>> i am selina wang in san francisco. this is "bloomberg technology." coming up, tesla has its foot on the gas when it comes to earnings. reporting a work -- a week earlier than expected. is the company even close to breaking even? plus, uber loses another. does this impact the road to the ipo?

of steps away, why the head softbank was a no-show. what this means for the future ties to saudi arabia. story, tesla is pushing up earnings by one week. the announcement was made late monday as tesla is expected to deliver a record quarter and come close to profitability. that is according to none other than ceo elon musk. morgan stanley says it hopes to speed up earnings and is more likely a positive sign. following this announcement, citroen researchers performed a surprise u-turn, saying he is long on the company. been a vocal long-term shorter of tesla, but now says, like a magic trick, well everybody is focused on elon musk smoking weed, he is quietly smoking the whole automotive industry. we'll hear from him later, but let's turn to bloomberg is this

week's max for a full analysis. what is your take on why they decided to push up earnings so early, is this a positive store they want to tell fast? max: the conventional wisdom if you look at what is happening in the stock market and this morgan stanley note is that they pushed it up because they have good news to announce. is support for that statements from elon musk that came at the end of the quarter and general intuition that, why would you want to push up that news? the only caution i will say is it is a little dangerous to put normal business logic to this company or elon musk. he has a track record of doing things his own way and it would not shock me if these guesses turned out to be wrong. selina: you had an interesting research report when you wrote that you expect tesla to have a major week and free cash flow. where you protecting that? -- why are you predicting that?

have heard alerts about q3 from tesla. how many cars have been able to deliver, we know plans take cash. that gives us information and the one policy that is missing the rawact that materials that go into the car are only 2-3 months later. when they send a car immediately, they cash in the full price of the car. each of these model threes that tesla is selling is bringing into the bank the profits booked on the car. in addition to that, it is bringing in working capital to the tune of $20,000. times nearly car

40,000 additional cars, that is $800 million of revenue that they have largely overlooked. researchers citroen said they are long on toast the -- one on and have been vocal shorts. he says they are light-years out of the competition. very cleverf all, a turn of phrase on smoking the auto industry. the quiet story the past few months is that while the ceo was behaving colorfully and getting into the crosshairs of the fcc, sec,company was -- the this company was quietly producing many cars. when you look at the history of the auto industry, the speed of this ramp up in terms of production is pretty unprecedented and, right now,

the model three is outselling most cars in its class. quietly, tesla has become this force. the big question is, can they make it profitably, and if so, how profitably? selina: on that note, let's talk about this $45,000 tesla model three. can tesla be profitable at that price point and what margins are you expecting? pierre: $45,000 is the average selling price they expect for the model three in the long run. was set for car $35,000 and we know the highest price model is in excess of $70,000. if you compare to what happened $45,000 is atry, good range. to be atxpect that car the average cost mark -- cost

margins expected, which is 25%. that is still something you will get once production has related to quality issues would be off the table. rapidly, it should head toward 25%. how are you factoring in this recent settlement with the sec? this is going to be a significant headwind, more oversight on elon? pierre: that is a good question and if you want an honest anwer, i see it as exceptional engineer and executive, but his personality has its drawbacks. reverse can only do good. enjoying his committee kaisha non-social media -- controlling

his communication on social media will only make their life better. who is not thean ceo is something i see, whatever the company. selina: what is the latest we know a potential candidates for the chairman and board directors? max: the assumption is as going to be somebody currently on the board of directors. they are throwing around james murdoch. they are looking for is someone who is not literally his brother or best friend, but someday who he cans, he trusts, but who still bring some measure of independence. thanks both for joining us. u.s. stocks tumbled tuesday,

driven by weakness in tech and chipmakers trading at the lowest in one year. that is ahead of earnings later this week, including amazon, twitter and google. here to join us is michael regan. it seems like investor nerves are at an all-time high. issues,de tension brexit, concern over interest rates, can big tech or earnings change the wind? michael: they certainly can. tech has come off its highs. you look at the new york faang is down 18% from its high in june. almost entering a bear market with a 20% drop. a lot of the big names are still doing good for the year. amazon has a strong year-to-date gain. alphabet is still hanging in there. june has really

freed sentiment to some degree. looking ahead to thursday with amazon and alphabet reporting after the bell, it is going to be a marquee event for wall street. especially because both of those stocks are very famous for the size of the moves they typically make after reporting earnings. amazon has gained or lost on average more than 7% after its earnings, mainly because it tends to surprise wall street. the average surprise either miss or beat in amazon is over 50%. moves about 6% on average after earnings. options are implying similar moves for both stocks. going into this report with a very recent momentum, which suggests any sort of surprise on the upside could be a positive catalyst, not just

for these stocks, but for the market in general. selina: taking it to amazon, there is concern they will face significant margin pressure. how much of a concern is that? michael: i think it is a big concern, not just for amazon but market wide. looking at caterpillar, a big slump for that stock after andning about rising costs margin pressure from a variety of things, including trade tariffs. tariffs are unlikely to be a major concern for amazon and alphabet, but they are definitely an unknown for amazon specifically. wager pressure is going to be a big thing for amazon after they announced the increase in their minimum wage. part of the story with the ofire market is this notion this very robust earnings group this year, kind of fading and bill next year. amazon is kind of a poster child for that.

it is expected to increase by 480% this year. that goes down to 36% next year. for off the bat, growth is expected to drop from 52% to 11%. investors will really be looking outlooksign that those have gone down too much. selina: bloombergs michael regan, thanks for joining us. coming up, uber wants to go public, but it is missing a key dealmaker. who fills those shoes coming next. if you like bloomberg news, check us out on the radio and the bloomberg app. this is bloomberg. ♪

selina: uber is set for an ipo next year, but it looks like it will do so without a key executive. the head of corporate development has resigned after allegations of sexual misconduct , which the wall street journal says he was disciplined for an expressed regret. he played a key role in negotiating the $9.3 billion with softbank this january. how does uber move forward? our techive bring in reporter who covers uber. cameron has been called a trusted advisor to the ceo. he negotiated a live deals. what does it mean at of the ipo? >> he was a holdover from earlier days and the top dealmaker. he came in to help. it is a big avoid for the company.

the company's cfo work in merrill lynch and is filling that role. cameron was leading corporate development and some of the business of element tasks have been moved to another executive. the firstis isn't departure. he reported on a lot executive turnover there. what is happening? eric: uber was going to bring in this outside cfo, so the acting left for one startup and another left for another. there was this exodus ahead of the new guy coming in. that left some vacancies. selina: he left because of sexual misconduct allegations. when you talk to sources at the company, where is employee morale? eric: the wall street journal reported on the allegations. cameron apologized and resigned. he had been there 4.5 years. the company is still soul-searching after all the problems of 2017.

there are questions about remarks made by the chief operating officer that the company has been looking into. there is a lot of soul-searching going on and the investigation. selina: switching gears, uber is increasing the cost of a ride in london by $.20 per mile and creating a $260 million fund to help drivers switch to electric vehicles. how would this work for the drivers? eric: uber says the money will go to drivers to help them by those vehicles. i think it is a smart position for uber, the histories ridesharing companies don't want to be seen as forces for congestion that are clogging the reds and hurting the environment. for uber, what is a small amount of money is good optics and a good way to help transition the fleet to an electric one, which would be a much better look for the company. selina: how much of this is just good public relations? there battling this court appealing. eric: about the status of their

employees all of the world. there is everything -- a calculus of the pr message. i think electric vehicles is an endpoint that over a longer span of time, ridesharing companies but want to end up investing some small amount of money to move there is a smart decision. we will have to see how it plays out in the real world. selina: does this help uber competitively in terms of luring more drivers? driver andu're a there is some pull of money, even if small, that gets me a more fuel-efficient vehicle, obviously there is an economic calculus you are making about whether you can make more money working for uber. selina: how effective do you think this fund will be? eric: i think it is soon and will have to see how it plays out and how much money uber puts behind it. and the availability

affordability of electric vehicles will have as much to do with the amount of money uber puts behind it. selina: right, they have a goal of only electric vehicles in london by 2025. is that realistic? eric: it has as much to do with electric car manufacturers as uber. there is a limit to how much money uber can put behind it if the cars aren't there. willa: eric newcomer, we be watching this closer. thanks for joining. coming up, legislation to adjust new technology, how does the government itself integrate it into daily services? how code for america aims to bring bureaucratic processes to the digital age. bloomberg technology is streaming on twitter. check us out at technology and be sure to follow our global breaking news network at tictoc on twitter. this is bloomberg. ♪

selina: how is the government use technology to run the country? government services are also -- often slow and bureaucratic. code for america wants to help. the use the principles and practices of the digital age to improve how the government can serve the public. emily chang sat down with their founder and executive director at the wired 25 conference to

discuss. take a listen. we continue to work with states and counties and cities. we have been showing how much is to apply for food stamps. it was an hour-long long process, always got messed up. now it is simple across almost the entire state of california. we are taking it a step further. if you apply for food stamps, you might need medicaid. why are you filling out two forms with the same information? we are showing in five different states had you can integrate that and make it so much is your by doing more than one service at a time. emily: he's been sometime in d.c., but you're going to louisiana. give us some of the work you are doing. rouge, wein baton working with the state of louisiana. medicaid enrollment is a real challenge and we are helping them take these data-driven into the application of their technology to administer medicaid.

emily: jeff bezos maybe point at the wired 25 summit that government programs are quite well-funded in the billions of dollars, and yet too many citizens seem inefficient. is the problem with resources, how the resources are depo are delivering these? jennifer: the problem is that we have neglected the machinery of government and that is a choice we have all made. we wanted government to be very risk-averse and accountable. we haven't taken all of that talent and these new approaches that you see in great companies and apply them in government. i don't think that is the fault of the public service. i think that is the fault of the american people. if we helped create this situation, we can change it. that is what we are trying to have everybody understand. neglecting the machinery of government is a choice. it's make a different choice, but the best talent in the

perches that really work in government and then we will have a government we are excited about. emily: you were in the room and president trump had the first meeting with tech leaders and at the time, there was concern about how the white house would bridge the gap between washington and silicon valley and could perhaps hold back the march of technology. have you seen that? jennifer: i've seen that groups like the united states digital service still operate in the white house, run by some of the best people that silicon valley claims, that any private or public sector rockstar would claim. they are doing great work and that is important for everyone to understand. emily: you are not concerned about the progress of technology under the trump administration? jennifer: what i'm excited about is you have great people doing work that will support and i am very glad that they are still there and still making government work better in ways

that really do match my values. recently dropped a big contract with the department of defense. employees at microsoft and amazon have purchased of their bids for government contracts. how should tech companies handle these situations? should they be working with the government? jennifer: it depends on the situation. that silicon valley companies and other companies are sinking more -- thinking more and more about their relationship with government and where they can use their power to express their values. i want them to do that. i also want them to spend some time in government so that when they make these decisions, they can see it through the eyes of the people who are working in public service. arevast majority of them really doing public service because they want to help the public and i went to support them. i want public servants to understand silicon valley and his silicon valley to understand

public servants. emily: do you think there is too much moral exceptionalism and arrogance among people in silicon valley is that they think they can do it better? jennifer: i think silicon valley of a long path to go down really understanding how government works and becoming part of it. we just did this panel here at wired that finished with the line, government is us. b for that. let's get involved. that was jennifer parker. coming up, sun says no. why the softbank ceo is dropping out of its saudi conference and what this means for the future of their vision fund. plus, twitter is cracking down on fake accounts, but bots are still print -- still linked to pro-government regimes. this is bloomberg. ♪

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to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> this is bloomberg technology. speculation, the softbank ceo has pulled out of an investment conference in saudi arabia. the move comes after saudi officials admitted to the killing of journalists jamal khashoggi. a fist fightcalled inside the is to will consulate. remember that saudi arabia the biggestof backers, already committing 45

put in dollars to the first fun and promise another $45 billion for future funds. we had the founder and principal analyst of constellation research and in the studio, sarah mcbride. waseported that his son actually in riyadh and met with the crown prince, but he has stayed away from the actual conference. what is the significance of this? we know he has a close relationship with the ground prince. >> he essentially dropped out in a more gentle weight compared to some of the other business leaders who left, but sort of a compromise. to riyadh and met with the crown prince and others on the sidelines but didn't go to the conference itself. however, a lot of softbank execs remain at the conference. >> we've seen many top executives ought to stay away continuecomforts but to have business relationships with saudi arabia. do you think the turn of events

could fundamentally change the relationship between four and businesses and saudi arabia, or do you think it will eventually be business as usual? >> i think the money is too hard for people's turn away. i think people were hoping this would blow over but when it got worse, people got scared. a lot of the startups have a progressive viewpoint and to have this money impact their onspective of what's going is a challenge. the double-edged sword is for without, it'so going to be a difficult decision for a lot of startup entrepreneurs and a lot of investors. >> what are the chances that >> iank will go elsewhere think it's hard to say at this point. it will be interesting to see if an argument gets made, much has that -- happen with china

softbank could perhaps influence saudi arabia from within and help it become more progressive in certain ways. i think a lot of people will be starting to try to tell a different story about saudi arabia. mentioning -- selina: it's worth mentioning that it has a long record of human rights violations. is the result of this going to cause entrepreneurs and startups to look more critically and where the money is coming from, especially for saudi arabia? >> i think we will see a transformation in saudi arabia long-term. i think it is a lesson learned as well as for the saudi government to realize that their actions have a huge impact around the world. investors are going to take note to see what will take place in terms of how the saudi actions affect their investment but also how it infects -- affects

investors perceptions about doing business in saudi arabia. >> what? is the sentiment you are getting from them? of aere any incense started turning away money from softbank? >> a term sheet they probably would have accepted without too much thought, they are wondering whether to take the money or not . i think more broadly, startups will start asking more questions theirthe investors that own venture capital investors have, and that really hasn't been the case previously. employeesseeing tech have a lot more influence over their employers. is the google protest that cause google to not renew a defense contract. we might see a sort of revolt with the companies that choose to take money from certain sources that are deemed unethical? where here in half moon bay at a conference and the

conversation was come into weeks at money from countries that might not have the same values or ethics, and there was a big discussion today about what happens. there are couple of companies that are seriously wondering if they can take the money and put some conditions on behavior as to what to do with that money. i think we will see that. the other peas we may see with softbank is whether they use the ,ast piece of that vision fund they might say it's just excess expense and not recognize that revenue for that. we may see some actions like that to soften the blow. >> you reported on sequoia raising billions to compete with softbank. good this potentially benefit companies in terms of competing with softbank for later stage deals?

sara: absolutely, it's just one more piece of them -- ammunition those other firms will have. they often talk about investors and say were helping hospitals, college endowments, and they might not want to say the you're helping if you take money from the understanding will implicitly be there that maybe you're helping people you don't want to help. selina: how could this impact the overall ecosystem? money has come flooding into silicon valley. could this calls valuations to come down and make it a chillier ecosystem for funding? ray: i think it could change the ecosystem. the $100 billion vision fund in the five others they were think about creating, those are all at risk at the moment as people think about whether they will accept that money. i think it's going to be up to out aarabia to put

statement saying what they're going to do going forward so there is at least confidence. i'm sure those are some of the discussions that happened on the site and in those private meetings about what to do to change behaviors or look at the investment profile for these funds. rayna: sarah mcbride and wang, thank you both for joining me. can the social media companies successfully fight off future attacks? this is bloomberg. ♪

selina: twitter has become entangled over the jamal khashoggi issue. accounts tweeted and retweeted messages pledging loyalty to the kingdom's france halloween the journalist's disappearance. the suspension is the latest in twitter's crackdown on bots. the company has disclosed counseling to pro-iranian government operatives. is dr. samuels wooley. we are seeing these manipulations have it on social media across countries more and more ever since the 2016 election. how are these tactics evolving? sawel: whereas before we , now theyated bots

are being used to amplify attacks, not just in the united states but all around the world. arguably it has been happening for quite some time. there were reports that jamal khashoggi was just one of many influential voices that was targeted by the saudi ring farm.ment sponsored troll what do you make of that and how widespread are these? samuel: we found that state-sponsored trolling spreads all around the world. governments from turkey to saudi arabia but also within south america and southeast asia are making use of state-sponsored trolling as the mechanism to target journalists, basically to stop people reporting. it is a real strike to democracy when basically twitter and facebook, which were heralded as platforms of free speech, are being co-opted by government

control. about theat strategies they are using, are they learning from each other? samuel: we found that to some degree, nations are learning from one another. or 15,000 accounts on a site like twitter will be used to simultaneously attack multiple journals, to threaten them, to harass them. a lot of the time the accounts are used to attack activists, political opposition, and even to do transnational political attacks against news media and other organizations. selina: twitter has been releasing -- racing data that are targeting millions of malicious spam accounts every week. it's one thing to identify machine driven automated accounts, but what happens when you mix human interference with that? can twitter accurately find all the manipulations? samuel: it's a real challenge twitter and other social media

companies face to track automation and human driven propaganda. often the most sophisticated propaganda comes from cyber accounts. people add that element of sentiment of targeted harassment. twitter has had to try to combat this problem since the mid-2000's and it existed well before 2016. it's a problem that should've been in hand a long time ago. selina: jack dorsey has said his healthyne priority is conversation on the platform and facebook is hiring thousands of content moderators. what more should the companies be doing to address the problem? samuel: there should be flagging of automated accounts. any counts that make use of automation, especially for political purposes, should be known to the user. there needs to be more cure

ration of harmful accounts. they have to keep deleting accounts and look beyond the united states. until 2016 companies began paying attention to this problem. but the problem has existed around the world for a long time so it's time for them to start doing some real cleaning of the house. selina: how are the regime's evolving their tactics to do with the new and changing search regulations for twitter and facebook involving automated account manipulation? they often say they are one step ahead of the social media companies and i think this remains true. proliferating propaganda attacks or harassment are much more sophisticated than they used to be. there is the advent and use of thatess browsing bots login through the home page. so the detection out the rhythm on a site like twitter has a

hard time finding them. so the companies have a mess on their hands. selina: twitter released a comprehensive data set of accounts linked to the russian and iranian government. what your take on that gigantic data dump? samuel: it's really good that the company is working to release this kind of information. they need to continue this in focus internationally come and not just on the russians are the iranians and their influence on american politics, but they need to look at the ways this happen in countries like myanmar and throughout the west and throughout the world, really. research,scinating , thanks foroolley joining us. amazon is teaming up with american express to debut at no see car. cardholders with an amazon prime ever shipped can choose between an interest-free loan for 90 days or 5% back on purchases

subsidiaryamazon like whole foods. it will offer 2% back on purchases at u.s. restaurants and gas stations and mobilephone services. meanwhile, amazon's convenience stores coming to the big apple. the're planning to open up latest amazon go store across from the world trade center. amazon is said to be opening 3000 such locations by 2021. there are five go stores across the united states currently. for the second quarter and row, amazon has had a company record on spending to influence u.s. policy makers. the world's largest on -- online retailer spent 3.6 meter dollars on lobbying the federal government in the third quarter. the companies competing for a 10 billion dollar cloud computing contract with the pentagon. ask of fame short seller why he is long on tesla

stock. this is bloomberg. ♪

selina: verizon reported better than expected subscriber growth, helping earnings beat estimates. -- verizon is of still in the early stages of rolling down -- rolling out of it generation network. and according to sources, africa's largest company by market cap look to boost its stake in an online indian food delivery business. at company is already valued $2 billion. support -- it could

arrays of 600 mean dollars. tesla is getting help from the most unlikely source. one of its outspoken short-sellers. shares gained the most in three weeks as andrew left announces he is now long on the company. they predicted shares would slide to $100 by year end. bloomberg markets caught up with andrew left and ask him what has changed. >> it's amazing, elon musk has of himself sideshow that people have started to forget about the underlying business. musk saysadlines are, this or that it as a short seller, i'm always rechecking my data. up until a few weeks ago, i was short. now it's like, this car is dominating. , and thenominating

i'm like, can they make money? the started to read more and go deeper and deeper. i realized that for all these years, i didn't really understand the tesla story. i know there are still a lot of factors and execution is still there, but i think being short going into this quarter, knowing he just made earnings a week earlier on top of ford's earnings and knowing the company is finally hitting strides in production of the model three, i'm like, that is just wrong. october dueg the date for earnings has a positive sign, i want to know about where we go in terms of capital needs for tesla. at supply tove to the equity out of you are you are not worried about that anymore? or 27 hours, will see how much they generate free cash flow.

musk, buti've doubted there are so many different things that tesla said they were going to do, and i laugh. he got the sec to work on a saturday. when he says they will be cash flow positive this quarter, i'm not going to doubt him. wait and see. >> we need to put tesla in the context of the bigger automotive picture and event as well. auto sales as a whole have plateaued. would tesla be subject to the same industry headwinds, cyclical headwinds as everyone else? andrew: that's what really surprised me. is asked people are paying more money to drive a tesla. it's a revolution that i actually underestimated the way

people are buying these cars. the numbers you are talking are four other automakers, not for tesla. >> where does the price target go for you -- andrew: this is where it gets tricky. i always said as a short seller, at the end of the day, it's a car company. but we are basing those estimates on profit on old-school manufacturing. by not forcing his many parts are having as many parts, where does this model take you? and you don't know. one of the leading auto industry experts said they can do over 30% gross margins, i'm sure they would do more of those, some kind of crossover. so we don't know. thenot even looking at solarcity, let's call all of that call options.

i put the sensitivity on just selling cars globally. question, you write in your note that you are still target, thatprice tweet that you lost money and that they would hit that price point. why are you still wanting to stick by? it's just business. he said funding was secured, finding wasn't secured, i want my money back. it has nothing to do with my position on the stock trade. it was one particular date. >> let's move on to the self-contained world of marijuana stocks, or perhaps not. ore you closed your shorts

is there still more downside to come here? andrew: there is no more downside to come. if someone wanted to put your here, it's just a low flow story. herekronos is not going to delr for their investors, and i was short some smaller names in canada. it fell apart a lot faster than i thought. >> interestingly, we still see companies coming to the u.s., we saw a list on the york stock exchange as well as canada. could the added volume mean more stocks will be able to drain out the market? andrew: what we saw for the past few months was pure hysteria, removed from all fundamentals. more andwill come in

it would be great if the stoxx to become accessible. you'll have to be in such a rush. if you believe there are long-standing businesses that are going to stand the test of time, you can buy next quarter or the quarter after. selina: that was andrew left of citroen research -- research. netflix had to offer yields at the high end of price expectations. that's the first time that has happened. bonds at aced yieldless 6.4% say and another $1.2 billion for 4.6%. the company now has more than $10 billion in debt. in time, amazon scattershot attempts to shake up women's fashion isn't going so well. that's according to a report from jungle scout. allrel makes up 88% of

amazon private label brands, it only 1% of all private label sales, according to the report. women's fashion is struggling the most. oft does it for this edition bloomberg technology. tomorrow we will cover all things tesla as the earnings come on after the bell. this is bloomberg. ♪

haidi: welcome to "bloomberg daybreak: australia." shery: i met bloomberg world headquarters in new york. sophie: we are counting down to asia's major market opens. ♪ haidi: these are the top stories we are covering in the next hour. u.s. stocks fall for a fifth day as a late rally stopped short of pushing into positive territory. tesla among the winners