Libre is set to debut next year. We will hear how the head of libre and the facebook coo touted this big promise. But first our top story. Recordbreaking sales for amazon. Posted itsrce giant largest advance on thursday. Amazon didnt release specific sales figures, but they say it backs up broader reports that Online Shopping picked up this year. I want to bring in spencer and darren baker. Spenser, talk to me about what we learned from amazon this holiday season. In terms of their statement, we didnt learn much. Every year is another record for amazon. What we did see was that this was the first year, one that they rolled out their oneday shipping pledge on millions of items, and that they handled so much of their own delivery on their own. I think a little bit of the boost is that amazon got through christmas without any disasters. Everyone was wondering how they would do this year. And darren, every year is a record year. Is amazon just riding the wave of ecommerce or are they doing Something Special . A little bit of both. Ecommerce was up 17 yearoveryear. That period that we call cyber five in between thanksgiving and cyber monday was up 20 yearoveryear and amazon is dominating the holiday season. Onlines more purchases than the second biggest competitor, walmart. They are dominating the season. Taylor i think what was interesting, and if you look at the chart inside my terminal, is really in the last quarter, it was trading around that 200 day moving average. A lot of this concern from analysts was that heavy investment in sameday shipping was day shipping yesterday the clarity analysts needed that that is paying off . Spencer we know investment is bringing in the revenue. We dont know how quickly the revenue is going out the door. We will find out. We know that they had another good holiday quarter. They sold a lot of things. Choppers went to amazon for their products. We dont know how much it cost amazon to deliver those things. That is the Million Dollar question now. We know amazon brought in a lot of. How much did it shove write out the door to pay for delivery . Taylor what is your take on the battleground that is sameday, oneday shipping . It was only a few years ago when twoday shipping was a big deal. Deren i dont think amazon really cares whether it is driving margin longterm. They cared about a year ago when they sell results that showed ecommerce was highly profitable. They invested in one day shipping because they know the next battleground is the things you need every day. Groceries, stuff you buy at the pharmacy. Those are the products that oneday shipping really satisfies. ,ith a and other retailers investing in buy online, pick up instore, amazon had to match that. They had to have something that trumps even pick up in the store by offering oneday shipping. The more products they offer that on, the more of the wallet of the consumer they are likely to get. Taylor you mentioned other retailers. We seen a divergence with target and walmart leading amazon when it comes to the grocery business. Other retailers, macys, really struggling. Where do you see amazon being a leader versus a lag or . Deren i think theres a couple areas. The two you pointed out are the biggest risk. Where they are becoming a leader is offering other products, advertising, and basically other ways to monetize all that traffic coming to amazon. They are driving billions of dollars per quarter through their advertising business. If they can figure out how to hook that into more of a whole foods experience, oneday delivery, then theyve got a really good shot. Taylor spencer, you talked about the reduced dependence on fedex and focusing more on amazons own delivery services. What do we know now about how much more they are reducing their reliance on some of the shipments externally . Spencer i think we are going to see more of it. Doing to thelly is Logistics Industry what happened to retail over the past several decades. Amazon wanted to have its delivery operation constantly at work, just like a factory. They want to use that capital. They want to use their delivery machine constantly. Logistics has been more of a batch system. Things coming to a distribution center. Waves of trucks leaving. Amazon is sending multiple trucks to the same neighborhood. It is breaking a lot of rules in logistics. Sunday delivery was a good example. Things are dormant on sunday for most carriers. We are going to see them doing more and more because they have to. The best way for them to lead is by doing it themselves and doing things other carriers are not willing to do. Taylor you were writing that it is not only about amazon, but some of the downstream effects. Some brands are being very successful getting their brand out on amazon. Others like nike have said, we are good on our own. What brands are doing well on their own . Deren theres a million ways to quantify amazons dominance in the ecommerce category. How are brands going to navigate this . Made a stark decision to pull everything off of amazon. There are only a handful of brands that can do that. We looked at other brands like lego, which is a really interesting story. Amazon doesnt sell privatelabel toy products, but they sell a lot of toys. Lego generated over 2 million unique visitors and shoppers. Place moste first parents think of going. Half of the people ended up buying their product on amazon. If you are a brand like lego, you need to have your own website and you need to perform well for the consumer to want the lego product. You have to do everything you can to be at the top of the amazon shelf. Of just retail, as you look at amazon in 2020, what would be the biggest battleground for them . Beyond ecommerce, you have cloud computing. More between them and microsoft and google. Big horse race is to keep trying to gobble and amazon has an early lead in that. Maintain thatg to early mover advantage. Taylor we are also getting some deliverooamazons deal is being scrutinized in the u. K. Is there a real threat there or is this more antitrust chatter . Spencer i dont know that you can just dismiss it as antitrust chatter. The antitrust chatter keeps building and building. The question is, where is this needle going to get red hot and prevent amazon from doing some things it wants to do . It is hard to dismiss it as just noise given all of the attention on amazon. The other thing i know is that the folks paying attention to amazon are getting smarter and learning more about its business. Previously, i think a lot of them didnt understand it. How do you regulate something you dont understand . The greater scrutiny is definitely a threat. Taylor for all things amazon and the Holiday Shopping season, and spencer. Deren coming up, we go through 2020 predictions with gene munster. What he has to say about apple and tesla in the new year, that is next. And if you like bloomberg news, check us out on the radio, the bloomberg gap, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor apple is likely to continue outperforming its peers next year. Gene munster wrote that the iphone maker could chase its 80 rally in 2019 with another gain in 2020. To discuss this and all the other predictions, gene joins us from minneapolis. I want to take a look at a chart here inside my terminal. You know this better than anyone else. The share price which is having a massive runup, which actually hasnt caught up to the shares. 350 on the stock. Why is 350 your fair value . Gene i think fair value is somewhere between 350 and 400. I wanted to have a target that i felt comfortable putting out there as a prediction. It also is representative of a Consumer Staples company. Think of cocacola or procter gamble. Suggests a multiple similar to facebook. Typically apple hasnt gotten that multiple because it is a Hardware Company. Investors have been concerned about hardware companies. When we think about what the proper multiple is, i think this view that a Hardware Company is a great business, defined by what is impressive cash flow if you look at apple, they generate as much cash as them combined. If we use that as the goal stick here, the cash flow should drive the multiple. I think it is a Fair Assessment to give apple a fair value similar to what facebook would be. That yields a 400 target. Question, 350 is based on Consumer Staples. 400 is based on a multiple similar to facebook. They becomender, as less dependent on iphone sales, do you start to look at this software,re as a services, wearables business . What is your take on that . Gene it is not just hardware. It is hardware, software, and services. Hardware is 75 of apples business next year. But i think if you look at how the hardware is performing, it is performing more like a services business. Every three years, people upgrade their phones. Now we are starting to introduce the wearables. That is starting to take on characteristics similar to the iphone. Think about what happened with air pods. Younswer your question, need to look at this holistically and how the products operate and how they impact consumer buying trends. When we look at it through that lens, this is a Hardware Services and Software Company that performs like a services company. They took a large step back last year with the dip in the iphone business. Importantly, this should rebound and stabilize in low to midsingle digit growth. Taylor you mentioned the cash flow that this company generates. I want to fold that into some other income statement and Balance Sheet analysis. Cash, thending net cash minus the debt, 100 billion. What is the best use of cash for this company . Gene best use is to continue to give it back to investors that think the stock is undervalued. The company has so much resources to make big acquisitions. Theyve talked about this. Net cashl is to be neutral. The cap returnof policy theyve announced. Challenge when you are generating 50 billion a year. Timetablet given a of when they are going to hit that target. My sense is we are probably two or three years away. Is best use for apple cash to be net cash neutral. I think it will reward investors. If they use the majority of their cash, that stockpile we were talking about, to buy back stock, that should generate about 7 upside. Taylor i want to flip to another stock, tesla. Bears have come to the same conclusion, that tesla is dependent on china in 2020. Is tesla really set up in china appropriately for 2020 . Gene i would disagree with that. Important, 11 s of sales today. Having a china factory there is going to lower the cost of buying a tesla for chinese citizens probably by somewhere ofween 15 and 25 because the way the tariffs are structured. But this is important. Not the whole story. , wewhole story around tesla dont have a specific price target, we think it is worth much more than the 77 billion market cap, but as we think about how the story progresses, there is undeniable truth that tesla plays into. To reach that undeniable truth or escape velocity, the stock would suggest that we are moving in that direction but we are not there yet. To reach that, i think there are still some bumps in the road. Athink china is going to be positive factor, but ultimately the company has a much bigger ambition beyond china. Essentially capitalizing on the 90 million vehicles sold every year. Taylor one of your other predictions for 2020 is the rise of the direct listing. If i dont have to raise new money, do u. S. And that we direct list instead of ipo . Gene yes. That is the simple answer. If you dont need to raise money and the late stage markets are flush with capital now, i think theres an opportunity for free direct listings in 2020. There was one or two in 2019. The theme of direct listings is for real. Talk of other methods or companies to come public. I think this will live up to some of the hype. The way direct listings are structured is the companies cannot raise money themselves. They cant sell primary shares. They cant bring money into the company to help investment through the process of the direct listing. That likely will change in the next couple years. Some of those rules will be relaxed. I think you are going to see a material shift to direct listings. Taylor gene munster, always wish we had more time. Thank you for joining us. Oming up, mounting pressure what lies ahead in 2020 for youtube . That is our conversation next. Taylor increasingly impossible tasks for youtube. With each task, youtube gave people more reason to pack its freewheeling user generated business model. Joining us to discuss the challenges ahead is bloomberg technologys mark bergen. Mark, when you look back at 2019, did they do a good enough job policing the content, working on data privacy, as much as both regulators and investors wanted . Mark i think the pickle they are in is that regulators and investors want different things. You are seeing regulators putting unprecedented pressure and forcing youtube to change how it moderates its entire site with kids. No more targeted advertisements for kids. Investors are looking at google and alphabet. You want youtube to be as handsoff as possible. It is valuable in the streaming wars. Youtube as an advertising business is pretty phenomenal but has a major liability if the laws change. They want you to continue to be an open platform. Taylor talk to me about that liability. Do you see a time in the coming years when youtube becomes liable for the content on their site . Mark what is happening in europe and now in the senate in the u. S. , talk about changing copyright rules, that would mean that youtube would be liable for a music video or a video posted that violates the copyright holder. That would be something that would have huge technical and legal challenges. There is a bipartisan push now to repeal section 230, which is an issue for youtube as well as twitter and facebook. 2020, and as we look at do we think it is privacy issues or content moderation that will be a bigger issue for the company . Mark i think the Biggest Issue for youtube is around kids privacy and how they are going to solve that. Creators, some of the childrens creators might lose a majority of their revenue. It is going to fundamentally change how youtube operates. It may change a lot of the content on youtube. Going forward, creators are going to be liable, but it is certainly something that regulators are looking at more closely. Taylor you and i talked about taking over alphabet and having more responsibilities than just google. Any sense that he has a unique view on this, or will take a bigger role than before . Mark youtube, google cited it as the second fastest growth. It is fastgrowing. They have talked about responsibility, about content moderation, and about fixing their problem around kids issues. Inxpect it to be a big focus 2020. Taylor bloombergs mark bergen, thank you for joining us. Coming up, we will bring you the best of 2019, which includes endless facebook coverage, our interviews with the head of libra, and facebook coo, Sheryl Sandberg. That is next. This is bloomberg. This is bloomberg technology. Im taylor riggs in san francisco. Remaining 21 to sign on the dotted line in october. Bloomberg spoke to the official from facebook, david marcus. Was athe last week there lot of pressure mounting and i respect the fact that those businesses and leaders have a responsibility to their shareholders and employees and stakeholders. These companies will still have the ability to build. That they dont want to do the heavy lifting by our side at this moment in time and that is ok. We will have more members Going Forward in the next two quarters and we will go work really to address the questions raised by legitimate stakeholders around the world. A lot of the companies that did leave late last week are Financial Services companies. They are theoretically familiar with the road ahead. Are you worried that they have seen something that you are unaware of . No, and i want to strongly state a dont believe we are unaware of anything. I believe when youre core coreess when your business is in this space, and you receive a lot of pressure not to press on, at some point you have to make a decision on this high risk project, its an idea that we believe will see the light of day, but there are a lot of hurdles that we need to clear. Coreave to put your business and your own business interests first, versus a project like this that is high beta. Given that they are in the space, i understand that they would receive a lot of pressure and want to prioritize their own business. Letter that a few Democratic Senators sent to these companies urging them not to join the association. Ways like aany threat. Did you take it that way . What did it sound like to you . It did sound threatening. If you join, you will have a tougher road ahead. Have you been surprised by the pushback you have received . Are would say that there two tracks. There is the engagement on the regulatory front where we have conversations. There are legitimate questions. We need to bring the right answers to those questions. Now we have the ability to do so. We have a governance model and an association that was fully formed. Now the association can take this on and really make progress on all of these questions. For these types of letters to be circulated for a thing that is an idea or a project, and telling people they should not explore innovation at a time where, not only in this country but around the world, the core of our Financial System hasnt evolved much in 30 years and consumers around the world are paying the price. Whetherd ask ourselves this is the right approach if we want to lower costs and lower the barriers of access for Financial Services. Head ofwas david Marcus Calibra and facebook. Like 2016, facebook is under extreme scrutiny about how it handles misinformation and politicians lying on its platform. Coo Sheryl Sandberg spoke to bloomberg at the year ahead conference in november. This is a major test. We are building on some success. The 2018 midterms were very focused. Had new parliamentary elections. A big one. T this is this is the highest priority for the next year. Caroline you havent been afraid of dancing with controversy. About being mom and ensuring that the discourse is there. Talk to is about allowing them to run even if they may not be complete the correct. This is a really complicated issue. It is hard and there are strong opinions on all sides. Debate, there are facts that are getting lost. One of them is that