announcer: from the heart of where innovation, money, and power collide in silicon valley and beyond, this is bloomberg technology with emily chang.

emily: i'm emily chang in san francisco. this is bloomberg technology. coming up in the next hour, it big ms. for coinbase -- on revenue and earnings, total assets plunging by 63%. my conversation with the coo after the numbers crossed this hour. plus just as the u.s. signs a chip act into law, on the brink of a major slowdown. we will discuss. and would you subscribe to an electric car then own one? we will talk to the founder of an ev rental company that allows customers to reserve their own tesla in just minutes. tech stocks dragging the markets down, big concerns about chips.

ed ludlow is here with all the details. ed: certainly the center of my concern -- micron the latest chipmaker to give a signal of rapidly falling demand. stocks down 4.6%, the biggest drop since june. wider ramifications of the equity markets. pulling down the nasdaq 100, micron down 3.7%. look at the philadelphia semiconductor index and nasdaq 100 side-by-side. coming off our june and july lows, things have really changed. nvidia, micron, intel all adding to the same picture -- demand for the devices these chips are going into has dropped off and now the key inflation trend, the u.s. cpi for july, we are starting to talk about recession fears which has clearly spooked the market this tuesday.

earnings season does continue in earnest. second quarter sales missing estimates, a big drop in assets on the platform but signs that user base is sitting on the sideline and still engaged. emily: ed ludlow, thank you. we want to stick with coinbase and bring in sonali basak. i miss on revenue, a miss on earnings, they narrowed their user forecast and what i thought was interesting is the assets on the platform plunged by more than 63%. that seems significant. sonali: that drop off in assets, the drop-off in monthly transaction users and transaction revenue, that's a reflection of what you are seeing as a retail business. you heard in the conversation a lot of retail traders on the sideline, this is a pivotal business.

the stock down 5% after hours. this is after a steep drop-off this year. it had quite a run off -- quite a run-up in the last couple of days and it's giving that back. a lot of investors, bonds also drop and coinbase, the cost to borrowing rise because bondholders are losing a little confidence there. the question is what is the ford outlook? outlook for the third quarter doesn't look so rosy. monthly transacting users and volumes are expected to be down again. a little of that run-up we've seen in crypto prices, not enough yet to offset some of the pain you are seeing in those trading businesses at coinbase. emily: here is part of what emily choi had to say. emilie: i think it was a rough

quarter for most companies. in the crypto space, we had some big episodic events that happened during the quarter and some of those asset prices strunk which impacted the asset platform and others. emily: when i tried to ask for her forecast when this winter thaws, she said i shouldn't be prognosticating but thanks some of these are crypto industry specific factors and some of it has to do with the broader economy. and it came to hiring, they did get over exuberant. what did you make of what she had to say? sonali: it's true a lot of companies, you are getting pretty close to half a billion dollars in terms of impairment charges. similar things in charges at microstrategy and the block but what about what you are seeing in terms of the cash flow?

that's another half $1 billion nearly. our own bloomberg intelligent -- intelligence analysts are saying they are going to have to tighten the belt more when it comes to their cash burn given the topline pressures you are seeing when it comes to transaction revenue. emily: we will catch that full interview later this hour. thank you. the u.s. justice department is preparing to sue google as soon as next month, capping years of work to build a case that it illegal -- illegally dominates the digital ad market. i want to bring in julia love who just started covering dougal for bloomberg. welcome. this is a case the doj has been working on for years. what has been the big breakthrough? >> thank you so much for having me. this case is a long time in the making. the doj first started looking

into these questions in 2019. they brought their first case related to search but now we are hearing they are getting close to finally bringing a case of the ad tech market. emily: what could come of it? julia: there's a lot at stake for google. there was a similar case brought by the texas attorney general in which they are seeking to force google to sell off parts of its ad business. google plays several roles in this market. it also does business with publishers and advertisers, so the state of texas arguing google must sell off part of its business. it can't play all those roles and it's possible the doj could say something similar. emily: we spoke into google executives and they always talk about how they are constructively engaging with regulators. what has been their comment on this report so far?

julia: they haven't said much. they argue their role in the advertising market brings efficiency to publishers and advertisers. but behind the scenes, i colleagues have reported they've made settle in office -- settle -- settlement officers to the justice department but that has not yet done the trick. emily: there are a number of potential lawsuits coming over their dominance in the app store. what's the story there? julia: it does just seem like part of a very robust pattern of antitrust by the biden administration. facebook was sued over the acquisition of a small fitness app, so it's clear they are finally taking action. emily: julia love, who covers

alphabet for us. coming up, the u.s. is spending billions to revive the chip industry. but after years of not enough supply, micron says the demand for chip is slowing thomas so now what? -- designed for chip manufacturing is slowing, so now what? this is bloomberg. ♪

emily: president biden signed a broad come petition bill into law, including $62 billion were to mystic chip r&d. it's at the center of the administration's effort to reduce reliance on countries like taiwan. meantime, micron technology plans to invest $40 billion for

chip manufacturing in the u.s. as part of a broader 150 billion dollar investment strategy. the micron ceo told bloomberg earlier there could be trouble ahead for the chip sector, especially on the demand side. >> due to macroeconomic uncertainties as well as high level of equity customers have built across various market segments, that is a new thing in the demand quarter. emily: here to discuss if tom giles. walk us through what the micron seek to say on top of what we saw from nvidia this weekend intel last week. >> the picture from the chipmakers is becoming incredibly dour. micron basically set already our lord forecast for our revenue is

going to shake out in the fourth quarter is going to be worse than we expected. it's going to be at the low-end end or possibly for the low end. that sense shippers across the chipmaking industry. he talked about demand, buildup of inventory, there's the question about the key steep sweeper snapping up during the pandemic, that is starting to pullout. emily: so what is your read on this? is this a periodic correction or is there something more fundamental book on here? we be at the beginning of a recession collapse in chips? >> collapse is a worse word but but wait with the strong demand we have seen in the last completed book that is not sustainable. some of it was pulled forward as work habits changed. at the forever. there have been worries that in the wake of all but shortages

we've been seeing pat but demand weeks because it what stronger than the multipurpose phenomenon that happened, tumors can't get the parts that want in the time they need and tend to order more. it's called double ordering. that's a normal behavior. the industry but a printout it double ordering. did deceit meant going through the moon -- into the making. it starts to get back into balance and you how much of the demand israel and how much it phantom. that is a component of what is going on. not this is unusual, it's just we have a ton of upside a couple beers and now it seems to be correcting. you mentioned pcs because they are horrendous right now. tv eats, everything. one thing micron said that

what's different is pointing out inventory corrections in things like autos and industrial. these are markets that are holding up. well. i checked onto bets. i personally have been concerned about the double ordering on and if it turns out they were holding it to of memory inventory, i don't know why they wouldn't hold inventory and other parts as well. people will forget that statement at the next potential leg down. emily: the timing is so ironic because you have the u.s. spend -- place to spend plans the dollar bunch of manufacturing in the diet states, but do we really need it? tom: this is a big date of celebration for the chip industry. i listened to but it's press conference earlier and there was a big halloween and apart from the audience talking about innovation and creating jobs. and that came time, you have

these companies like intel talking about slowing down hiring, cutting back on and this is the industry that has been being months to get the chip to act through. finally they got what they want the event lands with the thought of the workday possible with micron making this announcement it day after india makes this announcement. what they are trying to do with the chip fact it is a long-term investment. it takes years and billions of dollars to build these factories and clearly, we thought during the supply chain crisis during the pandemic that that u.s. has fallen behind in production of key chips. two countries you mentioned already, taiwan and south korea. emily: are any chipmakers quake to whether this better than others? i'm thinking intel, which at tom mentioned, is investing a lot of money in america's heart and. stacy: they are and we can argue

whether they can productively deploy all the money they are getting think on their balance sheet and then they can do whatever they want. they actually have to stink it into the ground and make productive investments. they have been over for a long time talk quickly, the forecast they were giving to justify weapons, my personal opinion is that long-term forecast was outlandish. i don't know they are going to be able to do but pray biggest -- this step takes years. the general idea of whole long-term versus short-term, the whole industry, it's happening now and over time we will probably need that stuff. the industry is big. 556 break dollars in revenues

last year. we go into a downturn. but even single-digit growth over the cycle, it is a trillion dollar industry in years plus or minus. intake years, we will be glad on a broad basis some of these investment's are being paid. does that mean we're going to need them now? no. emily: so you are saying it's going to be a decade before i meets demand? stacy: no. i think supply is already meeting demand. but you have to remember, even as we go whole hog into this, you are not going to see any material out of capacity for years. even micron said we are going to do $40 million -- $40 billion. this stuff takes years and many billions of dollars. you could argue $52 billion or whatever is a rounding error in the grand scheme of things.

this is not going to structurally improve the percentage of capacity sold in the u.s.. so you have to start somewhere. tom: and don't forget, in the meantime, south korea, taiwan, these makers, they are not going to slow down. they are going to keep barreling ahead with their innovation and spending and that u.s. is going to have to work all the harder to catch up. emily: very good point. great to have you back on the show. thanks for stopping by. coming up, shares popping on the back of earnings. that's next. this is bloomberg. ♪

emily: lemonade says it's on its way to profitability. shares popped after groupthink smaller than expected losses. lemonade says it could reach profitability without any further infusion of capital. here to discuss it is the co- ceo. when do you get to that coveted profit ability? daniel: we will let it be known that within a matter of weeks, we will be at peak losses. we will see shrinking losses as we continue to grow. we reported 77% growth year on year, so we are seeing strong growth and shrinking losses. this is a reflection of the business doing what it is designed to do. many product launches, many market losses. more of these investments are beginning to pay off.

it's very gratifying. emily: you save have moderated spending and the pace of hiring and you have enough gas in that tank to subsist on the capital you have. what is your outlook if the macroenvironment continues to be very challenged, if we go into a recession? daniel: we are fortunate to be working in an industry that is resilient, so we are seeing green indicators flashing on her screen across the business. strong demand, strong efficiencies, strong operational efficiencies. there are a couple of variance where we are affected by the macro. cost of capital has shot up. but in terms of the fundamentals , the industry is really resilient.

the cost of capital would impact us if it weren't for the fact we were already well. other than that, it is a fortunate position to be in. emily: since the acquisition of metro mile, a third of the business as renters, 20% is cars. what sort of trends are you seeing in the insurance industry given rising inflation, given consumers under pressure when it comes to basic gas and groceries? daniel: inflation does affect our industry just because of the supply chain has been profound. you take the car into the shop to get it repaired and you would pay a lot more than you would otherwise. specifically within that industry. definitely an impact there and

an industry where you can't raise prices. everything has to be approved by regulators. you get mismatches between the time you apply and you can actually change those rates and inflation does impact you that way. we have the advantage having acquired metro mile being in the unique position of having a far richer, more precise data set on which to price. broad stroke proxies, gender, credit scores, marital status, spending 10 years with -- they can price and estimate the risk. having inherited all that data and injecting it into their text act, even under these relatively direct conditions the industry

is experiencing. emily: i understand you are exploring blockchain technology for climate change related insurance for farmers. what's the status and potential of that? daniel: it's a fabulous initiative. this is part of the lemonade foundation, this is entirely nonprofit and we launched the lemonade climate coalition where we are using a contract to enable subsistence farmers in africa to ensure their crops stop something like $50 of time. at those levels, the cost of selling a policy, supporting it, all of those dwarf the themes i just mentioned. a smart contract can execute at that insurance policy with zero

overhead. turning a higher policy into a smart contract, to buy coverage instantaneously, that will be translated into a wallet on a chain which will execute into a smart contract which will be parametrically driven so if there is a climate event, they will get paid. emily: fascinating. the lemonade co-ceo, thank you. coming up, we'll talk to the ev subscription companies, autonomy. they are letting people drive tesla's without owning them. that's next. this is bloomberg. ♪

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emily: welcome back to bloomberg technology.

let's get back to the markets now with shares of tesla -- one of the biggest drags on the nasdaq 100 after a slew of new single stock etf's that will amplify that's on a notoriously volatile share. ed ludlow is here with the details. ed: this is when it caught my eye -- we're looking at single stock etf that leverages an inverse etf. new products on the market launched tuesday, on a day when the stock is down almost 2.5%. whole point of a leverage inverse etf's you want to look at those outsized gains when there is movement in the stock. there's also a risk, direction is one of those providers. the stock was down 2.5%. that's the risk with a leveraged etf because at one point five times, that etf's -- that etf fell to 4.6 percent during

tuesday's session. if you think the stock is going to go down, they offer a bear etf. on a day when the stock was 2.5 percent lower, the inverse etf was up to pin 5% on a one to one ratio. regulars have been talking about this for a month. a at sex them on the month with a single name, tesla. this is the demand they have seen, tesla is where they are seeing trading volumes and inflows, so our get regulators are getting a little worried about this because you are making outsized that on a stock that can move in either direction depending your conviction. given what we've seen in the markets, it's an area we should keep an eye on. emily: would you rather subscribe to a tesla than own? joining the is the founder of autonomy, and ev rental company

that allows customers to reserve their own tesla and other electric cars in just minutes. how would you describe what you do that is different rather than a typical rental car company? scott: a rental car is going to cost you a lot more. it's a good option if you need a car in a city where you are visiting for a couple of days but flexible access to mobility is about avoiding going into debt and making it easier, faster and less expensive. one of the big barriers to electric vehicles is affordability. the average car payment in america is $650. we have a product i get you into a tesla model. tomorrow for $490. emily: talk to us about your partnerships. you are working to increase the supply of other kinds of cars. what kind of options are they? scott: we have been operating in

california throughout the first part of this year. what we proved is the economics and business really does work. we created a robust man list and we are expanding into the model why and announced an order for 23,000 vehicles across 17 different automakers. we are going to be expanding the offering to give customers more choice and it's going to be the entire electric vehicle buffet. everything from an entry-level vehicle all the way up to a hummer ev. we put in an order with all these automakers that are going all in on electric. it is an exciting time to be a consumer. you will have a lot of choice over the next 12 to 18 months. we expect our order for 23,000 vehicles will get filled differently by every manufacturer. talk to each of these manufacturers about the production timetable, when you can expect the order to be filled. we expect our biggest purchase

order, which will be with tesla, to start being filled right away. we placed an order for 8003 hundred cars from tesla alone. emily: how do you finance all these orders? historically it is kind of a difficult business. scott: fundamentally, we believe owning electric cars a good asset at this moment. you've got structural scarcity for electric cars and simply not enough cars being made and the factory to make use electric cars is the new car factory three years ago. we are looking closely at what gets produced, the announcement, everyone has said they are going all in on electric all topics not at the general motors and ford have said they are going to make an electric car, they're going to make all electric cars. general motors by 2030. these facilities come online in these products become available, autonomy is another way to get access.

we are not selling you a car, we are not lending you money and you can put this on your credit card. it is a month offering, so far less commitment. it doesn't show up as that. it leaves you with available borrowing capability. it's modern in the sense that it is 100% digital. everything is menu-driven. emily: what about what gets bought? what are you seeing in your market research about consumer adoption of electric car? emily: our -- scott: our order is following production. these are the cars we feel are going to be most popular. we are ordering fewer volumes of the higher end cars. our median price point tends to be around $50,000. our launch vehicle was the tesla model three. we believe the model three is this generations prius.

it does represent the media as the medium price point and that allows us to go over the $500 monthly payment. emily: something we will continue to follow. thank you for joining us. widely recognized as one of the prius athletes of all time, serena williams plans to retire from tennis after playing in this month's u.s. opens -- u.s. open. williams has 123 grand slam titles and almost $100 million in prize money. i asked if she was thinking about retirement a few months ago when she joined us on the show. >> every tennis player thinks about the r word as soon as they hit five years. it is so intense. it's literally 11 months out of the year. but i don't know. i'm living for the day. i always tell people i'm not planning for tomorrow. emily: here we are a few months

later and she has made a decision about the r word. speaking about business, she says she's going to focus on her venture capital firm which mostly invests in companies started by women and people of color. >> i wake up every morning thinking i cannot wait to open my computer and just talk to the company and see what we are going to do today. it's something i am super passionate about. emily: coming up, my exclusive conversation with the president and chief operating officer of coinbase. what emilie choi has to say about a rough quarter. this is bloomberg. ♪

emily: on to our crypto report now -- i set down with coinbase coo emilie choi. it was a miss while assets plunged. coinbase narrowed its user forecast. here is what she had to say about the quarter. emilie: i think it was a rough quarter for most companies. in the crypto space, we had some big episodic events that happened during the quarter. some of those asset prices shrunk which impact did things

like the asset platform another numbers. emily: the monthly transaction users actually beat but coinbase is losing market share. is that your take? emilie: let me unpack that. there are different pieces to the puzzle. the core retail customer is somewhat sitting on the sidelines in this turbulent market. we've seen that impasse cycle. they want to huddle for a little bit and they will engage with other things. we did talk about that there were episodic bankruptcies and as a result of that, we were untouched by that. we have incredible risk management and zero exposure to that but there was an aspect where we did not benefit from the liquidity flows that happened. there's also the reality that during the cycles, you have market makers and traders making up the bulk of the activity.

a lot of that activity happens offshore. to that extent, we may not have dissipated as much as others in the ecosystem. the way we focus on that as we drive more international growth and participate in that upside. we are investing heavily in products like derivatives which are users are showing demand for. emily: what is your take of where we are in the crypto winter? are you seeing signs of starting to saw or are we still deep-freeze? emilie: i'm smart enough to know not to make a prognostication where we are in the cycle. what i can say is coinbase has been through four major cycles, 10 years of operating this company, so we just know how to run a long-term business. we know how to preserve cash, how to operate it for the long term and that is what we are doing. emily: how much of what is happening is tied to the overall economy as opposed to crypto-specific factors? emilie: it's a mix.

it's hard to say what comes from the macro and what comes from the crypto winter. in some cases, they were intertwined because they caused a run on the assets that created some of those bankruptcies. ultimately, the way we approach that market condition is we think about how do we drive higher revenue generating activities. how do we cost cut in that type of environment and how do we make sure we have the absolute risk management in place so we avoid any of the contagion that happens? emily: you had limited ongoing hiring, a big amount of layoffs in june. you and brian have always talked about your thinking in the long term and looking ahead in the cycle. what do you think was the calculation here? where do you think things went wrong? emilie: it's entirely possible we got a little too exuberant as the market got frothy. that's a natural consequence. we are not the only company to

have experienced that. we took some of the earliest, quickest decisive action. as hard as that cuts were, we had to be nimble. emily: you announced a partnership with blackrock. are you expecting more of these institutional partnerships? emilie: i have wanted that blackrock partnership since the day i joined coinbase. we would not have it ready for it when i first joined. blackrock would not have been ready because their institutional customers were not necessarily mending crypto as the newest form of asset class. it was a new idea. for this to come together during the crypto winter is an incredible testament to where we are, where their customers are, and the most important point is it speaks to very institutional customers wanting to get crypto asset exposure. emily: will we see more of these

or are there other potential partners you are talking to that are interested? emilie: you will see more of the eighth and honestly we are the number one partner to partner with those folks given our focus on regulation, compliance and security. emily: there was a back-and-forth with the fec. i believe there's nine tokens the fec claims are securities. emilie: we have never shied away from regulation. it's part of our lifeblood. it was counterintuitively something we invested in in the early days of the company. in this case, the ftc has launched an inquiry about nine assets on our platform. we spend a terminus amount of time, effort and resources classifying assets and whether we believe they fall into the security or utility space. if this is an opportunity to have that dialogue again and

make sure we agree on a sensible framework, we welcome that and we will partner with any other regulators were lawmakers on this. emily: there's also insider trading case where a former coinbase employee has been charged. what is your relationship with the sec at this point and what is your comment on that case? emilie: we have a zero tolerance policy for front running. we pride ourselves on the amount of security and detection we invest in to make sure we can detect for front running. we worked closely with the dmk and they publicly lighted us, which is an unusual thing because we spent eight ton of time getting them up to speed on the new want of the case. we will continue to work with any regulators and law enforcement on making sure we nip that activity in the bud. emily: i know you are very active on the m&a front. curious what your strategy is in a downturn. apple ceo tim cook used the word

deliberate with me. we are going to be deliberate about spending going forward. emilie: that is a really good adjective to use. we will continue to be deliberate as well. we will continue to take advantage and the greedy where others are fearful. we did the zappos acquisition in the last winter and that catapulted us to be the number one regulated crypto custodian in the world. we are going to take advantage of these opportunities where others might be fearful. emily: coinbase president and coo emilie choi. the company started out posting social media clips of high school basketball players is now worth tens of billions of dollars. this is bloomberg. ♪

emily: overtime sports has just raised $100 million in funding to expand its reach into the next generation of athletes. the company started posting high school sports highlights in 2016 to build an audience that loves sports. over time boasts channels posting basketball, soccer and gaming and has branched out to run its own sports leagues. i want to bring in the overtime ceo, dan porter. i know you started out making bets on high school but you've evolved quite a bit since that time and you're focused on next-generation athletes may be just out of high school. give us a snapshot of where the company is today. dan: today, we have our core

business where we went after the audience, the average age of the kind of sports fan, season-ticket holder, the big four sports and we made a big bet we could go out and get that younger audience and that younger audience is the core of our community. what we did is we said we have this active community, we are on every social platform, they are very engaged with us. let's launch our own leagues on top of that. we saw some opportunity in the marketplace, we saw opportunities for athlete empowerment and we built these leagues with 17 to 19-year-old players. really, it's about the audience and professional sports it's incredible, but every generation once its own thing spoken in its own voice. so we launch the league in basketball, a league in

football, where we think there's an opportunity to draw millions and millions of fans and deliver sports in their own voice. that's a big bet and that's where the $100 million is going. emily: what's the decision to expand these leagues and potentially cash in on media rights? dan: our goal over the next three years is to grow audience. it's an interesting thing because you become a sports fan, you feel an emotional attachment to a team, your city, and we've got to get out there in front of our tens of millions of fans and convince them our league is the leak they want to pay attention to. as we do that and we have millions of followers on these leagues themselves, we want to bring on more sponsors and i think the value is rights stop you have amazon and apple, more competitors in the market data you've ever had before. we want to build a league the

fans like but also that media likes. emily: the goal was to build this audience of 15-28-year-old who are not as consumed by it as their parents are. what does a healthy audience look like? dan: first and foremost, they probably consume it in a lot of different places. i think that's true of you and me to some extent as well. there is no single platform for sports anymore. you are aggregating your information. they want to see athletes who are like them, who they can be aspirational toward. it doesn't mean nba or nfl athletes are an amazing, they are. but i think they want to be participants. they want to do not just be expected to sit on the couch and watch, they want to be spoken

to. i talk to young fans, they tell me i want to be seen, i want to be heard for what i bring and i think that's true across content and music and all aspects of culture. gen z and millennials want to put their stamp on it. they don't just want to consume it and that's what we have to figure out how to continue to do. emily: i know you are also working on an fts. i know there has been some skepticism on how big the nft market can be. what are you betting? dan: i'm betting an fts are not an end of themselves but a means to an end. if we can use an fts to give our audience a chance to participate metoo empower them, to activate their voice in the space, that is amazing. if we just think about it as here's another revenue stream or we should do the same thing as everyone else, i don't think we will realize the full potential.

but at its core, it's about decentralized participation and activating the audience and that's always at the core of what we do. i think of an fts the same way i think of as social media. like a platform to do more for the audience. emily: we will keep watching. dan porter. that does it for this edition of bloomberg technology. tune in on wednesday. we will hear from the roblox ceo -- shares are up injuring. plus what's next for the metaverse. and one of the many people in and on- [announcer] imaginein elon having fuller, thicker,

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