Security firm proofpoint. And 2019 ushered in some of the biggest tech ipos ever, as pinterest, peloton, uber, and lyft all went public. Wework, however, stumbled to debut. We will have a recap of it all. First, to our top story. Tesla shares set a new record high and reached that infamous 420 mark. You will remember 420 was the price ceo elon musk claimed tesla would go private at last year. Earlier today, musk tweeted, woah, the stock price is so high. Lol. Joining us to discuss is our Bloomberg News reporter, ed ludlow. Another day, another record high. What is driving it for tesla this time around . Reporter the momentum is all about china, taylor. Overnight, tesla secured 1. 4 billion in financing from local banks and much welcomed cash injection. That built momentum from last week, where in november, new vehicle registrations for tesla in china hit a five month high. Youll remember those vehicles are subject to a 25 import duty. The logic follows that if tesla get the plant can shanghai plant up and running, they can offer vehicles that are more competitive priced, and the unit costs will be lower. They will be able to get deeper into the more Addressable Market in china. That is really where recent momentum has been driving the stock higher for tesla. Taylor i want to come and show a chart i am showing here inside my terminal. It is the share price, then the shorts, which recently since the summer had been getting crushed. What caught the shorts off guard so much . Reporter longer term, the momentum extends from the profit surprise that came in at 1. 86. The forecast was for a loss at 0. 24 per share, and so that is really what happened. The stock is up 66 since that point. But really, elon musk and tesla are the masters of keeping everyone from tesla fanatics, to consumers, to wall street firmly focused on the horizon of what is to come next. The best and most recent example from that is the tesla cyber truck. That is the ev pickup truck that will not go into production until 2021 but all that people have been talking about in recent weeks. That is really what tesla is best at keep people focused on the positives in the future rather than focus on the short terms financials of the present for tesla. Taylor bloombergs ed ludlow, thank you for joining us. Now, we are coming up on not just the end of the year, but the conclusion of a decade, and big tech has definitely made its mark. We are joibed by mark mahaney of rbc capital. Simpleto start with a chart. Come look at the terminal here. Continuing to crush the s p 500 this year. What happened . Even with all the risks outstanding, big tech is the star performer. I think it has to do with the revenue that has been extremely consistent for these names. Some wonderful data points. Google has gone 39 straight quarters of 20 Revenue Growth. Facebook has gone 35 quarters of 35 Revenue Growth. And amazon has done something of 72 quarters of 20 Revenue Growth. Organic Revenue Growth. It is so rare you get that kind of consistency at that level of scale. They become compounders. There is a bit of extra in facebook after it traded off aggressively the year before, but people like compounders, and these stocks have them. Taylor we talk about the key things of 2019. It would not be 2019 if we did not talk about the year of the botched ipo. Did the market finally learn this year about the difference between growth and growth at any cost . I think so. If you set it up that way, the market goes back and forth. Sometimes it wants growth, sometimes it wants value. I think lyft and uber were gunning their businesses for growth thinking thats what the Public Markets wanted. The Public Market unfortunately for them changed their mind right when they had their ipos. It was an issue for both of them and they both have done the right thing. They have come out and committed to and they would turn breakeven or profitable. In the case of both companies that is in 2021. Taylor you have been covering this sector for decades. Do you feel that the market, even though it has a short memory, changed structurally when it comes to viewing profitability . Or do you think we could easily go back to favoring growth over value . I still think we will favor growth over value. Put this in context. Uber was in a very unusual ipo. We had never had a company go public with that level of losses, 3. 5 billion. I would be careful about extrapolating from that. Lyft also had big losses, over 1 billion. And then wework came out potentially offering more of the same and with some management questions, as well. We just had three issues that the Public Market said ok on in the first two cases and then no mas on the third one. If you want us to buy your to change your orientation, and they have. Taylor there are some other tech ipos on a smaller scale chewy andover, pinterest. They are trading below their ipo price. Was there a broad based theme or something idiosyncratic going on with them . I think it was something idiosyncratic and something to do with the timing of their lockup expirations. They generally outperformed the market and stayed above their ipo price. One clear trend is that the Public Markets are trading the lockup expirations, putting a lot of pressure on going in and buying them coming out. My guess is that the same is going to happen when we look at both of those assets since six months from now, they will be high above their ipo prices. That is our guess. Taylor you also mentioned uber and lyft a few times. Both stocks are down 32 , 36 since their ipo. What happened besides just timing . These things could have been poorly priced. I think that from time to time happens. It is a very hard thing. Trying to place a lot of paper out in the market with unusual circumstances, very high losses for each of these assets. They also were reporting decelerating Revenue Growth going into their ipos, so i think a lot of it has to do with these things being poorly executed and poorly priced. It is easy for me to say that on the research side, i am not a banker, but it hard to escape that conclusion. Taylor you are on the research side, which means you are looking at the fundamentals. When you take a look at cash flow analysis and all of that, do you believe them when they say they could be adjusted to be positive by 2021, which both companies are aiming to do . With uber, you have to peel apart the business. The eats business is still in the food fight stage, if you will. But on the ridesharing business, there was one number to keep in mind. The 20 take rate, 20 margins, that is a good business. Public investors, as they realize that, are warming up to uber. Taylor the other big, big theme of the year was streaming wars. You covered netflix did they do enough in 2019 to offset competition coming quickly and coming at them fast . Probably not, but they are getting awfully close to solving that problem, i think. The hedge is generating international, original content original content in international markets. They will launch Something Like 130 new series for the international markets. For the philippines, for south korea, for germany, for turkey, etc. That was the single biggest trend in consumer entertainment streaming. Everybody is streaming. Taylor i was reading though, correct me on what your research says, that domestic subscribers are more profitable than those international subscribers. So while netflix is Going International for the growth, are they as profitable as those really strong domestic subscribers . Theres kind of two answers. That is a great question. In some markets, the margins are higher overseas than they are in the u. S. The profitability of the market is determined by competitive intensity. Which determines how expensive the market is, and how expensive the content is. Butt tell anybody this, this is the most expensive market in the world when it comes to producing content. And thats the simple statement. There are markets overseas where netflix can scale with better margins. I think that statement is very widely believed in the Financial Markets. I think the Financial Markets are wrong on that. Taylor i want to end 2019 before we take a look at 2020 with what stock surprised you the most, whether it was to the upside or to the downside in terms of where you thought they would be, and then where they actually came in at. Netflix i didnt think would miss the u. S. Subs prior to the streaming launches. That was a big negative surprise, to me. Our big positive surprise which we got right was facebook. We thought it was way oversold last year. It owns the two largest social media assets and messaging applications in the world. It is a great business model, and investors forgot about that. They have come back to it. That was the positive surprise. Taylor facebook is going to lead us right into our next conversation, because mark mahaney of rbc is staying with us. Next, we go through his research on what to expect from his big top tech calls in 2020. And if you like Bloomberg News, check us out on the radio. You can listen on the bloomberg app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor we are back with mark mahaney of rbc capital. Now it is time to take a look forward to 2020 and fresh off the press, 53 pages, your top picks for 2020. I was shocked, number one is uber. How the heck is your top pick uber . Mark it is our facebook of 2020. It is a dislocated stock, unpopular, its a failed ipo, it has this eats business losing a lot of money, nobody wants to buy uber. We think the story is going to get better and better as we go through the year. It is likely to have more upside like facebook did. The economics are starting to prove themselves out. What economics are starting to what this company has to do is bring down operating losses each and every quarter. We think they will, and we think that by the end of 2020 going into 2021, we can have a break even quarter. Taylor moreso than lyft, because of its diversification . Rather than just rideshare . Mark i think they are probably joined at the hip. It is hard to see one dramatically outperforming the other. What i find is that the shorter term oriented funds have preferred lyft because it does not have the food business and is just in the u. S. Market, but the flipside is that uber has more leverage, they can sell one of their international assets. And they also have 70 market share in the u. S. Generally the company with the greater market share determines economics. That is uber. Taylor how do they overcome this in five, ten days . Mark i dont think it will be implemented immediately. I think this is going to be a court fight. We think that it could lead to Something Like a single digit percentage increase in cost. There are two or three hedges. First, uber and lyft gave out a lot of subsidies to drivers in order to get them to drive with uber and lyft in the first place. If you are giving them benefits, there is less need to give out subsidies. Second, they can pass some of these expenses onto consumers. And third is, there is only a small percentage of drivers that are actually fulltime drivers. Those are the hedges. Taylor i want to take a look at number two and number three top picks, google and facebook. With all of the risks, the antitrust, google and facebook are number two and number three. Mark i think regulatory fares fears have been rising for a couple of years. I think we are close to peak regulatory fears. It is highly unlike these assets get broken up. In which case, we have already seen the worst of it. We have seen fines imposed against both companies, and it has not impacted their advertising Revenue Growth rates. The interesting angle on google is that as the business has finally gotten scalable and big enough it is less of a drag on margins, so you could actually have a positive earnings story out of google this year. With the two cofounders kind of stepping aside, we may get more rationality in some of their investment spending, what they call the other bets area. Taylor are you thinking facebook is poised to see better ad Revenue Growth than google . Mark absolutely. Keep in mind, we have two things coming up this next year, the quadrennial year. We have the olympics and the elections. I think both of these companies materially will benefit from that. Facebook and google are a great way to play that. Taylor another big tech name is notably absent on your list. Where is amazon in your bull thesis . Mark i think there is an overhang there. For us it is a medium buy, not a strong buy. As a longterm asset, it is great. The overhang is that the aws business has been slowing down, margin pressure, greater competition from microsoft. I think we and investors want to see clearing of the air before we get more aggressive on the stock. Taylor i want to go down into some of the smaller companies. We were talking about netflix earlier. I heard spotify kind of compared to netflix in terms of going to the original content model. Do you see them doing that . Does that give you greater visibility on Earnings Growth potential for the company . Mark there are pros and cons with spotify versus netflix. The pro is they are not going to spend as much on original content as netflix is. The negative is that they have got much less leverage versus their suppliers. There are three major music labels. That means spotifys Gross Margins are always going to be smaller than nerflixs. The pros and cons either way we like spotify into this next year, we think they will wrap up some label deals and be a gross margin catalyst. Taylor when it comes to streaming wars, roku is another company that you like at this point trading right now at a 140. You have a 160 price target on roku. Is this just a good derivative play on the streaming wars, or do they add Something Special . Mark i think thats exactly it. There are three or four derivative plays. Off the streaming wars. They have all traded like derivatives. Roku is almost up 300 . Trade desk, 150 . Up. Ai is these are not new secrets. You just pointed out there is maybe 10 to 15 upside to the price target, not dramatic. I guess i am struggling a little bit and there is probably risk reward in large cap than small cap. Taylor as you looked at 2020 overall, you see mostly positive sentiment heading into the year. Overall, is that a correct way to characterize how youre feeling about the sector going into the new year . Mark i think the sentiment on the names is generally bullish, relative positive. It makes it tougher to really get a lot of upside in stocks. That makes you want to look for that dislocated stock. We had facebook as one of our top picks. We got it right, we got lucky going into 2019. What is the facebook for next year . With uber, it is dislocated stock, but i think investors will come to it as fundamentals turn. Taylor that is mark mahaney of rbc. Thank you for joining us. And coming up, we have seen rampant Cyber Attacks in the past few years on both personal and institutional scales. What will the Threat Landscape look like in 2020 . We will find out next. This is bloomberg. Taylor how to stop Cyber Threats . Cybersecurity concerns have been on the rise as data breaches frequently occur in spaces like Financial Institutions and social network platforms. With 2019 wrapping up and an election looming in 2020, we are now joined by the proofpoint ceo to discuss what the cyber landscape will look like next year. Proofpoint helps Companies Worldwide safeguard their data. I wanted to go to that first, how much you look at the space in 2020, do you expect firms to increase their spending on cybersecurity . I think the reality is the Cyber Concerns are increasing, not decreasing, because we have seen very highly visible attacks. People need to improve their posture. I expect spending on cyber related products and services to increase over the coming year. Taylor you were talking about three key trends. The first of which is they target people, not the infrastructure. How are they becoming more personalized, where more and more, we get tricked, if you will . I think the reality is infrastructure broadly has become more secure. Some type of targeted attack using some sort of social engineering. They look at your facebook account, instagram, they try to find out something about you and they craft a lure to try to make you click or engage with in some way. Tayor what do we do to stop it . Is there anything7 a number of things. We provide security to help organizations block these threats. We also do work helping raise awareness for every single employee. We can all be better at ensuring we are not being lured into a cyber threat. The unfortunate reality, if they attack you at work, they probably will attack you at home as well. Taylor the thing that shocked me was email. I thought we knew how to ignore spam emails. How are we still getting tricked by emails7 it is the way that business runs today. Allou look back, 94 of breaches come back to a single person, and being targeted is either an email or some way an employee is interacting with some cloud app. Taylor we are quickly approaching 2020 elections. What are the threats at this moment, the biggest issues . Any time there is some form of uncertainty around major events, and election eighth is a perfect and an election is a perfect example, you have more actions by cyber actors. People will click on things and are more susceptible to being lured into some kind of attack. Taylor how are you assisting political campaigns in that . For us, we are trying to help all of our customers be better secured and secure their employees. We are very much focused on watching what threat actors are doing and where the market is headed, making sure we are one step ahead from where the threat actors are. Taylor do you see similar threats like we saw in the dnc hack with clinton back in 2016 . Are those threats similar, and are we better prepared . I think we are better prepared, but the attacks are probably more sophisticated today. As we enter the election year, you will see more participants more broadly in the threat environment. Everything from state actors, to organized crime, to anyone trying to take adv