Post nine of the New York Stock ExchangeMorgan Brennan has the morning off. Dow session low was about 150. Well start with this rally in tech leading the s p to record closes yesterday these regulatory headlines out of d. C. Not slowing down the momentum out of the valley evaluation partners, early facebook investor, Roger Mcnamee is with us to talk about facebooks print they cant lose. No. What would it take to slow these guys down . To be clear, i think from an investor point of view, theyre delivering exactly what investors want and as long as that goes on, the stock is going to be fine to me, the question is the policy one that all of us as citizens that our government has to ask, which is, should there be some limit on what businesses can do when the actions of that business affect public health, democracy, privacy, and competition. And, you know, were wrestling with that right now and the governments getting its gears moving, but it goes slowly and until i guess its going to need to get a lot more momentum behind it before investors are going to pay any attention at all. So if you were just a strict Portfolio Manager in tech, you would probably be long here, right . Oh, yeah. And would remain so its been a fantastic stock and theres no immediate reason why that wouldnt continue the challenge, i think, is that the level of pressure from washington is going to increase. Yesterday, we had three different Government Agencies in the headlines, right we didnt just have the federal trade commission we had the department of justice initiating something new and we had the securities and Exchange Commission and the thing is, with the doj and the securities and the Exchange Commission, it may not be entirely civil actions were talking about. And that raises the stakes dramatically so i think if youre a Portfolio Manager, you have to look at this with some degree of caution that you didnt have previously. But at the same time, facebook is down 7 over the last 12 months, while ebay is occuup 20 so one could argue, it had a spike about a year ago i think over the past two years, its still up less than 25 . But given how other tech stocks have done over that period, facebook has kind of underperformed one could argue that it hasnt been a great stock and even given the issues that they have and jon, i think the real point that youre making here is that the issues that are coming to facebook right now are not unique to facebook im just saying, facebook might still be argued to be undervalid relative to all of tech either that or were going to see the actions of the government relative to google, microsoft, and amazon affecting those stocks in a manner more similar to what weve seen already at facebook. Because i dont think this is a facebook exclusive problem they have cambridge analytica. The other guys didnt have that really bright, shiny light and theres a film out just yesterday on netflix called the great hack which really delves into that which i think is going to increase pressure but at the same time, i do think you have at google all kinds of regulatory issues on the horizon. It feels like what youre saying is everyone is reacting to what theyre doing, but what if all of a sudden lawmakers get proactive or do you believe that thats just not going to happen . Because that could fundamentally change their Business Model . From your lips to gods ears as far as im concerned. Because i spend a lot of time in washington and the thing i can tell you is inside the trump administration, both the department of justice and the in the antitrust division and the federal trade commission are doing things that their counterparts in the last two administrations would not have even contemplated that is a huge change and really deserving of great praise. Inside the congress, on both sides of the aisle, you now have very strong advocates. So you have this unusual thing of a massively polarized country, and yet heres an issue thats bringing everybody together and by the way, justifiably. Justifiably. I think, again, i dont i am an activist, but im trying to argue for having a conversation about this for getting the full information on the table the issue that facebook is going to be wrestling with next, which i think will tip over to the other guys, are the issues of the securities and Exchange Commission relative to advertising. And you know, exactly what is going on there and what are the implications of having had fraudulent user counts or manipulation of users and what does that imply if the Company Bought or sold stock during those short periods there are going to be investigations of those things, and well have to see what happens. But from an investor point of view, you have to factor that in now, because thats not like a maybe, thats at were at the beginning of that. Although, whats also not a maybe is the first revenue acceleration in three years. Julia boorstins got more on the quarter. Julia . Reporter well, carl, facebook may have beat expectations on the top and bottom line, which initially sent the stock higher afterhours, but then it turned negative when c faux dave weiner pointed to some potential problems ahead he said facebooks revenue will see morepronounced deceleratio in the Fourth Quarter goingint 2020, saying thats partially driven by, quote, adtargeted related head winds and uncertainties. Mark zuckerberg said its been valuable for clarifying regulations Going Forward as well as the companys new focus on secure communication. He also talked about one other new focus of the company, ecommerce and payments take a listen. These are huge and important spaces and we have efforts in several major areas to deliver qualitatively better experiences than what exist today. From instagram shopping to facebook marketplace to payments across our apps to the new libra project that we announced to 27 other Companies Recently these efforts are important both for our profit experience and for our Business Reporter now, analysts are large lly bullish on these results. We have counted nine analysts that have raised their price targets on these numbers guggenheim writing, quote, while the facebookfocused regulation appears introducei, we believe that the spirit of the requirements will likely be applicable across the internet and social media peers and most readily addressed by the financially strongest players, of course, like facebook and we did hear a note of skepticism, though, from laura martin she writes, facebook is a target of regulators, we believe, which implies it no longer competes on a level playing field. This is an investment risk its competitors do not have. And of course, now that we know about the ftc antitrust investigation as well as that department of justice antitrust probe, well have to see how much of a distraction all of these different issues are as the company tries to innovate and fuel new Revenue Streams back over to you all right julia, thank you very much laura martin is not a big bull shes been raising a lot of concerns around this company and the thing is, for everybody else, i think the point theyre making is fundamentally correct, if all you look at is the ftc announcement yesterday because the blanket immunity to the executives and the company for the things that are known as of last week or whatever the date was that they said, i mean, that is immensely valuable and if youre a shareholder, youre looking at that, taking that to the bank and if the ftc were the only possible regulator, then i think the stock going up would be perfectly rationale. The other problem that i think Everybody Needs to Pay Attention to is weve talked about this before your Facebook Newsfeed today has a lot more ads than it had a year ago you know, perhaps twice as many. I mean, in my own feed, about every fifth or sixth piece worr this for years thats right. But whats the density that they become classified advertising . But are they good ads, thats the question and the data that facebook has makes their ads better targeted than the average bear, right i dont dispute that. But at some point, if its just a stream of ads, engagement is going to decline im just saying, theres a limit to how many ads they can put in. And it feels to me like theyre adding so theyre looking to new Revenue Streams, right and i find it so interesting that what theyre looking to is ecommerce and payments talk about opening yourself up to regulation. Look at what libra has already, you know, lit a fire under regulators and lawmakers so are you positive on this . And is that actually going to help them or hurt them to me, theyre pieces of the payment thing that are a nobrainer, right . The idea of doing cash transfers over messenger or whatsapp, those are things, those are established Market Opportunities that they should be really good at and shouldnt be that big a deal yeah, good at, but is it smart for them to go into. Libra is a disaster im not even talking about libra. Nothing solves that distribution problem than being the retailer itself. Then you can say, look, advertiser, we sold it, heres who we sold it to, heres the ad they saw before they bought it their Market Opportunity is a big opportunity. Ive heard some things that said, scale wise, its in the same basic geography as ebay, but they get essentially no revenue from it and they clearly can monetize that. Facebooks problem is not an inability to monetize business that it has. Facebooks problem is that it cant seem to do the monetization without causing massive distress to society. And that should be possible. Why is shopping with instagram taking so long to take off . These things, you make it sound so simple, but they havent been able to get it off the ground so quickly. I dont know. At the end of the day, these are rar sma very smart people, but their skill sets are very specific, and as they move into these new markets, you can imagine the financial services, you need a broader skill set than you need for doing just, you know, a news feed. And whether they have good enough people there, i think you can state with some confidence that the first pass on libra was underdeveloped relative both to market need and to the regulatory requirements of that space. And that facebook could probably, you know, do a better job if it wants to get that through. We had one guest last week call it the worst Product Launch in history so let me move on to tesla, though, the other big earnings story of the morning down double digits after reporting this largerthanexpected loss. Phil lebeau will help us understand what happened in the quarter. Phil reporter a lot to unpack here, carl tesla right now on pace for its worst day of the year, its worst day since september of last year, and if it falls much further, it will be the worst single day for tesla shares since 2013 heres what the Company Reported yesterday. A wider than expected loss the automotive Gross Margins is getting a lot of attention, because they fell under 20 . Theyre down to 18. 9 in the Second Quarter and yes, they had stronger free cash flow, but thats because you had a greater than expected number of vehicles delivered tesla did reaffirm its guidance for 2019 eliveries but if youre expecting a linear path or at least some certainty about the Financial Results over the next several quarters from tesla, well, listen to elon musk on the call last night your q3 and 4 will be good, 1 will be tough, q2 will be not as bad, but still tough, and then, ive said like q3 and q4 next year will be incredible. Reporter all right were you keeping score tough, not bad, incredible in q3 and q4, at least thats the prediction of elon musk at this point. As you take a look at shares of tesla, we should point out that chief Technology Officer j. B. Straubel, who has really been with the company all the way from the beginning, basically elon musks righthand man, he is moving into an advisory capacity he will step aside as chief Technology Officer so for tesla bulls out there, theyre looking at this and saying, look, theyre reaffirming guidance, but carl, youve got to look at these automotive Gross Margins and you cant underestimate the importance of j. B. Straubel. Even though he will still be an adviser at the company, he will not be the chief Technology Officer. Carl phil, thanks so much. Good picture of the quarter. Well talk about it in a moment. But i do want to get to Bertha Coombs at the nasdaq and the opening of this new ipo. We just had livongo open for trade, the stock price at 28 a share. That was above the initial range of 20 to 23. Just opened up 45 above 41 a share. Thats going to give them a valuation today of about 2. 8 billion or so, give or take a few hundred thousand dollars this is a company that does Digital Health management. They are famous for helping people manage their diabetes in fact, they have one of their 164,000 members here today talking about how it helped him avoid having to take insulin but theyve also branched out into Mental Health and other chronic disease management as well the company is growing very quickly, their revenues more than doubled the last year, above 66 million. But their losses doubled, as well so they are not yet profitable nonetheless, this is one of the health tech stocks that a lot of folks have been watching in Silicon Valley they are paid for by Enterprise Companies and growing very quickly. Again, livongoright now up mor than 50 in its debut. Back to you. Bertha, its getting to be a habit with some of these new issues yeah. Roger, on tesla, the journal today argues that its in danger of no longer being the markets growth darling yeah. I mean, todays announcement doesnt read well, at all. With my Portfolio Manager i had on, you know, the departure of the cto, that is very poorly timed. And you know, you look at this weve had all of these issues on their production capability and just how much do they give up by not being really extraordinarily good on the blocking and tackling . They built this incredible brand, and yet now that theyve got all of these people interested in the product, theyre creating all kinds of trouble for themselves and to me, thats really scare core question its margins or deliveries, right . Which one do you want to focus on because if youre focused on margins this morning, 18. 9 does not make you happy you want to be, you know, 21ish, but if youre focused on deliveries, hey, you know, i guess logistics hell is kind of in the past, in a way, although they seem to have some painters tape in some of these cars but, hey, theyre churning them out. Cash flow looks a little bit better yeah, you know, its not the end of the world but at the same time, these are the issues, jon, that weve been talking about all along. That why should you have to make a tradeoff between deliveries and Gross Margins . There are a lot of businesses, when you ship more product, your Gross Margins get better, not worse. And to me, this is this is just a sign that they havent solved job one of being a car company. And is job one judged quarter to quarter or judged by the longtime both. Who else isinnovating like tesla, just to play devils advocate if we dont look at this on such a shortterm basis, whats the story . I am one of these people who talks you know, im not a car person, but when i talk to people who own teslas, they really believe, right . And that to me feels like a really Strong Foundation to the whole thing, but when i talk to my friends who are car people, they look at the manufacturing issues and they look at that like its going to be catastrophic if they dont get their hands on it right away and i have a former partner who, you know, he does technology for a living and he happens to be a car buff and he just he thinks this is a disaster in process. And im not in a position to judge that i can see a great brand, i can see people who love it and to me the brand creates the opportunity to fix the manufacturing issues but at some point, youve got to do that. It reminds me of apple before tum co tim cook yeah. Okay. Okay i hear you brilliant guy at top, lots of ideas, always coming out with new stuff, people who love apple really love it, but, boy, their operations and parttime ceo hey a lot of parallels and a car person who is also a tesla person and see what they say. I mean, i just to me, i want tesla to be successful, because i want to believe you can create a car company and create, you know, in traditional industries, you can really break out and make things work so im cheering for them but this doesnt make me feel better well, thats why brandnew Car Companies are few and far between. Yeah. Roger, thank you. My pleasure good seeing you two days in a row, Roger Mcnamee. Later this hour, livongo just opening for trade. The executive chairman joins us in just a few moments. That stock is surging off the bat, up 60 . Stay with us so, every day, we put our latest technology and unrivaled network to work. The United StatesPostal Service makes more ecommerce deliveries to homes than anyone else in the country. Ecommerce deliveries to homes stand up if you are first generat crowd cheering ent. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent, but it doesnt equally distribute opportunity, and paths are not always the same. Im so proud of you dad. [man] i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. uplifting music wiswitch wireless carriersn bring in your own phone, and save hundreds of dollars. Its pretty much the easiest way to save since sliced bread. Sure is. Because savings is as savings does. And sometimes youve just got to stop and smell the savings. Im sorry, i think you mean roses. Oh right. You need to stop and smell the roses of savings. Bring in your own phone, switch to Xfinity Mobile and save hundreds of dollars a year. Now thats simple, easy, awesome. Get 100 back when you bring in an eligible phone. Click, call, or visit a store today. Welcome back take a look at shares of paypal, hit hard this morning, down 4. 6 does the Payment Company miss on revenue and cuts its fullyear revenue outlook delays product integration and pricing initiatives as well as currency pressures having an impact the company also coming up short on venmo payment volume by some 4 billion this is a very important metric, guys, because this is supposed to be the future Growth Engine when venmo came out, it was a wild success, because it was popular. But it came out a long time ago. There are more and more competitors. Youve got zelle, youve got square cash coming out, and paypal hasnt really monetized it in a significant way. Yes, more merchants are signing on, but on last nights conference call, talking about adding emojis, but engagement was never the problem. I wonder what the Business Model behind that is because venmo socialized payments, i think some older people, like myself, dont really want everybody in the world to know who were exchanging money with. So how exactly theyre going to capitalize on that, especially as payment volume maybe isnt showing up as expected how do you turn that into a viable business . The idea is you get more merchants to sign on and you take a cut of those transactions, its been slow going, but one of the reasons that paypal lowered its fullyear guidance is because they have all of these partnerships in the works, but integration is becoming a little slower than expected so you need to remember, paypal is one of the hottest stocks in the hottest payment spaces, and it has an incredibly rich valuation, including visa and mastercard and theyre getting into more Digital Transactions so paypal has to make the case theyre going to have more growth levers Going Forward and be able to compete with others obviously, the revenue outlook not helping. Did they give any clarity on libra last night you know, i was very surprised. Visa and actually, im not surprised given what weve heard. Ill take that back. I thought there would be more questions from analysts, but the consensus seems to be that it is just too early to know anything. And they are being very cautious, hedging their bets visas al kalie just said, we just signed on, we havent completely signed on, we signed our intention, but nothing is final yet. Lets get to Kayla Tausche in washington with some breaking news this morning. Carl, the department of agriculture is unveiling the details of that 16 billion aid Program First announced in may top agricultural officials told reporters the program would see 14. 5 billion go to a market facilitation or a direct Payment Program to farmers that will cover a wide variety of crops. Signups begin on monday, payments will begin next month and go through the fall and winter, if the trade situation hasnt resolved. The payments will be based on acreage products and the county where theyre ocated there will also be a 1. 4 billion fund to purchase certain excess crops as there was last year agricultural secretary sonny perdue said the program was entirely justifiable when asked about funding farmers hit by trade war versus businesses in other industries he also discounted the idea that farmers are getting overpaid, saying that academics who are calculating the cost of the trade war are not the ones struggling to pay the bills. He does believe china could still buy Farm Products at president trumps insistence and suggested some of that may already be happening or be in the works right now. He says there are no plans for a 2020 aid program, but he also said he didnt believe there would be one this year he said he will be monitoring the trade situation throughout the fall to see how and went anymore payments should be made. Carl all right ly take it, kayla, thank you i will take it, thats a big deal certainly with the political season gearing up. And when we return, back to tesla, those shares continue to get crushed this morning tesla bull and elon musks favorite youtube analy jns lerhihourstoi stay with us welcome back to squawk alley. The dow is down one third of a percent and european markets just closing seema mody joining us with a breakdown of todays action overseas seema . Not the type of Market Reaction you would expect on an ecb Monetary Policy meeting. European stocks are down, but take a look at the euro. A big intraday reversal. It initially hit a twoyear low against the dollar after the ecb signaled future stimulus, but when ecb president mario draghi took questions from reporters, he didnt exactly outline the steps the central bank will take in september, which then sent the euro higher at about 111 against the u. S. Dollar. Economists are still expecting the ecb to cut rates in september, and if so, europe would be joining a growing number of Central Banks that have already cut rates of the major economies, eight have cut rates since april, thats including turkey since firing its central bank chief earlier this month cut rates by over 4 . That was in todays monitory policy meeting in total, 15 Central Banks have cut rates so far this year and with Global Growth concerns front and center, other countries across asia and latin america are expected to embrace this dovish policy Merrill Lynch forecasting nine more Central Banks including the Federal Reserve will cut rates this year. So, of course, carl, that brings up a lot of questions. What does it mean for the u. S. Investor what does it mean for the fed . Some economists say that a fed rate cut next week certainly doesnt guarantee a weaker dollar, because they will coincide with, again, these other Central Banks trying to do the same with their currency back to you. Not to mention the amount of negative yielding debt around the world. Seema, thank seema mody lets get to sue herrera this morning and get a news update. Hello, carl hello, everyone. Heres whats happening at this hour the Justice Department says it will carry out executions of federal death row inmates for the First Time Since 2003. The Department Says five inmates will be executed starting in december in 2014, thenpresident obama directed the department to conduct a review of capital punishment, which resulted in a freeze on executions accused pedophile Jeffrey Epstein was found injured and in a fetal position in his jail cell in new york city. He was reportedly found semiconscious with marks on his neck sources tell wnbc that he may have tried to hang himself or use the incident as a way to get a transfer, but he may also have been attacked by an inmate overseas, Boris Johnson held his first Cabinet Meeting as british prime minister, pledging to break the brexit impasse that brought down his predecessor, theresa may. We have a momentous task ahead of us, a Pivotal Moment in our countrys history. We are now committed, all of us, to leaving the European Union on october the 31st or earlier. No ifs, no buts. You are up to date. Thats the news update this hour back downtown to everybody on squawk alley. Jon, back to you sue, thank you. Now one of Silicon Valleys premiere health tech startups, livongo, surging in its debut over at the nasdaq this morning. Shares currently up 53 . Livongo executive chairman glen tullman joins us now first on cnbc glen, good morning congratulations. Good morning and thank you. So 679 clients, 50,000 new members added in q1. You say youre saving clients with diabetes nearly 2,000 per year how . Well, most important, what were doing is were creating a way to empower people with chronic conditions to live better and we started with diabetes and now were transitioning and adding hypertension, weight management, Diabetes Prevention and behavioral health. And what we do is we put the actual consumer back in charge of their health care and we empower them with insights and information that makes it easier for them to live healthier and better lives now, investors are going to want to know, your r d costs doubled year over year marketing costs more than doubled, so did administrative costs. When do those costs stabilize for you . Whats the outlook, the strategy over the next two, three years well, one out of every two adults, americans, is dealing with a chronic condition, and thats not even talking about the International Market so were continuing to invest in building the business and so i think youll see our continued investment in r d and the other areas you mentioned. That said, as we scale, those will become a lower and lower percentage of our overall spending glen, why go public now youre relatively young, in terms of startups, started in 2014 and youre sort of breaking a drought here the first year since 2016 that any Digital Health company has gone public. So what went into this decision . Well, today, going public is really a branding event. And we deal with 20 of the fortune 500. Those organizations like to see that were stable, they like the transparency of public companies, and we also wanted to make sure that we had a currency to use for acquisitions as we grow our platform, our wholeperson platform, to serve more and more people with chronic conditions so i think theres a number of good reasons to go public. And we also, because were a sassbased recurring revenue model, we have great stability and predictability in our numbers. And i think thats an important element of being a public company. How much are you like an Enterprise Software company, given that you have a relatively small number of, i guess, clients versus a large number of members and i imagine your sales force really has to operate much like an Enterprise Sales force in satisfying those clients. Well, we do we have a lot of great distribution clients, so whether they be health plans or large pharmacy benefit managers, they help us distribute our platform. And to reach those members but youre right, we look very much like an enterprise from the standpoint of a very efficient selling machine, that allows us to reach a large number of members. And well see that continue to scale at a very rapid rate to what extent are you going to rely on consumer hardware, like the apple watch, like alive corpss devices, consumerfacing software as you advance and do that marketing, that Brand Awareness and try to grow . Well, we have relationships with, as you mentioned, with apple, with samsung, with fitbit, all of the latest technology we have a partnership in the cgm or continuous Glucose Monitoring world with abbott, with their libre device so we expect that all of that will become part of the information that we feed into our applied Health Signals engine and thats what allows us to generate better and better insights and what we call Health Nudges that make it easier for people to stay healthy so, were happy to actually take information from all of those various devices. Big year for Digital Health i ipos glen, thanks for being up with that stock, up near 60 . Thank you thank you. Still to come this morning, a near 30 rise in revenue for facebook from a year ago not enough to keep the stock in the green today. Back below 200 ciscos John Chambers is going to join us, talk about their earnings and the regulatory actions that were taken yesterday. Dow down 110, not far from session lows of down 150 back in a moment lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. This is a major shift for us but we built services that billions of people trust every day to communicate with the people they care about privacy has always been important to the services we provide, and now its even more central to our future vision for stoeshl networking its critical that we get this right and were going to build it into all of our systems Mark Zuckerberg stressing the companys focus on privacy on yesterdays conference call. All of this as facebook faces scrutiny from the ftc, the s. E. C. , and the doj and lawmakers for that matter. Our next guest calls this big techs, quote, midlife crisis joining us now is ciscos chairma chairma chairman, John Chambers. John, nice to see you this morning and thanks for being with us. Deirdre, its a pleasure as always, and carl and jon, good to see yall as well explain to what us what you mean by this midlife crisis and are all Big Tech Companies in the same phase . No. I think what you see is any company goes through periods of transition jack welch taught me many years ago, youll never have a Great Company until you have a neardeath experience and that is true. Cisco saw it in 2001 but what you are seeing, however, is very concerning. If the major Tech Companies dont focus on tech for good and a balance between traditional capitalism, if you will, and a social obligation to society on creating jobs, et cetera, there are going to be a lot of challenges the most recent being privacy. And this is where the Companies Must get ahead of the regulators and the lawmakers. If you rethink about it, their currency is very simple. Its track record, its the relationships, both with people and with the citizens, and its trust. And at the present time, facebook clearly is behind in catching up on those issues. And john, youve said that jeff bezos of amazon has done the best job of growing the business amid all the scrutiny how much of this has to do with a different Business Model, or are there any lessons that perhaps Mark Zuckerberg could learn from how jeff bezos has been handling it and to me, it seems like hes been avoiding it, because he hasnt had the same level of scrutiny well, its several comments first, if you really watch about amazon and what jeff has done, jeff has built an amazingly powerful company and clearly leads in so many segments of the industry his challenge will be different. I think you saw secretary of commerce im sorry, secretary of the treasury say the other day, concerned about the amount of retail jobs destroyed, et cetera so i think the issue ares that the companies had to be very careful on regulation and antitrust. If theres one company thats done the best job on balancing that, and i think they learned from their mistakes in prior generations, it was microsoft. They clearly went through challenges on antitrust and regulation two decades ago and if you watch what hes done, hes done an amazing job of understanding government, fair requests, impact on citizens, impact on customers, and hes threaded that needle pretty well i would say microsoft would probably be the model for other companies to watch what nobody has talked about, however although, john sure. I was going to say, goldman has done some work looking at microsofts share of Software Industry sales and if you go back to the consent decree, that growth rate really flattened out i just wonder whether or not facebook faces the same kriind f risk in their business i think it depends entirely on how quickly they react. And i think that was you, carl if you watch what microsoft did is they reacted slower, and now if you look at the growth rate, theyre beginning to grow very, very fast in many areas, from missouri to other categories so i think a lot depends, does facebook reinvent itself does it deal with a very legitimate request of government and citizens does it do the classics . Do you are you visible . Do you articulate the problems do you get ahead of the regulators who respond to it do you give regular updates until you see the progress if they do, theyll come through it fine. But this is a three to fiveyear challenge theyre going to face. My worry is more the reverse its like the Digital Health care company that you saw before with such a tremendous pop and his reasons for going public were very, very good but if we put regulations like sarbanesoxley and we begin to do this with privacy and begin to have unintended consequences from the regulations on the Big Companies that perhaps some of the regulation and government actions were very deserved, the impact on Small Companies should be taken into consideration for every legislative and regulatory decision it could have a huge impact on the number of ipos you see john, this is jon fortt hey, jon. Yesterday, from the dissenting ftc commissioner to some others, we heard more of this term surveillance kpac capitalism, really going at the core Business Model in targeted advertising. Do you think that potentially has legs and are there changes that the likes of facebook, google, even amazon can make to the model that modify it to kind of mollify their critics without destroying their model entirely . The answer is yes and yes if you watch, ive always been more a proponent of the privacy issues that europe led with. And all the regulators know that if they move, they will make mistakes along this way. This is why i believe that these companies have to get ahead of that model im writing an oped for cnbc, which goes up today, that talks about a new form of capitalism one that both focuses on the financial returns, but also the effects on society and the job creation and i think facebook and others have to get ahead of that game and do as much in giving back as they do in terms of creating economic wealth. If they dont, regulations will get tougher and antitrust will come certainly, john thanks very much for being with us this morning. John chambers. Its a pleasure, as always. Yall have a great day good to see you, john just ahead, speaking of microsoft, former ceo and l. A. Clippers owner Steve Ballmer reaction to his two newest plays. Er well get you reaction to that press conference if you missed it dows down 116 were back in a moment im melissa lee in today for scott wapner heres a look at whats coming up on the Halftime Report at the top of the hour. The moment of truth. Big tech all reporting earnings after the bell and why this market may be setting up for a strong second half rally and Airline Stocks are getting slammed today. How much more turbulence is ahead. That and much more ahead at the top of the hour at noon on the half jon, over to you thanks, melissa and after the break, do you remember this . And so where specifically will you be in terms of next. Next bonehead questions are not cool next that was may 2nd of last year elon musk ignoring analyst questions and devoting 15 minutes of his Earnings Call to one bold shareholder after the break, well get that shareholders thoughts on what musk and tesla are up to now ngoway. Fun fact 1 in 4 of us millennials have debt we might die with. And most of that debt is actually from credit cards. Its just not right. But with sofi, you can get your credit cards right by consolidating your Credit Card Debt into one monthly payment. You can get your Interest Rate right by locking in a fixed low rate today. And you can get your money right. With sofi. Check your rate in 2 minutes or less. Get a nofee personal loan up to 100k. Stand up if you are first stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Here, hello starts with hi mple. How can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone [ camera clicking ] wifi up there . Ahhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your xfinity store today. Tesla is on a rocky ride today after posting worse than expected secondquarter earnings on pace for its worst day of the year as losses and revenues disappoint ceo elon musk had this to say on the call about the companys future. Q3 or 4 will be tough q2 will be not as bad but still tough, and then like q3 and q4 next year will be incredible. And that i believe was last night, not may 2nd joining us is a tesla shareholder and youtuber who made a name for himself on a tesla Earnings Call when elon musk made an Earnings Call and shut down walled street analysts. Were going to go to youtube, sorry. These questions are so dry that was may 2nd. Uteener who then spent 23 minutes asking him questions, hyperchange ceo and founder galileo russell here with us at post nine. Thanks for being here. Thanks for having me. It seems to me like whether you like tesla or not, given the results that weve seen, its a risky stock, risky bet people need to understand that, right . Definitely. I think of it like a startup investment its rapidly growing, and thats why i get frustrated with the shortterm financials instead of taking a step back and seeing the progress this company is making this cash flow, 600 million plus, thats what everybody was pointing out before this, look how much earnings they are pushing and now they are pumping out cash flow and everybody is moving to a different part its margins or deliveries. If you were concerned that tesla has less runway than maybe some people think to prove out its model and it has to stabilize and youre concerned about margins, this quarter is bad if you think its got a lot of runway and you think about the improvements its been done, you are a fan of the latter. If youback out all the regulatory quarters, the quarters margin has improved. Another big trend thats played out is the highmargin software is getting booked as deferred revenue until they roll out the features even though they are getting the cash up front and thats why the earnings and Service Levels looked worse and the cash flow is strong. What matters at the end of the day is the cash in the bank and that they are actually collecting that revenue up front. The gross margin over the long term, seeing a lot of positives building in the software and autopilot revenue thats not showing up on the gap statement. Arent you concerned about credits . We can strip them out if you want because it is going to be a problem. Rather have it go the other direction. The company can survive and bring a compelling product to market without any regulatory credits, and i think they need to do that to make it a viable company. Now, it was a year ago when you asked your question and he went to youtube and at the time you said basically the entire wall street model just got disrupted and you predicted more questions like that, but what weve seen, especially last night, was to go the pretty traditional route. What do you think now . How are Earnings Calls going to go in the future, and if you could ask elon musk a question, what would it be im an adviser to a Company Called say which opens the tesla Earnings Call and that came out of the lets go to youtube moment and thats a product that many other companies products will use and is actually changing Earnings Calls, so i do think the other thing i wanted to highlight is teslas Investor Relations strategy since then has really, really improved and got away from the shortterm metrix to the longterm autonomy the biggest news out of the Earnings Call is they want to show a road map to get to a tera watt, up 30x from their initial plans which is real, really exciting which shows that the company is planning to get much, much bigger from from here. My criticism is tesla is like apple premany tim cook. People have the products, love it and the train is running on time and the predictability has not been there what do you think . I think that couldnt be a more perfect example elon musk i think is a genius, brilliant engineer and does miss targets sometimes, but if you take the good with the bad, hes an unbelievable leader and everybody is like whats about elon like hes a negative hes the biggest reason im in this stock im betting on the jockey and not the horse. I think hes an incredible ceo. I havent heard a single wore from you about the company and if you had to choose one what would that be . Is there anywhere where you can understand where the bears are coming from . I think the core skepticism and criticism is they are moving so quickly so sometimes they move up on seemingly easier things because they are moving so fast and trying to do so much, so i think if the company were to get in trouble, it would be part of that mentality, but i think thats just you have to take the good and the bad. This is a rapidly growing tech startup. That difference in culture which allows them to move fast because i think this is also the biggest advantage. Galileo russell, covered a lot. Thanks for having me. Dow is down 135 on this thursday morning approaching session lows once again. Fo pnts ovuroiabe 3k on the s p. Back in a minute i have these notes, but ive got to say im just fired up to be here today. Pretty cool. Pretty damn cool the whooo Los Angeles Clippers owner Steve Ballmer, former microsoft ceo, being himself and excited over the new additions to his team, leonard and george it brought to mind all those windows meetings, jon, right, where he was more excited than even that. The great thing is Kawhi Leonard is like fun guy because hes not like fun guy. Hes so stoic on the court until the win and Steve Ballmer is the exact opposite so they should do a Campaign Just on that. I feel like im being trolled a little bit im a raptors fan and being forced to watch thisclip over and over again this morning. Canadians could learn to trash talk a little bit. Yeah. There you go you got your win you should be happy about that. Obviously, its been quite the session as we digest facebook and ford and tesla. Tonight will be huge amazon, alphabet, intel all after the bell i think well also get what else is beside that, google, starbucks, expedia is going to be probably the it is the busiest day of earnings season. Yeah. More importantly weve got intels ceo on squawk alley tomorrow to talk about the results, whichever way they fall. And lots of other things, im sure no shortage for the intel ceo. China and huawei. Thats going to be big. Lets get to melissa and the half. Im melissa lee in for scott wapner a big moment of truth for big tech its 12 00 noon, and this is the Halftime Report. Get ready for amazon, alphabet and intel after the bell more than 2 trillion in combined value whats at stake for this tech trio and this market airline anxiety. Shares of american and southwest getting clipped. Is more turbulence ahead for this group two things are happening in this market right now that may be signalling a strong rally ahead. How to position for a seco