tv Bloomberg Technology Bloomberg April 21, 2022 5:00pm-6:00pm EDT
advertisers are pulling back. elon musk just got closer to making his twitter dream a reality thanks to some pretty big backers on wall street and we will tell you who they are. netflix shares keep plunging. cnn plus announcing its shutting down. is it a sign that streaming has peaked? we will talk about that later in the hour. first though, stocks selling off on the back of proposed aggressive fed rate hikes. snap with a big letdown after earnings and popping back up. ed ludlow is here to walk us through it. ed: a sharp reversal, jay powell saying a 50 point hike is on the table for a ticket to the market, thinking about the path forward and how aggressive the path will be. we saw yields rise, bringing down the equity markets for the nasdaq 100. bright spot, though, tesla closing up 3%.
it had been up as much as 11%, biggest jump since january. looking at how the stock traded, it kind of just about made it to a 3% gain but as the market fell away and yields rose, we saw the tech stocks giveaway with tesla being the standalone gainer with twitter being another big story. we will go through those developments throughout the show but the main takeaway is that it is off 10% with secured financing options on the table where he is ready to negotiate and there is great reporting to come for the steps he's taken. digging into this after hours, just crazy moves, snap. we are 6% higher after hours. they had been softer on topline growth and user growth than was expected. marginally softer talking about how advertisers hold back
because of the war in ukraine and the guidance for the second quarter is a bit softer but you will dig into that right away. emily: indeed. snap advertisers pulling back on spending in the days following the invasion of ukraine. mgm partners is with us now to discuss. is that it? >> they are giving us a lot of numbers. i think that what they are trying to tell us is that things got worse during march, but they are not getting more worse. they are definitely a leg down from what they expected themselves to be, but i think that to date data seems to indicate they are not getting more worse and the guidance here, this being the story they want us to hear, we are expecting more worse trends,
hence we are more conservative. so, that is with -- why the stock went down 20 and up five. they seem to be sticking with investors. emily: is this a story that is going to repeat itself with twitter earnings? >> every company has their own flavor of advertisers they work with. what is slightly more negative for these companies is snap is calling it out here, brand advertisers were much slower during march and they pulled back quickly. if you look at facebook versus pinterest, twitter is the one that over skews towards brand advertisers. if what snap is saying this with everyone else, twitter is probably the one who is going to see a more negative trend. facebook and pinterest may not as much. emily: meantime, twitter has
other drama to deal with. what do you think about elon musk as a buyer? do you like this? >> there are a lot of hurdles. logistical, financial, the overall how he gets the board to approve the current offer. i think this will be a drama ping-pong match for the next 3, 6, 9 months. i don't see a clear or immediate resolution in my opinion. there are too many variables. the macroenvironment is weakening. elon musk may have second thoughts as we see this unfold. >> does that make twitter a dangerous or risky stock to own right now? >> given what we are hearing with advertisers pulling back because of ukraine and the confluence of the headwinds we are seeing, interest rate hikes, supply chain uncertain, europe having some issues with consumer
brands, i think yeah, twitter is the one that is probably going to face more issues and we will learn more over the next week or so. >> do you see the problems that netflix is facing? people leaving their homes, not sitting on the couch all day, getting out and not sitting on their phones watching netflix or hanging out on snap chat? >> there is obviously a consumer behavior shift. the pendulum shifted extremely to all these internet stocks and companies and now we are seeing the pendulum swing very far away . people are sitting on flights and cruises and sitting away from ipads and iphones. at some point when we get back to the new normal we should see a resumption of consumer behavior, but until then i think all these companies that relied on engagement in front of your ipad and iphone are going to see pockets of weakness.
netflix again, also probably at the mercy of this vertical shift across the internet. tiktok, spotlight, youtube. there is this shift towards ad supported home-video, moving away from home consumption. it's a slight air pocket. emily: i wonder how much competition you think that snap is seeing from tiktok in particular given the similar audiences and our lack of visibility into tiktok results. how much is it tiktok alone that is taking a bite here? >> tiktok is definitely taking a bike. it's not too small to ignore, a much bigger force to reckon with from engagement and time spent on tiktok, as well as the advertiser share of wallet
perspective. i feel that when we talked to a lot of ad agencies, tiktok is probably positioning itself as a leaner tv advertiser, friendly advertiser for engaging platforms. it's closer to youtube and further away from snap. this is what they are currently positioning but tiktok is deftly something that will start to matter. emily: thank you so much there, lots that digest. the florida controlled legislature passed a measure to strip disney of special privileges in the state, escalating the feud between governor ron desantis and he asked -- andy giant entertainment, leading to a dissolution of disney caring meaning out its own municipal functions on their own. already approved by the senate, it now goes to ron desantis for
michelle, what's the latest on how much funding he has actually pulled together at this point? >> you said it, he is serious about it. raising $25.5 billion in debt financing. some of it will be in the form of junk bonds and loans. part of that is also a margin loan that is basically a loan secured by his own tesla shares. the other half is the 21 billion dollars in equity financing that is just him basically promising that he will contribute equity to the offer and so right now he is canvassing investors. he doesn't have $21 billion in equity at the ready and in the coming days he will be talking to equity investors and vetting them to figure out who he wants to participate in a bid with him.
emily: how do you expect us all to continue to unfold? >> if i knew that, i would be unusual. i don't think anybody, even elon musk, knows how it is likely to unfold. i was talking today to a very veteran investor, asking him what he thought, he said it depends on how elon musk feels that day. if he feels good, he will do it. if he doesn't, he'd won't do it. that is the world we are in, the world's richest man is incredibly rich and unpredictable and even silly, i sort of revel in it that it isn't easy to predict what comes next. >> who are these investors willing to get into bed with someone who is unpredictable on a given day? >> there is a lot that we don't
know, but we do know that 12 banks have agreed to the debt financing. they agree to put up that and then you know, it is the citigroup bank of america barclays, those kinds of big international banks. on the equity side we know that apollo is thinking about helping him. it's not clear what form that would take but through right now we still don't know who else. it will materialize over the coming days, that's what we are told. >> what do you imagine jack dorsey is thinking? he's been rather quick -- rather cryptic. initially supportive than he himself tweeting about the dysfunction of the twitter board . whose side is he on? >> he voted for the poison pill, the company confirmed that. we know that he is cautious about the deal as a manager and steward of his own shares of the company that he cofounded. my guess is that he is generally
sympathetic to elon musk and a lot of the things that elon musk says he would love to see happen if they were really possible, although not to completely abandon moderation, one of the things that musk seems to be implying or saying he might do. he doesn't say it straight out but he sounds like he is interested in producing moderation. one thing that jack did last week was he tweeted cryptically -- everybody stop and hug. what does that mean? does that mean the board of twitter should hug elon musk or vice versa? it does suggest that probably he thinks negotiate a resolution being possible but we are reading tea leaves here. emily: michelle, is there a potential for a negotiated resolution? what would that look like? >>
when i spoke to lawyers and bankers on this matter, they said every possible bid ends up as a friendly bid if it turns into a deal and for this to work for elon musk, he needs the board to remove the poison pill. even if he gets the offered done, the bill is contingent on that. this has shown that he is serious about the offer and it is going to have to turn into something friendly. one thing that i thought was interesting was that he said the offer is no longer contingent on do diligence. meaning basically -- we don't need to look into your books, we could do a deal tomorrow with the financing here, let's just do it. so yeah. emily: having covered social networking for so long, you think that twitter could change in a good way with this leadership question mark do you
like the idea of open source in the algorithm? >> i do think that was a good idea. i think that giving users more control over how they experience these social networks is a good idea. but even your boss or longtime colleague, he wrote a piece this week about what a brilliant manager elon musk is, talking primarily about tesla. look, you cannot really bet against him as a business decision maker, that would be very it could be that he is willing with his own money to invest even more into , other technology managing twitter better or easier. i'd like his tweet today that he could get rid of the bots and authenticate all users. that's a good idea, it would make twitter more like facebook. facebook was always intended to be and authenticate his network using your real name.
we know that that isn't what has happened entirely but it is still the general design. i would like to see twitter go in that direction. emily: he has personally pledged $21 billion in his own equity. how much of that do you think you would spend? >> it comes down to who he is able to convince to sign on for equity. if he had to do it tomorrow he could do $3 billion. it really plans -- depends on what their conditions are. another thing that is notable about the situation, until today there were some people who didn't take it seriously because there was a question about the financing and now that he does, one thing we are keeping an ion
twitter, there could have been some on the sidelines going seriously but with the money we might see them emerge. emily: we will continue to watch how it all continues to unfold. thank you. coming up, netflix day three, massive investor dumping shares with cnn plus shutting down, leaving hundreds of journalists potentially out of work. we will have the latest. this is bloomberg. ♪ is is bloomberg. ♪
losing subscribers for the first time in a decade, shares down further, for percent on the day. extending a massive selloff. i want to bring in gerry smith. is this just a flip, a blip, a netflix thing, or the streaming business at its peak? >> that's what all the investors at media companies want to now. not only did their stock decline after this but the warner bros. discovery and other media companies making big bets on streaming saw shares fall and investors are wondering if netflix is starting to hit its head on the ceiling of how many subscribers there are in the streaming is this. what does it mean for disney plus, hbo max. the entire media industry really went all in because netflix was so successful and if netflix is starting to hit a wall, that's bad news for everybody. emily: bill ackman dumped the
entire stake, 3.1 million shares . is there any relief in sight here? >> netflix said that covid really boosted their business and that now there are other factors boosting decline, like 100 million people sharing passports. a lot of things that netflix says they could do. a lower-cost at the port service is very interesting, let licks has long said they would never have advertising and now they are talking about a cheaper service with ads and it's an acknowledgment that they can't just keep raising prices but if they want to keep going they are the part of the market that once a cheaper service. emily: on the other sat, cnn plus, abruptly shut down less than a month after lunch.
i had a chance to sit down with andrew morse and here is what he had to say to me just a few weeks ago. >> the beauty of a subscription service is that if you create something of value, we will pick -- people will pay. we are confident that we are building something of value that people will give up a cup of coffee for -- per month to pay for the service. >> why did not -- why did they not get more of a chance? >> is largely a story about media companies that had inference strategies for streaming. the planning parent felt that they could exist as a standalone streaming service. the ceo there of warner bros. discovery, the combined company, saying for several weeks that their strategy is going to be one big streaming service
competing around the world with netflix. that really was a sign that cnn plus didn't fit into the vision. emily: streaming news is something no one has really cracked. i have heard a couple of analysts say over the next last last few days that netflix needs streaming news and sports. is that something cnn and other services will need if they want to rack up more subscribers? >> that is what was so interesting about cnn plus. no one had really tried to have a streaming service people had to pay for for news and now the fact that warner bros. discovery has pulled the plug on this so quickly, we still don't know what the market or the appetite is for a streaming service that you have to pay for. a lot of these networks have these services, but they are all free. numbers came out about their early subscribers, but it was
still early, only a few weeks into the launch and now we are left wondering, what can a streaming service for news really look like? emily: gerry smith, thank you. in the meantime, cheryl same berg pressured the digital edition of the daily mail regarding not reporting on her boyfriend, body -- bobby kotick, and the restraining order taken out by his former girlfriend. they reportedly worked with employees on the matter and facebook has an say -- said to have begun a review of her actions. coming up, three months after that security breach, new details on what happened from the okta co-founder with more on that and his new book, zero to ipo. that is next. this is bloomberg.
is a range of debt financing. you can see he has some of the biggest names in wall street involved in the process. 90% of the debt comes from morgan stanley, bank of america, barclays. $21 billion of equity financing. that means he has some options. according to sources, he started betting equity partners. look at his net wealth. he only has $3 billion of cash and cash equivalent. he could sell tesla shares, get some cash in the bank. according to bloomberg sources, he is out there in the market talking to potential partners who could get involved in an equity financing. the big takeaway, elon musk is ready, he wants to negotiate. we heard from twitter and the board who says they have now
received the offer and they will look at it carefully. emily: thank you. okta has concluded its investigation of a security reach. the january 21 hack lasted for 25 minutes according to the company and the hackers which we learned include a 16-year-old in england had control of a single workstation. two systems were reached -- breached i am joined by a leader of okta. he is also an author of a book. thank you for joining us. we're going to get to the hack, but i will talk about the book first. there are a lot of books out there about entrepreneurship. you say they don't give you what you need when you're in the trenches. what do they not have that your book does? >> one of the things for an
entrepreneur is the books that are out there try to lionize what happened to other folks. they walk through their lives and how they built their businesses. what we are trying to do is demystify what happens in entrepreneurship. to get advice from the best entrepreneurs in the world. it is basically the field guide that i wish i had when we started okta 13 years ago. emily: you also had a story about revenue flatlining. you went into a board meeting and you thought you're going to get fired and the company was done. instead, one of your investors called you and he gave you some advice. what did he tell you that enabled you to turn the company around? >> that's a great example of the actionable advice that doesn't get shared with entrepreneurs. they think it's a perfect journey and when they look from outside, all of these companies are destined for glory. okta revenue basically flatlined.
he called and he said you need to get help and you need to find leaders who have done this kind of thing before. then he said you need to keep the main thing the main thing. in our case, it was focusing on the right go to market segment and pivoting on management opportunities. emily: it is your five year anniversary and it has been an incredible ride. shares have gone way up. what is the hardest lesson you have learned in the five years since going public? >> a key thing of view on where you're going in the long-term. if you pay attention, you may feel you are not focused enough on the right things. if you take the long view, we are in markets with $80 billion. the company is growing 50% year-over-year and we have set clear benchmarks of $4 billion of revenue 20% margins.
emily: i'm sure you have learned a few lessons from the hack. your co-founder was on the show to talk about it. is and what he had to say. >> we are a trusted brand and that trust has been damaged. we take accountability for the mistakes we have made. one of our mistakes is that communication was not as clear as it should have been. emily: what is the lesson? >> first of all, as the global leader in identity, we realize now and appreciate what critical info structure is for our customers. we take all security events seriously. there are two things i want to clarify. the service was not breached. second, it did what it was supposed to do and prevented a major breach from happening. there's a number of things we have learned. from a technology perspective, we need to take to make sure our third-party partners are held accountable to the same standards we are.
secondly, we have to improve communication. we are a trusted brand and our customers rely on us for communication and trust when it comes to the platform, what we say, how we communicate with them. a great learning opportunity for us and things we better in the future. emily: how much harder will security and identity be an web three? >> web three is exciting. it is a combination of decentralization and modern technology. identity could be a game changer on the blockchain. think about our consumers us as consumers, our health and credit. we should not entrust this to third-party credit agencies that have reaches like we saw a couple of years ago. the challenge is this is not just cutting edge technology, this is bleeding edge technology and we have to move forward because -- before it becomes mainstream. emily: what do you think about elon musk making a bid for twitter? >> i think it's very exciting as
an entrepreneur. twitter has a lot more critical information about what you care about and what you can follow. i think he has shaken things that. there's an opportunity for more governance. this might be his rupert murdoch moment. if you think back to 1976 when rupert murdoch bought the new york post, he became the first voice into media and medications and i think that's what you are seeing now. emily: he's unpredictable on any given day. does that concern you? >> at the end of the day, twitter is a huge microphone for him. it is clearly an underperforming asset. the s&p has outperformed twitter over the last decade by two to one. there is a lot he could do with the business. if he separates out the technology from the media, you open source who can have access to the information. the question of moderation goes away.
let the capital markets decide how much moderation people want on their version of twitter. emily: you have another company that is focused on the brain. on curing brain disease. can you talk to us about that? >> >> it's a great company. we have 45 folks based in san francisco. we are focused on ai empowered neuro-therapeutics trying to cure central nervous system disease. two major ones are alzheimer's and rett syndrome. i am very excited about it. emily: thank you for joining us. and for telling us about your new book, zero to ipo. coming up, we will speak with the ceo of the platform about everything crypto and energy consumption and much more. that's coming up next. plus, their take on ethereum.
emily: bitcoin jumping briefly past 42000 and up since the beginning of the week. our crypto contributor sonali basak is here. it's not moving, why not? >> so much friction when you look at it. we are back to where we were at the beginning of the week. a little higher than where we ended monday. back to where we were last week. we haven't moved -- there are
some long-term trends about how people are using bitcoin that are worth taking a look at and that is settlement. bitcoin surpasses visa in the amount it has been settling. that is due to the work on layer two protocols. it's worth taking a look into how bitcoin and the networks are changing payments because that will be the adoption that drives the price later on. emily: i want to bring in our next guest, ceo of tezos. what do you make of the fact that we are seeing a lot of movement here in the crypto markets? >> this ruptures one of the main narratives people have been saying. that it's and uncorrelated asset
to traditional equity markets. other things are unexpected like at the beginning of the pandemic. >> i'm curious about what you think of the conversation for bitcoin versus ethereum, proof of steak and what that might do to change the way people interact with blockchain? >> there's a lot of things to that question. bitcoin and ether secure themselves through something ed proof of work. in effect, it consumes energy in order to secure the blockchain. proof of steak networks, tasers uses. people have realized that people are energy consumptive, but there is not one as popular as bitcoin or theory of. it has been a big debate. basically devalue the technology enough to hold your nose and
accept that it consumes a lot of energy in most instances or do you want to go to alternatives like tezos that don't use as much energy consumption? >> how do you think about that in terms of not just energy consumption, but transferring assets? there has been so much conversation this year about lightning network and the ability to facilitate payments over bitcoin. we have had a conversation internally, it's like you can do that more simply without it. . where does tezos play into that situation? >> it answers a question that they have not been able to solve. for this to scale effectively, you need to have a formal governance mechanism that
upgrades in a meaningful fashion. that's the way it would work if you thought about it happening in the order of billions of participants. tezos is the only blockchain the issues -- addresses the issue of stasis. bitcoin and theory in to date -- ethereum have had problems in terms of technical -- we have seen limitations over the last year or so where ethereum has come under scrutiny for having large energy consumption that it to upgrade itself to the proof of steak version that it is been promising since 2014. >> tezos it's second only to ethereum and conversations in the art world. what you think about the prospect of elon musk owning twitter? >> pound for pound in terms of an attainment value, it is not disappointed. tezos feels like greenwich village in
the 1960's, all of the cool kids are there minting a lot of art. twitter has been an excellent platform for the discussion about this in the cryptocurrency space where the project gets a lot of attention that it would not normally. i am in for the thunderdome elon musk version of twitter. it is kept me on the site in terms of entertainment value and matt levine articles. >> i wonder also, what is the future of communicating about crypto? is it twitter discord mash-up? ultimately, there seems to be a need or want for a more social communication aspect into cryptocurrency above and beyond payments. >> i think a lot of these projects have been mostly reactions from breitling people.
the problem is they often say odious things. there is an uncensored version of the web that is very promising. once it stops being championed by repugnant people that society doesn't quite like, i think it will take off. >> fascinating. lots of food for thought. coming up, we will continue this conversation on crypto and energy consumption from another angle. talking to another company that is taking gas waste from oil fields and harnessing it to power bitcoin mining. that is next. this is bloomberg. ♪
emily: caruso energy systems taking waste gas from oil fields and using it to fuel bitcoin mining just announced $350 million in new equity funding to accelerate their mission to align the future of computing with the future of climate. i want to bring in the ceo to talk about this. this is gas that would not normally be used. how does this work? >> in the oil field, there is something called flaring. it's one of the largest emission sources. a company drills and oil and one of the byproducts is natural gas. if they don't have access to a pipeline, the most economic thing for them to do is light on fire. when they do it, they end up venting a lot of methane into the atmosphere and that's a potent greenhouse gas.
it creates this massive waste with no beneficial use. everybody loses in the situation. emily: how to use it to power to coin mining? >> we created a technology where we build, operate, and manage these mobile data centers that we deploy into the oilfield and we co-locate on the sites that would be flaring. instead of the gas being flared, deal -- goes into the system to power computing infrastructure for high-performance computing, cloud computing product and things like ai research. emily: you are running a pilot program using excess natural gas from exxon and north dakota. how's it going? >> we can't comment on the relationship with exxon. no comment on that for the time being. emily: can you tell us more about the process? if you can rack up big partners,
this could be quite powerful. >> flaring is a global problem. the world bank has an initiative to and routine flaring. there is a large amount of gas tickets flared every day with no beneficial use. we can harness that, we can power the entire bitcoin network eight times over. it is enough to power all of sub-saharan africa. it's a significant amount of wasted gas globally. today, we operate in north dakota as well as colorado and wyoming. with the additional financing, we are planning to expand into markets like the permian basin in texas, a market in argentina, places like abu dhabi and oman in the middle east where flaring has been a persistent challenge. emily: what are the
opportunities that you see to align the future of computing and the climate? >> our core mission is to align the future of computing with the future of the climate. for us, that means building large-scale computing infrastructure to solve the world's most energy intensive computing problems. like digital currency mining is a great example. ai research, high-performance computing. if you look at many estimates, they project that the global power consumption from computing is going to exceed 10% in the near term. our focus is trying to enable humanity to be able to benefit from all of those innovations that are going to come about from that without having to suffer environmental consequences of sourcing the power in a non-climate allied capacity. emily: is bitcoin mining on a path to hurt climate? >> our focus is trying to ensure
that that doesn't happen. emily: given the way it is happening now and there are plenty of people who have raised alarm about how bitcoin is created, how much is a way that it happens now hurting the climate? >> bitcoin mining as an industry is one of the cleanest power sourcing industries in the world. by many estimates, it is 50% to 60% of the total power powering the network is sourced can renewable mission reducing way. you compare that to the standard grid that is multiples of what the u.s. grid for instance is powered from renewable perspective. emily: if you can harness all of it, you can power many more things than bitcoin mining. >> correct. we recently launched the crusoe cloud that is delivered on -- focused on delivering low-cost
low impact computing solutions for people focused on ai research. we are working with amazing research universities like m.i.t. to help discover mysteries of the universe in a way that doesn't impact the climate or your pocketbook. emily: we will be following the latest developments. thank you for joining us. that does it this edition of bloomberg technology. we will be back here tomorrow. don't forget to check out our podcast. you can get wherever you get your podcast. i'm emily chang in san francisco. this is bloomberg. [speaking foreign language] ♪
good morning and welcome to daybreak australia. we are counting down to asia's major market open. >> good evening i'm shery ahn. u.s. stocks slide as treasury yields a surge with traders bracing for the possibility of more aggressive fed tightening. >> president biden boost aid to ukraine and vladimir putin says that russia