It is still unclear if the person who died as a strafford is a staffer or contractor. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. Im a, and this is bloomberg alisa parenti, and this is bloomberg. Emily coming up, tesla posts smaller than expected losses for the second quarter, but investors are looking ahead of the curve. The big focus on model 3 production, and whether the car of the masses cuts into teslas luxury car. And unleashes its potential after completing its fastest test yet. I spoke to the companys cofounders about what they learned and when passengers will be able to take a ride. And square continues its banner year with a better than expected secondquarter. We will break down the Earnings Report with ceo jack dorsey. First, to our lead. Tesla shares swinging and lay training after reporting secondquarter earnings. Last thaner lost analysts expected. Revenue is also better than expected, at 2. 8 billion. The question now is how much cash elon musks company burned through after unveiling its most affordable car yet. Must spoke heavily of the model ata sedan that starts 37,000. Us in the studio, dana. Ashares now up more than 4. 5 . What are the highlights . Were going tohey spend a lot, but they spent less than investors have feared. Model 3 reservations are through the roof. It sounds like these fears of cannibalization are not as severe as some were concerned about. They have seen an increase in and xations in the s since the 3 was revealed. Emily i am looking on the bloomberg, tesla spending 1. 16 billion in the second quarter. They had signaled heavily that they would bring the model 3 to market. They still have cash on hand that will bring them through the end of the year. Emily lets talk about production. He did say over the weekend when they unveiled the model 3 that he would be going into production hell, that they all would be going into production hell. Take a listen. Frankly, we are all going to be in production hell. Welcome. [laughter] for at least six months, maybe longer. But you guys know that. You have been through this. I look forward to working along side view in the journey through hell. If you are going through hell, keep going. [laughter] emily most of the people in that crowd were employees. But what does a trip through hell mean for investors . A trip through hell is on everyones mind, a production snafu . But there was nothing about that today. I think we will hear questions about that on the call. He is willing to get through model ss through the week. Is that possible . They are going to begin the true beginning of mass production. 500 a week from 30 or 50 is steep. People are wondering if there are any roadblocks, when he says hell, what does that mean . But they are sticking to this aggressive headline of one million cars i 2020. Emily are we seeing any signs of demand for the model ask for model model x or model s softening . Was a quarter to quarter drop, and you see a rise in inventory on the balance sheet. What they said is they want to get more model s and model xs to their stores. They need to have extra cars around to test ride. That is another interesting question for the call, is the rise in inventory something to be worried about . Emily ambitious as ever, what about the model y . Any new details . There is the semi truck and then there is the model y, a crossover. They said they look forward to adding a semitruck to the fleet in late september. Emily what about solar panels, solar roofs, as well as they dig a factory . The giga factory . They have started installing solar roofs for employees to test them out. What is solarcity at this point . Is this brand going away, or are they shifting to roofs . And there was a mention of the project in australia, a Big Energy Storage project. Emily when it comes to the half a million deposits they have for people who want the model 3, what is the likelihood that all those orders are completed . I think it depends on how long you are willing to wait and whether you qualify for the tax credit. The tax credit begins to ratchet down once tesla hits a certain volume. The big question is, where are you in line, how important is the tax credit to your pocketbook as you make this purchasing decision . If you arent going to get the car for another year, can you wait that long . Emily i know you are about to jump on the Earnings Call. We will listen for your headlines. Now to others stocks we are watching, sun power had its worst day in almost a year, tumbling 20 . The supplier lowered its forecast for 2017. Suppliers and mexico are facing delays that may push the projects into next year. And, on another topic, wonder woman delivered big profits for time warner. Secondquarter earnings beat analyst estimates. The studio has seen Box Office Sales rise thanks to the superhero movie. Coming up, the dow hitting 22,000 points thanks to apple reaching a record high. We will examine techs affect on this historical run in stocks. Bloomberg. The dow surpassing 22,000 copy attention of President Trump. He discussed the fourth round number milestone achieved since he was president. Pres. Trump the stocks hit a record high today. We have picked up more than 4 trillion in net worth in terms of our country, our stocks, are companies. That has growth rate been much higher than, as you know, anybody anticipated except maybe us. But that is going to go higher, too. Emily this record close also grabbed the attention of abigail doolittle. He joins us from new york abigail, when you look at the nasdaq, there is actually a lot of volatility today. Did was pretty amazing, because the nasdaq opened up by about half a percent, pretty bullish, and by midday was down about 7 10 of 1 , a huge swing of more than 1 on the straight on the day. The reason this matters is because volatility breeds volatility. It typically moves toward closing volatility, and dont inget with the tech pullback june, this is an indicator that something similar could be ahead. The nasdaq finished flat, but not surprisingly fitting to that volatile action were some big movers on the day, including upside on that very strong june quarter report, lus the outlook much better than expected. Down after wells fargo warned around the generic space, and viacom also lower. Apparently time warner cautioned forecasts that wait on those shares. The nasdaq finishing flat, but a lot happening beneath the surface. Emily apple allowing with a high today. We spoke with tim cook yesterday. He was optimistic. What impact did this have . Much. Bably not so that apple quarter was tremendous, especially in terms of the outlook allaying fears the macbook. The revenue numbers suggested pretty much everything is going just fine. You would think that would maybe give a boost to facebook,. Mazon, alphabet, and netflix instead those stocks finished and some ofat, the money going into apple could have come from those tech names. Interestingly, apple is now better than amazon. If we hop into the bloomberg terminal and take a look, this is the year to date chart. Bottom of the s p 500 up 10 . Up top in yellow and white, facebook and netflix up 45 . In grain, apple overtaking amazon in blue. Apple is now trying to take out netflix and facebook. Time will tell. Emily abigail doolittle, thanks for that update. Whats in store for the Tech Industry as the quarter earnings season winds down . Joining us, an analyst with rbc capital markets. You dont cover apple, but you cover all the rest. What is the big highlight from earnings season . Obviously we saw a Strong Quarter from all these companies. Demand trends remain consistent. I think this was our 30th quarter in a row for yearoveryear Revenue Growth for google, our 17th for facebook, and about 20 yearoveryear growth for almost 10 years now for amazon. We have seen consistent demand trends. The investments were happy and they were heavy last year and a year before that, and probably next year too. These Companies Make they have a lot of new opportunities to go after, whether it is amazon talking about advertising revenue, or netflix sending money to build out its international library. These companies all remain in growth. There is no scenario under which these margins will materially expand. Will not materially expand. Emily is there room for other players at this point . Like snap or twitter . Its unknown. Whether they can get to a couple billion in revenue, probably. We call that the experimental budget zone. Advertisers want diversification from google and facebook, but to get much more than that, 5 billion, there is no one out there really getting that. You have to come up with innovative ad formats. We thanks cap has a better chance of getting we think snap has a better chance of being ther getting there. Emily are you worried about snap . Absolutely. At 24 bucks about two or three months ago, so we clearly do not know the stoxx yet. Emily can you are holding that . Sticking with it the Company Needs certainly agree accelerate the daily average user growth. It is same thing with twitter. Snap needs to get the growth rate. Seller rating. Celebratingte react reaccelerating. It is still growing triple digits. Revenue no triple digit provider out there, and it is snap. Emily do you think they can get it going . I think so, for two main reasons area that they need to fix the revenue problem. Like facebook was what that mobile thing. The android thing is what blindsided snap this time, and snap needs to make sure it is integrated well on android devices. The second thing they need to do growinghe daus again, to keep rolling out better features. I think snap maps is a cool feature that theyve got. If they dont innovate, the stock will flatline at best. Emily amazon forecasting a potential quarterly loss for the first time in a while. Are you concerned . Not really. 20 years of growth, investments, losses, gains, i think they have kind of proven emily and bets. Yes, and successful big bets. Cloud computing was amazons big bet. I think the kindle family has been pretty good. I think these echo devices, they have a home run on their hands. By the way, groceries is a logistics business. Amazon is logistics. A bit of concern, but over time they have built up trust. Seeing success with its own original content, netflix spending billions of dollars on original content. Now you have competitors like hulu, the handmaids tale. Do you think netflixs burn is sustainable . I am not going to size so much on netflix. We have done surveys for two years in a row. Of amazonat customers, 50 are netflix sub its netflix subscribers. I think what is really happening of the big death bundle, and consumers, especially more advanced internet users, are going to netflix. You have this huge tail wind to streaming, and i think netflix is the biggest beneficiary. Got great content, but they are going to add more sense this year than they did last year. In the u. S. , their most mature market, they are adding more subs this year than last year. We are not at the end for netflix. Emily i like the confidence. Thank you. Coming up, the wearables market is still weak, but fitbit shares are soaring. Symantec, to forecasting sales and profits that beat analyst estimates. Cybersecurity projected sales of 1. 29 billion for the current fiscal quarter. However, symantec is also paying the price for a rapid turnover in the sea suite, having gone through four ceos in the last five years. In return, they have spent 27 million on exit packages for the Party Managers and replacement awards for new ones. Fitbit shares surging in late trading after the Company Posted secondquarter results that beat analyst expectations. The company sold 3. 4 million devices in the quarter. Also out with earnings, square. It topped analyst estimates. Joining us from new york, selina wang. I want to start with fitbit. It all comes down to the smart watch market, doesnt it . Selina we saw shares soaring today, but thats not totally good news. Things werent quite as bad as we thought, but there were still losses. They just did not lose quite as much money as expected. Revenue still declined 40 from a year before. This quarter is really just a quarter as they are transitioning and getting ahead to what investors are really watching out for, which is the debut of its smart watch. So much is riding on this, and analysts will be watching it closely to see if it lives up to its competition. Emily a lot of questions in terms of how big the smart watch market is, and whether apple is simply going to run away with it . Choice. Fitbit as no the market has been shrinking and declining. Fitbit went from being first lace for many years in the wearables market took their place, being beat out by apple. Reported that they have been ramping up the technology for this smart watch, but they dont have a choice. Analysts say investors cant wait for the smart watch to get there soon enough. They need a new market. Emily what are the new products in the pipeline . Selina they are upgrades of the existing product. That theeiterated smart watch will be coming before the holiday season, and the timing is important. It was originally planned to roll out in the spring, and that has been pushed back to the fall. Analysts hope it will have all the full feature sets, including heart rates, gps, an app store, connection with music. The price point, we have heard, is under 300. Emily lets talk about square. Shares hit a record high last week. Selina these pairs slightly. They beat extremely high expectations. They beat on the top line, the bottom line. We saw gross payment volume increase as well. I think the story is that square is just not a niche payment processor for the food truck stand or the one person hairdresser. This is for mediumsized businesses as well. Larger sellers continue to contribute to their platform. They added more larger sellers as well, and the larger sellers also have more money to buy into the whole suite of software services, ranging from food delivery, instant deposits, and Employee Management services. Emily where does it look like most of the growth is coming from . Isina most of the growth still coming from new ancillary businesses as well as the core businesses. For n instant deposits and the food delivery are three areas where they saw greatest growth, and that is contributing most to the newer line, because larger businesses see value in having this end to end solution, and i dont have to shift together services from other providers. Emily selina wang, thanks so much for joining us. To join daybreak asia designed to watch my exclusive interview with jack dorsey. That will be running throughout the day. Hyperloop one gets closer to its futuristic transportation reality. We will talk to the cofounders about the historic test. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing Xfinity Mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Mark President Trump today publicly endorsed legislation sponsored by senators tom cotton and david perdue that would reduce illegal immigration to the u. S. Legal immigration to the u. S. Pres. Trump the green card reforms would give American Workers a pay raise by reducing unskilled immigration. This legislation would not only restore our Competitive Edge in the 21st century, but it would resource reduce the sacred bonds restore the sacred bonds between american citizens. The think its bill signed by President Trump is a declaration of an allout trade war against russia. Impotence byal surrendering executive authority to congress. Fighting broke out on the floor of Brazils Congress today during a debate to decide whether to suspend the president on charges of bribery. The president would be suspended 3 of the 5132 members vote against him. More than 7000 Syrian Refugees were driven from lebanon through syria today, part of an agreement through Syrias Al Qaeda branch and lebanons hezbollah group. Has the lockout battens have been fighting alongside syrian president hezbollah combatants have been fighting alongside syrian president Bashar Alassad since 2013. Im mark crumpton, this is bloomberg. It is just after 5 30 p. M. Wednesday in new york, 7 30 a. M. Wednesday morning in sydney. Paul has a look at the markets. Paul the positive lead from the u. S. Is expected to translate to gains in the asiapacific. We are seeing strength on nikkei futures. On the asx, we are seeing futures up by 2 10 of 1 . We will be watching rio tinto shares. They are slumping in london despite profits surging. It was, however, a miss. The market was expecting better. Rio tinto also announcing a 1 billion Share Buyback and 2 billion dividends. We will also watch the Australian Dollar today with trade data from june due out. That is expected to shrink a little to a 1. 8 billion surplus. Sydney. Allen in more from Bloomberg Technology next. Emily this is Bloomberg Technology. Tesla shares gaining in late u. S. Trading. The company burning through cash less than analysts expected. The burn rate was still a quarterly record, and almost double what tesla went through in the first three months of the year. We will bring you all the latest headlines from the conference call. Joining us to break down the results, kevin, who covers tesla for us. All eyes on model 3 and how production difficulty will impact the results. What do you think the highlights are . Kevin i think the cash burn is probably at the top of the list. I am not sure there are a lot of numbers in their. Just from the perspective of being second quarter, havent really gotten to model 3 production ramp. Solar roof contributing revenue just yet. This is a quarter that the smaller than expected loss is a good thing, smaller than expected cash burn is a good thing, but there is a lot of heavy lifting to do until model 3 generates cash flow for the company. Emily talk about the heavy lifting, elon has talked about going through production hell in order to make this happen. What do you think that means for investors . If you think about it, in 2016 this was a company that produced 86,000 units globally and distributed were delivered 76,000. You are talking about, if you just look at the backlog order for model 3 going from a niche of boutique automaker to approaching a volume manufacture , manufacturer, and the run to half a Million Units by the end of next year is going to be a multiple more difficult than it was to go from zero to 70,000, and expensive. Emily we spoke earlier with cannibalization. What is your outlook on how interest in the model 3 will impact interest in the model x and model s . There will beve significant to cannibalization, and the reason i say that is because as we have seen, the first models to come out toward 300 miles, ie guess, is longrange. 40,000, and it is only the real version. Ar wheel drive once you start to opted up with dual motors in several options, you are well into the 50,000 range. Arethinking is you probably not going to see a lot of 35,000 model 3s closing the gap on costs. Ite you model up the three, closes the gap on the s. Emily all right, kevin. We are listening to the Earnings Call. We will bring you headlines as we happen. Hyperloop one just completed its second phase of testing. In the nevada desert, a prototype accelerated down the length of its 500 meter long track, reaching 192 miles an hour. It lies above the track using magnets and allows for a top speed of 760 miles per hour. Earlier today, i spoke with sherborn should smart Shervin Pishevar and josh giegel about what this means. It is about improving the technology. We have shown the hyperloop israel and it works, and we are moving into what we call the commercialization of hyperloop. As for all the conversations with governments around the world, we have shown in the videos that you saw the actual fullscale hyperloop working with the pod traveling at incredible speeds, faster and faster, and now we move on to the commercialization process of actually building this out around the world. , i have to take it you gave me to ride the hyperloop. When will i be able to use this . Hervin sooner than you think that is a very special ticket, emily, and youre guaranteed to have a ride. It is a promise of both me and josh. Rob yes josh yes. Josh, what is the timeline . Josh we have to make sure it can be reliable for 30 plus years in actually get it into a mass manufacturing market. That is whats next for us on the engineering side, and we think we will be able to do that by the 2021 timeframe. Emily shervin, how do you overcome cost barriers and safety concerns . Shervin that is a good question. The way we have architected the hyperloop is to make it the cheapest, fastest, safest form of Public Transportation in the world. The way we have designed it, the reason it can be cheaper is that the motors we have designed only line for everyhe 30 kilometers, whereas other solutions have continuous motors expensive tomore operate, maintain, and build out. What you will see as a future that is very similar to what you have seen with paris and brussels being connected with highspeed rail, where there arent even any flights anymore between those cities. Everyone is taking the highspeed rail routes. Whats interesting about Hyperloop One is that our solution essentially will be an ledsolution and a control system automation solution, so we want to engender companies around the world ellie maes hyperloops using our Technology Building these hyperloops using our technology. Up withlon musk came the original white paper on hyperloop technologies, and he says he he has said he did not want to commercialize the technologys, but now he has the Boring Company. He says, just received approval for the Boring Company to build a hyperloop, new york to d. C. And 29 minutes. What do you think of his apparent push into hyperloop with the Boring Company . Hyperloop one is focused on getting the hyperloop out into the world. Infrastructure is very difficult to move forward. You need the collaboration of governments around the world. We have been in deep discussions with governments for a long time , and we can build it overground, underground, and tunneling is just one of those solutions that is very expensive to just do tunneling, so we want to have a multimodal solution and spread that around the world. Emily we are hearing that musk may want to build all the components. What would it be like to go up against him . As you we are very, have seen, being able to do this in two and a half years, have 300 billion minds. 300 brilliant fines. We are brilliant minds. There are partnerships to be pursued. Emily there has been turnover, particularly on the tech and engineering side. How are you handling that . Josh we have had no shortage in people interested in working for us. I brought in a new hardware engineer that came from the google x program and other things, as well as a new software lead starting in about a week and a half from now. There are candidates knocking down the door. Did move on and there was a lawsuit, and im curious, shervin, what you learned from that experience and how you are moving forward. Shervin we are focused on building the real hyperloop, building it around the world, as we have shown with the milestone of the pod traveling at those speeds, breaking these speed records. We are very focused on the future, and thats all they care about. You, youforgot to ask are one of the earliest investors in uber. What are your thoughts on Travis Kalanicks resignation, and who do you think is the right person to lead the Company Forward . Shervin i think uber is one of the Great Companies of our generation. The impact it has had, the scale it has reached. Every company has lessons it learns in that kind of historic run. It is the Fastest Growing company in history, and that you will reach some friction, and they have taken it seriously, and i think it is one of the greatest opportunities for an incredible leader and ceo to come in and lead a company at the forefront of where Transportation Solutions are going. Emily on take yet another turn in the uberwaymo courtroom battle, the Ridesharing Company as asked a judge for larry page to submit an additional two hours of questioning. Uber claims the sea the executive was illprepared. You will remember that alphabets Autonomous Car unit, waymo, sued uber this year, claiming that Anthony Levandowski stole trade secrets and patents. Waymo had no immediate comment on the filing. Coming up, we speak with airbnbs global head of trust and Risk Management on what the company is doing to garner public trust. Emily facebook with new numbers on instagram. Its young users spend an average of 32 minutes a day on the app. For users 25 and older, usages 24 minutes a day. The company is attributing its growth to the stories feature, similar to snapchat. Instagram now has 260 million daily users. Meantime, airbnb is taking big steps to build trust between hosts and guests. Ony plan on doubling down three key areas, safety, connection, and support. This comes as airbnb continues to combat complaints on its screening process for hosts and guests, and faces numerous attacks from hotel lobbying groups. Joining us is airbnbs head of global trust and Risk Management, nick shapiro. You posted about earnings in a time of an unprecedented crisis in trust in business, and government, and the media. What are you doing to increase trust in airbnb . There is a crisis of distressed. People are trusting last in these institutions, but they are trusting each other more. Airbnb was designed to build that trust. We looked back at how we can leverage that new phenomenon, and thats when we came up with, its about a hierarchy of needs. We need to build that trust. That mean, does because i know you are using technology to facilitate it . Nick absolutely. People need to feel safe. We need to we do another of things to do that. A number of things to do that. We background check hosts and guests in the u. S. But just being safe is not enough. There are detailed profiles, there is a messaging system where you can learn more about each other, and there are reviews where you can look at previous history. On top of that, people need to know they are not alone. When they get to a listing and it is not what they wanted, not as advertised, theyve got someone to reach out to. Emily you have a National Security background. I am curious how that experience informs what you are bringing to airbnb, and how you might complement something brian chesky might think. Nick thats a great question. Airbnb is filled with the most optimistic people in the world. Brilliant, and also very optimistic. I come from a background in bring a different light to that. I am way more cynical, because of the previous experiences i have had periods but i think a healthy dose of cynicism matched with the optimism and brilliance that most of our engineers and project managers bring to the table is a good partnership. Emily hotel lobbying groups are upping their attacks on airbnb. There is a recent ad connecting the platform with terrorist. How do you responds . Nick it is disgraceful and despicable. People have fought very hard for this country, and to have an issue like that politicized to make a business point or continue to price gouge their consumers is very hurtful. Safety is a number one priority of airbnb. Trust is the thing we focus on the most. We do a number of things like breadcrumb checks, global background checks, global watchlist checks. Hotels dont do that. Emily there was a recent report of a woman who was a guest, saying she was sexually assaulted by a host, and she claims a background check would have revealed the host had been arrested in the past for battery. E denies the allegations how are you handling this case, and what do you tell guests about their host, and vice versa, if something is flagged . Nick its a good question. The behavior this woman encountered was abhorrent, and thats why we removed this host from our community and offered her will support. A background check was done on the host, and there were no prior convictions. If you do a background check and nore are recent charges but convictions, it is hard to hold someone accountable when they were acquitted from an offense. I think every incident should make you think. One incident is one too many for us. Safety is our number one priority. We are always going back and saying, should we have done something differently, and we will do that every time something happens. Emily lastly, you are getting into these magical trips and connecting people who are going to take you around for a more wellrounded experience. This is increasing the amount of time that guests will spend with these people. What does that mean when it comes to trust and safety . I think what it means is we need to work hard to pull back the curtain and let folks know what we do to keep them safe. We want people to make informed decisions. We cannot eliminate all the risks, but what we can do is tell them exactly what we do and make sure they make the best decisions for themselves. Emily nick shapiro, thanks so much for stopping by. Coming up, the samsung bribery case, a billionaire vicechairman at the center of the case takes it the stand take the stand for the first time. Emily elon musk on the Earnings Call right now, telling svestors that both the model and x vehicles increased after the release of the more affordable model 3. We will continue to monitor the call. He just said tesla is getting 1800 orders a day for the model 3, even though he says, we dont promote it. Jadeamsung bribery case lee took the stand today for the first time. Allegations that he bribed a friend of south koreas former president to secure her support for a key merger in 2014. Joining me, peter ahlstrom. What did he say . Peter this has been longawaited. Lee has been in detention since february. He denied that these gifts that samsung made to the friend of President Park had anything to. O with the merger samsung doesnt say that they gave a variety of gifts to this friend to promote equestrian sports in the country, including about 800,000. But they say that promoters in the government frequently come to them for contributions like they do to other governments in korea other companies in korea. Emily how big of a distraction has this been . Peter it is a big distraction. There is daily coverage. The trial has to end. It has to end next week. The trial will be completed, and the judge needs to make a decision. Emily so, next steps . Peter samsung electronics, the business, has been doing well. Their smartphone business has been coming back quite a bit. What is yet to be seen is what will happen to jay y the. Jay y. Lee. Is little question that over some period of time that he will ascend into this role. The question is whether he will be able to do it in the short term, or if it will take a bit more time. Emily a bit more time means years . How long . there has been criticism by the prosecutors that they have not been able to produce a smoking gun that has connected lee to the prosecutions. The question is whether the court will determine if this is going to go forward. Mily fascinating peter ahlstrom, thanks so much. That does it for this edition of Bloomberg Technology. Be sure to tune into daybreak asia tomorrow night for my exclusive interview with square ceo jack dorsey. Is this a phone . Or a little internet machine . [ phone ringing ] hi mom. It makes you wonder. Shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. [ laughing ] so all you pay for is data. See how much you can save. Choose by the gig or unlimited. Call or go to xfinitymobile. Com introducing Xfinity Mobile. A new kind of network designed to save you money. From our studios in new york city, this is charlie rose. Charlie the Washington Post dictated reported that President Trump dictated a statement between his son and a russian lawyer that claimed the meeting had primarily been a russian Adoption Program subject. This was later shown to be misleading. Joining us is philip rucker, the White House Bureau chief and analyst for msnbc news. Phil, tell me for those who did not read the story, who did not get their
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