Transcripts For BLOOMBERG Bloomberg Technology 20240713

Shares are down in after hours trading. We will have a report. And, libra grilling. Facebook Ceo Mark Zuckerberg is anticipated to face lawmaker questions on the social networks controversial cryptocurrency on wednesday. We cover what to expect. First, our top story. Snap fell as much as 10 in late trading after reporting thirdquarter earnings. The Company Reported revenue and user growth beating analyst estimates. It has been boosted by an increase in downloads to the revamped android version. But questions remain about longterm monetization. To break it down for us, i want to bring in Jitendra Waral from bloomberg intelligence. First lets talk about the third quarter, daily active users. I have a chart here that i am showing in my terminal. Seems like those daily active users knocked it out of the park. Jitendra q3 numbers were pretty strong. It is the q4 guidance that fell short. Looking at the backdrop here, the stock is up 154 year to date. The valuation, to sustain that valuation, the expectation was stronger guidance. But the user number is the hardest one to really beat. Everything else is in their control. They can rampup monetization, they can cut costs if they want, but the user growth is the harder metric. The fact that they are projecting better than expected user growth in 4q as well, it is showing that they are getting results and fundamentals should follow. But what you are seeing is a mismatch in what expectations were going into the quarter, which was much stronger guidance. Taylor part of the reaction, expectations had really gotten ahead of themselves Going Forward . Jitendra yes. The biggest question for snap is one of longevity. If you look at expectations for the company, revenue is expected to more than double. Bear Case Scenario doesnt really believe that, with ongoing competition from facebook, from tiktok. Obviously the user numbers are telling us they are fighting back pretty well. But to instill faith in the longterm expectations, user quarter after quarter they need to show User Engagement remains and continues to grow. Taylor instagram came out with a competing product called threads. Tiktok is increasing competition for snap. How much is competition a real headwind . Jitendra in some International Markets it is a big headwind. But in the core markets, the last two years they have been fighting with facebook and instagram, and have been pretty resilient. We saw the numbers. The average daily snapchat users opening the app 30 times per day. It shows you that the core audience engagement is still there. Now, they are focusing more on driving original content and localized content, more a. R. Features, filters, to keep the engagement steadily increasing. The monetization level is still below twitter, much below facebook, and things like that. As far as keeping a steady pace in user numbers and User Engagement, they can fall back on the monetization side. Taylor longterm revenue looks good, the margins, you said they are pretty effective at costcutting, not profitable yet. Did we learn anything about any update on when we could see the Company Started turn a profit . Jitendra there is a possibility that by 4q, on an adjusted basis they will break even. Cap profitability will take a couple years, but this is a big step since where we started. Margins ate gross the time of the ipo were close to 50 , so they are showing progress. But the overarching number to watch for, even longerterm, remains the user number. Because all the fundamentals follow that trend sooner or later. As far as keeping that up through innovation, original content, these kinds of things, then the longterm confidence in growth storyrm will grow and valuation will follow. Taylor that was Jitendra Waral of bloomberg intelligence. Thank you for joining me. Softbank is taking control of wework, resulting in founder adam neumann leaving the board of the struggling Office Rental start up. But he is not going away emptyhanded. He is expected to sell 1 billion of stock to softbank. He can also assign two board seats and will get a 185 million consulting fee. We are joined by leanna baker. Is this the beginning of what looks like the new wework . Leanna for weeks now, we were wondering how wework would keep the lights on and it looks like softbank is coming to the rescue. And adam neumann, the charismatic ceo and founder, is also stepping aside from the board. He will give up his board seat, he will have an observer role, able to appoint some board members, but the handson role is being given up, so the start of a new chapter for wework. Taylor can you talk to me about how realistic some of these numbers are when it comes to adam neumann . He is coming away with 1. 2 billion, a 185 million consulting fee, a credit line extension. Is that fair and normal . Liana it definitely raises some questions of governance, but remember that adam neumann owned a controlling stake in the company. So to get him out gracefully, softbank did have to pay up. He wasnt just going to go away. This was the company he founded and he did have that stake. It is unclear how the negotiations went down. Wework has not confirmed on the record any of these numbers. We are still waiting to hear what the company has to say. For sure, neumann has put in his work and he is getting a pretty package to get him out of the picture. Taylor shira ovide on bloomberg opinion, a pretty scathing column, talking about where is the board of directors and their accountability on management, particularly because they chose the softbank deal over the jp morgan deal. Which does dilute existing shareholders and let adam neumann walk away with however many millions of dollars. Where is the board of directors . To hirehey were careful outside advisors and a law firm and bank over which package makes sense. Jp morgan tried to put together a compelling rescue package of their own of some outside 5 billion. Investors had been reported like starwood. But the board did decide that this was the better route. And some might say that softbank is the more stable outcome for the company. Softbank had already invested 10 billion and they are coming to the rescue again with another almost 10 billion. They have deep pockets that could keep the company operating, but the board did hire all these advisors to make sure there wouldnt be any lawsuits or Corporate Governance crises, because there have been so many already at this company. Taylor pushing this forward, what can a new ceo and chairman do that adam neumann could not do . Liana there is another executive coming in, the ceo of sprint who executed a turnaround there. He will come in as chairman, replacing neumann, and he may lead a search for a new ceo. There could be even more fresh blood. The coceos running the company right now, they were there during neumanns era. The company could still have some major changes Going Forward. Softbank, if they ever want to exit this investment, they may have to figure out how they would do that. In 2020, we may be talking about an ipo then. Definitely it will be a different story. Taylor my thank you to liana baker. Now for some developing news out of the u. K. A u. K. Official has said the latest brexit delay means there will be an election as a result. The same official says this is the only way the country can move on. Now, Prime Minister Boris Johnsons plan was derailed as members of parliament dramatically blocked his plan. Earlier, European Council president donald tusk responded by saying he would recommend the accept the u. K. s request for an extension. Coming up, Texas Instruments tumbles. The street not looking kindly at the chipmakers forecast and the numbers are knocking down others. Later, zuckerberg is headed to capitol hill to defend his cryptocurrency dreams. Something secretary mnuchin has said he has had multiple meetings about with representatives from facebook. Here is what he had to say. Sec. Mnuchin i have met multiple times with the representatives from facebook. We have told them we thought their launch was premature, that they have not addressed fundamental issues around money laundering, bsa requirements and others. Taylor shares of Texas Instruments are tumbling in after hours trading on tuesday. At one point, they were down more than 9 . This as the chipmaker posted a weaker than expected forecast for the quarter. It is another sign that rebound in demand for semiconductors will take longer than investors hoped. To tell us more, i bring in bloomberg technologys ian king. You have been covering this chip sector for us. So, coming into this, we will we were looking for top and bottom line declines through the end of the year. Does that look like it is playing out . Ian we were expecting things to continue to decline but at a if you like a better rate, the declines would be smaller. What we actually got from Texas Instruments was the reverse. Instead of being 3 , 4 revenue decline in the fourth quarter, they are predicting as bad as 14 . Taylor we thought a lot of their sales, 56 , came from stable markets. Industrials, auto sectors. Did any of that stability help them . Ian absolutely not. Communications equipment was arguably their worst market, down 20 . Automotive was one they cited as being considerably worse, pretty much across the board. Taylor they do also lead some of the sectors in communications. That is the one area they dont have a lead. What can we expect from the company in the sector moving forward . Ian their chips are an important component of cell phone systems. If you are looking for a readthrough on whether the big telcos are spending on their network, this would not be a good sign. Taylor i want to pull in some conversations we had about the trade tensions. We did hear from the cfo of the company. I want to take a look at what was said. The weakness is broadbased. It is due to macro events, and specifically, trade tensions. You think about when there are tensions in trade and obstacles to trade, what do businesses do . They become more conscious and they pull back. We are at the very end of a long supply chain. When the ones at the front pool back, it becomes a traffic jam. Taylor clearly, putting a lot of the blame on trade. Is that valid . Ian two ways to look at it. Up until now, they have not done that. They have been reluctant to assign blame. Now, they are saying the evidence, you cannot ignore it. On the call, they were getting a lot of questions along the lines of, look, the markets are not overall that bad. How can you prove to us this is not you losing market share . Their answer to that was that market share in these markets takes a lot longer to shift. Of course, it is the economy. It is the trade tensions. Taylor given the stocks index, all of these chipmakers have been a bellwether for sentiment on trade. I want to take a look at the chart here. Its the forward p. E. Ratio. The stock is surprisingly looking really overvalued at 17, 18 times forward p. E. How much more do we need to see to push the sector forward . Ian very good question. You have one of the worst years for more than a decade for what is going on in terms of the fundamentals. Yet, money has come flowing it on the expectation that we have seen the worst of it and things would get better. The actual analysts have not been believing that. Many of them have been scratching their heads and saying this does not make a lot of sense. I think we are at a point now where we are going to see that money come tumbling out. Or we are going to see other Companies Come in and say no, this is a Texas Instruments specific thing. We are fine. It will be interesting. Taylor latest thoughts on all the chipmakers. Thank you to bloombergs ian king. Now, embattled e. V. Startup faraday is aiming to raise 850 million by the First Quarter of next year. The ceo told bloomberg the company will use the proceeds as a bridge to an initial public offering, but did not set a timeline for a listing. Faradays chinese founder filed for bankruptcy last week and put his stake in faraday under the yrust of creditors. Ceo says fara is protected from debt but needs to go public to secure its longterm future. The company is also exploring a joint venture in china to Scale Production and shield it from tariffs. Coming up, big banks versus fintech. Who do you got . That is the question we will ask the head of u. S. Largecap Bank Research at wells fargo security. Securities. Our conversation with mike mayo, that is next. This is bloomberg. Taylor lyft surged tuesday after executives said the company would turn a profit by the end of 2021, one year earlier than analysts expected. Lyft has been cutting back on subsidies for riders and drivers that had been racking up costs. Now, the Digital Banking revolution is hitting one Financial Institution pretty hard. U. S. Bank will cut several thousand workers at its branches. Bloomberg has learned it is part of a digital push by the bank. Here to tell me more about that digital push and how banks are keeping up in the digital age is mike mayo, wells fargo security securities head of u. S. Largecap Bank Research and senior bank analyst. Mike, is now the time to finally believe that banks are embracing and integrating this digital revolution . Mike absolutely. We think that u. S. Banks are on the cusp of the biggest impact of technology on their business in history. That should be a winwinwin for the customers. Better service for the employees. More time to do what they want to do, talk to customers. And for shareholders, the most efficient banks in history at least a few years out. Taylor you are wearing a hoodie. If you are a bank analyst, you wear a suit and tie. Are you now a tech analyst . Mike i dont think i can be a bank analyst without being a parttime tech analyst. I dont think you can be a banker without having your tech analyst hat on. To have banking, you need to have technology. By the way, the biggest purchaser of Technology Services of all industries, the Banking Industry spent 150 billion over the past year just on technology. You know what . If it does not work for banks, it is not going to work for tech but we think this is the start of not only a beautiful friendship, but the most serious marriage that has ever taken place between banking and technology. Taylor on these analyst calls, i think of bank of america highlighting the increased use of payments. Mobile banking. What area within technology is really transforming banks . Is it peertopeer banking . Mike bank of america, you could say who was going to win . Banks or fintech . Fintech is going to win. That is bankamerica mobile banking. In seven years, bankamerica took from nothing to mobile banking where they processed a level of deposits equal to the seventh largest bank. Equal to 1500 bank branches. That is a phenomenal story. In addition, bankamerica over the past few years has increased throughput in a variety of ways. Mobile banking, ach payments by 50 or more. At the same time, they have reduced their Technology Expenses for their infrastructure by 2 billion. So you are growing the franchise without growing expenses. And it is due to technology. It is a fantastic marriage between tech and banks, such as at bankamerica. Taylor if bank of america is the winner, who is the loser . Mike a lot of banks are stuck in an old mindset, a last century mindset. You have the largest banks, scale providers jp morgan, bankamerica, citigroup, goliath s are winning. You have the Smaller Banks which have specialized services, facetoface relationships. Friendly with the town council. I think other than that barbell approach, those banks in the middle have a lot of soulsearching to do because they dont have the scale to compete with the biggest banks. And they dont have the one on one service of the Smaller Banks. Taylor we started off talking about a company, u. S. Bank, that is cutting back on some of its branches as it is transitioning to the digital age. Banks be increasing their presence, but hook me in via digital . Mike banks dont have a choice. The world is going in the direction of technology and banks are going along for the ride. They might not be leading. I think the Banking Industry, they have been a laggard. That is out of safety and security for the customers and dealing with regulators. But we forecast a loss of jobs in wall street and the Banking Industry of 200,000 over the next decade. That is due to automation. Any job that can be automated should be automated. Having said that, jobs such as advising or technology or anything dealing with customers, those jobs should be expanding while you streamline the backoffice. Taylor you know we love running marathons, so anytime i can read a Research Note of years that yours that combines the analogy of a marathon along with financial analysis, you are always welcome back. Saying that, why did you say we are only on the second or third mile on what is a marathon . Mike in new york city, we are about to have the new york city marathon. That is a very big event, as you can see. But when you look at artificial intelligence, big data, banks are hardly scratching the surface. It is an archaeological dig to unlock the data they have on customers. Bankamerica, they took a number of fields to fill out for a Mortgage Applications from 200 down to 10. That makes your life easier but that is just the beginning of using big data to make customers lives more efficient and effective. The whole payments revolution, that is changing. The reduced use of cash. Just generally, faster processing of computers should allow banks to operate much more efficiently. So you have a combination of softwaredriven changes such as a. I. And automation. You have hardwaredriven changes due to faster processing and more efficient data centers. Then, you have the whole payments revolution. You add all that up and you get the most efficient Banking Industry in history five years from now. Taylor 20 seconds, do banks acquire fintech or build out their own platform . Mike fintech, friend or foe, both. Banks will be buying more fintech players so they can leverage strategy, but they will compete a lot more inhouse. Taylor wonderful. Mike mayo of wells fargo, thank you for joining me. Coming up, he is the man ben horowitz of Andreessen Horowitz calls the best ceo he has ever worked with. We will hear from the chief executive of an a. I. Startup. That is next. This is bloomberg. Taylor this is bloomberg technology. Im taylor riggs in San Francisco. A. I. Based startup databricks is raking in the investment. Just eight months after securing 250 million in funding, it is adding another cool 400 million from backers such as microsoft and Andreessen Horowitz. Along with that, a new valuation of more than 6 billion and that is more than double its price tag in february. To tell me more about this investment as well as how databricks uses a. I. To help companies organize their data, it is ceo ali ghodsi. Thank you for joining me. Walk me through your business model. Ali the Way Companies solve the Worlds Toughest problems using data. We take massive amounts of data and do Machine Learning on it. We do that in the cloud. Customers rent our service in the cloud from us and they pay us by the hour. Taylor congratulations on the funding. What are you using this for . Ali we will invest over 100 million on the european center. A lot of a lot of it will be research and development. We have massive demand for our service over the last year or two. We will invest it back in r d and looking at over the next three years investing in all these opensource projects. There will be dedicated teams for each of these in europe. Taylor why is there more demand in europe right now . Ali the demand is worldwide everywhere. We have a big headquarters in San Francisco with engineers. There are difficulties moving engineers to San Francisco, there are visa issues. Balancing the two with europe and San Francisco is a good plan. Taylor with those visa issues, how much of it is restrictions from the Trump Administration and how do you get around that . Ali we have seen in the last few years, more and more people get their visas rejected. Some of the employees on visa get expired and cannot come back. We are trying to work around this and trying to expand around the world. Taylor with this increased funding comes increased valuation. More than 6 billion. How much of being a unicorn status in this environment helps you or hurts you . Ali we are not really focused on that. We are seeing massive demand for service. We are just trying to keep up with the demand. We are not focused on the exact valuation or the unicorn status or what the markets are doing. We are just seeing demand we need to satisfy. Taylor investors or customers have not had increased focused on Free Cash Flow or profitability at this point . Ali no, the focus is mostly how do we actually grow our business . Everybody wants a. I. Every enterprise on the planet and Software Company realizes in the next couple of years, the need to build a. I. Into their software and they need to get there fast. They have deadlines so they ask us how can we get there . Please help me. That is what we are focused on. Taylor what is the most frequent question you get these days from investors . Ali i think the most important question is is a. I. Going to be a threat . How is it going to change society . Those are the kinds of questions we get. Taylor and you mentioned the importance of a. I. And the race. Who is winning the a. I. Race between china and the u. S. . Ali the way i see it, the enterprises that have software today will build a. I. In it. They need platforms that help them and we provide that platform. Whichever enterprises on the planet right now, i think all over asia, the united states, all of them are trying to build in a. I. Technology. The important thing is we can build a platform to support them. Taylor a. I. And big data is all the rage. Up until now, it has been a huge growth opportunity. Recently, when you have data in the name of the company, it is now directly correlated with privacy. What are you doing to help protect customer privacy . Ali we built technologies that help you become compliant. We have a technology that helps companies become compliant. A lot of the technologies we build helps track the data so that if someone was to find out the data, we enable companies to buy that technology from us. We focus on that quite a bit. Taylor yesterday, we had a startup on and he said it was not an directly response to wework, but they realize given the heightened attention on Corporate Governance, they started having more board meetings. Have you had a sense of doing anything to increase your Corporate Governance to help appease investors . Ali our investors are super supportive, as you can see. We fund raised eight months afterwards and it was unsolicited. They came to us and wanted to invest. We have just seen support. Taylor if we could all be that lucky. That is ali ghodsi. Thank you for joining me. The new ceo of a struggling japanese screen supplier to apple says he has about a year before deciding whether to take the plunge on next generation, organic light emitting diode displays. In an interview, he says, the company will manage our Balance Sheet well. Take a listen. We have some new products coming, which we plan to put into the market nearly. That, i think, we could prove to the outside that our Oled Technology is now ready for mass production. And to serve our customers. Also, we have some unique fingerprint sensing technologies, which we also plan to put into the market soon. These kinds of growth drivers, i think, will help us to, once we get the money, come out strongly to go into the black side as soon as possible. One of the biggest concerns for japan display is the shift of mobile phone industry from lcd panels to oled. What is your strategy . We are seeing some changes regarding the market trend. Due to the point that the price competitiveness and also all of the customers, now many of the customers shifting from to shift shifting from just selling smartphones rather than a recurring business is a key factor in lcds having a tendency to be used due to its price competitiveness. I think those kinds of changes will help us Going Forward. But having said that, we will keep on building our technology as well and try to be flexible Going Forward. When it comes to the mobilephone business, capx is the name of the game. How do you plan to keep up with the companies that are spending billions of dollars on their own fabrication equipment . In the past, even in the lcd, i think we did manage our Balance Sheet as well as expected in this kind of big capxoriented industries. Therefore even entering the oled market Going Forward, i think we should be more smart in rationalizing those things and tying up Business Partners or Financial Partners so that we cannot use our Balance Sheet, but enter into the market in a wise way. Taylor that was the ceo of japan display. Coming up, gmail hooked us on free storage and now google is making us pay. We discussed the companys plan to have customers cough up cash for more of the cloud. That is next. This is bloomberg. Taylor google hooked billions of customers onto its Digital Services by offering free storage. But that is beginning to change. In recent months, the tech giant has whittled down some of its free storage offers when people hit storage caps. They have little choice but to start paying, otherwise they risk losing access to emails, photos and personal documents. Joining me to discuss is bloomberg technologys alistair barr. So storage is no longer free . Alistair that is right. Gmail back in 2004 was very famous because it came out and said one gigabyte of free storage for everyone and people used to be obsessed with managing their inboxes. Then, it was no longer an issue. Now, basically, that free deal still exists, but it is not getting better. Google has pulled some other strings to make some free cloud offers it had before basically go away. Taylor some of those strings is actually how you stumbled upon this story, right . Alistair that is true. There was a very good deal when you buy chromebook, a cheap laptop that runs googles operating system. When you bought those, used to get two years of 100 gigabytes of free storage in the cloud service. That has now gone down to one year only and it is through this new program called google one, which is basically a paid subscription program. Google is pushing that a lot more. So, one of the things we found on twitter, especially with gmail users finding out they were not getting emails and they were messaging google, saying what is going on . And they said all you have to do is pay 1. 99 a month and you will be fine. Taylor in the perspective of google, what does that represent to them . Alistair 1. 99 for 100 gigabytes a month and now it is 2. 99 if you want to go higher than that. That does not sound much, but i did some back of the envelope calculations, if you have one billion gmail users, if 10 go 1. 99 a month, that is 2 billion in annual revenue. Taylor the key is it is not only annual revenue but reoccurring revenue. They will count on this monthly and yearly. Is that what analysts were hoping for . Alistair that cost goes on forever, but for wall street, that is fantastic. They really love a recurring cloud subscription revenue type business. Apple has done it with icloud very well through the years and google is following the example. Taylor what is the elasticity, the stickiness of gmail . So im going to pay or shut off my email. What does the customer do . Alistair that question is a really good one. It is not just about email, but the other files you store. The google one includes emails and other things attached to the emails. It also includes photos and things like that. Specifically on email, if i send you an Important Message and you miss it, it is terrible. Accountsall your other attached to the account so it is very hard to change. On the photo side, you have 5000 photos in the past five years, for instance, you dont want to suddenly delete it or put it somewhere where you might lose the photos. The incentive is to just upgrade and pay. Taylor finally, does google feel a little bit late in the game . We know apple has been doing this. They are charging . 99 for some extra cloud storage. Is it google playing catchup . Alistair i think it is slightly different. I dont think that type of thing plays quite that way because basically, you are either in the apple universe or google universe. The people in the google universe, it is their time to pay now. Taylor that is a new fixed cost for all of us. That is bloomberg technologys alistair barr. Thank you for joining me. Still ahead, Mark Zuckerberg is headed back to capitol hill, this time defending his companys cryptocurrency plans. What to expect from his testimony, next. This is bloomberg. Taylor Mark Zuckerberg is defending Facebooks Libra project at a congressional testimony. He says the cryptocurrency will not be launched without approval from the u. S. Government. I want to bring in bloomberg technologys kurt wagner who is in d. C. Preparing for this testimony. What did you need to hear tomorrow . Kurt well, im interested to see how much Mark Zuckerberg can actually speak on behalf of libra. A lot of the thinking now is because the association is actually official as of last week, facebook is one of 21 members, what kind of power is that give Mark Zuckerberg to talk about the future of the currency. He can share his own views on it, facebooks efforts of building a digital wallet but as far as the currency itself, i dont think Mark Zuckerberg can say much. Im curious to see how lawmakers will react when they realize the person they brought here may not have the answers they are looking for. Taylor is it notable it is zuckerberg and not david marcus . Kurt i think it is notable. I can understand why the committee would want to bring it Mark Zuckerberg at this point. They already had david marcus before this committee back in july. They have spent numerous hours already asking him questions. Now, they want to hear from his boss. I think it signals that facebook is taking this seriously. There was a lot of talk in the last week as a lot of these partners from facebook started to leave the libra association, maybe this whole thing would come crumbling down. I think the fact Mark Zuckerberg himself is showing up in d. C. And willing to take questions is a sign that they see something that they will sustain and something they will continue to put resources into moving forward. Taylor libras arrival feel dead on arrival to you . Kurt i dont think so. Mostly because the whole thing has just been a concept up until now anyway, so it is not as if they launched something and no one is using it which i think would be much worse situation than what we are in now, which is they have an idea for something and people have a lot of thoughts about that idea. It is not so much that they will never get this off the ground, although i think that is certainly a possibility. I think the bigger issue is more they are not getting a lot of public support right now from anybody. It is hard to take something from the idea phase to the actual product rollout phase when everyone you talk to about it is trying to keep you from getting there. I think that is the Biggest Issue facebook has right now. They just cannot get a lot of support. If they can come out of this week and if Mark Zuckerberg can leave that hearing tomorrow and feel like maybe he changed a few minds that this might be a good idea, that would be a massive win for facebook. Taylor they are not getting a lot of support from the congressional side. We heard from treasury secretary Steven Mnuchin today and he said he had multiple meetings with representatives from facebook and that he is saying libra feels a little bit premature as well. Does this highlight the bigger headwinds given now the treasury secretary seems to think they have a lot more work to do around this . Kurt i think this plays into one of the biggest questions we have had all along which is who is actually going to regulate this thing . Who is ultimately going to be in charge when libra exists and people are converting their u. S. Dollar or their euros into libra . Someone is going to have to make the rules and we dont know who that someone is. When i think you see the u. S. Treasury secretary come out and say, hey, we need to pump the brakes on this thing, that is not a shock to me. No one is saying libra should launch right now without any kind of rules in place. But until we figure out who is going to make those rules, it is going to be more of the same. A lot of people throwing out warnings and saying we should not do this. Nobody wants to give a green light before the necessary parameters have been established. Taylor you are in d. C. We got some other news around facebook highlighting more states attorneys general are joining the new York Attorney general in looking into these antitrust probes. How much more significant is it that now, i believe it is 45 states and 10 districts and territories now joining in on this fight . Kurt i am trying to figure that out myself because at this point, the state a. G. s are doing something, the ftc is doing something, the sec is doing something. There is so much antitrust activity happening around facebook right now that i dont necessarily know which one to be most afraid of. My assumption is that because there are so much discussion, one of these will eventually take the lead and be the front runner on this investigation. Certainly the more people interested in this, the worse it is for facologys kurt wagner, thank you for joining me. As we were talking about earlier in the hour, i want to recap snap. It had fallen as much as 10 in late trading after reporting thirdquarter earnings. While questions still remain about longterm monetary vision, the company did have strong user growth in the quarter. Snap reported 210 million daily active users of its snapchat photo messaging app. The Company Shares more than doubled in value so far this year. Here to discuss, Michael Levine of Pivotal Research who has been racing over to us, just getting off the analyst call. What was your question on that call . Michael just trying to get a better sense in regard to the revenue outlook. There was maybe a little bit of disappointment from shorterterm investors with regards of being a bit of deceleration in q4 relative to q3. I feel like the company addressed it pretty well. U. S. Growth, which i think is still viewed as largely being a more u. S. Centric story, was extremely strong. Theyre adding a lot more users in the rest of the world. Theres a little bit of a lag, but it feels like they are getting the right pieces in place in regards to monetization. Taylor are you happy with the updated guidance you are getting from management . Michael i think they are fabulous results. There has been a wall of worry with regards to user growth. The user numbers were fabulous for the quarter. Outlook was very strong as well. And, i think when you talk to the company, at this point i would say ownership has probably been a bit more hedge fund centric in nature. They have been spending a lot of time with the longonly community. The feedback i have heard is it is great. We love to own stocks when they jump 20 . We dont love owning them when it goes down 20 . I think they are doing an effective job tightening up the range of expectations. I look back objectively and i am like 50 revenue growth, that is fabulous. Those are terrific numbers. Taylor im showing a chart to the audience of the growth really in this daily active users. It is hitting 210 million. What else do you need to see from this company to take on Bigger Companies like the likes of twitter or instagram . Michael what i have been seeing in terms of the proprietary research that we do, i would like to see a continued adoption of advertisers. Where if you look at twitter, pinterest, snapchat, they are more niche by way of comparison versus google and facebook. Seeing that continue to move in the right direction, continuing to see new ad Product Innovation is key. One of the things where i feel like i have gotten a lot of questions from investors is they want to understand what is the opportunity in terms of advertising . Snapchat is probably a slightly harder format to monetize in versus discover lenses snap select. The message you heard pretty loud and clear on the call was this is a function of growing demand. There is more than ample supply and i think there is a lot of headroom. Taylor you have to explain this to me. Showing another chart to a bloomberg audience which shows the percentage of shortselling. At one point, it was 30 . Now back down to about 12 or so. Why the big Short Interest in this company . What is the downside . What is the bear case . Michael we are seeing this with a lot of other highgrowth names in both software and internet that are trading at large multiple ranges. The reality is its harder to basically say, i know that this is the exact right, this is what something should be trading at. There has been a healthy retrenchment in the entire sector. Within the context snap has held up pretty well. One of the things i dont feel everybody necessarily appreciates there is a lot of things going on from the execution perspective, both on revenues and user growth last year, that there has been a real wholesale change in senior leadership, in terms of derek as the cfo and Jeremi Gorman as the chief business officer. I think you really have totally different stories. Taylor we have to leave it there. That was Michael Levine of Pivotal Research. That does it for this edition of bloomberg technology. Join us again next time. This is bloomberg. En the following is a paid program. The opinions and views dont reflect those of bloomberg, its affiliates or its employees. The following is an important paid program about humana Medicare Advantage sponsored by humana. At humana we believe it is never too late to learned abcs when it comes to medicare. Know there is the alphabet, a, b, and see. What does that mean . A, b, c, d. A is hospitalization. B is