taylor: welcome to bloomberg markets. i am taylor riggs in san francisco. aul: and i am paul allen in sydney. taylor: facebook underwhelmed's wall street. plus, tesla delivers. quarterly profits top analyst estimates. 2020 deliveries expected to top half a million as the company's

cash pile gross 18%. and, new evidence raises fears that coronavirus could spread undetected. first, i want to take a look at how u.s. markets fared today. it was fed day here in the u.s.. the nasdaq leading the gains as the s&p 500 underperformed. reiterated his ability and desire to propel the economy forward. that means you are getting a drop in 10 year yields, down about seven basis points on the 10 year. the fed makes no moves today. is alsoly, jay powell giving us a stronger dollar, slightly up. it looks like it is going to be a fairly quiet day in this part of the world. futures indicating some modest declines. alsoes for the nikkei

weaker by about half of 1%. new zealand is up and running, kind of flat at the moment. we had the trade numbers a little earlier. million surplus, better than expected. the kiwi dollar not really reacting a great deal. much thehat is pretty theme across currency markets. the aussie and the yen fairly stable right now despite ongoing fears about the coronavirus. for more on that, let's get over to new york. >> the world health organization has called an emergency meeting later thursday to discuss a formal global alarm over the coronavirus update rate governments are tightening travel restrictions and several airlines are cutting services as the death toll mounts. the u.n. says the whole world must be on alert. china is racing to contain that

virus and building work continues around-the-clock on two new hospitals in will land. beijing has ordered extra medical supplies to help the fight. at least one senior official has been fired. left rates and policy on hold saying the labor market is strong and the economy continues to grow. consumption remains only moderate and investment and exports are weak. economic activity actually declined in eight states last quarter and was stagnant in three more. veteran investor warren buffett is pulling out of the newspaper business. sellingre hathaway is major papers. they said last year that most surviving titles are "toast."

global news 24 hours a day on air and at quick take by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. taylor: tech earnings season underway with facebook just the latest to report. shares in late trading falling about 6%. one possible explanation is there could be some concern with revenue growth. last quarter, facebook revenue grew 29% year-over-year. for more, let's bring it our market analyst. you worried about slowing growth rates of facebook ads? >> it is interesting. facebook grew its ad revenue at exactly the right we thought it was going to grow in 2019. we are not worried in that respect. it is exactly where we think it is. think,ing is slowing, i

because some of the issues that facebook has been dealing with on a quarter after quarter basis regarding privacy, regulation, content moderation, political advertising, all of these things are weighing on the company. overall, things are still growing. users are ahead of where we thought they might be. this is a company that is continuing to perform quarter after quarter. taylor: every analyst on the street was excited about facebook in 2020. you have political ads, the olympics. is this perhaps more of a later 2020 story when we could see a pickup in revenue then? >> i think we are seeing it throughout the year. we do not forecast on a quarterly basis. we are thinking that facebook ad revenue is going to increase on a worldwide basis

this year. political advertising is part of that. certainly things like the olympics will add a post. i think overall, continuing gains among your average advertiser who is continuing to spend because of the accurate targeting, because the audience is there, and because instagram is also still growing. results doll, these not look too bad but shares are down 7%. i get the sense that we all are kind of groping around to try to find some reasons for that. what is your theory? >> we follow revenue and usage for facebook. the stock market is not something we directly comment on. i really believe that facebook has proven itself, at least according to our forecast. it has beaten our forecast for numbers in terms of number of users this year.

this is a company that, even though it has had problem after problem, it is continuing to outperform the estimates. it is hard to say exactly why the market is down at that point. paul: is there a sense perhaps that facebook has just gotten so big, it has billions of users, it dominates the advertising arena. is it simply running out of room for growth? >> i don't think so. we are forecasting about 22% growth this year. i think it has got instagram, which is still growing at an even faster rate. we estimate that ad revenue at instagram will increase about 54% this year. there is a lot of headroom ahead for a platform like instagram. you could question some of the other platforms like whatsapp. recently, there was news that facebook decided to pull back on placing advertising in the whatsapp messaging app.

that is concerning because whatsapp is such a popular property among users around the world. but if you just look at facebook and instagram, both of them are still growing. taylor: the analyst call for facebook has started and mike zuckerberg is saying he has proud of the progress facebook has made in election integrity. he admits they were behind in 2016 but that they feel more advanced right now going into 2020. are they doing enough spending to ensure the election integrity? >> that is a good question. there was a lot of debate over whether facebook would or would not accept political advertising. what needs to be addressed is the state of political content. there is so much political content that can go on to facebook because it can spread virally. those kind of things are still hard to control, not only for facebook but for other platforms.

so, sure, facebook is doing better at moderating political content but i think it still has a long way to go to make the platform safe and comfortable for users and some people may get fed up if they don't see facebook continuing to make changes and continuing to monitor the changes going around about political discussion on facebook. taylor: did anything today change your attention on the focus when it comes to antitrust? >> nothing so far. obviously, we are still waiting to hear the final word. i do think that facebook has been putting a lot of steps in place. it is really going to be a wait and see. i do not have a prediction of what is going to happen. i think that facebook is definitely taking steps.

is hard to say what is going to happen this year. taylor: thank you for joining us with that analysis. microsoft second-quarter earnings coming in above the highest analyst estimates today, beating on profits and sales. revenue rose to nearly $37 billion, marking the 10th straight quarter of double-digit sales growth. cloud demand continues to dominate. analystght from an later this hour. coming up, we will check in with tesla as it soars in after hours trading after another record quarter. this is bloomberg. ♪

inl: shares of tesla surging after hours trading. the electric vehicle maker continuing its role.

of theelerated arrival model y. the model 3 raking in over $7 billion in sales. that heat estimates. second consecutive quarterly profit. first half losses in each of the last two years, giving way to positive results. vehicles in00,000 2020. joining us over the phone, garrett nelson. no shortage of highlights. what really stands out for you? >> thank you for having me. what really drove the quarterly beat was the top line. about $300 billion

-- that is really what drove the beat. sales guidance was really what analysts were looking for. they are saying that 2020 sales will comfortably exceed 25,000 vehicles. that applies a betty 6% year-over-year -- applies about a 6% year-over-year increase. overall, this is a solid release from tesla. paul: when tesla was in the depths of what elon musk described as production hello, there were concerns over whether they could meet demand. can demandn now, meat supply. >> it is really all about execution in the near term for tesla. they are ramping up the new factory in china. we do think there is a risk. it is located not too far from wuhan, so there is some operational risk related to the

coronavirus spread, we think. we think it will take a while for them to really maximize margins from that plant given that it is in the startup phase. it typically takes one or two quarters to really at full production. we think that is going to weigh on their results in the first half of this year. wasor: one number that surprising, i am showing a chart you did notce that have a big jump in the top line so cutting your way to profit long-term is not sustainable. this quarter, are you comforted by the fact that you are getting a boost on the as well because you are also getting growth in revenue? >> what drove the revenue beat was higher price. the average vehicle sales price rose for the first time in seven

quarters, up about $2000 per vehicle from the third quarter. we knew what their sales were in terms of number of vehicles for the quarter, we just did not know the average price realization. they are showing they have some pricing power given the demand for teslas. modelspecially, the new y, which we think will sell very well here in the u.s.. taylor: talk to me more about the model y. you have to offset those lower price, lower margin model threes with the higher-margin product. y -- is the y it? >> we think so. model 3 share a

lot of parts. it is not hard to switch their production line. it should make a fairly seamless transition. the real opportunity, there is not a whole lot in terms of electric vehicles. the extremely popular crossover in suv vehicle types. ford'se tesla's model y, e, which will be debuting this year. there is a lot of new competition coming, but we think tesla's model y has a good mix of price and range, and that is really what electric vehicle buyers care about. paul: i thought one of the interesting things in this report was about the solar storage. than alltores in 2019 previous years combined. is this one of the things that

sort of sets it apart from other carmakers, that tesla is not just a car company? does this justify the sometimes elevated share price we talked about? >> we think that is a long-term plan but we view that as a non-core business. part.a very small we think it has some value longer-term. price, the share growthation we have seen out of the auto business. the next big driver will be the new factory in germany. we were a little disappointed that they did not provide more detail regarding that factory. we expect they will be breaking ground soon. they did say they expect first shipment sometime in 2021.

we will be curious as to what they will say about that on the call coming up soon. we are waiting for that to begin shortly. another future revenue stream, the data that these cars provide. thatere a way to monetize in the future? >> if they can kind of crack the code related to autopilot and achieving full level five automation, that would be a huge opportunity. we do think they are ahead of other automakers when it comes to other auto -- when it comes to autonomous driving. if they do have a breakthrough that takes them to the next level in deliver on this robo taxi promise elon musk has alked about, that would be

chance for growth and unlocking value in the shares. taylor: when would that happen? >> that is a good question. i think you have to look back at what they were saying about this three or four years ago and more recently. it really has not changed with what they were saying back in 2014 and 2015. it seemed like the automated driving was right around the corner, and here we are in 20 and it is still not here. based on our research, our best guess is it could be at least a decade before we see that. ways off and we are highly skeptical of some of the things that elon musk has been saying on that front. taylor: i want to take a look at another chart we are showing. you know the story better than anyone else.

at the closing price as of wednesday, you had a market cap at $104 billion. that is where the price would be if we were available to be open. we are looking at a market cap of $116 billion. is that market cap justified? >> we don't think so. we recently lowered our rating to sell from a hold on the stock. we think they are being given plenty of credit. today's close, their market cap was greater than every automaker with the exception of toyota. the fact is, they have produced a fraction of the number of vehicles. we think the market is giving the company plenty of credit for growth which has not materialized yet. that really raises the risk, the risk level, execution risk, with the company. another thing, we think a lot the recent run-up has been due

to short covering. six months ago, the short stock interest was a little over 25%. the short interest now is under 14%. we attribute that to a lot of the recent run-up. hasthat reason, we think it less upside. it seems like the shorts are being squeezed again. kind of less of a coiled spring affect going forward. garrett nelson of cfra research, thank you for joining us. we are awaiting the start of the tesla earnings call so we will bring you headlines from that as we get them. on cloud business delivers. microsoft profit and sales beat estimates. this is bloomberg. ♪

taylor: microsoft second-quarter earnings coming in above the highest analyst estimates today, beating on both profits and sales. it seems to be all about the cloud coming in at $11.9 billion in revenue. how much market share are they taking from amazon? microsoft is the fastest-growing player in the cloud computing field. amazon is still the big dog in the fight with aws, but microsoft is coming on very strongly, a clear number two revealsehind aws and kind of bringing up the rear. -- and everybody else kind of

bringing up the rear. is prettyzure astounding, even in the world of cloud computing. that enormous of contract, $10 billion, is there now and expectation that microsoft will continue to deliver big deals like this? how much more upside is there? lenn: a lot of it is derivative off of that. there are a number of sectors that have gone pretty strongly with microsoft as the plaut -- as the cloud provider. will there be more big deals like that? we doubt there will be gigantic deals and cloud. cloud tends to be a bunch of really small deals adding up.

the jedi contract with the government, $10 billion over a certain period of time, that is a lot of money but it also raises the awareness that microsoft is a serious player here. computing revenue also coming in. is there something different they are doing? glenn: there has been a lot of refresh in computers lately. older systems are slowing down and people want to get new computers. 7 support,of windows and a lot of people were sort of forced into going with a new machine to support windows 10. to glennre thank you o'donnell. turning to some breaking news on the china coronavirus. death toll rising to at least

169 people. all of the latest, next. this is bloomberg. ♪

taylor: welcome back. i'm taylor riggs in san francisco. paul: i'm paul allen in sydney. we are looking at earnings from facebook, tesla and microsoft. sue joins us in new york. all three are exceeding estimates, but they are trading in different directions. what are the reasons for this? sue: it has to do with the concern that facebook may have peaked. let's go to the after hours trade, the stocks are moving in different directions. facebook is down as much as 7%. tesla is in double digits.

very different stories of beating the estimates. we will start off with microsoft. the cloud growth accelerated. this is really a cloud story. demand persists. d and the second quarter, up 14% year-over-year. the $1.32ew away estimate. facebook, the shares fell off the bat. as much as 6.4%. they accelerated. the story here is the numbers are overwhelming. rapid growth was expected and it did not happen. now, tesla. it stays on a roll with a second straight quarterly be in eat terms of profit. i had to do with profitability and the ceo delivered. let's take a look at the details behind the facebook decline.

what is really interesting is if we take a look at facebook, going to some video if we have is um, what is fascinating they did have increases in their subscriber ship, but analysts say the concern is what we really need to see is global growth. and in the increasingly regulatory environment for facebook, as it faces privacy issues, as it faces legal issues internationally, it is not getting that growth so that raises the question come how does facebook increase revenue going forward? take a look at tesla. it is all about the model y. it was announced in this latest earnings report. there it is, that is the future of the company. it will probably be it's best model going forward. they accelerated the launch of it. that is a positive. they beat on all of their numbers. there are many in the bull bear

debate. the bulls believe that this company is heading for greatness. the bears believe it is a bubble set up to fall. but the bears right now have to wait for any kind of indication. very strong report. su.or: thank you, the coronavirus death toll is dead andt least 100 69 the world health organization calling an emergency meeting on thursday to consider issuing a global alarm. confirmed cases in china have surpassed the reported number of sars infections from 2003. one company in the u.s. that is racing to find a cure, a biotech workingsan francisco, to determine if it's previously identified anti-coronavirus antibodies can neutralize this strain. theys been volatile, as released in news about the vaccine. the ceous to discuss is

of the biotech firm. doctor, it is great to have you. you are one of the latest companies working on a vaccine. how is your technology different from other biotech's who are also scrambling to find a potential vaccine? >> sure. we have a powerful and productive platform to identify antibodies. antibodies are proteins that circulate in the blood and protect from viral infections and can help overcome them. and we can isolate those from people who have recovered from an infection, modify them, manufacture them and make them available to other patients. this technology has been quite fruitful. nhe earliest examples is a antibody against ebola. isolated thatists in collaboration with the nih, and it is now being tested in

the congo by the nih and is a showing inability to reduce that infection. so we feel good about that. taylor: it is very -- >> we have antibodies for malaria and others. taylor: it is interesting that you bring up ebola, we have talked about sars from 2003, what have you learned from those viruses that can help you gleam some information about this virus and how to get a vaccine out of it? >> we have a number of antibodies we have isolated against sars, and also against mers, those are both coronavirus is. our scientists anticipated it was only a matter of time before the next coronavirus operate, so we have already been testing them for their ability to neutralize other strains. some of them have the ability to neutralize the coronavirus isolated from bats and other animal species.

so there is a possibility that they could also neutralize this new virus. so we are testing that possibility now with a number of antibodies. we do not yet know the answer, but our hope is one or more of them will be effective. simultaneously going back and isolating new antibodies, specifically against prettyrus, and we are confident that we will be able to generate those antibodies. it will take a little bit longer, but we will get there one way or another. paul: given what you have learned about the coronavirus so far, what can you say about its potential for getting worse, for becoming a pandemic, or could we end up in a situation where it eventually disappears? >> i think we are all hoping it behaves like sars and will eventually disappear. is early data suggests it

considerably more infectious than sars, perhaps less lethal, but certainly more infectious. and as the report indicated, there are already more cases of patients in china than there were with sars. so we are hopeful that this, like many viral outbreaks, will be self-limiting, which would be great. but we are working really hard to bring our antibodies forward in case that is not the path it follows. is it important to keep perspective during these crises, because they generate a lot of fear. but it is worth remembering that well mores killed than half a million people -- wto has said that the flu has coded well more than a half million people. >> flu can be a fatal disease

for many people. it kills thousands in the u.s. every year. and for that reason, we have a very interesting antibody also that is capable of neutralizing all strains of influenza a that have arisen since the 1918 pandemic, that we are currently testing in humans. and we hope to be able to get efficacy data as early as this year to determine to what extent we can reduce the frequency of flu infections. it is a paradigm for what we hope we will be able to do with the coronavirus as well. dr. georget was scangos. the white house just issued a statement about the coronavirus saying, "the u.s. and china are incoordination over the virus and protecting the public health of both countries. the president appreciates president xi's cooperation." and we will have much more next.

stick with us. this is bloomberg. ♪

taylor: welcome back. i'm taylor riggs in san francisco. paul: i am with paul allen in sydney. now first word news. ofthe indicated associate president trump says he knows the president was aware of pressure on ukraine because "i was working for him." legalrnas spoke as the team argued that donald trump cannot be impeached for taking actions partly motivated by a wish to boost his reelection chances. white house is also trying to delay publication of john bolton's new book on national security. grounds. the brexit deal has been approved, clearing the way for the u.k. to leave the eu on friday night.

officials on both sides say the fight over the divorce deal was the easy part in negotiations in the coming 11 months will be far more difficult. provided in brussels details on the deal, but voted overwhelmingly in favor. european union has followed britain and has a stopped short of banning huawei. this could begin a new rift with the u.s., which has lobbied for huawei to be blocked from the next generation network. the u.s. is there secondly just -- largest trading partner and the u.s. has hinted repercussions if huawei is not kept out of negotiations. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. paul: thank you. now back to coverage of tesla's fourth-quarter earnings. joining us to discuss it in new york is our analyst, who

currently has a buy rating on tesla, a very optimistic price target as well. pierre, we have had another profitable quarter from tesla with plenty of highlights in the report. have we reached a turning point, is this the new profitable tesla of the future? rre: it generated a billion dollars in the fourth quarter, more than twice than what wall street was expecting and it was still 30% higher than what we were anticipating. and so that means that tesla can start a new factory and keep ramping up as they engineer their new models. it is a turning point, yes. the second thing i find amazing in what we have learned today is tesla managed to start up a new factory with stable gross margins, adjusted growth

margins. so that means the underlying gross margins have continued to expand in the fourth quarter, so tesla is going from being world-class in terms of the gross margins to doing even better than that in only three months. paul: let's talk about that new factory in shanghai, because one thing that is bound to come up l when italysts cal gets underway is because discipline. -- is because discipline. -- is cost discipline. it is not showing up in the financials. what is your opinion on that? pierre: that will be the question to ask on the call in the next 45 minutes. and mentioned the factory mentioned it affected gross margins, so we know it is there in some shape or form. in one thing i can tell you,

, the in the first quarter numbers were in the order of about $150 million. that could be the kind of cost we are looking for. where it is exactly in the numbers, we are working on it. taylor: what questions are you asking on the call? pierre: probably the one that comes first to mind, what is the rough order at the shanghai factory so we can evaluate the improvement in gross margin of the company, excluding that round, because that will give you the best indication of where the growth margins of the company is heading toward the end of this year. taylor: it is interesting the company said they do not see the average selling price changing. we no they just lowered the prices of the model 3's in china to help compete, do you think

the lower-priced tag will stick to gain market share or will this help them boost prices again? pierre: that is a good question, but it is difficult to know. it is hard to know the price movements. there is an element being competitive, but the good thing for tesla is you do not have a company that is -- in china the key element, you itw, is how much can you -- is a sensitive measure. if you lower the price by a couple thousand dollars, it massively increases your growth in the market. we have seen a lot of price adjustments in the u.s. and now it is not stable. so the company has to find its sweet spot in china. this is where they will devise how much money they can make per

car and how many cars they can sustainably sell. the one thing i can say is that that shanghai factory is probably going to be very significantly more efficient than the other factories. for a lot of reasons. factories are messy. them, thereompare is an element for tesla to invest like an improved cost position into better pricing in china, that is what you see with the price movement. erre before, -- pierre, you go, i know that the last time you had a sell rating, so what is your bull price? friends inost a few that last story. my prices $800. to give you background, the

price target, the previous price target i had was $530 two years ago, so i really look at tesla on a five-year horizon. and what kind of potential the company has. and my thinking is very simple. be as 2025, tesla will large as bmw, much more profitable, and will still be gaining a lot of market share. and potentially it will start expanding again the margins with autopilot -- like the getting to maturity. when you look at that, by that time the stock will be between $1500-$2000, which means a price target of $800 for the end of this year is reasonable. paul: ok, thank you. thank you for joining us to break down the tesla numbers.

earnings season is underway for tech. we will give you a preview of what to expect from amazon, next. this is bloomberg. ♪

taylor: amazon is preparing to report fourth-quarter earnings. bloomberg intelligence thinks that e-commerce giant may disappoint on guidance amid record sales. let's bring you the details. ♪ >> analysts remain bullish on earnings with 53 buys, four holds, and zero sales as we go into the fourth quarter report. amazon got a high price target of $2300 a share from benchmark, but if the company wants to continue teir 23% rally, analysts say growth in the cloud and one-day day shipping is key.

it was that one day shipping investment that turned many heads. david kerr knows says he expects "another record revenue holiday quarter and the impressive, aggressive one-day shipping rollout could result in revenue eclipsing the high-end of guidance. comes from the cloud business. the risk was highlighted from raising competition from microsoft and alphabet and underscores increased risk of a. further deceleration at a wf." tim culpan says that "a wf no longer has the cofactor." >> it is not the hip cloud offering that people expect, they are going a little bit cool on it. >> with 2020 shaping up to be a big advertising year, some analysts want to see how amazon will start taking market share and the growing advertising market to drive future revenue growth. ♪

taylor: back to facebook earnings, growth seems to be slowing in a company that is facing privacy regulations and continue to scrutiny from lawmakers and antitrust officials. the ceo also spoke about the company's efforts in election integrity on the earnings call. >> we are very focused on election integrity. this is an area where i am proud of the progress we have made, preventing foreign interference. in 2016, butd after working to protect elections in countries across the world from the eu, to india to mexico and the u.s. midterms for the past few years, we think our systems are more advanced now than any other company's, and we are often alerting intelligence about the threats we identify. taylor: coming off the facebook call is our next guest, michael living of pivotal research. what is your key takeaway as you get off the analysts call?

mike: the real standout was around the deceleration in the u.s. the other regions were pretty healthy in terms of growth. from mydid not get, perspective, super satisfactory answers. that was combined with, and where i think the stock took the dr leg down, is acceleration from the run rate they put up in q4. taylor: i thought they were poised to benefit from a very robust spending environment in 2020. are they not looking better? michael: one thing they called out as a risk factor was having a, theyadwinds from ccp are probably the most effective company online in terms of leveraging user data. and they are talking about the upcoming changes that will happen on google chrome, as well as from apple, so they are

talking about those as also been additional risk factors. paul: michael, did you get a from the call that the ceo continues to do just enough to continue to avoid more regulation? michael: i cannot tell. one of the reactions at that will come out from folks is your next conceivable catalyst for the stock hearing something from the ftc or the doj. ents, whenst our two c you had them seek an injunction in december, you know, probably a reasonable indication that they would look to make a move against them. paul: these lingering clouds, the regulation, perhaps one of the reasons we have seen the stock decline, despite what was a reasonable set of numbers. decelerated bys.

550 basis points. that was a pretty big chunk. and a definite disappointment. because i think that, to your question earlier, that the present view is that it was a pretty healthy advertising quarter. was a pretty big standout. taylor: are they spending enough to prepare for the 2020 elections? michael: i think so. they have had a very good and consistent track record of giving folks range and they have come in toward the lower end of that. and also worth noting, which they clarified, is you have $550 million headwinds that showed up in gna, so the numbers were actually a lot better than if you take the one-off. what you saw on the headline. taylor: you pointed this out.

this chart.ow facebook has been underperforming compared to apple, alphabet, what gets this multiple to climb higher? michael: it is a tough question, taylor. for one, you must feel like there is some end of the overhang from a regulatory perspective, which i do not have an easy answer for you there. it has probably been why we have had a relatively conservative assumption for the multiple on the stock. but it certainly is not going to be results like this. i think what will happen over the quarter is you have the most notable change from a data perspective being in google, that will roll out in february, february 8. you will have estimates cut for the first time in a while on the revenue side. and i think that people just

assume when they guided for the revenue deceleration in quarter 4, they were being conservative and now you pre-much have to take them at their word. levine,chael living -- we are unfortunately out of time. stay with us, this is bloomberg. ♪

paul: good morning. markets have just come online in sydney. taylor: i'm taylor riggs in san francisco. welcome to "bloomberg markets." ♪ top stories this thursday, the world health organization has called an emergency meeting as the coronavirus claims more victims, at least 169 people have now died. tesla in the fast lane, earnings have beaten expectations and the new model