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, a big miss 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.

coinbase, 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. 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-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. take a listen. >> 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 assets on platform and other numbers. emily: when i tried to ask for her forecast when this winter thaws, she said, i shouldn't be prognosticating but thinks some of these are crypto industry specific factors and some of it has to do with the broader economy. when 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 other companies felt some pain. you are getting pretty close to half a billion dollars in terms of impairment charges. we've seen similar things in charges at microstrategy and the block, but what about what you are seeing in terms of the cash burn? that's another half $1 billion nearly. our own bloomberg 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. sonali, as always, thank you. meantime, 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 illegally dominates the digital ad market. i want to bring in julia love who just started covering dougal for bloomberg. first of all, welcome. this is a case the doj has been working on for years. what has been the big breakthrough? julia: 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 various roles in this market. it orchestrates the market, it also does business with publishers and advertisers, so the state of texas is arguing google must sell off part of its business. it can't play all those roles and it's possible the doj could see to do 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 particular 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, my colleagues have reported they've made settlement officers to the justice department that so far have not done the trick. emily: there are a number of different potential lawsuits coming. apple over scrutiny of 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 enforcement by the biden administration. last month, the ftc under lina khan sued facebook over the acquisition of a relatively small vr fitness app, so it's clear they are finally taking action. emily: julia love, who covers alphabet for us. thank you. 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 chips is slowing. so now what? this is bloomberg. ♪

emily: president biden signed a broad competition bill into law, including $52 billion for domestic chip r&d. it's at the center of the administration's effort to reduce reliance on countries like taiwan and south korea, whose homegrown companies are leading the market. meantime, micron technology plans to invest $40 billion for chip manufacturing in the u.s. as part of a broader $150 billion investment strategy.

but 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 levels of inventories customers have built across various market segments, it is being adjusted demand. emily: here to discuss. walk us through more of what the micron ceo had to say, on top of what we heard from nvidia and intel. >> the picture from the chipmakers is becoming incredibly dour. this morning basically micron said set already our lowered 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 ot possibly below the low end. that sense shippers across the chipmaking industry. he talked about demand, buildup of inventories. there is a question about all these pc's we were snapping up during the pandemic, that is starting to level out. emily: so what is your read on this? is this a periodic correction or is there something more fundamental going on here? could we be at the beginning of a recession collapse in chips? >> i mean, collapse is a worse word, but there have been a lot of worries that the strong demand we have seen in the last couple of years that is not sustainable. some of it was pulled forward as work habits changed. anything from home elevated demand, and that cannot last forever. there have been worries that in the wake of all the shortages we have seen that the demand we

saw, that was stronger than it looked -- there was a phenomenon that happened when customers cannot get parts they want when they need it, they tend to double order. it's called double ordering. that's a normal behavior. but the industry doesn't know it is double ordering, they just see it as demand. as actual demand's lags off, supply and demand backs off and you discover how much the actual demand is real and how much of it is phantom. that is a component of what is going on. none of this is unusual. it's just we have a ton of upside over the last couple of years and it now seems like in some markets it is definitively correcting. pc's look horrendous right now. smartphones don't look great, tv's, 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 very well. people are latching onto those. i personally have been concerned about the double ordering phenomenon in these markets. if it turns out they were holding it to of memory inventory, i don't know why they would not be holding inventory of other parts as well. people will forget that statement at the next potential leg down. especially in some of these end markets where right now demand looks strong. emily: the timing is so ironic because the you have the u.s. poised to spend billions of dollars on manufacturing in the united states, but do we really need it? >> this was supposed to be a big day of celebration for the chip industry. i listened to president biden's conference earlier and there was hooting and hollering 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 spending. this is the industry that has been lobbying for months to get the chip to act through. finally they got what they wanted and it lands like a thought -- thud on the worst day possible. what they are trying to do with the chips act is a very long-term investment. it takes years and billions of dollars to build these factories, and clearly, we saw 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: what are your thoughts on this? are any chipmakers poised to whether this better than others were not? i'm thinking intel, which at tom mentioned, is investing a lot of money in america's heartland. >> 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 sink it into the ground and make productive investments. in given their near-term issues, it is biting them now. even the forecast they were giving to justify the investment, my personal opinion is that long-term forecast was outlandish. i don't know that intel will be able to deploy this. this stuff takes years. this general idea of whole long-term versus short-term, the industry goes through downturns. it is happening now probably. that being said, over time, we will probably need this stuff. the industry is big. $556 billion in revenues last year. maybe we go into a downturn. but even that mid-single-digit

growth over the cycle, it is a trillion dollar industry in years plus or minus. 10so i think in 10 years i think we are going to be glad on a broad basis some of these investments are being made. does that mean we're going to need them now? no. emily: so you are saying it's going to be a decade before supply meets demand? >> no. i think supply is already meeting demand. but you have to remember, even if we go whole hog into this, you are not going to see any material amounts of capacity for years. even micron said we are going to do $40 billion. they are not planning on bringing that in for production until the second half of the decade. this stuff takes years and many billions of dollars. by the way, i have been saying this, $52 billion or whatever is a rounding error in the grand scheme of things. in my opinion, this is not really going to structurally improve the percentage of capacity installed in the

relative -- in the u.s. you have to start somewhere. >> and don't forget, in the meantime, south korea, taiwan, these chipmakers, 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. tom giles and stacy rask on, great to have you back on the show. thanks for stopping by. coming up, lemonade shares popping on the back of earnings. we speak to the ceo next. this is bloomberg. ♪

emily: the insurance start up

lemonade says it's on its way to profitability. shares popped after reporting smaller than expected losses in the third quarter. lemonade says it could reach profitability without any further infusion of capital. your to discuss is ceo -- here to discuss is ceo daniel schreiber. when do you get to that coveted profit ability? daniel: we're turning a corner right now. we will let it be known that within a matter of weeks, we will be at peak losses. we are going to see shrinking losses as we continue to grow. we reported 77% revenue growth year on year, so we are seeing strong growth and shrinking losses. we are very much on the path. this is really a reflection of the business doing what it is designed to do. this is the output of many product launches, many market losses. 12,000 pushes of production software in the last year alone. more of these investments are beginning to pay off. it's very gratifying. emily: you said have moderated spending and the pace of hiring

and you have enough gas in that tank to not need additional capital and to subsist on the capital that you have until you get to that point. 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 pretty resilient when it comes to resilient, so we are seeing green indicators flashing on her -- on our screens across the business. strong demand, strong marketing efficiencies, strong operational efficiencies. there are a couple of areas where we are impacted by the macro. cost of capital has shot up. which is why we will be spending it much more cautiously. but in terms of the fundamentals of our business, insurance as an industry is really resilient. the cost of capital would impact us if it weren't for the fact we

are already well-funded. other than that we are reasonably impervious to what is happening out there, which is a fortunate position to be in. emily: since the acquisition of metro mile, a third of the business is 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: so, inflation does affect our industry and it affects the car insurance space perhaps more than others because the supply chain impact on the car industry has been pretty profound. you take the car into the shop to get it repaired and you would pay a lot more than you would otherwise. we are not talking about 9% inflation, we are talking 20%, 30% inflation specifically within that industry. definitely an impact there and in an industry where you can't raise prices. everything has to be approved by regulators.

and 50 regulators at that. you can often get tiny mismatches between the time you apply and you can actually change those rates and inflation does impact you that way. we do have the advantage having acquired metro mile being in the unique position of having a far richer, more textured, more precise data set on which to price. industry at large uses broad stroke proxies, gender, credit scores, marital status. we have precision so they can price and estimate the risk of every mile driven of every individual insured. having inherited all that data and now injecting it into the text act, we should have an advantage even under these relatively direct conditions the -- duressed 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 the potential of that? daniel: it's a fabulous initiative. this is part of the lemonade foundation, which is entirely nonprofit, and we launched the lemonade climate coalition. this is the crypto coalition where we are using a contract to enable subsistence farmers in africa to ensure their crops -- you're talking something like five dollars worth of premiums over the course of a season, something like $60 of claims. at those levels traditionally, trends cannot operate. the cost of selling a policy, supporting it, handing a claim, all of those dwarf the themes i just mentioned. but a smart contract can execute those kinds of policies instantaneously with zero overhead. turning a higher policy into a smart contract where a farmer in

africa can buy coverage instantaneously, that will be translated into a wallet on chain which will execute into a smart contract which will be parametrically driven so if there is a climate event, they will get paid instantaneously with no overhead. it is part of our nonprofit initiative we are very proud of. emily: fascinating. daniel schreiber, thank you for joining us. coming up, we'll talk to the ev subscription company autonomy. how they are letting drive tesla's without owning them. that's next. this is bloomberg. ♪

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>> welcome back. i'm emily chang in san francisco. tess the one of the biggest rise

on the nasdaq 100. after a slew of single stock etf's that will amplify that on the notoriously valid shares. >> leverage has inverse. tesla is a really interesting example. on a day when the stock is down almost 2.5%, the whole point of the leverage is you want to look at outside gains when there is movement in the stock. depression is one of those providers launching her. this is the 1.5 x 1.95 shares. the stock went down 2.5%. that is the risk. at one point five times, that means the etf fell nearly 5% or 4.6% during the tuesday session.

if you think the stock is going to go down, it is the ticker on the day when the stock was 2.5% lower. this inverse etf went up. regulators have been talking about this for about a month because it is not a new product. asx came on the market 30 days ago. this is the demand they have seen. they are offering a number of products but tesla is seen -- this is where they are seeing training. given what we have seen in the markets of late, it is an area we should keep an eye on. >> thank you. would you rather subscribe?

the ceo scott painter with me now. how would you describe what you do differently here than a typical rental car company? >> a rental car is something that will cost you a lot more. it is a good option if you're going to meet a car in the city after a couple of days. it is about making it easier, faster and less expensive. or believe is one of the big barriers for electric vehicles is affordability. the average car payment in america is $650. we have a product to get you into a test the model three. click talk to us about your partnership. we know you are working to increase the supply of other kinds of cars. what kind of inventory options are there? >> we have been operating in

california for the first part of this year and what we really proved is the business really does work. we created a robust demand list and now we are expanding into the model. we also announced an order for 23,000 vehicles across 17 different automakers. we will be expanding the offering to give customers more choice. it will be the entire electric vehicle buffet. we put in an order with tesla, general motors, all these automakers going all in on electric. i think it is an exciting time to be a consumer. we expect that every order for 23,000 vehicles is going to get filled by every manufacturer. we want to talk with each of these manufacturers about when they can expect this order to be filled but we do expect our biggest customer or biggest purchase order which will be with tesla to start being filled

right away. we placed an order for as many as 8300 cars from tesla alone. >> how do you finance all of these orders? rental car companies are historically a difficult kind of business. >> fundamentally, we believe an electric car is a good asset at this moment. you have structural scarcity for electric cars. the factory that makes used electric cars is the new car factory three years ago. we are looking very closely at what get produced, what goes into the announcement. everyone said they are going all in on electric. it is not as if gm, volkswagen afford said they are going to make an electric car. ford will be electric. these production facilities come online. autonomy is just another way to get access. we are also interestingly not

selling you a car or lending you money. you can put this on your credit card. it is a month-to-month offering so far this commitment. it does not show up in debt. it leaves you with available borrowing capability. it is really moderate in the sense that it is 100% digital. you don't have to do anything off-line. there is no negotiation. everything is menu-driven. >> what about what gets bogged? what do you see in your market research of electric cars? >> our order is really following consumer adoption. if you look at the cars we ordered by manufacture, we are ordering fewer volumes of the higher and more expensive cars. median price point looks to be around $50,000. we have extended into the model y. we think the model three is this generation's areas. but it does represent the median

price point in the pack. that allows us to deliver a $500 monthly payment. like something we will continue to follow. scott painter, thank you for joining us. widely recognized as one of the greatest athletes of all time, serena williams plans to retire from tennis after playing in this month's u.s. open. williams is now 40 and she has one 23 grand slam titles. i asked if she was thinking about retirement just a few months ago when she joined us on the show. listen to what she had to say then. >> every tennis player thinks about the r word. it is so intense. it is 11 months out of the year. but i don't know. i am not planning for tomorrow, only in business. >> here i am a few months later.

speaking of business, she says she will also focus on the venture capital firms that mostly invest in companies started by women and people of color. >> i cannot wait to open my computer and just talk to the company or see what we are going to do today. it is something i am super passionate about. click serena williams. >> coming up my exclusive conversation with the president energy of operating officer of coinbase. what emily choi has to say about a rough quarter. this is bloomberg. ♪

>> onto our crypto report now. i sat down with emily. it was a miss on revenue and earnings. coinbase also narrowed it these are forecast. here is what troy had to say. >> i think it a rough quarter for most companies. in the crypto space, we have had some big episodic events that happened during the quarter. some of those asset prices shrunk. >> the monthly transactions --

coinbase is losing market share. is that your take? >> let me unpack that. i think they are different pieces to this puzzle. one is evercore retail customer is somewhat sitting on the sidelines in this type of turbulent market and we have seen that in past cycles. they will come back on and engage with some other things. there were some echoes -- there were some episodic properties that happened during this quarter. we have incredible risk management. we have zero exposure to that. there was an aspect where we did not benefit. during these types of cycles, you had traders making up the bulk of activity. a lot of that activity happens offshore. to that extent, we might not

have participated as much as others in the ecosystem. it we on that is we drive more international growth, make sure we participate in that upside and we are investing heavily in derivatives which users are showing a lot of demand for. >> what is your take on the crypto inter-? are you seeing signs of started to thaw? >> i am smart enough to know not to make a random production about where we are in the cycle. coinbase has been through four major cycles, 10 years of operating this company. we just know how to run a long-term business. we know how to preserve cash and operate in it so we are investing in the long-term. >> how much of what is happening is tied to the overall economy, what the fed is doing versus the crypto industry? >> in some cases, they were

intertwined because some of the macro conditions caused a run on the assets that created some of these bankruptcies. the way we approach that market condition, we think about how we drive, higher revenue generating activities, how we cost cut and then how we also make sure we have risk management in place so that we avoid any of the contagion that has happened. >> you said you're going to have limited ongoing things. i know you and brian always talked about how you are thinking about the long-term and you are looking ahead in the cycle. what was a miscalculation? where do you think things went wrong? >> it is possible we got a little too exuberant as the market got really frosty. i don't think we are the only company to have experienced that. we saw there we took some of the

most decisive action with the cuts as hard as they were. we will always be nimble and adjust the markets as we need to. >> are you expecting more of these kinds of institutional partnerships? what kind of partnerships? >> i have wanted to do that black rock partnership from the day i joined my base and to tell you the truth, we would not have been ready for it. in terms of the product suite and compliance and compliance at everything we needed. blackrock would not have been ready. their customers were not necessarily demanding this crypto as a class. for this to come together now, during the crypto winter, it is such an incredible testament to where we are, where they are, where our customers are and i think the most important point is a space to institutional powers. >> will we see more of these?

are there more potential partners that we are talking to that are interested? >> you will see more of these. we are the number one partner to partner with. >> coinbase has had a bit of a back and. there are nine tokens that coinbase has listed. >> we had never shied away from regulation. it is part of our lifeblood. it was counterintuitively something we invested in from the early days of the company so we welcome healthy and sensible regulation. in this case, the sec -- fcc has launched an inquiry about our platform. we spent a lot of time and effort classifying assets and whether or not we believe we fall into the security space. if this is an opportunity to have that dialogue again had to make sure we agree on a sensible framework for the, we welcome it

and we will partner with the ftc and any other regulators. >> there is this insider trading case where a former employee has been charged. what is your relationship? what is your comment on that particular case? >> we have a zero policy talent -- a zero tolerance policy for front running. we pride ourselves on the amount of security and detection that we invest in to make sure we can detect for front running. we worked very closely with the doj on this case. they publicly lauded us which is a very unusual thing. we will continue to work with any regulators and law enforcement to make sure that we nip that activity in the bud. >> and i you active on the m&a front. curious what your strategy is now in the downturn. how are you thinking about being

delivered about spending going forward? >> that is a good adjective to use. whether it is organic or any of these activities, we will continue to take advantage and be greedy where others are fearful. that helps catapult us to be the number one regulated crypto custodian and all the world. this had us being the prime brokerage. we will take advantage of these opportunities where others may be fearful. >> coming up, the company has started posting social media of the best of au pairs is now worth over a million dollars. this is bloomberg. ♪

>> overtime sports has raised $100 million in funding to expand for the next generation of athletes. they started up posting high school sports highlights back in 2016 in an effort to build an audience of 15 to 28 euros who love sports. 80 channels across six platforms are venting football, soccer and gaming and over the last year, the companies branched out into running their own sports leagues. i want to bring in dan porter now. i know you started off making this bet on high school but you have evolved quit a bit since that time. now you are focusing on next-generation athletes. maybe just out of high school. give us a snapshot of where the company is today. quick today, we still have our core business where we went

after the audience, the average age of the average sports fan, season-ticket holder. this is still in the 40's and 50's and we made a big bet that we could go out and get that younger audience. that is the core of our community. what we did is we said we are on every social platform, they are super engaged with us and 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 these with 17 to 19-year-old players that are high school-aged. some are out of high school. it is about the audience. as a professional sports is incredible. every generation wanted something spoken in its own voice so we launched a leak in basketball and a leak in football where we think there is an opportunity to build millions and millions of fans and deliver

them sports in their own voice and that is where the hundred million dollars is going. >> what is the vision to expand these leagues and also potentially cash in on media right? >> ever goal over the next three years is to grow audience. it is kind of an interesting thing because you become a sports fan because you have an emotional attachment to a team, your city, anything else like that and we need to get out there in front of all of our tens of millions of fans and convince them that our league is the league they want to pay attention to. as we do that and we already have millions of followers on the leagues themselves, we want to bring in more sponsors and i think the value that all investors see in sports leagues is right. you have amazon and apple, competitors in the market than you ever had before. we want to build a leak that the fans like it also that the media

likes. >> the goal is to build them -- what does a young, healthy sports of an audience actually look like? >> i would say first and foremost, they probably consume it in a lot of different places and i think that is probably true of you and me to some extent as well. there is no single platform for sports anymore. you're kind of ever getting your information. they want to see athletes who are kind of like them, that they can be aspirational toward. it does not mean that nba or nfl athletes aren't amazing, they are but i would say they want to be participants. they want to not just be expected to sit on the couch and watch but they want to have input and be spoken to. when 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 is obviously 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 is what we have to figure out how to continue to do. >> i know you're working on nft is. there is some skepticism about how big the market can actually be. what are you betting? >> i am betting that they are an end in and of themselves but they are a means to an end. if we can use entities to give our audience a chance to participate, to empower them, to activate their voice in that space, that is amazing. if we just think about it -- here is another revenue stream. i don't think we will realize the full potential but the core of blockchain's and entities are

about decentralized participation. that is always at the core of what we do. i think of entities the same way i think of social media. a platform to do more for the audience. >> interesting, we will keep watching. that does it for this edition of lumbar technology. tune in on wednesday. we will hear from david suzuki after their second quarter results. plus, what is next for the metaverse and david sachs, one of the many people in elon musk 's inner circle subpoenaed by twitter. this is bloomberg. ♪

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