Transcripts For CNBC Squawk Alley 20240712

Welcome to squawk alley for your wednesday morning im Carl Quintanilla with julia bore steen, mike san tolely with us for the hour dow is lagging down 60 jackson hole tomorrow, of course, were watching hurricane laura, the retailers but mike, crm, continues to astound. We thought 20 gain was impressive its now at session highs of 27 today alone on what bloomberg called the best revenue surprise in a decade. Yeah. Its pretty remarkable obviously the results themselves are emboldening people to say that this was as expensive as the stock has always looked undervalued or misvalued or didnt appreciate the durability of what theyre doing on the market share side of things for the longterm. What is interesting, too, if you look at it compared to some of the other software bell weathers over the last couple years, as big as todays move is, its kind of a catchup if you look at how microsoft and adobe in particular their anointing crm into that class inpenetrable areas that seem like theyre going to grow forever. You dont want to make it seem like its a laggard. Its always been a good performer. And expensive stock. But it is interesting this market willing to just pay up more for this select class of companies that its decided just are going to own the future. Its not really that much of an exaggeration to say that the big question is theyre dragging analysts to raise price targets. Theyre changing the way the street is being forced to approach valuation the question is are they you know, overplaying this hand in this shortterm at this point. Well, your point about it being anointed to a rarefied error is a good one, mike, especially on the heels of the addition of the dow which takes effect on monday mark talked to jim cramer last night on mad money about the companys astounding growth rate take a listen. I never thought, you know, when we started this company, jim, now more than 21 years ago that we would create a company thats worth more than 200 billion, that, you know, this year well do more than 20 billion in revenue and here we are. Its amazing look at this growth rate were still growing this year at 22 at 20 billion. Thats faster than any Enterprise Software company so well continue to watch the price action today, julia, on salesforce, even as we learn more about new Companies Like palentere. Absolutely. Just for salesforce, carl, so important to note that the guidance for the full year was stronger than expected its not just the growth weve seen so far. Interesting that Current Quarter guidance was a little soft but when it comes to full year, they do absolutely expect these trends to continue pretty powerful stuff there now well learn more about palentere. Interesting stuff in those companies numbers there in that s1 josh, what do you got . So, julia, it took 17 years but palantir now looks ready to make its Public Market debut remember this company was cofounded by peter teal back in 2003 its mission providing software that customers use to integrate volumes of data from images to spreadsheets into a central platform where it can then be securely analyzed and interpreted. Palantir is best known for its work with the u. S. Government. Ceo told me his software is very useful and sometimes deadly. Referring to palantirs work with the America Military and war fighters revenue grew 25 in 2019 and the First Six Months of this year nearly 50 but its still not making a profit, posting a net loss of 165 million now, carp and his company clearly enjoy staying apart from the crowd. In that filing, carp ripped into his tech peers, writing the engineering elite of Silicon Valley may know more than most about building software, he says but they do not know more about how society should be organized or what justice requires our company was founded in Silicon Valley, but we seem to share fewer and fewer of the Technology Sectors values and commitments. Having said that, the company does seem to share at least some of big techs values palanti rerks has two class of stock, class a and class b and also plans to introduce class f shares too meant to give the founders just below 50 of total voting power. Echoing steps taken by tech giants like facebook and alphabet carl, back to you. Wow what a story, josh thanks for that. Good place to start with our next guest as well joining us is capital founder and managing partner low tony joining us for the first time good to have you with us thank you. Thanks for having me. I would love to get your thoughts on palantir, sort of the color behind the s1 yesterday. The business model, karp himself what do you think investors should know . What surprised you yet on that filing i dont think there was anything that necessarily surprised me palantir is an Amazing Company its been around for quite a while, as was noted earlier in your segment i think whats most interesting to me is the fact that its taking the direct listing approach, which were seeing more and more companies at least explore. I think theres a lot of innovation that happens in Silicon Valley and now that same mindset is being applied to the process of realizing liquidity for investors. It will be interesting to watch this we have seen a couple other high profile direct listings with spotify and slack. So i think this combined with the trend towards the special purpose acquisition company, is spaks, this is something that i think is an interesting trend, kind of trying to hack the process of getting a Company Listed right no believe me, its gotten so many peoples attention the risk factors in the filing were really interesting, as im sure you are aware they sort of point to i wont call it reputational risk, but they included in the risk factors the degree to which theyre shrouded in secrecy, some argue the degree to which they might be reported on from time to time given their client base. How significant is that to someone like you i think the way that i look at it is you have to really focus in on the fundamentals theres always going to be some extra baggage that comes along with certain types of companies, especially high profile companies, companies that are not very transparent but i think the materials well outline the risks. And i think its prudent for an investor to take that into account. But again the focus has to be on the fundamentals in this case just looking at the path to profitability, also thinking about the cash thats on the Balance Sheet to be able to support the company, kind of going back to the direct listing process. Most times when a Company Goes Public through the normal ipo process, capital is raised as well because shares are sold in this sense and direct listings, capital typically isnt raised but theres another hack which is doing a financing prior to the direct listing to kind of have this hybrid approach of being able to raise some capital and then turn around to the direct listing so i think those are some of the fundamentals to look at. Another interesting thing which might be the reason that palantir decided to stay private for so long is just the fact that theres a lot of integration and customization that often happens with their work and so i think part of this was the ability to be able to provide more of a True Software solution so then the company could get valued much more like a Software Company as opposed to a services company. Lo, julia bore stin here. You mentioned some of the hacks that palantir is doing in the way its going public. Interesting two of your top holdings, spacex and sofy expected to have eventual ipos im wondering how as you look at what palantir is doing in terms of their approach to going public, how do you think that will impact those two companies and some of the other major startups, Major Private Companies as they think about offering their shares . Yeah. This is something thats been interesting to look at over the past 20 years or so because you look at some of the companies that are in the Technology Space like google. You know, google was only private for about five years so from the time it was founded until the time it reached the Public Markets, it was actually only five years, which is amazing in hindsight to look at how long these companies are deciding to stay private today so, i think theres a lot of things that factor in. You know, number one, companies are staying private longer because theyre able to realize their dream while not being in the eye of the Public Markets and under the scrutiny of all the filings that are required and trying to manage to the expectations of analysts so thats a positive in that were seeing these Companies Come public in a much stronger financial position the ability to have a Solid Customer base and to be able to kind of chart their own path moving forward so i think that a lot of companies are exploring this as an option. I think theres also a lot of regulatory process thats required to go a traditional ipo where as its a little lighter with direct Listing Technology already exists obviously theres also the talk about the pop on an ipo and whether or not that is money being left on the table. You know, is it the case when the ipos are priced by the bankers, you know, is this pricing actually reflective of the demand that exists in the market and the company doesnt really realize any of that additional ipo pop. So i think thats another consideration. Yeah. No, thats a great point in fact right now the s. E. C. Is on the tape voting, Commission Voting to ease rules on the disclosure of risk factors maybe in some ways responding to the trend that direct listings had become the other big topic for us this morning is this etsy piece on amazon this new blog post in which Josh Silverman argues that amazon is trying to wipe out its competitors by backing californias Consumer Protection bill and says amazon supported the bill as an abuse of market play amazon, lo, is one of your top holdings how much leash do you give etsy on Something Like this well, theres the process of thinking of marketplaces as a way to connect buyers and sellers. And so i think what etsy and josh is saying and josh is an ebay alum and ebay was the inventor of this model i was an ebay alum as well and there are already laws in place to be able to protect buyers from sellers that are selling fraudulent goods, counterfeit goods. And this particular bill, the way that i read it, it really is focussing on Online Marketplaces and kind of carving Online Marketplaces out from some of the other methods that connect consumers directly to sellers in a gathering. Think about an antique shop. Think about even a flee market those are the same types of dynamics its just that these marketplaces do it online. So, you know, look, we all have to realize that amazon is in the business of trying to sell as many products as possible. Amazon started selling directly to consumers and then the technology was so good and it built out such robust infrastructure it made sense to open that up and allow third parties to be able to access that infrastructure and process as well. And i look at the ability for these other marketplaces, like etsy, that are competing on a different level. You know, theyre bringing more homemade and craft types of goods. Historically those have been able to compete kind of showing that even going back to ebay the originator of the model, there were these certain vertical needs. But, you know, i think, look, its tough to be able to compete against amazon it feels like amazon is coming after every particular type of industry that sells goods directly to consumers. So i can certainly understand the frus tlags and viewing this as potential play for amazon to be able to further its depth into the consumers as the place to turn. More broadly, lo, along those lines, though. We have this Public Market that has given trillion dollar plus valuations to five or six of these massive entrenched incumbents that now potentially could be it could be argued are antiinnovation or theyre basically exploiting their advantages of scale in a way that maybe make them targets of regulators or other competitors. How do you think of that as you look at your own investments and how you think it will play yeah. Were investing at a much earlier stage when companies are just Getting Started but these are actually the questions that we have to assess when deciding whether or not to go after a particular opportunity. These are the types of questions that entrepreneurs and investors are asking themselves as Companies Get started. Will this ultimately lead a company down the path to being in the crosshairs of one of these larger Companies Like a facebook or a google or an amazon and so i think when theres that level of wanting to understand whether or not this is going to be something that a company can do to achieve or will it just get wiped out by one of the Larger Companies, thats going to open the eyes for anyone especially on the regulatory side who want to really understand if there is a level Playing Field for companies to be able to compete so i dont think well see a slow down. You know, what were seeing is the recognition that technology is woven into the fabrics of our lives. I think in this post covid environment, one of the things that weve seen aside from the unfortunate effects on our human lives is that we have a dependence on technology its interwoven into our lives in every aspect. And so we want to continue to see the innovation that happens from these early staged companies. I think its fine for the Larger Companies to want to partner, potentially acquire, but we want to make sure these Young Companies are able to compete. Right lo, that was fantastic we really hope youll come back because theres a lot more to talk about that we didnt get to today. Thanks very much thank you take care. Lo toney, plaxico capital manager Founding Partner julia . Carl, a lot more to discuss there, especially as we see the regulatory piece of this. Now, as we go to break, take a look at shares of hpe after beating on the top and bottom line shares up about 6 well discuss with Ceo Antonio Neri next. Dont go away. Good morning, mr. Sun. Good morning, blair. [ chuckles ] whoo. Im gonna grow big and strong. Yes, you are. Im gonna get this place all clean. Ill give you a hand. And im gonna put lisa on crutches wait, what . Said shes gonna need crutches. She fell pretty hard. You might want to clean that up, girl. Excuse us. When owning a Small Business gets real, progressive helps protect what you built with customizable coverage. And im gonna eh, eh, eh. Donny, no. Oh. And our profit was up 33 and eps 45 . We feel we have stabilized the revenue, and we are on our way to see incremental improvement as we move to the quarters ahead. And all that hard work was due to the excellent result we got in our backlog and also the cash flow from operations, which in return return significant Free Cash Flow for the fourth quarter. To what degree would you attribute the strength of these large, cyclical waves that were getting as a result of the pandemic how much of that is playing into the new fundamentals of the company . Yeah. I think obviously we still navigating through the pandemic as well as micro uncertainty, but what i see when i speak to our customers and partners is the need to continue to Digital Transformation on the back of the explosion of the data. We continue to see and thats the demand in the areas that Hewlett Packard industry grew 82 , which is actually i believe is growing faster than any. And the reason why thats happened, carl, we provide a true hybrid experience from the edge to the cloud for all the apps and data. Thats also fueling our models in term of revenues with air growing 11 . But also what we see is the need to bring resiliency to the i. T. And their operations obviously powered these new remote work force and ultimately extract every bit of value from the data and thats what were doing. Our portfolio is unique. We have a Clear Strategy to become the Platform Service company and we are starting to see the momentum yeah. Question for you about your guidance i think its interesting that you declined to provide guidance last quarter, but now youre back to forecasting. How much insight do you have into what kinds of both consumer and corporate trends youre going to be seeing in the back half of the year yeah, julia so, we provided guidance for the year on eps of 1. 30 to 1. 34 the reason why we have good line of sight on the sequential improvements that we expect. And the fact that we delivered very, very Strong Performance in q3 we expect orders to continue to grow for the next quarter and we already saw that in month three of this past quarter and also lets remember that despite the fact that we clear a big portion of the backlog, we had more than 500 million in q3, we still have a portion of the backlog to continue to work on it. And also we have dig nif kant amount of what i call backlogging customer acceptances for the very complicated businesses when you bring it all together Strong Performance in q3, strong cash flow as well and the line to continue sequential improvement, we will continue to double down on that innovation i talked early on where we see the demand antonio, you make the case that those parts of the business that are as a service type areas growing nicely, clearly theyre offsets in some other legacy areas because top line growth, even next year, not really expected to materialize in organic way. Do you see a way at some point down the road where the Overall Company in terms of Revenue Generation can get back to growing based on the mix of some of these fastergrowing areas . We believe so, michael. I think it is obviously a question of time because the reality is when you pivot to as a service model, obviously all that revenue is deferred but the fact of the matter is that we can actually recognize the harder revenue up front if customers adopt in that consumption model. So, our model is actually incredibly flexible. The moment we accelerate this is good for our infrastructure. Its good for our services because every time we attach 100 of the services and its good for that revenue. Obviously we have a portfolio thats heavily weighted to infrastructure today but, that will continue to pivot and we will think over the next three years as we said before we will deliver everything as a service. Antonio, finally, sort of a qualitative question on guidance i mean, youre part of a growing population of companies that have resumed guidance, but whats the calculus there. Seems like it would have been an easy call to say theres too much uncertainty going into the fall, were going to hold off for another quarter. No. We believe q2 was the bottom of the year i mean, obviously q2 was another good quarter lets remind ourself q2 for us was a full quarter impact of covid because of our fiscal year, right . Which is february through april. And i felt it was very, very proactive for us to give that confidence to the market that we believe we are on the ushape of the recovery and because of line of sight, my leadership principle is when you know something share it with the street we felt we need to hold ourself accountable. In the end, were holding ourself accountable. We can see it. We are confident we will deliver against our guidance and obviously as we get through october where we bring the security analysts together with us, we will talk about 2021. Well, thats certainly born out in your willingness to come on in quarters that were strong and in some cases not as strong. So we thank you for that well talk to you next time. Thank you very having me, carl antonio neri. As we head to a break, take a look at shares of urban out fitters. Up 20 this morning after the retailer posted a surprise profit of 35 cents a share thats despite a 13 drop in same store sales stock is now on pace for its best day on record thoerks it is still down around 10 so far this year lbeig bk. Wel rhtac im hector. Im a delivery Operations Manager in san diego, california. Weve had a ton of obstacles in finding ways to be more sustainable for a big company. We were one of the first stations to pilot a fleet of zero emissions electric vehicles. The amazon vans have a decal that says, shipment zero. Were striving to deliver a package with zero emissions in to the air. I feel really proud of the impact that has on the environment. But were always striving to be better. I love being outdoors, running in nature. We have two daughters. I want to do everything i can to protect the environment to make sure they see the same beauty ive seen in nature. My goal is to lead projects that affect the world. I know that to be great requires hard work. My goal is to lead projects that affect the world. music anncr give customers access to precisely what they want, when they need it the most. With adyen, the payments platform that delivers convenience for all. Adyen. Business. Not boundaries. The saga between mcdonalds and their former ceo is far from over our kate rogers has more on that hey, kate. Thats right. Were getting a statement on mcdonalds on the continued probe in the firing of easterbroke and the reports improprieties by the hr and whether he covered up for other employees while he was ceo mcdonalds saying in a statement the board will follow the facts where ever they may lead adding that our board and ceo are committed to leading with integrity. We know actions speak louder than words since being appointed ceo in november, chris has installed a new chief people officer, announced refreshed values with input from employees around the world and has committed to making these values part of everything we do we will continue to make changes where necessary to support all parts of our organization. Remember, mcdonalds is suing to easterbrook, moving to fire him with cause instead of without clause to claw back some of the severance dollars. Easterbrook said the company knew about allegations and about his relationships with other employees when they negotiated that severance package we should add the companys new chief people officer coming from boeing and has been reviewing the companys hiring practices as well as criteria around how the company handles employee complaints mike, back over to you. Kate, thank you very much for that update. Time now for a news update with sue herrera she has that for us right now. I do, mike. Thank you very much. Here is whats happening at this hour, everyone. Hurricane laura is strengthening quickly. It is now a category 3 storm with sustained winds of 125 Miles Per Hour storm surge is now expected to hit 15 to 20 feet in parts of louisiana. Cnbc. Com has more on how refineries have prepared for this storm. The u. N. Nuclear Watchdog Agency says iranian governments have agreed to allow access to two suspected nuclear sites. Dates have also been set but not disclosed for the inspections of the sites where iran is suspected of having stored or used undeclared nuclear materials. And along the u. S. Border with mexico, drivers are reporting wait times of up to ten hours. The long waits come as the Trump Administration resumes cracking down on nonessential travel you are up to date thats the news update this hour julia, ill send it out to you thank you so much, sue. Coming up, he works with some of the biggest names in sports, including Megan Rapinoe and russell westbrook. Well talk the future of live or wh sptsitsports exec casey wasserman. Stay with us announcer cnbc news update is sponsored by rather than worry about how to pay for longterm care. Brighthouse smartcare℠ is a hybrid Life Insurance and longterm care product. It protects your family while providing longterm care coverage, should you need it. So you can explore all the Amazing Things ahead. Talk to your advisor about brighthouse smartcare. Brighthouse financial. Build for whats ahead℠ brighthouse financial. Were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [student] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Still no fans in arenas or stadiums as professional sports moves forward with the new normal post covid. Although both the Miami Dolphins and university of miami indicate theyll try with limited capacity this fall our next guest, joining us now is casey wasserman, ceo of wasserman. Thank you for talking to us today. I know you represent a wide range of players, dozens of nba, mlb as well as nfl players and i know each of them is different, but can you give me an overall sense about how they feel about their health and safety and whether they feel comfortable returning to play . I think for the most part they feel incredibly comfortable. The leagues have all done a great job. Obviously there have been a few issues, mostly in baseball, mostly with one team but where there has been a bubble, whether the National Womens soccer league, the wnba, obviously the nba and the nhl, they have done a spectacular job. And it shows that if you take the right protocols and have the right measures in place, that you can keep the players safe and you can produce a great product for tv its not obviously the full experience of a packed venue but its a great experience. And now that you got some teams returning to their home markets with the right precautions and the nfl is obviously going to be next, you can execute a season its going to be a season clearly unlike any other, but you can have season. That is, i think, good for everybody. You represent a lot of nfl players. What do you think is going to happen with the nfl season and how much money could be lost for a lots of different people, including your company should the season be cut short . Well, look, if the season is cut short, its just its frankly just a prorata adjustment for all parties i imagine the nfl will do everything they can and i expect them to be successful in having a full 16game season. And i look forward to it it clearly will be different in different cities i imagine l. A. Wont have fans and dallas will. And or some version of some capacity and youre going to have Different Things around the country. But the games will be played the broadcasts will be on. I expect the ratings will be incredible and peoples excitement and engagement just like they have been for the other sports that have started will be up significantly. Yeah. Casey, we certainly have seen a hunger for live sports and those ratings. You do mention that mlb and i know you represent a number of mlb players. They were battling with the team owners about getting paid for a full season when the season has obviously been shortened how does that kind of conflict and all of these situations that were seeing arise, how is that going to impact the way you negotiate with these leagues Going Forward . Well, look, in the major leagues in this country, theres collective bargaining, so the players have a union the owners have a bargaining committee. I dont think anybody, either side, is particularly happy with how the process went i think theyre happy to be playing baseball and having people talking about the great performances of great players playing for great teams on the field. But clearly the relationship between the players and the owners and the league in baseball would be at the lower end of the quality of relationships compared to a league like the nba. And so, its something everybody has to work on there is going to be a labor conversation coming up and all those things will be factors. And its the reality we live in. Obviously baseball has a history of labor disputes. And lets hope that calmer heads prevail in these Uncertain Times and we can actually all Work Together to produce a great result, which is lots of baseball played on the field in front of full stadiums casey, i wonder what the premise of those conversations is going to be in a few months meaning, teams really dont know if they have the budget for no gate revenue, exactly what is going to mean for appetite for renewal of the broadcast rights and everything else. Do you see a major effort to shift the overall economics of any of these team player kind of equations or league finances through all this or is everybody just in wait and see mode no. Look, i think next year will be interesting in leagues that operate with salary caps because salary cap is base on projected revenue. And if some percentage, whether its depending on the league 30, 40, 50 of your revenue is from tickets and you have 0 there, for example, in the nba next year f they ran the salary cap based on projected revenue with no fans, i imagine every nba team would be in violation of salary cap today for committed contracts they have today for next season. By the way, if you cut the players no, team can sign them thats not a situation that produces good result for anybody. What you have seen over the last decade is the leagues almost all evolve to where the players and the owners are truly partners. They are 50 50, essential Gross Revenue participants and it has been good for the health of those sports the media dollars are obviously the biggest piece of the pie the fan dollars, sponsorship dollars all those contribute and they have produced Extraordinary Results for player salaries but also for Team Valuations and that means that the system is working so i dont think youre going to see a big change in that youre going to see some adjustments that are necessary and appropriate in a time like we are in where you may not have any fans, which is a significant portion of the revenue but thats appropriate but those arent longterm, systemic changes now, i think its worth noting here, casey, in addition to running your company, youre also chair of the Los Angeles Olympic Committee for 2028 and youve become an advocate for the idea that athletes should be able to have a political opinion to be able to advocate for things on their jerseys, when theyre playing in the olympics how important is that to your clients . And why have you decided to take such a stand on this well, i actually dont think its political i dont think being antiracist is political i think thats basic human rights that ought to be the standard which we all operate under. And my view is the ioc has a rule, probably appropriately, to restrict political speech and protests on the field of play at the olympics and my point is simply that being antiracist is not political. And we have seen some other leagues do incredible things the nba has done incredible work the wnba has done incredible work mls, even european soccer has done a great job of allowing athletes to have a voice, have their whether its to take a knee in unity, moments of silence, some messages on their jerseys as the nba has done. Those are appropriate and thoughtful around a subject in my mind that is absolutely the standard which we all need to operate which is sort of no racism is acceptable and my point to the ioc was this is the reality we live in. This is the standard we should all hold ourselves to. And the ioc has a platform and its going to happen and they ought to create an environment where they create an opportunity for the athletes to have a voice on how and when and where it happens. That is not all political speech all the time this is antiracism, speech protests, opportunity to discuss in the right forms in the right way. And i dont think theres frankly much debate about it well, casey, theres so much more to discuss and i hope well be able to have you back as we have more live sports return and then, of course, ahead of the olympics next year thanks so much for joining us. Any time. Appreciate the time. Guys, were watching facebook today came within 68 cents of 300. Not too long ago of course, a lot of targets now in the 315 range, but the market cap closing in on 850 billion now. Were back in a moment facebook shares rising again, hitting an alltime high again. We are joined by ubs tec analyst eric share dan to talk about this call. Eric, good to have you on. 330 bucks a share, basically little over 10 higher from here so its not exactly like, you know, everybody on the street is cheer leading this stock tell me about the rational behind what you think the shares are worth right now. Sit basically just, hey, this is the market were in and willing to pay for these Digital Economy or something going on specifically at facebook right now . Well, theres two things really i think number one, there is a lack of growth around some pockets of the market and an ability to pay for growth at reasonable multiples this stock is still trading at multiples that are nowhere near where its traded historically at different alltime highs prior. And the earnings power Going Forward on the other side of covid19, we look for continued 20 plus top line growth, continued Margin Expansion so i think when you look at names not only like facebook but also alphabet, we have notes out about both of them in the last two days youll see a recovery in Digital Advertising youll see some of the ecommerce things that you talked a lot about on cnbc today also play out the forms of Digital Advertising being the enabler of those shift to ecommerce and with facebook in particular the reason why the stock has been so strong in the last two days has been they flipped the switch on this facebook chaps product to allow merchants and businesses to sell direct to facebook users across facebook and instagram and facebook is becoming ecommerce player over time as it is an advertising play and thats what attracting investors to relook at the name as well. Yeah, on the ecommerce opportunity, i see that in your report here you think it could be 10 billion in revenue for facebook, lets say by 2023. As the company is growing revenues 20 a year, revenue 2023 is probably going to be 150 billion. So 10 billion out of 150, i just question, look, what the market today should be willing to pay for that portion of the companys top line three or four years down the road. Is that really the specifics of a revaluation for this stock i think its one element of the revaluation. I do think investors, especially in recovery names are now going out to 22 and 23 and looking at a return to core margin, core earnings power this is not one of the tech stocks out there just trading on revenue multiples or gross profit multiples theres real earnings and cash on the Balance Sheet and Free Cash Flow supporting the shares as well. Theres multiple elements to the call and i will tell you, the note we put out came out a little over a day ago. And i would tell you a lot of clients and a lot of investors believe 10 billion could be too low. And that understates the opportunity. So, we did a Sensitivity Analysis this is the number we land on. And its interesting to give you the feedback that many investors believe it could be a much larger number than that. Eric, julia here. I reported on that note yesterday. It was interesting because you talk about the opportunity in ecommerce and how this is a huge, huge potential for facebook but what im wondering is do you see facebook diversifying into actually generating revenue into the transactions themselves or do you think this is really going to be just about the advertising opportunity around ecommerce. Is this truly a potential to diversify Revenue Streams or just further the strength in advertising . Well, thats a really interesting question because i think theres going to be a couple different forms of this not only is there facebook shops, which is them becoming more of an ecommerce platform, you could see Companies Like shopify and yesterday announcement from big commerce which we dont cover that can be plug their merchants into this platform thats more of a take rate model where you can see facebook itself being the ecommerce platform, taking a take rate those are things investors are more aware of that happen on platforms like amazon and alibaba. But then you can also see an environment where theres going to be continuation of growth in things like instagram shopping where thats much more of an advertising unit when you look at your instagram news feed and see what looks like an advertisement thats trying to incite you or induce you to shop, thats an advertising unit thats not ecommerce so theres a number of different avenues, both through the advertising channel and the ecommerce marketplace channel that theyre going to be having some exposure to these themes Going Forward. Eric, thanks very much for running through the rational for us appreciate it. Facebook up 6 . Thank for having me certainly be talking about ecommerce on facebook for a while. Coming up after the break, the man advising tiktoks media strategy, he joins us coming up. Ayitusn o nus. Mite st wh come on in, were open. All we do is hand you the bag. Simple. Done. We adapt and we change. You know, you just figure it out. 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Its full of everything that you need to know about Getting Started on your selfdirected ira today. Youll be glad you did. If youre stuck at home watching the playoffs, your favorite shows, you may have noticed a new commercial for tiktok the company increasing its ad spend in a Big Marketing push ahead of the potential ban on the 15th our next grist runs a consulting company. Media links ceo and Founder Michael cason joins us now thank you for talking with us today. My pleasure we always enjoy a chance to have a chas tiktok is a client of yours, and i know you have worked with kevin maher for years, but you also work with the advertising agencies you have said you believe that tiktok and its survival is essential for the advertising landscape. Why is that . I think competitive friction is a good thing, and we believe based on the conversation weve had with the Largest Advertising Agency Holding Companies and the brands themselves and chief they reach a particular demo, and i would say the Marketing Industry is kind of staying above the fray of the politics in this consideration, but are looking at the competitive nature and again the demographic that tiktok seems to reach so effectively in a fair and open competitive market, which i think we are all prideful of, generally speaking, in the united states. Kevin was brought in to build tiktoks advertising business, still relatively nascent considering how many users it has. Give me a sense of how you see tiktok trying to build its credibility and its relationship with brands right now and how important it is to simply reassure advertiser that its going to be an ongoing concern well, i think its one of those times when we have a bit of a disconnect between maybe d. I dont want to say wall street in this case, but two different streets. The streets where tiadvertisers, and where people are playing out political intrigue they both play here, and certainly its a bit of that cloud, but i dont think its getting in the way of advertisers making decisions the im proud to say kevin has been a friend and associate for many year, but all one needs to do is look at the success he had launching disney plus, maybe one of the most successful consumer launches in history to get to the levels they did. Again, his experience will bode he well. The marketers that we have spoken to and interacted with are very, very supportive of tiktok as i said, its a way to reach a prime demo i do my sort of motherinlaw research, watching meyer grandkids, who are interacting all the time with tiktok therefore, if youre interested in reaching those people who will be making the purchase decisions sooner than later, its a great place to do it. Its a competitive player, if you clear whatever the cloud might be, i think you have a winner in terms of what they can capture in the advertising space. In terms of the potential buyers, will they be more confident in investing and big commit miles an hour should microsoft be the buyer which buyer do you think is most beneficial if im to believe what i read you have several on the one hand and microsoft on the other hand. It will replayoff harsh potential cloud is, so advertisers feel entirely comfortable. I think either one of those is very satisfactory to the advertising community. Both oracle and microsoft represent wildly strong brands, oracle certainly a little less in the consumerfacing world, microsoft certainly with linkedin and xbox, as you know, have experience in this space. I think either one of those are a absolute. We would love to have you back on soon thing you for joining us. Thank you so much, julia. A great discussion, julia. Obviously its going to be an interesting next few hours as then powell in the morning lets get to sully and the half. Thank you very much welcome to halftime report. I am Brian Sullivan . For scott again today. Stop us if youve heard this one before another record high for the s p 500 and nasdaq apple hitting another street price target the cyclicals may be about to break out in a big way well tell you wide. Joe