♪ romaine: welcome back. apple earnings, one key revenue -- 1q revenue. eps, $1.68. iphone revenue coming in at $65.6 billion. overall, this does seem to be a beat on the top line numbers, but the shares are under

pressure. romaine: it is worth remembering, -- caroline: this is the first time what we have seen more than a quarter million dollars for this. maybe it is a case, the stock was up 81% in 2020. maybe a bit of profit taking when you see it get the results that many hope for. joe: that is exactly right and some important context in all of this which is that all of these numbers are up just massive amounts. even with a 2% or more down day and some of the headline indexes with some of those big selloffs, it is inconsequential in the grand scheme, and the kind of selloff that is cliche, it was due. how surprise can you be when you run into a speedbump? i want to bring in bloomberg intelligence contributor. it looks like a good headline

numbers, but the stock under a little pressure. what is your takeaway? >> these numbers are solid. our expectations were for the iphone to be very strong. they came in very nicely, total sales above our estimate. from every different product line, whether you are looking at iphones, ipads, that is almost 2x the margins in the product business. this is a clean quarter. the question is what is in the stock versus what is not. people had high expectations, but in our view, this is a very, very solid quarter. romaine: how quaint. let's talk about the milestone and caroline mention this, they did cross $100 billion mark. there is only a few

companies that have crossed that. the general sense is that apple has become this juggernaut. it is a cash generating machine, what actually gets investors excited at this stage? what more can they do given apple's size and multiple that would make investors think, this stock and appreciate another 80% like it did last year? >> that is a great question, but the vectors that drive the fundamentals of the company are still the basic. one is iphone units. the iphone is still skewing to the upside from a price mix perspective, so we expect of you that it is going on. the two factors that are independent are iphone units and the services business. the services business obviously

has a dozen subsections within it and it is a very margin rich business, and we think that overall, this is a business that is going to add to the platform capability that apple has. those are the two big things, the car is nice, all of the new buzz products are nice, but this is a two factor story, iphone units, and services. caroline: what about geography with china going strong? anand: the two that are very important to the apple story are china and the u.s. emerging story is the pandemic. if they are able to create a platform that creates appeal within india, even for the products business are the services business, this is a

business that could add several tens of billions of revenue to the overall over time. from a manufacturing basis, that is important and from product, india is important. those are the two, u.s. and china markets, and the india market. joe: what is the biggest risk facing this country? anand: it has a 35 multiple, this is a company with 100 billion plus in sales, so expectations are very, very high. this is not going to be a straight line up into the right kind of situation. you are going to have bumps along the road, both in units as well in services sales. i think that is one key risk for sure. the other key risk is that, you will have sort of a slow down

overall consumer market, or overall slowdown in sales, and that could hurt the iphone business, but for the next couple of years, we don't see that. romaine: always appreciate you hopping on for earnings like this. apple beating across the board. shares under pressure. the other big story was the trades that we saw in a lot these heavily shorted stocks. the sec and u.s.s/put out a statement saying they are monitoring the ongoing situation and that they will work with their fellow regulators to review the activities of regulated entities, intermediaries, and market purchase offense. caroline: to the point. meanwhile, we are going to do the same when it comes to these earnings. we will give you the breakdown of results when it comes to apple, facebook, and keith gangl

will speak to us next. this is bloomberg. ♪

♪ caroline: let's get you up to speed with facebook trading off the markets. it was down at one point, but we are now trading in the green as people are impressed by the fourth quarter numbers. strong quarterly results really across the board. they had the tailwinds of political ad spending and to focus on e current -- e-commerce. perhaps there is a slight slowdown in the number of daily active users and u.s. and canada calling to 5.9 million. maybe that being some of the peak products.

people perhaps turning to other competitors. investors like it, up six- tenths of 1%. romaine: apple out with earnings, 21% jump in sales. $111.4 billion in the fourth quarter, their fiscal first quarter. they also be all of their unit revenue numbers came in above, $36 billion on the balance sheet. joe: for more on all of the action, these big names reporting earnings, let's bring in keith gangl. objectively speaking, these are extraordinary corridors, and all of these companies certainly -- facebook, apple, firing on all cylinders, yet the stock market is underwhelmed.

what does that say about how much optimism is baked in and what is it going to take 2% higher from here? keith: these names are high, so it does not surprise me to see knee-jerk reaction. the earnings across the board for apple, outstanding. tesla, not as big as what people expect, it had a good revenue beat, but the etf, a little bit light. 50% over the next multi-year, so it is a little later than the bullish expectations, so would not be surprised to see selloff. caroline: overall, fundamentally, does the buy remain for a company like tesla? it looks to be expanding internationally, even though it seems to be paying a lot to it ceo that they blame for margins being suppressed and whatnot. keith: tesla is a different story than the other two. we do not own it, and we would be neutral to underweight it by not owning it. the valuation is risk, so you

have to believe in the ev story. we like to see a pullback before we step in. it used to be -- it is a way better company, better profile, but the valuation is super rich, and that is hard to explain and you really have to buy into the story, and the stock on the multiples -- we will see if it actually gets there in the next six months. we will see what the pace is, but the guidance is a little bit less. romaine: want to get your thoughts on apple, and it remains the juggernaut that people would expect it to be. that can kind of work against these companies. we saw pretty decent revenue growth overall and of course, all of their units, posting sizable revenue growth. margins seem to be -- and we are seeing selling prices on the iphone. as an investor in apple, what is your long-term visa visa for the

company? joe: -- keith: i would say the iphone, we saw big upsides in the quarter. that will be a key driver. the other key driver is the services. that will be 20% by next year. almost 2x the other iphone business. that is what we have seen over the last several years, and now as it is morphing into a software company, the multiples is in the low 30's. i think it can maintain that multiple as long as the service revenue is growing. joe: i want to get your take on where we are and the market cycle. the fascination of everyone today, the small cap, mean stocks. do they tell you something about where we are in the market cycle? do they say we are at an overall

worrisome point, or are they weird, special situations, more idiosyncratic that does not tell us much about where the bigger names on index level moves are heading? keith: great question. everyone is watching and fascinations, but we are not involved. but we do look and see what the implications -- i've been doing this for 25 years and i have not seen anything quite like this. i am amazed and shocked at how a stock fundamentally is not see anything change from two weeks ago, but up a lot. maybe it was undervalued before, i'm not sure. maybe it is overvalued now. tier biggest question, i think these are more outside of what is going on in the overall economy. we will see if it can unpack the overall stock market. hopefully it does not. it could be a little bit of a canary in a coal mine.

at this point, i do not think it is. caroline: going back to companies at the fundamentals, facebook, what do you make of the numbers coming out in terms of the growth we saw in the fourth quarter and whether that sort of peaks when you see a slight slowdown of growth in the u.s. -- does that were you at all? keith: a little, but this is a sector growth company that is growing 10, 20, 15% going forward. the multiple is only at 20 times for a growth company, so it is not that bad. the user growth slowed a little bit, but not terrible. we expect to see the strength in q1 and q2. i think facebook is still a name to own for the next year or two. romaine: keith gangl, grady investments portfolio.

what you did not miss was gamestop, and that wild ride coming up next. we will talk about it even more. this is bloomberg. ♪

♪ caroline: we have discussed all the key earnings that have come out after the bell, but the big headline, it was the phenomenon that is gamestop. maybe it is blockbuster, maybe amc, all of the other names that seem to be climbing. joe: absolutely extraordinary day. there are no words, it is just amazing. i loved watching it all day. the intraday moves, amc up 300%. bed, bath & beyond, up 43%. express, up 214%. gamestop up 135% at its peak.

romaine: there is a lot of other companies. joe: tootsie roll. romaine: kodak, nokia, you have traders out there that have a list of heavily shorted companies with low flow, and you just go to town, get a few friends and i don't know. joe: at blockbuster. romaine: is that illegal? joe: apparently it can drive up big names. joining us, gabriel grego, quintessential capital management partner. thank you for joining us. what is the future of your industry, what is the future of shortselling? is it a career risk if anyone is going to advertise or be on the short side of a stock? gabriel: absolutely, yes. it turns out this is a risk and i think the shortselling is

bright -- the future of shortselling is bright but it is not always a game that can work all the time. i would say you should differentiate between active shortselling and passive shortselling, just because it is very hard to ride the system of the market, when the market in the short-term term can do anything. what has been happening the last few days can be sobering for a lot of funds, and should spur a lot of the funds to be even more careful with such a thing as risk management considering the shareholder base on a company, and i would also say, maybe it is a good opportunity for a lot of selling to emphasize what is ethical shortselling, which is basically going after companies that are misbehaving. whatever has been happening to this stock like gamestop

or amc, it is less likely to happen to a company -- just because i would say criminal behavior creates a moral outrage . they are messed -- less likely to play this game, so shortselling is alive, but you have to be careful. it is not a game. study very well what you are doing and do not be stubborn. if you see the market is turning against you, either you are wrong to, or either you are right, be the timing is wrong and you have to rethink it. caroline: i like the way that you are illustrating you are an activist when it comes to shortselling. i am interested in your perspective on transparency. there are a lot of calls, the sec and janet yellen are monitoring. is there an element that there should be more transparency about the amount that is

shorting, not just regular -- is there more transparency needed in the short institutional side? gabriel: it is a very interesting question. in my opinion, i am also biased, but i think i am right on this issue -- i think you should be on the same kind of leeway in market and a trading that you leave too short investors. you want the transparent markets. you want asset prices to trace value, and the only way you can do that is if there is no symmetry between long and short -- asymmetry between long and short investing. being very careful about putting out pieces, making sure you check your facts, and he separate facts from opinion, and you do things in a rational way

like any good professional. many funds do that, and some others do not. i think you should differentiate between unethical, smash and grab behavior that sometimes you see in the market, and what i think is more about putting out a case that you believe in and stick to it to be proven right or wrong. if you talk about regulators, i am not totally negative on what is happening with the stocks. i think it is an interesting development. a new power is coming out in the market. the market is free, so everyone has a chance of exactly how they should fit. it would make sense that regulators look at it and make sure it is done according to the law. you start getting into problem

areas once you start trading, not because you believe in it, but because the purpose itself with the trading is to move the stock price in a direction that you try to do. i am not a lawyer, it seems to be that is a little bit what happened, provided it is not against the law, i do not think what is happening should be hurting. romaine: what that is not against the law. that is what people on wall street have been doing for time. if traders on a social media platforms that we are all going to do this, do you look at that and say that his collusion or is that a bunch of people with a thesis that the stock valuation should be something different than where it is on that day -- as a short seller, you take the opposite side or at least you try to. why is it any different for someone who's taking the long side? gabriel: you are making a good

differentiation. one thing is to say, i believe in it, here is the evidence on the logic, here is my thinking, and this is my target price. i may be right or wrong, but that is ok. it would be different if i were to start calling all of my colleagues and said, listen, on this date on thursday at 2:00 p.m., we are going to simultaneously start shorting this dock, and then we all covered -- this stock, and then we all covered. the sec would rightfully crackdown on all of us. i only have sympathy -- it is very democratic in a way that is happening, but it seems that is a little bit of what is happening. if they are doing it because they believe gamestop is worth $22 billion, that is one thing. if they are doing this to "punish" shortselling hedge funds -- by the way, we are not sure any of the stocks right now -- in that case, they are just

trying to move the stock price, and that seems it would need some scrutiny. caroline: gabriel grego, wonderful to have this time with you. really thoughtfully spelling out what is his issue here. managing partner a quintessential capital management. we will have our one-hour special covering all this retail mania. emily chang hosts gamestop phenomenon. we are going to dig into all of the intricacies, the market moves, and joe, romaine, phenomenal in terms of bringing back of the feel-good factor when you walk into blockbuster, get a tootsie roll, and to get a dvd. but if netflix falls on the back of these trades, it is a whole other world. joe: if you have to reduce your short exposure, your hedges are not working and you have to reduce your long exposure, so if shorting comes dangerous, you can see how it has ripple effects in the market. romaine: the problem is there

were no hedges. enter gabriel's last points, who was going to determine what's good faith. joe: we will. caroline: that does it for what you miss.

♪ >> welcome to a special edition of "bloomberg technology." i'm emily chang in san francisco. this hour, we bring your special coverage with what is going on with gamestop. shares closing at $380 apiece today, up 883% in just two weeks. a reddit based trading group has piled into the stock. some wall street investors will join us this hour, as we drive all angles of the story. we will get insight from short-sellers, retail investors, security law officials. we are also