WEBVTT - Tesla Stock Will Be Below $200 In Next 12 Months: Kudla 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:30.440 Podcast on Apple Podcasts, SoundCloud and Bloomberg dot Com. A 0:00:30.560 --> 0:00:34.280 rally in the shares of Tesla after the company reports 0:00:34.360 --> 0:00:39.440 his first quarterly profit and a positive free cash flow. Uh. 0:00:39.600 --> 0:00:41.960 Here to tell us more about it is David Coudla. 0:00:42.080 --> 0:00:44.839 He is, of course, the chief investment strategist, founder and 0:00:44.920 --> 0:00:49.080 chief executive of Mainstay Capital and Bloomberg Markets. Brought to 0:00:49.080 --> 0:00:52.040 you by Commonwealth Financial Network, the number one r I, 0:00:52.240 --> 0:00:55.080 a broker dealer that JD Power has named highest and 0:00:55.200 --> 0:01:01.120 independent advisors satisfaction among financial investment firms five times in 0:01:01.120 --> 0:01:05.160 a row. Learn more at Commonwealth and dot com and 0:01:05.200 --> 0:01:09.479 we turned out to Mr Coula to learn more about Tesla. So, David, 0:01:09.640 --> 0:01:14.040 are you a believer or are you still skeptical about Tesla? 0:01:14.480 --> 0:01:19.800 I am still skeptical skeptical about Tesla, and I am 0:01:20.600 --> 0:01:24.319 was very excited about the news yesterday very excited about 0:01:24.360 --> 0:01:29.039 the rally and after hours trading. Unfortunately, I was only 0:01:29.560 --> 0:01:31.759 able to short the stock at a high of three 0:01:31.800 --> 0:01:34.600 twenty one. Today. Maybe I'll have another chance to short 0:01:34.640 --> 0:01:38.080 it higher. It's trading about three twelve now. Um. But 0:01:38.280 --> 0:01:42.320 you know, we we expected with yearning announcement pull ahead, 0:01:42.360 --> 0:01:46.280 we'd have some good results, and we did even better 0:01:46.319 --> 0:01:49.480 than expected. But it's about the sustainability of those results, 0:01:49.520 --> 0:01:53.480 which we don't think they could maintain, and all that 0:01:53.560 --> 0:01:55.800 they did in the third quarter to generate these great 0:01:55.840 --> 0:02:00.160 results and as good as they are, best quarter by 0:02:00.160 --> 0:02:04.760 far in two years. Uh, you know, everything negative cash flow, negative, 0:02:04.760 --> 0:02:07.720 earnings negative in this whopping quarter and the stock is 0:02:07.720 --> 0:02:10.320 trading at three eleven. Yeah. Well, actually I was going 0:02:10.360 --> 0:02:12.800 to just say, what is your target? Because I'm looking 0:02:12.880 --> 0:02:16.239 right now. Bank of America, Mary Lynch. Their target is 0:02:16.240 --> 0:02:21.680 two hundred dollars underperform. Goldman Sachs target to sell. Cowen 0:02:21.919 --> 0:02:26.360 price target to fifty underperform. What's your price target? Our 0:02:26.400 --> 0:02:28.639 twelve month price target on the stock is one eight, 0:02:29.280 --> 0:02:31.840 and we think that longer term, the stock has to 0:02:31.880 --> 0:02:35.280 settle somewhere, uh, down between a hundred and a hundred 0:02:35.280 --> 0:02:38.800 and fifty and we and we say that just compare 0:02:38.840 --> 0:02:44.320 to stocks, compare to automakers general motors trading at a 0:02:44.440 --> 0:02:48.200 PE of about five or six. And if we take 0:02:48.280 --> 0:02:51.399 this number and extrapolate it a number which we don't 0:02:51.440 --> 0:02:55.520 think they can maintain in terms of earnings. UH. Going forward, 0:02:56.520 --> 0:02:59.520 Tesla is trading at would be trading at a price 0:02:59.520 --> 0:03:03.720 to earnings multiple at forty to fifty times, which is 0:03:03.800 --> 0:03:07.720 higher than any automaker anywhere in the world. And you know, 0:03:07.760 --> 0:03:10.840 we know that as we go forward, they have a 0:03:10.880 --> 0:03:13.280 debt repayment that Elon must said in the call last 0:03:13.360 --> 0:03:16.720 night would probably mean a flat you know, no earnings 0:03:16.720 --> 0:03:19.000 in the first quarter. They've got a Model Wide to fund, 0:03:19.000 --> 0:03:21.399 they've got a China Giga factory to fund, They've got 0:03:21.400 --> 0:03:25.919 other operations to fund. And we know, you know, when 0:03:25.919 --> 0:03:29.160 you pass through the numbers, UH, there was a little 0:03:29.160 --> 0:03:32.880 bit of accounting tomfoolery to to uh, to make a 0:03:32.880 --> 0:03:37.120 good number. Elon Musk has been managing this company, headlined 0:03:37.120 --> 0:03:39.440 to headline. In the second quarter, it was about being 0:03:39.480 --> 0:03:42.600 able to say they built five thousand vehicles in one week. 0:03:42.840 --> 0:03:46.120 They only average a little over four thousand Model threes. 0:03:46.720 --> 0:03:49.480 They only averaged a little over four thousand model threes 0:03:49.560 --> 0:03:51.880 per week in the third quarter, after hitting that five 0:03:51.920 --> 0:03:55.720 thousand a week benchmark. Now he's got the headline of 0:03:55.760 --> 0:03:59.760 this great quarter. Um, you know, are our bare thesis 0:03:59.800 --> 0:04:03.880 is meant like some bears on on Tesla going bankrupt. 0:04:04.160 --> 0:04:06.880 It's just that it's someday that the stock comes down 0:04:06.880 --> 0:04:11.640 to reality and trades closer to where other automakers trade, 0:04:12.320 --> 0:04:15.000 even if it is a sustainable business and it's not 0:04:15.040 --> 0:04:17.440 going to be at three hundred or three fifty or 0:04:17.440 --> 0:04:20.240 four hundred dollars a share, how do you respond, David, 0:04:20.320 --> 0:04:23.760 to those investors or even those analysts who say that 0:04:23.800 --> 0:04:27.960 Tesla is not just an automobile company. Tesla is a 0:04:28.040 --> 0:04:33.360 technology company, and it will expand its offering to not 0:04:33.520 --> 0:04:39.360 just include automobiles sold through their own dealerships, but an 0:04:39.360 --> 0:04:44.600 attempt to lease automobiles for rides sharing or to compete 0:04:44.680 --> 0:04:50.600 against Uber and Lift, and also to provide charging that 0:04:50.680 --> 0:04:57.839 would really change the way people interact with their vehicles. Right, So, uh, 0:04:58.040 --> 0:05:01.200 I understand that that thesis that both talked about, But 0:05:01.440 --> 0:05:05.600 we've got now a ten year old company that drives 0:05:05.680 --> 0:05:11.640 more than of its revenue from selling automobiles less than 0:05:11.640 --> 0:05:14.240 ten percent of the revenue comes from those other businesses, 0:05:14.279 --> 0:05:19.160 whether it's solar panels or energy storage or UH solar 0:05:19.640 --> 0:05:23.240 roof shingles, all of those those other business activities in 0:05:23.279 --> 0:05:27.840 the energy division and solar divisions of the company. H 0:05:28.000 --> 0:05:31.000 As we look forward into the future of mobility, there 0:05:31.080 --> 0:05:33.960 is this assumption and Elon Musk talked about it last 0:05:34.040 --> 0:05:37.160 night in the conference call. There's this assumption by the 0:05:37.160 --> 0:05:41.000 Tesla bulls that that Tesla will just own the future 0:05:41.000 --> 0:05:43.440 of e V it will own the future of autonomous, 0:05:43.480 --> 0:05:45.640 it will own the future of ride sharing, it will 0:05:45.680 --> 0:05:51.320 own the future of robotaxis and autonomous Weymo is recognized 0:05:51.320 --> 0:05:55.080 as the industry leader UH. You know General Motors when 0:05:55.279 --> 0:06:01.000 when UH, When UM soft Bank UH passed on an 0:06:01.040 --> 0:06:04.520 investment in Tesla, they made an investment in General Motors 0:06:04.560 --> 0:06:10.080 Cruise division. When Honda, Japanese automaker wanted to look for 0:06:10.480 --> 0:06:15.279 their next generation of electric vehicle battery architecture, they bought 0:06:15.279 --> 0:06:17.520 it from GM. When they wanted to team up with 0:06:17.560 --> 0:06:20.720 somebody to work on autonomous, they did with GM. So 0:06:20.800 --> 0:06:24.040 there are a lot of competing technologies out there. I 0:06:24.120 --> 0:06:30.320 know there are those faithful UH people, followers of Tesla, 0:06:30.800 --> 0:06:32.920 but the future is going to look a lot different 0:06:32.920 --> 0:06:35.200 than what they might think and maybe what Elon Musk 0:06:35.320 --> 0:06:38.440 might might be preaching. David Coodla, thank you so much 0:06:38.480 --> 0:06:41.119 for being with us and sharing your views. David Coodla's founder, 0:06:41.200 --> 0:06:45.440 chief executive officer, and chief investment strategist of Mainstay Capital 0:06:45.600 --> 0:06:49.719 Bold call shares below two hundred and the next twelve 0:06:49.880 --> 0:06:53.320 months interesting to see. Right now shares up eight point 0:06:53.360 --> 0:06:57.680 four percent, trading just below three huh actually right now 0:06:57.839 --> 0:07:11.560 nearly three hundred and twelve dollars to share. There has 0:07:11.640 --> 0:07:14.920 been a report in the New York Times about President 0:07:14.960 --> 0:07:18.480 Trump's phone, his cell phone, his personal cell phone, uh, 0:07:18.520 --> 0:07:21.000 and the fact that he continues to use it and 0:07:21.080 --> 0:07:24.840 it makes him susceptible to hacking. He has denied this, 0:07:25.160 --> 0:07:27.760 so has the Chinese government. What do we make of this? 0:07:28.600 --> 0:07:31.119 I don't know, but Clint Watts probably does. He's senior 0:07:31.120 --> 0:07:34.280 fellow at the Foreign Policy Research Institute, also senior Fellow 0:07:34.320 --> 0:07:36.520 at the Center for Cyber and Homeland Security at the 0:07:36.520 --> 0:07:40.360 George Washington University. Thank you so much, Clint for being 0:07:40.560 --> 0:07:44.960 with us. So what was your impression of this particular story? 0:07:45.000 --> 0:07:49.320 Do you believe it? I want to say no, but 0:07:49.400 --> 0:07:50.960 every time I say no in a story like this, 0:07:51.080 --> 0:07:54.280 it turns out to be a yes. So I think 0:07:54.320 --> 0:07:58.240 there are some important things in the article um to 0:07:58.320 --> 0:08:01.280 think about. And one was the notion that the Chinese 0:08:01.320 --> 0:08:05.320 government essentially identifies friends of President Trump and then goes 0:08:05.360 --> 0:08:08.440 to influence the friends to tell Donald Trump and his 0:08:08.600 --> 0:08:12.200 friends what to think about different issues. And whether that 0:08:12.280 --> 0:08:15.360 happens on a cell phone intercept or in reality through 0:08:15.400 --> 0:08:20.320 business associates, this is a very adept influenced strategy I've 0:08:20.360 --> 0:08:22.640 also seen. I think this is actually the second or 0:08:22.760 --> 0:08:26.040 third story that I've seen about the president's cell phone 0:08:26.040 --> 0:08:28.640 maybe not being secured or used in a secure way. 0:08:28.680 --> 0:08:30.960 If you remember back to the start of the Obama 0:08:31.000 --> 0:08:34.920 administration when President Obama was addicted to his BlackBerry, you 0:08:34.960 --> 0:08:36.600 know this has come back to the two cousin eight, 0:08:37.120 --> 0:08:39.360 and there was a lot of worry about how they 0:08:39.360 --> 0:08:41.600 would secure it. I think they eventually convinced him to 0:08:41.679 --> 0:08:44.960 not use it because of the security issue. I'm not 0:08:45.040 --> 0:08:48.680 sure that that sort of convincing has been done in 0:08:48.679 --> 0:08:51.160 in the White House. And and one thing just tangentially 0:08:51.200 --> 0:08:53.720 is we've also seen a White House where a lot 0:08:53.800 --> 0:08:55.880 of aids, a lot of people that work in the 0:08:55.880 --> 0:08:58.800 White not S are recording each other. So every time 0:08:58.840 --> 0:09:00.600 I have doubt about these stories that we would have 0:09:01.160 --> 0:09:04.080 on secure lines that could be intercepted, I do find 0:09:04.679 --> 0:09:07.000 uh that there are users in the White House of 0:09:07.080 --> 0:09:11.640 cellphones uh, making recordings, uh, using things sort of in 0:09:11.720 --> 0:09:14.880 a loose fashion, which could could lead to something being insecure. 0:09:15.360 --> 0:09:17.560 So I'm not convinced one way or another yet, but 0:09:17.600 --> 0:09:21.200 I think the approach, whether it's intercepting a cellphone conversation 0:09:21.320 --> 0:09:24.840 or trying to influence the president through his business associates, uh, 0:09:25.080 --> 0:09:28.120 that I think it's very true. Clint Watch, Do you 0:09:28.160 --> 0:09:33.280 believe that authorities will intercept those individuals or individual who 0:09:33.480 --> 0:09:37.640 is responsible for those packages containing crew pipe bombs and 0:09:37.880 --> 0:09:41.160 envelopes with white powder that were addressed to the Clinton's 0:09:41.200 --> 0:09:44.439 at their Chappaquad, New York home, or to Barack Obama 0:09:44.520 --> 0:09:48.160 in Washington, d C. Or indeed John Brennan att CNN 0:09:48.640 --> 0:09:53.640 New York Studios. Yes, I would actually expect him to 0:09:53.640 --> 0:09:57.400 do it fairly quickly. Um, if you look at the 0:09:57.520 --> 0:10:00.440 packages they intercepted overnight, it seems like that they know 0:10:00.520 --> 0:10:02.560 what to look for. They've gone through the US postal 0:10:02.640 --> 0:10:05.000 system and been able to identify other ones that have 0:10:05.080 --> 0:10:08.640 been distributed. This gives them very strong leads to go 0:10:08.720 --> 0:10:10.959 back to where was the point of origin for these 0:10:11.000 --> 0:10:14.800 packages when they were disseminated. The other thing that's interesting 0:10:14.800 --> 0:10:17.720 about to ask this case as opposed to the last 0:10:17.760 --> 0:10:19.800 reason one, which was Austin. If you remember we had 0:10:19.840 --> 0:10:24.120 bombings in Austin, this show is a very weak delivery system. 0:10:24.280 --> 0:10:27.040 You know, there wasn't much reconnaissance done and the packages 0:10:27.160 --> 0:10:32.480 are are rendered to law enforcement and they're not exploded. 0:10:32.760 --> 0:10:35.960 This gives you tremendous amount of human forensics to look for. 0:10:36.720 --> 0:10:39.199 You can actually look at how they were constructed, if 0:10:39.200 --> 0:10:41.960 they had ever maybe tried to test these before. And 0:10:42.000 --> 0:10:44.600 so I imagine right now there's actually quite a bit 0:10:44.640 --> 0:10:48.240 of evidence. I think it's ten packages that I have 0:10:48.400 --> 0:10:52.560 seen have been intercepted or picked up. There's they've been 0:10:52.640 --> 0:10:56.560 routed to UH targets to make sense based on UH 0:10:56.720 --> 0:11:00.680 certain ideological mindset. So they're going to you know, descend 0:11:00.679 --> 0:11:02.840 on that fairly quickly. I think they actually have a 0:11:02.880 --> 0:11:04.640 lot of evidence to go on, as opposed to some 0:11:04.960 --> 0:11:07.880 like in the Austin bombings back in March, when the 0:11:07.920 --> 0:11:12.120 devices are exploding when they are are delivered you know, 0:11:12.200 --> 0:11:14.880 directly by the assailant or set up in an I e. D. Fashion. 0:11:15.240 --> 0:11:17.720 That's much tougher to go on. So Clint, do you 0:11:17.720 --> 0:11:21.600 have any sense of why the packages didn't explode and 0:11:21.840 --> 0:11:24.280 whether they were intended to explode or more intended as 0:11:24.280 --> 0:11:28.960 a warning. Yeah, just looking at it, you know, just 0:11:29.000 --> 0:11:32.320 from the pictures I've seen. Usually look for a few things. One, 0:11:33.280 --> 0:11:36.360 what is the actually the explosive material, and if this 0:11:36.440 --> 0:11:38.880 is mostly black powder from what I've heard, or or 0:11:38.960 --> 0:11:42.000 other things just packed into a pipe, that is usually 0:11:42.040 --> 0:11:45.160 your least sophisticated. If you remember back to the terrorism 0:11:45.760 --> 0:11:49.480 era with al Qaeda and the Zazi case for example, 0:11:49.480 --> 0:11:53.560 we were worried about peroxide based explosives. Um plastic or 0:11:53.559 --> 0:11:56.440 military grade would be even more sophisticated. But the other 0:11:56.480 --> 0:11:58.920 part of the device with the triggering device is that 0:11:59.000 --> 0:12:02.720 a remote that needed pressure debtonated. None of these went off, 0:12:02.800 --> 0:12:05.320 which means these could just have a device trapped to 0:12:05.360 --> 0:12:08.400 the outside that never could have you know, detonated the 0:12:08.440 --> 0:12:11.320 device at all. What we do know those these were 0:12:11.360 --> 0:12:13.600 explosive devices, That's what you know. We've seen that from 0:12:13.600 --> 0:12:16.880 several reports now and that they could have exploded. So 0:12:17.240 --> 0:12:19.959 I think the danger is there. I think the signal 0:12:20.040 --> 0:12:22.640 has definitely been sent, but it's not the most sophisticate, 0:12:23.240 --> 0:12:26.400 sophisticated bomb maker that you might encounter. Clint, I'm wondering, 0:12:26.679 --> 0:12:29.520 from your experience in the U. S. Army and as 0:12:29.559 --> 0:12:33.720 an FBI Special Agent on Joint Terrorism, I'm just wondering, 0:12:34.240 --> 0:12:38.000 do you think that the risk from domestic domestic terrorism 0:12:38.040 --> 0:12:41.760 has increased more than it has been in recent years. 0:12:44.000 --> 0:12:47.080 I don't even think it's increased more now. That is 0:12:47.120 --> 0:12:49.840 definitely the case. Domestics should be our main focus as 0:12:49.840 --> 0:12:53.520 opposed to international. But even going back about six years, 0:12:54.160 --> 0:12:57.480 you could see this train coming. If it wasn't for ISIS, 0:12:57.480 --> 0:13:01.719 and they're sort of spectacular attacks, success attacks overseas um 0:13:01.840 --> 0:13:05.600 rallying a lot of Americans to join online, we would 0:13:05.640 --> 0:13:09.440 probably be more focused already on domestic extremism. To me, 0:13:09.559 --> 0:13:14.720 it's is far outpacing international extremism. UM. That doesn't mean, 0:13:15.000 --> 0:13:17.719 you know, in this case, we couldn't. This could be 0:13:17.760 --> 0:13:20.800 an international extremist for some reason, trying to cloak themselves. 0:13:20.800 --> 0:13:23.760 I think that's unlikely. Uh. And so just based on 0:13:23.800 --> 0:13:26.079 the targets and impact. It looks like it's it's towards 0:13:26.120 --> 0:13:28.920 domestic extremism, but we should also look at a sort 0:13:28.960 --> 0:13:31.920 of a wild card hypothesis too, which is, if you 0:13:31.960 --> 0:13:35.000 want to create panic in the United States, particularly in 0:13:35.000 --> 0:13:37.920 these very divisive times of an election period, it's also 0:13:37.960 --> 0:13:42.680 an opportunity for a foreign government UH an intel service 0:13:43.000 --> 0:13:46.080 to create a provocation which stirs peer and panic in 0:13:46.120 --> 0:13:49.400 the audience space too. I think that's highly unlikely, but 0:13:49.720 --> 0:13:51.880 we shouldn't entirely rule that out, and I'm sure that's 0:13:51.880 --> 0:13:54.720 what the invest investigation the FBI is pursuing right now 0:13:54.800 --> 0:13:58.840 is trying to determine. Clint Clint Watts, Thank you, Senior Fellow, 0:13:59.000 --> 0:14:02.920 Foreign Policy Search Institute, also Senior Fellow at the Center 0:14:03.000 --> 0:14:06.880 for Cyber and Homeland Security at the George Washington University. 0:14:07.320 --> 0:14:11.840 You can follow him on Twitter at Selected Wisdom, and 0:14:11.920 --> 0:14:15.400 his most recent book is Messing with the Enemy, Surviving 0:14:15.400 --> 0:14:19.320 in a Social media world of hackers, terrorists, Russians, and 0:14:19.600 --> 0:14:33.880 fake news. Yesterday Wall Street hated big Tech. Today it 0:14:34.040 --> 0:14:36.440 loves it, and we're looking at green on the screen, 0:14:36.720 --> 0:14:41.080 led by Twitter shares up nearly eighteen percent after reporting 0:14:41.120 --> 0:14:45.080 earnings that beat expectations. Amazon and Alphabet parent company of Google. 0:14:45.400 --> 0:14:47.640 Such a report earnings after the bell, but those shares 0:14:47.680 --> 0:14:51.120 also climbing higher up give or take about four percent. 0:14:51.320 --> 0:14:53.560 Scott Kessler joining US now head of equity research for 0:14:53.600 --> 0:14:57.080 cf are, a Research in New York. Scott, let's just 0:14:57.120 --> 0:14:59.840 start with Twitter because we actually have data to look through. 0:15:00.160 --> 0:15:03.720 Can you talk about how they outperformed and what this 0:15:03.800 --> 0:15:06.480 means about sort of some of these big tech companies 0:15:06.480 --> 0:15:09.320 and social media companies being responsible when it comes to 0:15:09.440 --> 0:15:15.840 having members that count or users that count. Thanks. Yeah, Um, look, 0:15:15.840 --> 0:15:17.640 I mean when you see a stock like this moving 0:15:17.640 --> 0:15:20.240 in by the way, I mean, Twitter is no stranger 0:15:20.400 --> 0:15:24.320 to post earnings um volatility. I mean it's a stock 0:15:24.360 --> 0:15:27.840 that moves quite a bit after their report results. Um. 0:15:27.960 --> 0:15:31.000 This time, it seems they are performed pretty nicely. I 0:15:31.040 --> 0:15:36.000 think most notable was the revenue increase, which was far 0:15:36.080 --> 0:15:40.960 above the consensus. They reported about seven fifty eight million 0:15:41.000 --> 0:15:44.120 dollars in revenue and folks were looking for about seven 0:15:44.320 --> 0:15:46.880 million dollars in revenue. And I think there are a 0:15:46.920 --> 0:15:50.080 number of factors that contributed to that, but most obviously 0:15:50.160 --> 0:15:54.920 as they're continuing to focus on their strategy of health 0:15:55.000 --> 0:15:58.960 on the platform as well as providing a good experience 0:15:59.000 --> 0:16:03.120 for both users and marketers. And then in addition to that, 0:16:03.320 --> 0:16:06.080 I think we would be remiss if we didn't acknowledge 0:16:06.120 --> 0:16:09.720 that they might have been benefiting to some extent from 0:16:09.760 --> 0:16:12.200 some of the challenges that Facebook has been going through recently. 0:16:13.240 --> 0:16:16.400 Scott Kessler, can you speak to the video aspect of 0:16:16.880 --> 0:16:20.720 Twitter's strategy? And also as a disclaimer, Bloomberg of course 0:16:20.760 --> 0:16:25.600 provides at TikTok, the twenty four hour streaming network for 0:16:25.680 --> 0:16:29.640 business and financial news for Twitter, tell us about video 0:16:29.680 --> 0:16:33.080 and how that plays into their future. Yeah, so him, 0:16:33.160 --> 0:16:36.200 I think it's pretty clear that UM over the last 0:16:36.440 --> 0:16:40.760 year or so, Twitter is kind of refocused its strategy 0:16:40.840 --> 0:16:43.080 to some extent, and one of the big kind of 0:16:43.520 --> 0:16:47.920 UM thrust for them from a growth perspective is video. 0:16:48.000 --> 0:16:53.400 So they highlighted UM a number of UM new agreements 0:16:53.840 --> 0:16:58.200 with respect to their Live initiative, and their live initiative 0:16:58.320 --> 0:17:00.480 is you know, really at the core of a company 0:17:00.560 --> 0:17:04.680 is about which is really about UM getting people information 0:17:04.720 --> 0:17:08.399 and content exactly when they want. If you use a 0:17:08.440 --> 0:17:12.800 search engine, if you use UM some type of news portal, 0:17:13.280 --> 0:17:15.679 you might have to wait until it's surfaced with an 0:17:15.760 --> 0:17:19.560 algorithm or someone can actually report on it. Um. Twitter, 0:17:19.640 --> 0:17:21.399 I think for a lot of people is really the 0:17:21.520 --> 0:17:24.560 go to source when it comes to breaking news, and 0:17:24.640 --> 0:17:28.560 so they've really capitalized on that by um, I think 0:17:28.960 --> 0:17:32.280 focusing on video as an opportunity, and they've done well. 0:17:32.320 --> 0:17:35.440 They've signed a lot of agreements, I think importantly though, 0:17:35.520 --> 0:17:39.520 they've gained some traction and you can charge more for 0:17:39.560 --> 0:17:42.480 the video advertising than the run of the mill um 0:17:42.520 --> 0:17:46.280 advertising that Twitter might have been uh, you know, involved 0:17:46.280 --> 0:17:49.440 with predominantly over the last number of years. All right, Scott, 0:17:49.480 --> 0:17:51.600 Let's shift for focus a little bit to Amazon and 0:17:51.600 --> 0:17:54.520 Alphabet both expected to report earnings after the bell today. 0:17:54.640 --> 0:17:58.840 Amazon shares up nearly fift year to date, pretty massive run. 0:17:59.080 --> 0:18:00.760 Do they have to actually know that they're able to 0:18:00.760 --> 0:18:02.880 generate a big profit this time or do people still 0:18:02.920 --> 0:18:06.439 not care? You know? What's interesting about these companies? And 0:18:06.520 --> 0:18:12.320 I can put everyone from Amazon to Twitter um in 0:18:12.400 --> 0:18:16.240 this kind of bucket of companies where people absolutely want 0:18:16.280 --> 0:18:19.320 to see the growth. But growth is by far um 0:18:19.359 --> 0:18:22.200 the most important thing. But then when you can throw 0:18:22.280 --> 0:18:27.520 in um profitability or significant profitability, especially when you might 0:18:27.640 --> 0:18:30.760 surprise people, and I think Amazon has done that. I 0:18:30.800 --> 0:18:34.840 think Tesla did that yesterday. I think that the magnitude 0:18:34.920 --> 0:18:37.520 of Twitter's beat was pretty significant. Even a company like 0:18:37.600 --> 0:18:43.640 Microsoft that reported yesterday, they're upside in terms of the 0:18:43.760 --> 0:18:48.600 UM revenue and earnings numbers versus expectations. Those give people 0:18:48.680 --> 0:18:50.960 confidence and that's really what I think a lot of 0:18:51.000 --> 0:18:54.959 investors are looking for right now. Scott Tesler, do you 0:18:55.040 --> 0:18:59.880 believe that Amazon, with its variety of revenue streams, whether 0:19:00.080 --> 0:19:06.040 the Amazon Web Services or it's hardware sales, it's online offerings, 0:19:06.080 --> 0:19:10.399 and of course the actual store itself, do you believe 0:19:10.440 --> 0:19:16.160 that Amazon is set for another round of growth? Well, Pim, 0:19:16.160 --> 0:19:19.600 what I can say is, um, we have another team 0:19:19.600 --> 0:19:22.960 member here to Nomobile who covers Amazon, and so my 0:19:23.119 --> 0:19:25.600 thoughts on the company are more broad. But I think 0:19:25.600 --> 0:19:27.359 it's fair to say, and we've been positive on the 0:19:27.359 --> 0:19:31.359 stock for UM years at this point. Um, Yes, there 0:19:31.359 --> 0:19:34.160 are a lot of levers for growth. UM. They seem 0:19:34.200 --> 0:19:36.520 to be doing a very good job at moving into 0:19:36.560 --> 0:19:41.240 new categories. But I would also say that there are 0:19:41.520 --> 0:19:45.760 competitors everywhere and they're looking to take share from Amazon. 0:19:45.880 --> 0:19:48.600 I think in the court e commerce market it's pretty 0:19:48.680 --> 0:19:51.639 challenging and it's becoming challenging and some of the cloud 0:19:51.680 --> 0:19:55.040 services offerings as well. But there are other areas that 0:19:55.040 --> 0:19:58.760 they're moving into where they're the upstart, they're kind of 0:19:58.760 --> 0:20:01.199 trying to take share, and so it'll be interesting to 0:20:01.200 --> 0:20:03.639 see how that plays out in the context of what 0:20:03.680 --> 0:20:07.200 they report later, especially from a cost and expensive perspective. 0:20:07.280 --> 0:20:11.360 Everyone's looking at UM cost going up because of UM 0:20:11.480 --> 0:20:16.399 the US Postal service contract and UM increasing expenses related 0:20:16.440 --> 0:20:19.040 to that. All right, thanks very much for spending time 0:20:19.080 --> 0:20:21.440 with us. Scott Kessler is the head of equity research 0:20:21.840 --> 0:20:25.159 for c f r A Research, and he can be 0:20:25.200 --> 0:20:30.040 followed on Twitter at Kessler c f r A. I'll 0:20:30.040 --> 0:20:32.680 just say that where the tech companies go is really 0:20:32.680 --> 0:20:34.919 where the market is probably going to go in the 0:20:34.920 --> 0:20:36.960 near term. Anyway, they've been the real driver, right so 0:20:37.240 --> 0:20:40.840 if these are disappointing earnings, it'll be an interesting day. 0:20:41.400 --> 0:20:44.400 Right now, though shares a Twitter higher by more than 0:20:44.800 --> 0:20:49.160 seventeen per cent. You're listening to Bloomberg Markets. I'm pim 0:20:49.240 --> 0:21:02.720 Fox along with my co host Lisa abron Woods. We 0:21:02.760 --> 0:21:07.080 are broadcasting live from the Bloomberg Interactive Broker's studios. Brian 0:21:07.160 --> 0:21:09.919 Eggar joining us now Senior Gaming and lodging analyst with 0:21:09.960 --> 0:21:14.520 Bloomberg Intelligence to talk about his experience buying a ticket 0:21:14.840 --> 0:21:18.359 to win one point six billion dollars in the Mega 0:21:18.400 --> 0:21:22.880 Millions competition that was drawn Tuesday night. Did you win? 0:21:23.560 --> 0:21:25.119 I did not win. That's why I'm here today, as 0:21:25.160 --> 0:21:28.320 I explained to him. But with the one out of chance, 0:21:28.440 --> 0:21:30.040 would you have? I don't know if I would have quit, 0:21:30.160 --> 0:21:33.560 but my sense of urgency might have might have been modified. 0:21:33.880 --> 0:21:35.879 I'm so glad you didn't win, because we're so pleased 0:21:35.920 --> 0:21:39.120 to see you. So let's just talk about how much 0:21:39.160 --> 0:21:43.320 attention both this as well as the record powerball drawing 0:21:43.320 --> 0:21:46.800 that will occur Saturday night, how that's brought to the 0:21:46.960 --> 0:21:50.560 entire lottery industry, and who's benefiting from that business wise. Sure, so, 0:21:50.720 --> 0:21:53.840 there is a bit of a trend the watery operators 0:21:53.840 --> 0:21:56.600 that basically tighten y odds somewhat, which brings in more play, 0:21:56.680 --> 0:22:00.199 results in less frequent but much harder jackpots, and that 0:22:00.280 --> 0:22:03.960 in turn attracts more lottery ticket sales. And watery ticket 0:22:04.000 --> 0:22:06.840 sales for multi state games have grown in about a 0:22:06.880 --> 0:22:09.200 four and half percent, Ray Brannam over the last number 0:22:09.200 --> 0:22:15.040 of years. Brian, the companies behind this technology i GT 0:22:15.480 --> 0:22:20.240 International Game Technology and Scientific Games. Right, this is basically 0:22:20.280 --> 0:22:23.480 a duopoly because there's been a lot of consolidation in 0:22:23.520 --> 0:22:26.000 this industry. Yeah, that's true. I g T is nearly 0:22:26.080 --> 0:22:29.840 eight of US watery sales. Side games is about twelve percent. 0:22:29.880 --> 0:22:32.440 There's a company called Intra lot that's tem percent. But 0:22:32.440 --> 0:22:37.520 you're absolutely right, it is effectively duopoly. Okay, so it's 0:22:37.560 --> 0:22:41.359 just the states. Are the companies that run the lotteries 0:22:41.480 --> 0:22:44.480 for the states or the duopoly that make the money. 0:22:44.520 --> 0:22:47.200 But are there any other companies that sort of benefit 0:22:47.240 --> 0:22:50.119 as people get into the mood to plunk down money 0:22:50.119 --> 0:22:52.600 that they may most likely will never see again. So 0:22:52.640 --> 0:22:54.960 the way, well, there's the states themselves, if you will 0:22:55.000 --> 0:22:58.560 get South Carolina with a big winner or New York State. Basically, 0:22:59.359 --> 0:23:03.120 thirty cents on a dollar spent goes to various state 0:23:03.280 --> 0:23:07.120 education funds. The lottery companies themselves basically get a small 0:23:07.160 --> 0:23:10.520 percent one or two percent of the lottery ticket sales 0:23:10.880 --> 0:23:14.600 in return for basically either running these facility management contracts 0:23:14.680 --> 0:23:17.840 or a lottery management agreement. So the lottery players do 0:23:17.960 --> 0:23:19.960 get a piece of the action, if you will, when 0:23:19.960 --> 0:23:23.359 people buy tickets. Brian, is this also a case of 0:23:23.480 --> 0:23:27.639 being able to adjust the odds. That is something that 0:23:27.680 --> 0:23:31.160 happened back in two thousand, fifteen and seventeen the Powerball 0:23:31.280 --> 0:23:34.800 and Mega Millions lotteries slightly tighten the odds. I mean, 0:23:34.920 --> 0:23:39.040 it is true that the resulting higher payouts and less 0:23:39.400 --> 0:23:41.600 less chance of winning results in a little more excitement, 0:23:41.880 --> 0:23:44.760 more media attention, and that does result in an elevator 0:23:44.840 --> 0:23:47.119 level of ticket sales, which, if it's a secular trend, 0:23:47.359 --> 0:23:49.639 would benefit UM, the I D T s and side 0:23:49.640 --> 0:23:52.480 games of the world. You know, I gotta say, do 0:23:52.520 --> 0:23:56.640 you buy lottery tickets? Him? Do you buy lottery tickets? Brian? 0:23:56.680 --> 0:24:00.000 On a regular basis? On a regular basis, I do not. Um. 0:24:00.040 --> 0:24:04.119 Do you know that two thirds of Americans gamble and 0:24:04.200 --> 0:24:08.640 that last year they spent nearly seventy three billion dollars 0:24:08.680 --> 0:24:11.800 on traditional lottery tickets and that is equal to more 0:24:11.840 --> 0:24:16.119 than two hundred dollars a person. Is there evidence that 0:24:16.200 --> 0:24:20.600 people are more likely to increase that amount if the 0:24:20.640 --> 0:24:23.800 total jackpot is bigger but they have fewer chances? In 0:24:23.800 --> 0:24:26.560 other words, is this like a get rich quick kind 0:24:26.560 --> 0:24:29.679