart that we made for our bloomberg audience, having a pretty good day, trading at 90, 91 cents on the dollar. Four bonds. That there were to be Debt Financing what is the appetite , right now for a junk deal . Michelle it is interesting. If you look at that graph or chart, the bonds are trading at pretty distressed levels amid the turmoil related to the ipo and last week there were reports that wework possibly having assumed than expected cash crunch. Possibly having a larger than expected cash crunch. And then the bonds did rally, and that actually helped their borrowing costs, but it is still to be seen how much appetite there is from Bond Investors for a deal like this. You know, going into the end of the year, sometimes it is hard to get risky deals like this in a highyield bond market done, unless there are some pretty lucrative or sweetened terms offered to them. Taylor and, ellen, i want to take a look at another chart, which shows this about 10 relative to uber and tesla, some other Risky Companies we talk about, and on friday, we talked about terms of the conditions, 25 plus libor. Any sense we do not have the appetite for the yield . Any sense about where they are commanding a 10 yield . Ellen the problem could be next month if they do not get money. This is a company that spends a lot and doesnt have control over expenses. We have seen them trying to cut certain parts of their business, layoffs, just trying to get expenses under control. Taylor michelle, our colleague at bloomberg, tim, pretty much said that the damage to softbank by backing up wework again would be much more than any billion dollar investment. What is the damage to softbank if they stepped up to the plate here . Michelle it is an interesting opinion, but at the end of the day, softbank has already put a lot of money into this company, so they will not just walk away. Probably, you would have to weigh the hit if they did that with the amount of money theyre going to have to put into help turn wework around. It is kind of the same story with jp morgan. They have already put a lot of money in and have taken a reputational hit, and at this point, they may have to bite the bullet and help turn the company around, putting good money after other money. Taylor where does the company stand . Amid all of the background noise, do they continue to push forward, selloff investments, save cash . What do they do in the coming weeks as the rest of this gets had out . Hashed out. Ellen it seems like last week, they were going to close in private elementary school, wegrow, and they are selling the gulfstream jet. There were some reports that they were maybe freezing the opening of new locations. My sense is that they are really hunkering down and trying to get expenses under control while they figure out how to move forward, and i think any major cut they are likely to make, as the coceos told staff, they are likely to cut a lot of jobs starting this month, so very soon, just trying to get the core business under control. Taylor that was bloombergs ellen huet and michelle davis. Bloomberg has learned that investors including softbank and jack ma has a company that is valued at 16 billion, a top Online Financial Services firm. The company is indias top Online Financial Services firm. And coming up, this week starts earnings season. What you need to look at. As the big banks start reporting this week. This is bloomberg. Thats next. S next. Taylor earnings season is underway with banks reporting drugs week, including citigroup and wells fargo reporting tuesday, Morgan Stanley thursday. Here with a look at what to watch when it comes to technology is our bloomberg reporter, sonali basak, so talk to me first. What are the banks technological priorities here . Sonali you have banks spending the most money on technology, jp morgan and bank of america each spending more than 10 million, annually, even when we see them keeping a big lid on costs. Why are they spending the most money . Because they are the ones going after the millennial consumer, in terms of Digital Banking and Digital Payments so you can see , this really doubling down, while the other investment banks will focus more on electronic trading, for example. Taylor yes, so with technology, what are we looking to hear from them specifically in terms of hiring, Digital Payments, all of their technological advances . Sonali sure. We have been hearing that banks are hiring more coders, and you can see in this chart that Digital Banking is the number one thing that people are looking at. With that said, i would not get too scared, because they still have a lot of branch networks, and something not high on the list, watching a relatively ablockchain still relatively small percentage on what people are looking at in terms of hiring and expenditures here, and the same with biometrics and a. I. , even, even though you hear a lot about Artificial Intelligence taking over other parts of the industry, like investments. Taylor and when you see Digital Banking there, 53 , a lot of these come from peer to peer. Payments. What about zelle . How much will be the future of banking for Companies Like bankamerica. Sonalil you can see the figures in their Earnings Report that the zelle figures are a Straight Arrow upward for bank of america. And it is pretty significant in exponential growth, so it is pretty big, including not necessarily for zelle but Digital Payments, and bank of america does highlight its relationship with zelle, and both banks highlight this with younger customers in particular. Taylor as revenue remains uncertain, in such a volatile environment, do the analysts you speak to think it is a good idea that these banks are continuing to invest in technology, increasing investments in that space, even though Topline Revenue growth can be elusive at times . Sonali it is true. Investors and others know that apple is a threat and that facebook is a threat, so they like to see these banks investing more in technology to prepare themselves for the future, because the traditional business lines are really pressured. If you look at trading, there has been pressure all year. Loan growth is growing, but rates are low, and people are going to want to see these banks transition into a new era while also attracting new customers in a competitive environment. A lot of investors compare that to the chinese counterparts who have seemed to crack the code in terms of Digital Payments and attracting people to more online methods. Taylor and is it just the big banks, or what banks are poised to outperform, given the transition to being more of an Online Company as opposed to a traditional Banking Company . Sonali the visas, mastercards, the Global Payments of the world that are outperforming versus the banks are the same structural headmans women talking about. So you can see them betting on technology and winning. A lot of them are investing and not seeing a lot of growth, but payments, if you look at the stock chart, it cannot be denied that they are winning in the investment race. Investors are going to things that can be transacted online. Taylor the banks and the increase over into the technology space. That is bloombergs sonali basak. Thank you for joining me. And i want to transition to uber, ceo firing about 350 employees, hitting a handful of divisions including selfdriving car develop mid and food delivery. More thandismissed 800 employees over two rounds of cuts in july and september. Joining me to discuss is bloomberg technologys lizette chapman, who covers the company for me. So, first, start with the 350 that we heard about today. What do we know . Lizette the way it was described in a company email, Dara Khosrowshahi said this would be the last in a wave of cuts that he promised last spring, so as you mention, they had some cuts affecting marketing, product engineering, and now with this, it extends to uber eats and autonomous driving, so it increases the total number of people laid off to around 1200 or so. Investors seem to like that, and the stock which has been trading 30 down from its ipo since may bumped up a little bit, about , 4 , today. Taylor you mentioned this was the last wave. We also got the 800 in july and september. Those cuts different allyrtment and geographic from what we got today . Lizette this is part of a larger strategy that the ceo laid out over this spring. If you were to design uber, what would it look like, and they Went Department by department, and they said, hey, we have to seek profit, and as we have talked about on the show, it did deliver a 5 billion loss during its first quarterly report, not a good look. Your question was how is this different, it is a continuation of what was set in motion back in the spring, and he said this would be the last wave of cuts. Whether another will come who , knows . We just know we are able to report and confirm. Taylor the 5 billion loss number, if you look on the essay function of the terminal we see , they are projected to lose 6 billion by the end of this year. Are these cuts enough to offset that, or is it just a step in the right direction . Lizette yes, they will not touch the 5 billion or 6 billion, but to be clear, the 5 billion loss reported last quarter, a big chunk of it, 3 billion, was related to ipo costs, so looking at how their expenses are going to make sure that they are able to deliver all of the profit, which, so far, it has not been able to do. In light of that onetime expense. The pressure coming down since he ipo . Its not good to have your stock trading below where it ipoed, and there is the larger transformation that Dara Khosrowshahi is trying to do since inheriting this company from its previous ceo and founder, which is not growth at all costs as a mentality. It is a continued growth, but lets take a look at profit. As a public company. Taylor you mentioned growth. So, finally, what does this mean for expansion plans . We have talked about autonomous driving and uber eats. How do they fit into the core ecosystem . Lizette across all of the different lines that we outlined before and geographically, about 70 of these cuts were coming from north america, the other 30 spread out more globally because this Company Still needs to and wants to grow. Taylor lizette, thanks for joining me. Coming up, apple is surging on unexpectedly high iphone demand, but catching criticism for sending web browsing data to Chinas Tencent holdings. More on apple and its complicated relationship with china next. This is bloomberg. Taylor china may be winding down its fight with tencent games played outside china, they have told reporters about the nba issue. Tensions flared after the general manager of the Houston Rockets tweeted support for hong kong protests. The state run tv network which quit showing nba games. Meanwhile, apple coming under fire on monday for sending data, including ip addresses, to Chinas Tencent. This is the latest criticism of how the Company Operates in the worlds most popular nation. On. Ino populous joining us is mark gurman, who covers all things apple for us. Walk me through how this is different from what they were doing before. Mark to answer your question pretty simply, it is not really any different. This is more of a revelation that has come in light of the last week or two of discussion about the way china and apple had been working together and how apple has been operating, like you said, in the region. This comes down to a feature that is Pretty Simple in practice. Basically, they use google outside of china and tencent in china to figure out if something if the website is malicious to steal your data. As part of that time apple can send ip addresses, which is a way to get your location, to both tencent and google. The question is, is tencent receiving that location data and how big of a concern that is, and that is what people have been talking about this morning and what the issue comes down to. Taylor and how valuable is this data to tencent. Mark if they are able to get user location data, it is very valuable because they are known to have strong affiliation with the chinese government, which, here in the u. S. , that is not something people would be fond of, apple providing location data to a governmentaffiliated search engine. It does not appear anyones location data is in danger. This is just a lot of people responding and criticizing apple, following the nba revelations that you so eloquently outlined. Taylor mark, a really good story out highlighting the demand for the iphone 11. This this come down to it being 50 cheaper than the comparable model one year ago . Mark 750 is what the iphone ii starts at, but this year, a lot of people are due to upgrade, right . The average consumer tends to upgrade their iphone four years ago, and four years ago was when the iphone 6 and 6s were popular, where they changed the screen size. Four years is up. It is in was five years since those funds came out. Those are having batteries that are starting to give out. The processors are quite sluggish. They are losing compatibility with ios 13, and it is time to upgrade, and that is this fall, and you are seeing people combined with that 50 are price cut jumping on these new models. , taylor and the street has been really, really bullish on this. Given that we got a potential phase one trade resolution on friday, we know that some tariffs will not go into effect and to be determined on december 15. Any idea if that is also boosting demand if apple does not have to pass on higher costs to the consumer . Mark i dont think so. I do not think consumers are thinking about that. Apple is not impacted one way or another by these october 15 these 1015 tariffs foreign investor or analysts whether or not they were going to go into place or not, but to investors, these tariffs not going into effect, like you said, could give some optimism that the december 15 tariffs also will not go into effect. Obviously, we do not know that, but i do not think that consumers are seeing any impact, with the iphones. Taylor Credit Suisse are really bullish on this also because when you take a look at the average selling price, it also gives some momentum to that average selling price that is so key to earnings. What is the number one thing you want to hear about on earnings on october 30 . Mark yes, i sort of disagree with Credit Suisse. On that point about the asp rising. I think that the esp may go down quite a bit. One thing that is lost with this demand is very is it is still likely to be down yearoveryear, and the asp going down, so we will see, but to answer your question, the most important thing will be the Holiday Quarter q1 for 2020. Taylor bloomberg technologys mark gurman. And senator Elizabeth Warren is going after facebook again, warning of dangers ahead of the 2020 elections. We break it down. This is bloomberg. Next. This is bloomberg. Y95ooo taylor this is bloomberg technology. Im taylor riggs in san francisco. Democratic president ial hopeful Elizabeth Warren is taking on facebooks political ad rules, and doing it by buying ads on the social network. The democratic senator bought an ad that falsely read breaking news Mark Zuckerberg and facebook just endorsed donald trump. Shes going after facebook for refusing to fact check politician ads. This comes after the factchecking policy allowed trumps team sharing ads that showed Vice President biden promised ukraine money for firing a prosecutor. That is an ad dividing campaign dismissed as smear tactics. Joining me to discuss it all is sarah frier who covers facebook for us. Eric newcomer, who covers the intersection of tech and politics. On the phone, jeanne zaino, Iona College Political Science Professor and a senior advisor. Sarah, let me start with you. Talk to us how we got here with this fight between facebook and Elizabeth Warren. Sarah we are looking at this fight about what impact facebook has on the election. Whether they act or do not. Facebook has an algorithm that suddenly can manipulate what we see in their feed. They have these rules that they apply about what can come down. Warren is calling them out by or stay up. Warren is calling them out by saying by taking no action, they are actually taking action. The funniest thing was facebook responded to this by tweeting out against warren and saying the fcc does not want broadcasters to discriminate on candidates ads, so we dont want to either. Warren clapped back and said you are making my point. You are not regulated. And broadcasters are regulated. Taylor we have the tweet showing the fcc, basically what Elizabeth Warren is saying, you are making my point. Is up to you whether you take the money to promote lies. Again, sort of making her point, if you will. Sarah absolutely. What i think what this shows us is the election is going to be about facebook the discussion about the election. Its much easier to run against facebook than the opposing candidate because facebook does hold a lot of control, subtle or direct controls over what voters will see. Taylor eric, if you take a look at the intersection of tech and now politics, what does this fight showed you from the political angle about how much tension there is between big tech and some of these Democratic Candidates . Eric i agree with sarah. They are working the reps right now. There is a push among conservatives to really make sure that facebook and google allow a wide range of sites. Some that journalists might say may not pass fact checkers. Democrats have been arguing that as well. You see this jockeying up pressure conservatives on one side, Elizabeth Warren and democrats on the other, pushing facebook to police what is on its advertisements. It is not so much legislation at the moment. It is just sort of political pressure. Facebook knows this pressure is coming as all of these different politicians get to weigh in on antitrust investigations that will progress and privacy legislation that could come up. They need to stay close to these politicians while they have the politicians have these interests around what speech is allowed on the platform. Taylor jeanne, as a Political Science professor, what is your take on this fight between Elizabeth Warren and Mark Zuckerberg . Jeanne i think it is illustrative of how far we have come. It is astounding that now you have one of the leading candidates in the race for 2020 taking on a big tech company. Shes leading the charge and other democrats and republicans are sure to follow. That is far and away from where we were just four years ago, let alone eight years ago. I am old enough to remember Barack Obamas campaign when having a website was a big deal. You think about how far we have come now. I think part of the problem here is we look at what Elizabeth Warren is saying is that it is narrowly focused on facebook and Mark Zuckerberg in the context of this 2016 and what the democrats did. Certainly not her plan. But the way she talks about it i think there are larger questions beyond facebook and Mark Zuckerberg that need to be addressed, but still has not resonated popularly. Certainly, her plan does address she has a fourpart plan breaking up tech companies. Breaking up is probably an overstatement, but addressing these issues. A lot of potential legislation. All of the attention at this point seems to be focused on facebook because of its role in 2016. To me, i think from a legislative perspective, that is a bit of a problem. Taylor is facebook taking the right approach in your opinion of being handsoff . Not wanting to police content . Not wanting to do a lot of fact checking. Is that the right strategy . Jeanne im astounded and i think sarah said it earlier by their response to Elizabeth Warren. It is not a good idea normally for a corporation to say we are like those networks that are regulated by the fcc because what they are doing is inviting in regulation. They are far better off staying the platform they are where, by the way, since 1996, they have been protected by challenges in terms of libel and are not regulated. If they have public pressure, self policing makes sense. But the statement they made really opens them up to the argument that several people have been making, which is that you too should be regulated. That is not a good strategy in my estimation. I dont know how that got through facebook and they allowed that to be the statement they put out. Taylor what does this mean for them as we approach 2020 . The pressure will only heat up. Sarah absolutely. I think jeanne made a great point is that facebook for years said we are not a media company. We are a technology platform. A place where people can talk about whatever they want to talk about and see whatever they want to see. That is not a neutral stance. I think what we are going to see ahead of the 2020 election is politicians pressuring facebook and pressuring facebook if facebook makes a change, it will help their campaigns in the way facebook ended up helping donald trump in the 2016 election. Not just by ignoring the russian influence, but also by assisting his campaign in running their advertising that ended up playing to peoples fears. Taylor so much still to discuss as we approach this 2020 election. Sarah frier, Eric Newcomer and professor jeanne zaino. Thank you for joining me. I want to stick with facebook because the social networks proposed Cryptocurrency Libra continues to lose backers. On monday, booking holdings, the Parent Company of travel sites like kayak and priceline, jumped ship from the libra association. That means facebooks group has lost seven of its 28 founding members. Others that have left include mastercard, visa, ebay and paypal. Joining me to discuss, max chafkin. What is the significance that now seven of 28 are out . Max not the direction facebook was hoping this would go when they unveiled libra. What you are seeing here is that there has been a huge sort of public pushback from regulators, both in the u. S. And europe, to the idea of facebook basically, along with a handful of other companies, minting its currency. The fear is that currency could weaken the power of national currencies. What is interesting here is we have a bunch of the sort of most reputable payments people getting out. Last week, there was a letter from two Democratic Senators that basically said, you know, you guys better be careful here because if you are getting involved with these potentially unregulated payments with facebook, we might look at your overall business. You have these Companies Saying it is not worth it. The other thing here, just to facebooks strategy Mark Zuckerberg going to congress to testify on this next week. This kind of will potentially change the dynamic there. We might expect lawmakers to speak a little bit less about libra, maybe more about facebooks other issues. Taylor it is interesting you brought up the letter from the Democratic Senators. It is like a lot of blackmail pressure if you join this association, you will be damaging your company. Be examining your company. What do the remaining companies do regarding the letter and the heightened political pressure on them . Max we definitely saw some people use the phrase blackmail. That is probably pretty harsh description of it. What the senators are basically saying is if you are inadvertently financing things like terrorism, we will look at your business overall. You can debate that, but i think there is a reasonable position there. One thing that is important here is facebook really does not want to own libra on its own. It is important for facebook to say this is a consortium. Facebook is not replacing your world currencies with the facebook dollar. We are working with some of the best and brightest names in finance, tech and putting this thing forward. The hope is this will be a broad coalition. What we have left now is a bunch of crypto companies, as well as companies that dont necessarily have as much at stake. They dont have like a giant payments business that could get scrutinized by congressional committees. I think the hope here from facebooks point of view is facebook continues talking about this. Mark zuckerberg goes to washington. He begins to address regulator concerns, and slowly but surely, you have some of these guys coming back on board. Visa or mastercard they dont , necessarily want to stand out there with Mark Zuckerberg while he is getting pelted with questions. Maybe down the road as this thing becomes more real, you start seeing some adoption. I think that is the hope. We have to wait and see. Taylor do companies not want to join because of the regulatory pressure or because being associated with the name that is facebook is not a smart tragedy right now . Tegy max i think both of those are possibilities. As we said in the earlier segment, Elizabeth Warren basically trying to use this is one point of view it could be arguably really using the relative controversial qualities of Mark Zuckerberg to attract fundraising and bring on supporters. Clearly, facebook is super polarizing. I think the other issue is that it is not entirely clear what libra has to offer for some of these companies. Companies that have really good businesses kind of working within the traditional Financial System we dont know how far out this is. This could be a really speculative thing that could excite finance twitter and financial nerds for good reason because it is cool. But if you are sitting with visa, mastercard or one of these established companies, you might ask yourself is this worth the trouble . How does this help our Business Today . Taylor max chafkin on all things libra. Thank you for joining me. Coming up, taking on wework. While the biggest name in shared office space is struggling, competitors are poised to pounce. We speak to the ceo of the rival industrious, next. This is bloomberg. Taylor before weworks ipo went belly up, it was the hottest name. It is the largest privatesector tenant in new york and london thanks in part to customers, free rent and rich broker commissions. Moves that help it get past its competitors. Now ,its rivals are rushing in to take advantage of weworks current struggles. One such rival is industrious and they say using management agreements instead of outright leases will help set them apart from wework. Joining me now for our work shifting segment is the cofounder and ceo of industrious, jamie hodari. Talk to me about the upheaval wework has caused to the industry. Jamie thank you for having me. Let me start to define quickly what industrious does. We are the largest premium workplace provider in the country. We have about 100 locations across 50 cities. Within our sector, we are known for three things. We have the best economics in the industry. The highest Customer Satisfaction scores. As a result of that, we are the First Company to move from signing risky armslength leases with landlords to doing Partnership Agreements with landlords. As a result of that, now on the eve of being cash flow positive. That is certainly different than what you see in the rest of the industry. The upheaval go ahead. Taylor give me more about your Business Model. You talked about the management agreements and how you differentiate yourself. So what is your Business Model . Jamie what we do is go to landlords and partner together to create a workplace, you know, a shared workplace complex at the building level and use that to positively influence the performance of the whole building. When you partner with a blackstone or brookfield, the quality of Workplace Experience you can deliver is much different than when you sign a lease with a landlord and are not able to coordinate with them in the delivery of the Workplace Experience. It is much riskier business than we are seeing now. Taylor you talked about being able to ride weworks coattails on the way up. It was the leader in the cosharing workspace environment. Now that wework has faced some struggles, how are you hoping to also stay in the game and differentiate yourself . Jamie i think what we see is most companies are transitioning from the experiment to phase of our industry to the more pragmatic rollout. Most Companies Say i am. Curious to try having a third party deliver the Workplace Experience. Measured howanies it went. How happy are my employees . What is my employee attrition rate when a provider like industrious do this for me . The reality is most fortune 500s, most Silicon Valley businesses in the last year have come to the conclusion that they got as good or a better outcome. They are starting to double down the utilization of service. Workplace as service. The wework struggle comes at an odd moment because you see the industry growing incredibly quickly, but the largest provider in the industry, for reasons unique to their own management style and some of the Strategic Decisions they have made, are having to pull back on growth. That is providing a very interesting moment because if you look at a seattle, dallas, 400,000 new seats of demand coming online, wework will put 250,000 on those seats and then they will have zero new seats. It is not clear what is going to happen. For providers like us, it is an exciting opportunity. Taylor the biggest complaint from the street is this is an industry that has not been tested in the case of a recession or a downturn. How are you protecting your Downside Risk . Jamie i think there are some good arguments this industry will perform very well in a recession and Companies Using that as the ability to move more forcefully. Into outsourcing the workplace needs. The reality is what we always assumed is this industry will perform like hotels or airlines or workplace operators of yesteryear in a recession, which means a 9 to 15 revenue decline. The key is to build a business with margins margins are north of 30 at the unit level, that can withstand that revenue hit. The problem is providers have not focused on profitability, have not focused on building those healthy sort of sustainable margins, because then a 12 , 13 revenue decline could be a problem. Taylor what are your updated numbers on being cash flow positive and profitable . Jamie updated numbers . We are about a month or two away from that. The way this has worked our company has grown revenue at 120 a year, every year for five years in a row. We will probably grow 120 next year but we have been disciplined in the overhead growth. You dont usually see that. In these highly funded cilic and valley businesses. For us, we have made it a commitment to grow overhead at 50 a year. If you think about how that works, if you will do revenue at 120 and revenue is 60 , you and your overhead is 60 , you will become profitable pretty quickly. You go very quickly from there. That is what the next year or two has in store for us. Taylor jamie hodari, thank you for joining me. Still ahead, while ipos for Companies Like lyft and uber did not wow investors, pinterest did. They are getting ready to reap the rewards. That is next. This is bloomberg. Taylor in a year of some bigname lackluster ipos, one has stood out pinterest. The social media discovery site is the fifthbest public debut among technology and communication stocks. Its early investors will get cash in on tuesday. That is when the 180day lockup expires. To tell me more about what is behind pinterests success is Bloomberg Intelligence Senior Analyst jitendra waral. I love the title of your latest note. We talked about how the Second Quarter momentum can carry the stock through into the second half. What are the fundamental driving that momentum . Jitendra they have been investing a lot in tools in the background to improve recommendations for the users, to make tools for advertisers to upload catalogs. We are seeing momentum in terms of how these tools are actually helping them fuel usage and revenue. Yes, the momentum should continue in the second half but the difference will be last quarter, that strength was a surprise. This second half it will be an expectation. Taylor you talk about scaling. When do we expect them to start scaling . Jitendra it is still an investment year for pinterest despite their Strong Quarter they reported last year. It is mostly because the strengthen international the , differential they have towards their peers, and the conversion of these new ad units, radio being one of them, it will take time. 2020 is what they are really priming the pump for. International markets, you can see strength coming from canada, western europe. Those things would actually add up to the 2020 expectation. They are setting themselves up well for 2020. That does come with some volatility in the second half as they ramp up and prepare for that. Taylor one thing that sets apart pinterest from other peers is that profitability is visible. When do we expect them to turn a profit . Jitendra it should be next year. On an adjusted ebidta basis. It will take a couple of years, but like you said, compared to other names, the visibility was definitely higher in pinterest. They have shown that they can manage these costs well. That is the perception change that happened. Can they hold that perception in the second half . That is a question mark. I would not be surprised if there is volatility. As a Business Model in general, because it is an ad driven Business Model, longerterm margin should be higher. Taylor given the path to profitability, how has that been reflected in the valuation reflected to its peers . Relative to its peers. Jitendra it is one of the reasons why you see hesitation from a consensus standpoint. Yes, it is a strong longterm growth story, but the valuation is higher than its peers. We have seen a correction in the stock the last couple of months. It is going to have to show that consistency and more confidence in the longterm story. Opportunities that are presented in front of them before consistently justifying the valuation. Taylor only 30 seconds left. Key note you need to hear on the Earnings Report . October 31. Jitendra continued progress on the engagement side of things and really how new advertisers are coming into the platform. So far, it has been skewed by advertisers spending more than before. So they are probably seeing better roi, but how are they scaling the new advertisers . Taylor bloombergs jitendra waral, thank you so much for joining me. That does it for this edition of bloomberg technology. Bloomberg technology is livestreaming on twitter. Check us out technology. Be sure to follow our global breaking news network, tictoc, on twitter. This is bloomberg. Everyone uses their phone differently. 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