quest this is bloomberg technology. a huge surge for the nasdaq, s&p and dow. they spoke, tesla and microsoft all skyrocketing. they all report better than expecting -- expected earning results. facebook saw a decrease in ad results. in april, they are seeing some signs of stabilization. facebook blowing past

expectations for users and ad revenue. a drug also showing some positive results that may have been getting investors some optimism. to facebook, tesla and microsoft in a moment. let's bring in taylor riggs to wrap up the day that was. information showing that gdp pal -- gdp fell 5%. maybeas thinking that things were not as bad as we think and that there was a sign that things could stabilize if not improve. you could say that was going on in the markets all day long. we got that data of a 4.8 percent drop in gdp. markets were already shrugging it off. looking ahead to that news that we got from gilead. tech is doing the best stuff. 3.6% today.

those small-cap stocks are also some of the biggest out performers as we talk about how to reopen the economy. gilead sciences was the driver behind all of this. they were up 5.5%. helpedxperiment drug coronavirus patients recover more quickly. some 11 days instead of 14 or 15 days that was initially expected. dr. fauci came out and said this was a very positive sign. past some of the negative data that we got this morning and forward to future optimism. >> tesla and microsoft shares skyrocketing. facebook even higher. let's start with tesla and microsoft. tesla beating revenue expectations. still saying they have the capacity to deliver .5 million cars by the end of the year. microsoft is driven by the -- by a lot of this remote work.

rap of the numbers. >> hears numbers out of both companies. getting a big boost on the bottom line despite a lost year over year. free cash flow is negative. $900 million. that is worse than the expected drawdown. the first quarter they said was impacted by deliveries. they had a goal of 500,000 deliveries in 2020. they will revisit that in the second quarter. we will get details until about june or july. microsoft, similar story. big numbers on the top line. 50% year-over-year. the cloud is better. cloud growth was a bright spot for the company. that was similar with microsoft as well. of course, personal computing. we are all staying home and working from home. that benefited as well.

extent, wetain expected microsoft and then tesla. facebook was the surprise. 2.6 billion monthly active users. a significant increase in ad revenue despite that slow down toward the end of the quarter. what is your take? >> we learned this from google yesterday. things were bad. the advertising market was weak. not as weak as we saw. estimates came in related to alphabet were much less than expected. you see a similar theme coming across facebook as well. revenue was flat in the first few weeks of april year-over-year. it was not negative. they are already showing signs of stability in that advertising market than the first few weeks of april. april is supposed to be the worst. if you see revenue come in flat on a year-over-year basis, that is a big outperform a relative

to expectations when we thought that ad revenue would decline significantly. it is showing these big advertising companies are proving to handle this better than we thought. much for thato update. we will continue to monitor these headlines as they will in and the earnings calls begin. i want to bring in deborah williams. a marketer who covers facebook. i would've to get your take on what taylor mentioned earlier. we are seeing flat ad sales. for the first three weeks of april. the question is if you could get worse. ,he real concern is about q2 not q1. what is your overall take? >> think those are excellent points. i agree. q1 was a better quarter than most expected. i do have to remember to say that january and february were pre-much normal months. we really only had march as

being the month where there was a lot of concern and downturn. for those that were saying that q1 was going to be negative, i don't think we ever thought that in our particular models. you are right, looking at q2, there are a couple of things that stood out for me. i want to push back on the idea flat forbook has been the early part of april. is this a good start? if you compare that to what snape reported last week, snape -- snap reported last week revenue actually grew in the first few weeks of april through april 19. facebook said it was flat in the first three weeks. if you compare those two companies's performances, you have to wonder what is going on here. it makes me think that facebook

's performance is worse than people think. in terms ofbility flatness, that is not necessarily good. that is something i would want to pay attention to. >> yes. what is your sense of how bad this could get based on signs you are seeing in other places? unfortunately, no one has a crystal ball on that. i think one of the state issues is that businesses are reopening at vastly different rates around the world. you have some countries where business is starting to reopen. you have other countries with the regions in those countries like the united states where businesses are very much locked down. any recovery that is going to happen at facebook is going to be incredibly slow.

it has to be. varying opening rates going on, you don't know what businesses will be open and to what extent and in what markets. there is a lot of tough change and challenge ahead for facebook. itself in a lot of types of businesses. we have not talked about facebook exposure to small businesses. they are hurting horribly around the world. facebook has always touted the fact that they have 8 million advertisers. and as a large percentage large percentage of those are small businesses. these businesses are trying to stay afloat. rather than spending more on marketing. that is a concern that we have not seen fully play out. >> small businesses. one big concern, what about instagram? whatsapp? what could he other pain points

be? >> instagram has always been a bright spot for facebook. we think advertisers are still very intrigued with instagram, stories, shopping related ads. that is where advertisers will continue to play. whatsapp, the advertising potential within whatsapp is nonexistent. facebook has pulled back on advertising within whatsapp. messenger does have ads. we don't hear of a lot of attraction -- a lot of traction on messenger ads. this could spin even further beyond q2 as we think of some of the initiatives facebook is taking in terms of opening up that you messaging and video chats. that is something they announced for messenger rooms. we could see at revenue potential in those areas but that is further down the road. we will have to continue to whether through this difficult

q2 before we start to see any momentum on newer, experimental areas of advertising like that. how do you think facebook fares compared to google? we heard of google yesterday, they are both getting the lion share of digital ad dollars. does google have an advantage given that it's bread and butter is search that facebook does not? >> i think they are in similar positions. we saw that in the relative earnings reports between the two companies. google does have potential risk because it has a lot of small businesses as well that are part of the advertising roster. it did say in its earnings yesterday that a lot of the searchers that were happening were not necessarily related to commodities, the things that

lend themselves to advertising. they were probably related to things that have to do with covid and staying at home. relatable.ess it closed off those keywords. if we were to compare facebook and google, they have both been in relatively similar positions even though the temp said advertisers they would typically reach out to me in some cases be different. >> in the meantime, we are getting headlines from earnings, zuckerberg saying that covid-19 will have a continuing impact on the business. that is alluding to what you said there. even facebook, even mark zuckerberg cannot foresee this, how dangerous is that? >> at think it is dangerous for every business. this has been said many times before. we are in unprecedented times. there is uncertainty around the

economy, it is weighing on every single business around the world. i am not surprised that mark zuckerberg does not know what is ahead. it is something that a business like facebook is going to have to confront along with all of the other businesses that advertise on facebook. that is where it is going to come down to. advertisers,jor the auto companies, the entertainment companies, the travel firms that typically advertise on places like facebook and google, when they are starting to be able to come back and open business. there is so much uncertainty about the future for those businesses that i not sure exactly how they're going to whether this. we would all be coming to you for the answers. debra williamson, thank you for sticking with us and giving us your thoughts. have some breaking news. we have comments from the president and also the governor of florida.

they say they are planning to start reopening their economy on monday, may 4. the president saying he wants the country reopened and is concerned about being closed too long and that he would intervene if decisions made by the state were unsafe but he wants to see sports stadiums packed again. we will see how other states respond to what the president is saying. we will dig into microsoft earnings results. is all this remote work from home driving activity in the clouds? we will take a look. this is bloomberg. ♪

>> continuing our look at tech

earnings, microsoft shares also skyrocketing after hours. it is all the new activity in cloud and working from home. i want to bring in glen o'donnell. we expected microsoft results to be good. morgan stanley naming microsoft its topic in uncertain times. is there anything surprising about these numbers? glen: not really, we expected them to do well. it has been one of the companies that is still shining through all of this. it hasprisingly because been providing a lot of the technology that people need to get through this. all of the work from home and teleconferencing and that kind of thing. microsoft products have been in high demand. where do you expect to see continued growth? are you concerned that as the

economy starts to reopen, we are hearing about it in florida. some of the gains that microsoft has made, whether it is there teams or products or elsewhere, do those gains decline? lenn: we will see some users decline but much of what is happening now will continue as the new normal as people start going back to the offices, not everybody does. i think we all learned how useful these technologies like microsoft teams, zoom and others have been. i have to say that i use all of these systems. i have been personally very happy with the quality of the voice and video. it has been very good. i think that is a testament to how microsoft has not just designed is technology but also handled the load. most of these prescription services -- subscription

services, you assume you will have a certain amount of customers using it at any time and then you have way more. you may run out of capacity. that has happened with microsoft. it has happened with everybody. i think microsoft has been weathering the storm well. that bodes well in the long term. they are building trust with customers. headlines fromng the microsoft call. xboxsoft saying there holiday 2020 launch is on track. we know that gaming has generally seen a boost as a result of all of the shut in time. how much do you expect the gaming sector to buoy the overall business? n: overall, it is still a small percentage of microsoft's revenue. it won't make that big of a difference. based on the release they issued

today, xbox content and services were up 2%. i would have expected more. coming back to subscribers, you pay for the usage and you use it more. it is basically going to cost you the same. revenue was, it will not make a big difference when you have those bursts of activity. the capacity is there. gaming is a big business. smalll, it is still a percent -- small percentage. thatcrosoft is saying coronavirus and the pandemic is hurting one-off licensing deals with small businesses. we know small businesses have been particularly hurt by this crisis. the president is having an event with small business leaders at the white house right now. he says that it will all vary from state to state. as we start to see these moves with states reopening, what do

you think the impact of this is more broadly on the markets and the companies that you cover? glenn: small business in particular has been suffering. i have concerns about the small business sector. large business, most of it is ok. travel and entertainment aside. the rest of the economy is still moving. albeit at a sluggish pace in some places. the machinery is still trying to cooperate. i think large companies are going to whether this. small business is a different story. the sooner we can get things restarted, the better small business will be. technologies from microsoft are going to reflect that as well as other technologies. if you go to business, you're not going to be using microsoft as your services anymore.

we will have to watch that play out and see how small business performs and how things recover once we do start getting back in business. so much.you glenn: thank you. >> good to hear where you stand right now. some headlines rolling in. facebook says its profit margins will shrink this year due to covid-19. mark zuckerberg says it plans to hire 10,000 mark employees this year. that is in contrast to alphabet saying they slowing down hiring through the end of the year. interesting to see that from zuckerberg. we will continue to listen to the call. up,he meantime, coming google wants in on the zoom action. making its zoom competitor free. we will talk to mark furman about that, that is coming up.

this is bloomberg. ♪

>> welcome back to bloomberg technology. i am emily chang. emily: google meets will be free for all users. google wants in on the zoom action. i want to bring in mark. a huge move. google meet has been a videoconferencing editor and option to zoom. zoom has really gotten a lot of the lion share. mark: that is one way to look at it. had hangouts for years. they had gmail, it is built in, the bed with and technology. this video chat was theirs to lose. they lost it to zoom. verizon wireless got in.

moreteams has gotten much impressive. facebook is coming out with its own free radio chat service. -- video chat service. they are requiring people sign up with a google account. they say they have 100 million users. i am sure that will skyrocket once he becomes free. emily: zoom has a free option. what does this mean for zoom, microsoft, webex? google says they have a 60 minute limit for this but they are not enforcing that until september. ify are waiting to see people will use this to catch up with friends or if it is something that businesses will use, the free version.

that is where google is trying to challenge microsoft. by 11%ock was down today. there were arguments about whether that stock was in play given their revenue. it was clearly a challenge for them. google has deep pockets and can do something like this. thank you so much for your insights there. we will take you back to earnings results and dig into tesla with its first order -- first-quarter earnings reports. that as its production has been halted as its -- at its headquarters here in california. this is bloomberg. ♪

emily: welcome to "bloomberg technology." i'm emily chang in san francisco. than profitability better feared. tesla says it can still deliver 500,000 vehicles by the end of the year, but production remains a huge concern. production at its headquarters in fremont, california has been ground to a halt. firm top holding in many of your funds. what is your take on the headline results here? folks -- one of the

factories is going to reopen. what is the next quarter going to look like? long-term, which we are interested in at ark, the long-term impacts of covid-19 we think will be that the auto industry, which was already going to consolidate because of electric autonomous vehicles, that is going to be pulled forward. you will have companies struggling. they are going to look to the core business. innovatione cutting products. companies like tesla that are already further ahead on autonomous electric technology are going to shine here. the chinaort-term, factory is key for tesla.

that is back up and running after the shutdown this year. we are looking forward to seeing what happens. emily: what about demand? it is one thing if they can't make the cars, but let's say reduction restarts. is demand going to be there when you have 22 million people out of work, an economy that has been plunged into a recession? for the auto industry as a whole, we could see auto sales hit their peaks. carhink longer-term two households are going to become one car households. for electric vehicles, tesla has always been supply constrained. we see that demand still there. in the next couple years, an

electric vehicle according to our work is going to be cheaper than a gas powered car. that sticker price is going to drive that uptick in demand. it is already lower on a total cost of shipping basis and on an operating cost basis. now what will become cheaper on a sticker price basis. emily: i want to ask you about regulatory credits. there were $354 million in revenue attributable to regulatory credit. i wonder if without those the situation would look different and significantly worse. what are your thoughts on that? tasha: the key number to look at in the report is automotive growth margin excluding credit, which came in at 20% for the quarter. that is higher than most analysts were expecting. they were something in the % and, 60% and 17% -- 16

17%. at ark, we don't take into account any regulatory action. it is hard to predict. we want technologies that are viable in the underlying economics without subsidies. that is how we model electric vehicles and the battery cost declines associated with them. even without support from these credit, we think ev's will take off just on those economics. if theit is one thing car industry in general is slowing down, especially after this. i understand tesla might be a winner relative to other carmakers, but it can't be good for tesla if other people in general are going to own less cars, if other people in general are going to be financially strapped. i wonder how that fits into your long-term optimism. what i will say.

the long-term picture, i think people are going to own less cars. it is because they will use autonomous ride-hailing networks. one opportunity that is overlooked for tesla is they autonomousnching an taxi service once they achieve full autonomy. before that, elon musk said they would launch a ride service with autonomous drivers. after the crisis, there will be pent up demand for gig workers. tesla is cheaper on an operating car. than a traditional they could collect more miles per autopilot. they have a vertically integrated insurance offering. we think that business in particular could have very good

profit characteristics for tesla. tesla is transforming into the services model longer-term. i think that is what we really want to focus on. big picture in the automotive world, everything is shifting toward electric vehicles. tesla is the leader in electric vehicles . we think they are -- vehicles. we think they are three years ahead of the competition. emily: another point you made in some of your research is you think tesla's plan to start a ride-hailing business, that they should do that sooner rather than later as we come out of this crisis. i find that interesting, given that uber and lyft are struggling. uber is reportedly considering around of layoffs. -- a round of layoffs. why do you think tesla should invest in that right now? tasha: tesla has this innate

cost advantage over anyone. anyone operating a different car. operating costs are cheaper. maintenance is cheaper. total cost of ownership is cheaper. that is a better characteristic for drivers to sign up. -- financing and insurance because tesla is able to offer that and that is vertically integrated into the company itself, we think they could have a better cost profile on that business as well compared to britain left that had -- to uber and lyft that has to look to outside partners. the reason for doing it coming out of the crisis, right now ride-hailing is hurting. that makes sense. when you think the stay-at-home bans are lifted, do you want to get into mass transportation or maybe a ride-hailing vehicle or

personal vehicle? we heard today on the nxp call that people are buying their first car ever because they want to avoid mass transit. i think ride-hailing could be strong coming out of this. that is another reason for tesla to strike while the iron is hot. those underlying cost dynamics set up a nice profile for tesla. it aligns with the long-term vision to become an autonomous taxi provider. i think now is the time to do that. emily: interesting. that is something we will follow. tasha keeney of ark invest. thanks so much. coming up, we will dig into those uber and lyft layoffs, as i just mentioned. lay off a hugeo chunk of workers. uber considering layoffs. we have that story after this

quick break. ♪

emily: taking a quick look at facebook shares after hours, skyrocketing. mark zuckerberg same place book -- saying facebook plans to hire as many as 10,000 additional employees this year. they say google has announced the hiring slowdown. facebook says ad sales were down significantly from travel and autos in particular, relevant to the conversation we were just having. strong ad growth however coming from the gaming industry. they are seeing the first signs of stability for the ad business in the first few weeks of april with ad sales in the first few weeks of april being flat.

facebook whoever will be looking to cut travel, marketing, and construction costs. we continue to listen in the facebook earnings call and will bring you more headlines as we have them. i want to talk about ridesharing. letting go of 17% of its workforce -- lyft letting go of 17% of its workforce, furloughing employees. uber considering big layoffs as well. lizette chapman covers ride-hailing for us. walk us through the cuts and what this means. today thatounced they would be slicing 1000 of their employees, or 17% companywide. this would take effect immediately. they also announced a 5% furlough of employees along with pay cuts companywide ranging the 10% up to 30% for

executives. they announced they would suspend scooter operations. this was a series of cuts they said they had to make. emily: what do we know about uber's plans? we know the chief technology officer is stepping down stop he has been there a long time, but also reports that uber is considering laying off 20% of its workforce. lizette: correct. there have been reports that they are considering that. the company has not yet formally commented. resigng-term cto did recently and gave his notice. ohis follows the cpo wh , asgned a couple weeks ago well as a longtime employee. they are facing a bit of a

suck, if you will. emily: a leadership vacuum. talk about the soundness of uber is lyft, considering uber planning to lay off 20% of its workforce. uber is a much larger company. uber also has uber eats. lyftis more focused -- lyft is more focused entirely on the united states. is one more in trouble than the other? lizette: a great point is that lyft is focused on north america. uber is focused globally. lyft has been completely focused on rideshare and recently spinning up delivery options through partnerships. uber, on the other hand, has all

of these other businesses. you have uber eats. they have seen an uptick in that . that is something we will be watching for when they report earnings next week. whoy: lizette chapman covers ridesharing. thanks so much. the scooter company line announcing layoffs today, 190 people. we will cover all of these stories as they continue to evolve. meantime, i want to bring you another story. the trump administration planning to launch operation warp speed, a manhattan project style initiative to drastically cut the time it takes to develop a covid-19 vaccine. an assistant professor of emergency medicine at john hopkins university says the country still has a long way to go with testing capacity. take a listen to a conversation with our own tom keene from

earlier today. >> people are probably tired of me harping on testing, but it is the underpinning of everything else we need to do. while we are getting better with testing, we have a long way to go. we need to keep laser focused on that. on medications, we are seeing a lot of progress. we are seeing vaccine progress, which will be key to long-term fighting of this disease. a lot of ways to go. find the most reassuring about testing? how much more testing do we need in the u.s. and are tests reliable right now? lauren: the point-of-care diagnostics are getting better and getting picked up more broadly. we still have major issues with the supply chain around testing. we still need the reagents, the materials to run the tests. we still have issues with the

swabs that you use to take a lot of these tests. we need to focus on making sure we not only have enough tests, but they are in the right place. the key to getting back to work is making sure the tests are distributed where we can detect where new outbreaks may occur. >> let's go to your core competency, which is emergency medicine. an emergency room and may -- in across thisber nation where people walk in the door after they stub their toe, etc. we are going to test all of those people for the virus, aren't we? lauren: that is the hope so we can get them the care they need without putting health care workers and other patients at risk. the idea is people who don't show symptoms of covid-19 come into the hospital, we would put

them in a different part of the hospital and safely care for them while we are still dealing with covid-19 in the community. tom: i look at the huge challenges. i am by mount sinai on the upper eastside in new york. you can see it in the faces of the people. will we end up with two emergency rooms, two hospitals? lauren: i hope that we aren't. we can't distribute our clinicians like that. we can't distribute our resources like that. my hope is this will become a disease we can manage with tools like other diseases that make people sick, like flu, like hiv, like a bunch of other diseases where we can find people who have it early, safely care for them without putting others at chainnd that our supply and resources allow for that.

tom: i think about the sadness here, 58,000 deaths as well. the same amount as we exceed those killed in vietnam. give us the scope and scale at the johns hopkins university right now. can we say you look forward to a may that will be improved from april? lauren: i do hope so. we are seeing a slowdown in cases. we are starting to feel the pressure release, but that is the time to be vigilant. cases, see spikes in especially as people relax social distancing practices, as they tried to go back to work, go back to work, so this does not mean we have a toolkit to fight this. we have to be proactive and follow social distancing still.

it does get hard. we have to remind each other that it is still really important. emily: coming up, we will be talking about amazon. amazon also reporting earnings later this week. we get a preview coming up. this is bloomberg. ♪

emily: amazon said to report its first quarter results tomorrow. i want to bring in bloomberg's matt day, who covers amazon for us. they halted their non-essential e-commerce business, but saw a huge spike in essential items, grocery delivery was a huge part of this quarter. still a relatively small part of amazon's business. what are you going to be watching? will amazon's mix of sales

be interesting. traditionally they have not relied a bunch on groceries and staples. for them that is like flipping a switch as the pandemic ca -- as the pandemic came and people shopped from home. overall it will be what they have been selling and how much demand boost they saw from people children at home. emily: advertising has been a growing part of amazon's business. they have been coming in a distant third to facebook and google, but supposedly an increasingly important part of the business. we have seen facebook and google's ad businesses suffering at the end of march. will we see the same for amazon as well? matt: i think so. advertising is free money for amazon once they turned this business on. being at the top of search results on amazon.com is

lucrative for them. notle expect that to be hit only from the economic slowdown, if people who buy an ad -- you have nothing to sell because you are out of inventory, you will get pushed way down the rankings. how about aws? could that be the bright spot, or with companies suffering as a result of the economic crisis, are they not going to be able to pay up for that? matt: microsoft's results are a clue. they are running second to amazon. this makes the better case for cloud computing power. we might see midsize businesses pullback because they don't have the cash right now to do the cloud computing shift. they might have had plans, but now they have bigger issues like making payroll. emily: amazon got an exclusive

deal with the nfl to stream its live games, on top of twitch, which amazon owns. matt: amazon is desperate for live sports content. they are making a push for english soccer and other things around the world. this is them trying to make the next step in making prime video a sports destination as well and see how they can break into new areas of entertainment for the prime business. emily: what about prime video? netflix saw some pretty incredible numbers, but they are looking at content drying up, especially in the second half of the year if they can't restart production on some of these shows. i assume amazon would be in a slightly worse position than netflix. what do you see? dynamicsexpect similar to play out there.

amazon prime is in an arms race for content with netflix. they were shelling out millions a year on content. they might face some of the same struggles as netflix. emily: matt day for bloomberg news. we will be covering amazon tomorrow. thank you so much for your insight. just to recap the big earnings we have been reporting on, tesla, facebook, and microsoft all seeing their shares rocket after hours. tesla posting a surprise profit for the first quarter. the company burned through a $900$900 million -- almost million in cash. tesla saying they could deliver 500,000 cars by the end of the year. facebook reporting revenue and users beat estimates and saying it sees signs of advertising demand stabilizing in the first three weeks of april as ad sales

are basically flat. we will dig into this more after the show. apple results out tomorrow. apple and amazon tomorrow. you won't want to miss that here on "bloomberg technology." bloomberg daybreak: australia starts now. ♪

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haidi: i am haidi stroud-watts in sydney alongside shery ahn. u.s. stocks rallied to a seven week high on hopes of a virus treatment. the nasdaq on track to erase 2020 losses so far. president trump sees the light at the end of the virus tunnel. a project called operation work speed aims to drastically cut the time it takes to develop a vaccine. tensions rise between australia and its biggest trading partner, china.