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tv   Tech Check  CNBC  November 2, 2021 11:00am-12:01pm EDT

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protocols that represent the ability to disintermediate represents another idea. and i think when you -- >> okay. >> look to find opportunities you should look for those opportunities that change the way we do business in the world. >> okay. >> and move us forward >> sounds good got to cut it off there. it's the end of the show thank for joining us that will do it for "squawk on the street." "techcheck" starts now ♪ good tuesday morning and welcome to "techcheck. i'm deirdre bosa with julia boorstin and carl quintanilla. why shares of tesla cratered earlier and why it's coming back this morning. then, reasons to be bullish on software. fresh buy calls on salesforce, work day, adobe and more plus
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deutsche's gold standard in cloud. and later, why those shares are getting fresh this morning, carl, chegg on their face. >> we'll start with tesla on quite a run. closed 8% up yesterday now giving some of that back after some mixed messaging from elon musk on twitter phil lebeau has all that hey, phil. >> hey, carl that mixed messaging is the reason for the stock being down, what, almost 50 bucks earlier today pre-market it came back a little bit. now it's down what about 20 bucks or so, 30 bucks right now on shares of tesla here is where this started last night elon musk tweeted when asked about the hertz deal that this was not a signed contract yet, in terms of the 100,000 model 3s that will be going to hertz as part of an agreement that was announced last week. well, we reached out to hertz this morning and a spokesperson says deliveries of the teslas have already -- have already started. we are seeing very strong, early demand for teslas in our rental
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fleet which reflects market demand for tesla vehicles. whether it's a signed contract or not a signed contract, clearly there are model 3 that has are being feathered into the hertz fleet and the expectation is that's going to continue, though we haven't heard anything from elon musk this morning, as you take a look of shares at hertz, we talked about this last week, guys this is the reason you saw shares of hertz pop early last week when mark feels, the interim ceo announced this deal. all of this coming when there's so much focus on what's happening in the ev market because of an ipo that is expected to happen as soon as next week. we're talking about rivian, an electric vehicle maker these trucks, delivery vans for amazon as well as pickup trucks, there's me driving the r1t the electric pickup truck that the company is now delivering and they've got a number of orders there their ipo, here is what we know about this, this was the s1 originally filed october 1st the amended october 1st was
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filed yesterday. it will be traded on the nasdaq. rivn is the symbol ticker. 135 million shares will be offered and amazon, which already owns a 20% stake in this company, they did say in the amended s1 that they, amazon, may van interest in buying additional 200 million by the way the valuation of this ipo right now is expected to be a little north of $53 billion. as we mentioned, amazon owns a 20% stake in this company, ford owns a stake in rivian as well so this is the ipo that people will be focussed on once it happens. again, the road show starts today. the expectation is that we see the ipo at the nasdaq next week. guys, back to you. >> phil, it's so interesting back to tesla. the street continues to ss to struggle today it's bernstein margins are getting better as the shifts to the model y. we continue to struggle with the valuation when it's greater than
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all gas engine vehicle makers combined >> and he's not alone. i mean, even the most bullish analyst struggle with this valuation. how do you sit there and say, okay, how much do you give credit for how much do you buy into the fact that we will see more people driving electric vehicles how do you factor in the potential for autonomous, for ride hailing, all of that is in there. it's a bit of a guessing game at this point and you have a market that is so hot for evs that it keeps pushing it up. so now you have those who are looking at their -- doing their math, the analysts and they're saying, this doesn't make sense. the valuation doesn't make sense. yet at the same time, they all agree that tesla is the play when it comes to electric vehicles right now now, is it the play at this valuation that's the question here >> phil, that's always been the question, though, right? this competition coming online and worth noting as well piper sandler said forget about hertz and let's look at the
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competition. no one has come out the to make a dent on that demand for tesla. i wonder if you can wrap this all together, that video of you driving that rivian truck, i want to know from you, how did it compare to how a tesla handles and how some of the other evs handle from some of the more mainstream traditional automakers >> well, remember, when you're driving a tes larks you're driving primarily a sedan, although the model x is what they call an suv so it's a different vehicle when you're driving a pickup truck. deirdre the more accurate comparison is the r1t with traditional internal combustion engine pickup truck. there's not a whole lot of comparison there you've got that battery pack, which means a lower center of gravity. it really handles much more smoothly than a traditional pickup truck i think electric pickup trucks will do very well. you got the power. you got the torque and i think that they're going to hold up better than people
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expect granted, we were driving this in suburban areas so we haven't been able to put this through the test. >> you didn't go off roading. >> no. we didn't go off road. and the question becomes, how many people will go off road look, there's clearly a market for contractors who will want an electric pickup truck and want it to have the durability that they get from their traditional pickup truck right now but in terms of the driving experience, an electric pickup truck has a lot of advantages over a traditional pickup truck. and i think that's going to come out. that's going to be the appeal of the f150 lightning the appeal of the e silverado from general motors i think you'll see this market, pickup trucks convert over to electric vehicles much quicker than people are expecting. >> well, phil, this is going to be fascinating to watch. we'll be watching that rivian ipo and that valuation thanks so much, phil. let's stay with stocks the s&p and nasdaq notching new record highs this morning with the latter on pace for its 40th
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record close of the year and its longest winning streak since august of 2020 joining us now with the outlook for tech, sara malek thank you so much for joining us i want to get your sort of broad perspective before we dig in to specific tech stocks what are the different macro factors that you're watching right now for the tech sector? >> it's the flatter yield curve that's been a tail wind for the tech sector recently what we're looking for is two key data points to tell us the sloek of the yield curve one will be payroll data we expect gradual increase and second is the fed meeting. two key items out of that one will be tapering where we think that's been well telegraphed and they'll announce that but second is rate hikes. right now the market expects multiple rate hikes in 2022, but the fed is saying 2023 investors are worried 2022 rate hikes will choke off growth. however, our issue is that tech
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valuations look pretty stretched versus value stocks. if the fed stays dovish, the next move could be up with yields and that's actually more positive for cyclicals so we're pretty selective on tech here. we think you need to focus on companies, both pricing power and the ability to beat earnings next year. >> so, let's talk about some of those picks among the megacaps and which companies you do like right now. sounds like you're bullish on amazon but bearish on apple. tell us a little bit about that. >> i'll start with amazon, which is a company that didn't beat earnings last week, but with amazon, it will be short-term pain for long-term gain. they're making huge investments. they added 250 million square feet to their fulfillment and logistics business that's 175 times the size of the pentagon built this will be great for amazon going forward. looking at some of their other businesses, their core retail business actually grew 8%. aws did well amazon, we think, is actually well positioned for 2022 and they have pricing power with
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their prime membership and raising prices for whole foods customers. but apple we think is the opposite this is a stock that has lagged and likely continue to lag consumers are shifting from buying goods to buying services. you look at the iphone, it's about half their business. it's grown 47% year over year. this isn't sustainable in the past, this was a low single digit growing business. the story is the same for ipads and macs grown 45% and 30% year to date if you look at history, they really have minimal growth that normalization of apple's growth will be tough on the stock price even though sit a fabulous company but the growth needs to normalize for apple. >> right and going back to your amazon thesis, there's a lot of things that amazon does well. aws, of course, they're growing advertising business, streaming. but something that has yet to be seen i suppose is their grocery end, sort of hybrid commerce business they're pouring a lot of money into it. i'm not talking about the
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fulfillment centers but physical stores could this be a risque part. they're making a big bet on groceries not just whole food but own chain of fresh stores now. >> i think for online companies the omni channel strategy is the key to have an online and a brick and mortar business which is what amazon is doing. we were happy to see pricing power in their whole foods business because that will help drive their margins going forward. so these are investments we think amazon making -- >> if people pay for it, right this puts them in a league to compete with other physical retail stores and grocery stores that have more experience? >> yeah. their test markets people have been paying even with the price increase for whole foods and the delivery fee so, so far it seems to be working for them but really the key for amazon what you mentioned was their advertising business did grow about 50%. aws is strong and we're happy to see with tough comps the core business growing double digits is all positive and coming in 2022 perhaps a price increase for prime members. so this company has a lot of levers it can pull going forward and has the scale to control their logistics business which
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is necessary given the supply chain issues that we're seeing >> saira, i want to get your take on alphabet in particular and specifically looking at how while we're seeing strength and surge, some of the growth drivers such as youtube are seeing the growth rate slow. what are you anticipating for that company going forward. >> alphabet you look at the stock it's doubled since the pandemic it's been very strong, fundamentally it's a strong company. they beat earnings last week our issue was a little bit around business mix because as you said, their core search business grew and that's a high margin business for them which helped drive their margins however, their growth businesses like youtube and the cloud somewhat disappointed. so, we still like alphabet here but going forward we would like to see more growth actually coming from their growth businesses, maybe more investment there so that they can take the baton from their core business that has tough komps and could start to slow over time. >> great stuff thanks so much for talking to us about your picks this morning,
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saira. >> thanks for having me. eantime, the company formerly known as facebook continues to play defense. meta's vp defengd against the whistleblower's attack saying the findings were a mischaracterization of their data he also pointed fingers at apple. >> i just do think it's important, you know, we accept scrutiny applied to us with size and success comes a lot of scrutiny and a lot of responsibility. we need to be accountable for that i just happen to think this instance apple would merit a considerable amount of scrutiny as well. >> is there anything -- >> for reasons the way they're applying their own changes to their own operating system >> this comes after zuckerberg said that meta wants to create a more open platform than apple did and meta faces regulatory scrutiny on a range of issues,
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clegg says the company needs to talk to regulators and researchers now about the metaverse before it comes to fruition and he said five, ten, 15 years they within the to get ahead of any potential regulatory issues. we have to note that clegg's interview was remote and his video kept briefly freezing. guys, maybe that's an indication there are many more hurdles that we have to cross before the metaverse can actually come to fruition deirdre, if you have a live stream that can freeze, every couple of minutes, you know, how are you going to really be immersed in the metaverse? >> yeah. well, yesterday we had the long conversation about who else might join meta in building for the metaverse. today on the tape just now, julia, microsoft planning future metaverse apps for xbox and gaming ft, deirdre, has a piece microsoft takes on facebook by launching metaverse on teams so this is accelerating quickly. >> yeah. i mean, i feel like we talk less about microsoft but they could
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potentially be big players i know my 5-year-old son plays in the mine craft metaverse, this is the next generation. definitely not a name to be left out. meanwhile the show we're also talking stable coins, are they the future? or a bubble waiting to burst president biden weighs in and we will discuss with the ceo of stable coin issuer circle next do stay with us. ♪ it's another day. and anything could happen. it could be the day you welcome 1,200 guests and all their devices. or it could be the day there's a cyberthreat. only comcast business' secure network solutions give you the power of sd-wan and advanced security integrated on our activecore platform so you can control your network from anywhere, anytime. it's network management redefined. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities.
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got a new report out of deutsche this morning. bullish on several software names. they initiate salesforce, service now, adobe and workday all as buys. they call microsoft, the gold standard of the bunch. stocks up 50% year to date deutsche sees upside of further 20%. still ahead, dee. >> more dollars for that market cap. meanwhile, regulation could be on the way for stable coins, popular type of crypto currency values peg two traditional currencies is like the dollar. president biden's working group on financial markets releasing report on the space calling on congress to, quote, act promptly to enact legislation so that stable koins and stable coin arrangements are subject to more oversights specifically the report recommends stablecoin i issuance to be limited to ensured banks giving regulators more control over the coins. one of the biggest stablecoin
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issuers circle releasing a report joining us now ceo and co-founder jeremy alair. walk us through a worst case scenario what are regulregulators and las worried on i realize circle has different transparency standards than tether which is twice the market cap of circle. what is the worst case scenario? >> well, i mean, there are a lot of different dimension than if you look closely at the report, there are many different kind of risks that the national government is focussed on. i think just stepping back, i think these can grow very quickly. stable coins are an internet technology, like other internet technologies, whether it's instagram or text messaging or
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just browsing the web. these things went from novelties to a billion users in a really rapid period of time and i think regulators see that there are network effects built into these technologies. there are large, existing companies getting involved so i think just generally anything that could grow to internet scale really fast and where it's really tied into the economy and has the potential to tie into the real world economy, there's a lot of risk that come along with that. so, you know, things like ensuring the safety and soundness of the reserves, that back the stablecoins, operational resilience necessary to ensure that there are not fundamental failures that could affect, again, real world economic activity. policing for money laundering. a lot of these are things that are on regulators mind as stablecoins become a mainstream phenomenon. >> it's been well reported the stakes are particularly high for stable coin which in many places
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plays into the greater economy and circle is seen as more transparent than some of your peers. i wonder why not separate yourselves further, go one step further and have your reserves fully audited? >> well, so, i think there's a nomenclature issue, circle has been fully audited, including our accounting procedures, operating procedures, by a global major accounting firm for almost five years. >> why is it called an awe testation and not an audit. >> so an audit is something that's done on the procedures of a firm you know, there are many types of audits. audits of your technology procedures and protocols audits of your financial accounting standards that's what an audit is in that sense. we are audited on all the various fronts, right? ates station is a specific accounting firm for an assurance
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firm which is what a global accounting public firm, an assurance firm is looking at a specific set of financial and accounting facts and saying are these accurate and that's what that is. i think the really important thing here is we go way beyond just that. we're regulated by banking supervisors across the entire united states. and we have been for almost seven years. this product has been supervised by banking regulators for -- >> i understand that >> four years. >> but why can tether say that they are working towards an audit, can you say the same? >> well, we've been audited. we don't need to work towards an audit. we've been audited for five years. so, and, in fact, our audited financials are available to the public now through our registration process. >> but reserves. >> so just to be clear, we are required by regulators to very
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specifically demonstrate the full reserves for a money transmission product on the exact same standards that paypal, strike, square, apple and every other firm follow. we've been doing that, the examination by regulators on a regular, annualized basis and regular reporting that we do with regulators. so i think there's just a lot of misperception around this. i think part of that stems from the fact that you've had completely unregulated actors that actually haven't been able to get an actual accounting firm to audit them as a company and so, that's an issue that exists i think it's very, very separate from the already regulated framework that exists for fintech payment innovation in the united states now, i think what we're seeing now is we're taking it up a level, right and as you know, very likely, we've already signalled that we're in the process of preparing to submit an application to become a national
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digital currency bank in the united states with fdic insurance, with supervision from the fed. i think that lines up very well with what the white house is seeing as a necessary step for this to become a mainstream financial infrastructure for payments in the world and to extend the role of the dollar internationally in this age of digital currency >>jeremy, you bwent on a tweet storm talking about the risk of regulation, there there are benefits and risks if it doesn't done right and complex type of regulation to impose what do you see as the biggest risks right now if the regulation is not done as you would say in the right way >> yeah. i mean, i think what a lot of governments are grappling with with this technology, you know, it exists out on the public internet it's sort of like the worldwide web exists out on the public internet
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anyone can connect and publish content. in some ways that same kind of open internet model is now getting applied to money, exchange of value, et cetera and that's a real struggle i think historically financial market infrastructure, whether it be payment systems themselves or capital market infrastructure have been very tightly controlled infrastructure run by, you know, tightly-controlled set of actors. and i think a lot of the challenge that we're going to see in the coming years as this regulation comes into effect is, how do we take the benefits of the open internet, of the power of the network affects of the open internet and have a robust supervisory framework around it that deals with underlying risks without actually saying, no, actually we don't want the open internet we're going back to these kind of closed off proprietary systems. so i think that's the core of the tension that exists that really requires a lot more engagement and if congress does put forward
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laws on this to work through the details. >> jeremy, as you said, you applied for a banking charter, but to some in fact crypto community it might be counterintuitive so, as you guys get ready to go public, how should investors value circle as a bank or as a crypto company very different valuations there. >> well, i mean, look, we think of ourselves as a financial technology innovator we're innovating at the very core of what the financial system is, at the very core of what banking and payments can become and you know, i think that's very exciting. if you think about the kind of many very significant companies that transformed communications, media, advertising, content distribution, television distribution, by building internet native businesses, we think that same kind of
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opportunity exists for building internet native global financial institutions and we think digital currency and block chain is the way that's going to happen and we think it can build extraordinary businesses as well so, that's very much, you know, how we look at that today. in terms of the relationship to various where you are on the spectrum of crypto ideology, if you want to think of it that way, very clearly we're very much in the sound money camp we believe in full reserve banking. and that's obviously different than a bitcoin denominated financial system, but one which is still safer and more resilient than the current financial system we have today >> jeremy, thanks so much for being with us today. we'll talk to you again soon jeremy allaire ceo of circle tesla's run things to teams. we'll explain after the break. "techcheck" is back after two.
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welcome back to "techcheck." i'm carl quintanilla with deirdre bosa and julia boorstin. stocks are higher today. s&p 4630 dow back above 36 k as the fed kicks off two-day policy meeting. arista networks is the best performer in the s&p up 20% after some pretty strong results. we'll get more on that in a moment first a news update with sue herrera. >> good morning, carl. good morning, everybody. here is what's happening at this hour pfizer shares getting a big boost from surging covid vaccine sales. which now account for more than half of that drug maker's revenues fiezer is raising its forecast for vaccine sales and it expects test results on covid shots for kids between the ages of 2 to 5 by the end of the year and for children 6 months to 2 years in the first quarter of next year. shares of armer shares are shooting up 16% after quarterly earnings more than doubled test
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mats underarmour raising revenue guidance despite supply chain pressures. and you can find out how under armour is driving growth on the closing bell tune in today at 3:00 p.m. eastern time to hear from the ceo of that company patrick frisk. ups announcing three days of nationwide hiring events starting on friday it hopes to hire 60,000 seasonal workers. out of the 100,000 new hires that have plans for the holidays tech research and consulting firm gartner posting strong results and raising guidance as well gartner shares hit an all-time high today they have risen more than 110% this year alone. you are up to date i'll see you again in an hour. back to you, carl. >> sue, sounds good. thanks. meantime record intraday high for nasdaq. josh lipton has moves. >> let's start with alphabet right near its high it hit a week ago that stock up nearly 70% so far in 2021. morgan stanley raising its price target to 3,200 on that one.
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bullish they say on google's innovation-driven ad growth. on the other hand, chinese tech down right now still positive in the past four weeks but all three names down big in 2021 and check out act vision as well slipping right now that stock is down nearly 20% this year. down 25% from its february high. reporting q3 results after the bell back to you all. >> another busy earnings week. thank you for that. back to tesla as you mentioned the stock in the red after ceo elon musk tweeted that the company's $100,000 vehicle deal with hertz has yet to be signed and he hopes that's not why people are buying the stock, but much larger picture here, shares are up 50% in a month after an 8% rally yesterday and this is the company, remember, that just surpassed $1 trillion in market cap one week ago it's already a fifth of the way to 2 trillion just remarkable. joining us now the margins newsletter
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some big numbers here. it's interesting i want to talk about this hertz deal are we seeing sort of a new corporate strategy where ceos say, hey, maybe being elon musk adjacent is a great way to boost our stock price. but in the end they have to prove that's sustainable and hertz is a good example of this coming up with this big announcement and elon musk tempering it a bit. >> yeah. matt levine at bloomberg said it best he said finance in 2021 your value is not ascribed by your future cash flows by your proximity to elon musk and i think hertz might have tried to take that strategy. you got to look back, october 5th, they named mark fields the interim ceo. he was previously the ceo of ford motor company he comes in. he's got to make a splash and he did. last week 100,000 new vehicles coming from tesla and side deals with uber and carvana. all over the press making such a big deal they hired the greatest quarterback of all time, tom brady to do an entire new marketing campaign and it seemed
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amazing. and then last night at around 11:00 p.m. elon musk says there's no contract signed we don't know why he did it. we don't know what the exact deals are. there's been no responses from hertz or tesla all this shows is how unpredictable things can be and how in this entire stock pr driven world where investor communications are so complex, how things can change on a dime. >> uh-huh. hertz did respond by the way, saying they have already began deliveries but again, your point is well taken that much is made about these announcements and then they have to deliver that is a little ncertain. you have to wait in the future speaking of that, though, i want to talk about rivian as well looking at ipo next week and this is another company i know you talk about the teenager economy and a company has large losses, just started delivering vehicles you read a lot of s1s. what did you make of rivians. >> i have written about the teenager economy this idea that
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you have these companies that are in their early stages or maybe a little bit mature but just been no real oversight. there's been no regulatory oversight no, oversight from the boards of directors to actually try to enforce some discipline and more mportantly, in a 0 interest rate environment, there's been no capital discipline it's like giving a teenager a no-limit credit card to spend. and i think rivian is interesting. amazon is a huge backer ford owns 12% and they've said that they're backing them in the entire ev fight. they've delivered 1,000 vehicles will they actually be able to reach a $60 billion valuation? when they've been losing money right now you say the words electric vehicle and your stock can go up 200% look at avis today this is the best possible example that yesterday in the earnings calls they said, which they beat, it was a good call, it was a good report they said that they will do
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something with electric vehicles and their stock is up nearly 200% today >> although i understand the skepticism about delivery. i understand the skepticism about losses but isn't tesla a giant lesson that when new economies emerge, that's pretty common, but they mature and things flatten out, efficiencies get better, costs come down. i mean, how many times do we have to learn this lesson and get hit on the head with the hammer >> yeah. listen, tesla has delivered relative to their prior performance. tesla has not delivered to achieve a $1.2 trillion valuation. listen, we can go like morgan stanley's adam jonas said, 5 million vehicles by 2030 their operating margins are improving, their gross margins are improving. we can say they're going to revolutionize the insurance business they will be the future of the electricity grid who knows. they are going to deliver nicely
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on potentially a million cars this year but their power still does not come from tesla the underlying company their stock valuation is still driven by elon musk's twitter account. and i think that's the most important thing to remember in the economy today, we try to ascribe rational analysis. we pull out spreadsheets and discounted cash flow analyses, but that has nothing to do with what's happening with the price action of a stock on a day-to-day basis and again, tesla is down a bit today, but does that have anything to do with the hertz deal hertz is still saying they'll receive delivery it was up 9% yesterday on what jim cramer very aptly called nothing. and it was up $130 billion in market cap yesterday there's no rational analysis that can be done on tesla's stock. >> well, so this idea that tesla's valuation is based on fame, the fame of elon mask rather than fundamentals, tell us which other stocks in the
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consumer-facing space, you see also fame rather than fundamentals driven right now. >> yeah. this is interesting. kim kardashian launches skin a billion dollar valued company. in the past everyone said your fame is just fame. it's not actually worth anything but now in a social media-driven environment, that fame does directly translate to dollars. it allows you to avoid marketing costs. it allows you to better get to market i think we have to understand that all these companies, ryan reynolds, a mobile phone company, george clooney has tequila. every pro athlete is invested in however many startups. now fame directly translates and allays marketing costs there's something that is interesting about that it's just something that investors bypass in general and just kind of look at as this novelty as opposed to analyzing seriously. >> yeah. when you can go direct to consumer a lot more opportunity for that
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thank you so much. we'll talk to you soon ronjohn roy. meantime, we're just a month into the quarter, but take a look at the biggest laggards on the dow. all of them are tech names ibm down 11% since may plus, zillow's $2.8 billion headache that story is coming up after the break. don't go away. ♪ i'll shoot you an estimate as soon as i get back to the office. hey, i can help you do that right now. high thryv! thryv? yep. i'm the all-in-one management software built for small business. high thryv! help me with scheduling? sure thing. up top. high thryv! payments? high thryv! promotions? high thryv! email marketing? almost there, hold on. wait for it. high thryv! manage my customer list? can do. will do. high thryv! post on social media? hash-tag high thryv my friend! get a free demo at
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tough day for zillow shareholders down more than 10% this morning take a step back, the company runs what has been a somewhat controversial ibuying program which has been a massive house flipping business. and it's reportedly having some trouble. bloomberg says it's scrambling to unload 7,000 homes, that would be bundled into one large sale to an institutional buyer clearly not what zillow had in mind when it first bought these properties the scramble follows reports from earlier this month that the company stopped buying purchases all together stock has been cut in half since the february high. ceo rich barten will be on cnbc this afternoon when the company reports earnings but it's quite an interesting story when we first heard about it, thought it might be an execution issue by more and more suggesting there's just these giant dislocations post covid regarding mobility that have changed macro factors for zillow. >> right zillow has gone into this ibuying space. buff you have to think about another company like open door that's down more than 12% today
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which has made an even bigger bet on ibuying and julia, analysts will have to wonder, does this actually open up a pathway for open door to get more market share or this company remember has been buying many more homes through this program in the second quarter. does that weigh on them more >> yeah, it might, deirdre one factor that impacted zillow and all these companies trying to flip houses the fact that workers are in such short supply that's one of the issues that zillow cited in the reasons it couldn't get the houses fixed up fast enough. they couldn't hire enough workers. peloton has been stuck in first gear down 40% since january. but bank of america says now is the time to buy. forecasting a beat and strong guidance when that name reports results happening on thursday. catch those numbers here on "techcheck." stay with us ♪ wealth is breaking ground on your biggest project yet.
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time for a gut check on education. tech company chegg is a rough one, shares are plunging after the companies results showed a surprise decline in subscribers along with the sales forecast that fell sort of estimates at least seven firms downgrading the stock today. and lowering price targets before this point 82% of analysts had rated it a buy. ceo warning in a statement the education industry is experiencing a slowdown that we
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believe is temporary and is a direct result of the covid-19 pandemic meantime, look at other education stocks, they're also under pressure this morning. important to keep in mind chegg has been an underperformer since january with shares down 60% since the start of the year which makes today's move, carl, all the more painful >> yep definitely one more of those dislocations we were just talking about. meanwhile, ever hear of on semiconductor, stock up more than 20% this week following stellar results and the ceo is with us next stay with us
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some continued some continued reporting on chip shortages apple has chosen to cut back on production of i ipads to alloca more components to the iphone 13 citing multiple sources. production of the ipad was down 50% from apple's original plan from the past two months and that parts were intended for older iphones were also being moved to the iphone 13 a similar story at nintendo. the company will reportedly only be able to produce approximately 24 million switch game consoles this year due to chip shortages, 20% below its original plan of 30 million units >> carl? >> julia, sticking with chips on semi and key apple supplier. the stock shot up 15%.
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it's now up 30% in the last five days record high as the chipmaker reported a 32% revenue gain, with so much focus on the supply chain and shortages, joining us is hassan al khoury. congratulations on the quarter good to see you. >> thank you good to see you, too i'm sure you talked this to death in the last 24-48 hours and for those worried about ongoing supply crunches, is this as bad as it's going to get? >> look, i think it's -- we're going to see improvement making progress on what i call the balance of supply catching up to demand it's not going to be done until '22. we'll still be in supply behind where demand is, but there's supply coming online and it will start easing and it won't get into balance probably until the end of '22 those who know the industry well have been burned before where there was a period of shortages
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and a period of gluts. is there any reason to think that this particular cycle may be different >> look. i think there is an underlying demand environment we are on semi we're focusing on vehicle electrification. that's a trend that is just starting and it will start coming online toward the end of '22 and into '23 and beyond is for the vehicle electrification. that demand is going to remain strong as more and more oems turn on models to electric vehicles and that demand is sustainable for the next decade. so putting capacity in place today in order to support that demand is actually a win-win for everybody and it's not going cause what you're talking about where you're seeing in more steady industries. >> now, hassan you just completed the gt advance technologies what does that deal tell you
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about your own strategic deal into the company >> as we shifted into becoming a powerhouse supplier for electric vehicles and more importantly the outside of the vehicle what i call the sustainable ecosystem which is renewable energy to electric vehicles along with charging stations. so everything required to make a sustainable ecosystem, at the center of it is the intelligence power and intelligent sensing that we're focused on. part of that new generation of power devices is silicon carbide. silicon carbide, we have to start with create our own substraight and that's what it does for us. it gives us the ability to meet vertically integrated all of the way through the oem need from us to get the traction and more importantly, back to the first question, it gives us the supply assurance of substrate whichis the raw material we need to create those devices and by
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default, given that supply assurance and more important, the supply resilience to our customers. >> does inventory management change forever, hassan i wonder, at the oems, for example, is the lien made sure inventory management is gone forever? >> i don't think it's gone forever, but we did take it to an extreme as an industry where it was too just in time. anything taken to an extreme is not going to be beneficial for everybody. i also don't think having inventory everywhere in the suspe supply chain is the solution for this you think about automotive ways and we cause corrective action the root cause of it is clear. the corrective action is not to shove before it is left and right and just stock up on stuff just in case what is important is to get the long-term visibility and that visibility of where demand is and what oems and our direct
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customers need and then we as an industry will put the capacity in place today in order to service that demand two years from now we're able to do that when we have that transparency and the long-term visibility because even if you have inventory and you have a disruption, what happens when you haven't built capacity to support it so it's all about long term planning and all about strategic planning and more importantly, it's all about the alignment of the semiconductor industry in this case when it is oem that's what's going to get us there and that's the engagement we're having today >> it would be amazing if we could find ways to smooth out those cycles of the past >> hassan, congratulations, great to have you. please come back. >> hassan al khoury, semiconductor. zillow reports in just a
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half hour. please don't forget to follow and subscribe to our podcast listen anywhere, any time, wherever you download podcasts tech check is back with us in just a moment. your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
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♪ ♪ one more thing, yahoo announcing it will cease all operations in china this morning. it's the second u.s. tech company after linkedin authority his been missing in china longer than jack ma. yahoo citing increasingly challenging business and legal environment in the country, you know, but can sometimes be a convenient excuse. the landscape especially with competitors has proven very difficult for many u.s. tech firms. you take a look at uber and linkedin and many others who haven't been able to compete >> yeah. epic games, maker of fortnite announced the chinese version of fortnite will be shutting down in mid-november. carl, we're increasingly seeing these u.s. companies can't operate in china the bar is too high and too challenging. the business challenges, and guys, we do have a bunch of names coming out this afternoon.
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activision, blizzard lyft, zero group, amgen. it will be a very busy evening all-time highs are on the dow, the s&p, and the dow and the russ will 2000 all at all-time highs today. let's get to the half and the judge. >> welcome to the halftime report i'm scott wapner the state of stocks and the state of your money as stocks hit record highs yet again the fed begins its most pivotal meetings in years, perhaps will these next two days end or extend the rally we'll debate that with the investment committee joining me for the hour today, stephanie link, jason snooip, jim linen that will, and took the words right out of my mouth. first all-time high for the russell since march 15th and first all-time high for the dow transports since may 10th. beginning 153 is the-year-old on


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