the third year bond closed right here would be at a new high for 2019 so i think applause is just what it is. applause i think the next move is a tightening thought it all along, it's just when. >> rick, thank you rick santelli. that does it for "the exchange." time to join me with tyler and melissa on "power lunch" which begins now we'll see you soon, kelly. i'm melissa lee with tyler mathisen new at 2:00, the race to go public lyft filing for an ipo inside their financials and what it means for uber in the ipo pipeline amazon planning to open dozens of grocery stores. stocks in the sector are dropping walmart and target could be impacted too markets having the best start in almost three decades "power lunch" starts right now >> and welcome everybody to "power lunch" for a friday i'm tyler mathisen stocks are higher to kick off

the new trading month. can you believe it is the first of march we are well off the highs as you see there. 72 points higher in the dow. it was up almost 230 points earlier. once again, dipping lower for the week, putting its nine week win streak now in danger we'll see where it finishes up in the meantime, nasdaq will post its tenth straight week of gains if it can end higher today and right now, it is up by about 50 points. kelly? we begin with the news that lyft has officially filed to go public let's get back to deirdre bosa with the details from san francisco. bob pisani also at the nyse with what it means for the pipeline you're right, deirdre. >> reporter: finally went public today kicking off a timeline for its ipo. raising $100 million in a nasdaq listing. ticker no surprise here. lyft here are the top line numbers in 2018 losses widened while revenue doubled year over year 31 million riders, 1.9 million

drivers. what investors care most about is how these numbers look next to uber's. lyft is still losing money and says in its risk section it may not ever be able to achieve or maintain profitability, it's getting losses under control and it's becoming more efficient at a faster rate than uber. we also got some other interesting disclosures. lyft has 39% of the u.s. market. this is a major jump from a few years ago andreally confirms the narrative that it has benefitted from uber's drama and missteps during the travis kalanick era lyft confirming it will give drivers away to get access to its ipo and confirming a dual class structure but doesn't give any details. a source tells me though john zimer and logan green have less than 50% of the voting power and there will be a sunset provision. the last thing, kelly, i want to point out, the biggest winners

from the ipo outside of the company, gm and fidelity >> deirdre, thank you, deirdre bosa in san francisco. let's bring in bob pisani from the floor of the new york stock exchange we expect 2019 to be a big year for ipos, open the flood gates and what does lyft tell you about how other ipos could be structured >> reporter: the initial numbers actually look surprisingly good. revenue $2.2 billion that seems higher than other people's estimates that i had. first impression is positive dual structure bothers me. we talked about this for many years, melissa, but generally, the idea is the investor buys into a company, the right to the price appreciation and earnings appreciation but also have a right to participate in how the company is governed and essentially, these dual class structures, mostly eliminate that they say, okay, guys, you, the investors, you can go and appreciate or dissipate in the price appreciation but let us run the company. i've got a problem with that

you see some media companies have traditionally had dual classes. they say that's to avoid having outside interference but a lot of other tech companies though, too, google has a class b and no voting rights or a class c with no voting rights i love the idea of the drivers participating in the ipo i think that's a wonderful idea. >> the sunset provision though, bob, really improves the structure somewhat in that dual class structure will be phased out theoretically if the sources are right in telling deirdre there is a provision in this and that could greatly improve the corporate governance as opposed to the likes of facebook and snap. >> snap certainly, a number of other ones out there underarmor too is another one. i agree, that would help a lot what we need is a little more outcry from the public about this these people in favor of this, they point out to what's going on with google but class b and c, excuse me, they don't seem to

trade with any appreciable price differences. if there was more value to having the voting rights, you'd think that share class would trade at a slightly different price but it doesn't and people say, ha, you see, the public doesn't care and maybe we need a little bit more of an outrage about this. >> bob, thank you. bob pisani the new trading month is under way. the dow and the s&p 500 having their best two month start to a year in about three decades. despite the uncertainty about trade and growth, they are both up about 11% year-to-date and look at the nasdaq composite up 14% even better. so can we head higher from here? joining us now, david katz, president, chief investment officer of matrix advises and the fast money as well, thank you very much. let me begin i suppose it was in some sense predictable after how bad the fourth quarter was and how dreadful december was that we would have a rally, but did anyone really count on a rally

like this over the first two months of the year >> you go back to the tapes in december we actually were looking for a very good 2019 and thought the rebound would be a lot quicker than anybody anticipated if you have a selloff like you had in the fourth quarter and it's not economic-based and we didn't think it was economic based, you can have a pretty good rebound the real question is where do we go from here and the market goes up for the balance of the year and a lot more volatility. you will have fullbacks in the upcoming period. so we wouldn't now jump into the market full throttle with new money. >> so steve, is this rightly just called the powell rally because there are lots of questionable data out there that suggests that profits are going to come down a little bit and that around the globe, economies are slowing. >> yeah, so if you're looking at it you have eps, basically turn negative margins that have basically peaked you have gdp that's coming in

pretty hard, so i would agree with the former guest. i would say not a good time to pile in and tyler, if it's powell, and the market is just going on money flows, he is not as dovish as you would like to think and in the face of the world, sort of coming down to a screeching halt and growth, i don't think it's a good time to put your money in the market right now. >> what makes you say that he's not as dovish as some people seem to think, based on what he's been saying >> so i know that the forecasts for him are not doing anything but people are actually forecasting or assigning or rejiggering their portfolios to him actually cutting rates and cutting out qt neither of those are on the table right now. that would make me change my stance pretty uniquely >> david, i see that one of your picks is alphabet, otherwise known as google and i'm wondering if you're concerned at

all about some of the outrage concerning youtube and the chats that follow these youtube videos and advertisers pulling out. >> we think the big companies like google and facebook will continue to have some negative press. there's going to be more regulation and it might slow their business on the margin, but one of the most effective ways to advertise. they're getting more and more dollars from advertisers, from companies, and if you just for cash sells at about 18 times earnings so we think they'll get through the negative headlines we don't think they'll change their habits so much in aggregate and get a great dominant business at a very attractive price. >> i wanted to ask you about lyft and the ipo now could be just a couple of weeks ago what do you think about snit. >> let's go back to what caused the sell-off, or, kelly, what hit last year in the tail end of the year and it was growth stocks so you have a company that just is burning through $911 million. has losses there, but revenue's

2.1. i'm not sure what the market is going to give them going forward. i'm sure the ipo is going to want it to be a sought after one, but is this the time to go back into the growth without really earning anything just yet? i'm not sure about that. >> what do you think about it going to the nasdaq? >> you know, i have an allegiance to the new york stock exchange i've been on the floor since 1993 and i think unfairly, these types of stocks usually migrate towards the nasdaq, but gone are those days, i think, this is probably a one-off would you have ever expected twitter to be here twitter is here. >> totally agree. >> so i think that this is gone are the days where certain classifications of public companies go nasdaq and certain classifications come to nyse i think it's case by case, but i am shocked that the nasdaq got it >> david, steve, thank you very

much we appreciate it >> thanks a lot. coming up, three big stocks in the news. first, we'll go live to cupertino for an apple shareholder meeting and what the company needs to do to keep growing. then we're talking tesla the stock sinking after musk's big announcement last night and amazon's potential move into ht eries and which stores could beurby it. all that coming up on "power lunch.

apple wrapping up shareholder meeting. tim cook is taking some questions. the stock, we should note, off nearly 25% in the past six months let's go straight to some shareholders in the stock. tim lesco with walter paisec tim, the sentiment seems to have turned i'm wondering if you think this is picked up or has been picked up on the shareholders meeting if you're concerned as well. >> the shareholders meeting, they talk about cash return to shareholders and increase in dividend or buyback program. they'll see the track going forward and the product line-up, five, six, seven years down the road happy to listen to what's going on with the shareholder meeting but certainly, the stock never traded at a particular premium to the market so not really

concerned even with perhaps some negative sentiment, it will be trouble for apple. >> check in with josh leadersip. >> ceo bob iger, executive compensation and two shareholder proposals rejected as the board recommended. as he does every year, melissa, tim cook took the stage to field some questions from the shareholders what do they have to ask him apple's strategy when it comes to the wearables business. tim cook noting that business is growing at a 50% clip, not going to be resting on that. yew goi you're going to see more things with wellness and health that's been a big focus of cook and company. a cultural phenomenon. remember, their air pods, they

don't break out the unit but ventures, 20 million to date he was also asked, melissa, is apple taking enough risk with the products one shareholder had that question we don't focus on the 90 day clock. we make investments for the long-term and investments you'll see in three to five years of course, that's true of apple as a company, as a culture they don't tip their hand to their pipeline like some other tech giants do but don't stop reports of what could be coming. assumptions of a new video streaming service coming and ar glasses down the road and finally asked about privacy. we know that's another big issue for cook we are pushing for regulation. he says, i am a free market guy and a believer in the free market but you have to look in the mirror and understand that it's not working guys, back to you. >> thank you very much josh lipton in cupertino walter paisec, walter, tim makes a good point not much is expected out of the

shareholder meeting. the focus is on a march gathering where they could potentially unveil some new products but in terms of what we heard from tim cook when it comes to wearables and their video streaming potential, anything, you know, is anything enough here at this point for sentiment to turn in the stock >> i mean, there's obviously been a lot of focus on investors from services. a 20% growth business. that brand at hbo similar to apple's as far as the high quality content and apple has obviously a reputation for high quality. maybe an opportunity to secure him as an executive to help at some point in the process. the vast majority of the profits and cash flow are from iphones and really the issue is, is this replacement cycle, which has been extending for four years

since the iphone 6, about the trough i mean, that's been the topic. iphone revenue is down 15% even though the service is up 20% can that replacement cycle stop extending, which is a possibility for 2019 >> tim, you want to weigh in on that and it was interesting the hear him mention richard and the content ambitions apple are clearly very large is that important to you they do something big in that direction? >> i'm not sure i want to see apple come out with their own television, rumored for about ten years now or a streaming service of their own brand but certainly, hbo's content apple doesn't do anything halfway. they want to sell you something that will make them money. you have a sflss business that people look at either a broadcast television business or more smart home devices. the speaker, earphone, the watch. all of these things make apple money and they may have smaller share in those devices, so they need to grow those businesses faster there's some expectation to make some acquisitions.

perhaps to bolster the amount of money they spent on content but i probably see them making acquisition to get larger in that space rather than just hire someone. >> walter, walk me through the watch which felt like a nothing burger for a while but seemingly has a lot of traction. how big of a business is it going to be? >> a lot of things that apple does, people position as a nothing burger because iphone is obviously such a big thing but the watch has been a steady performer for them wearables has been very good look, the health care opportunity that's out there linked with their focus on privacy notwithstanding the issue with face time and the camera going on, it's a huge match and a revenue opportunity for them in the services space which is a 20% grower. it's higher margin, so if you can get that iphone line, nott be declining 15% and maybe just

around flat while your sflervic are growing 20%, this discount to the market multiple >> that's a tall order, walter, to get that to stabilize are we going to see a foldable phone? we've seen actual for factor evolution, some might call it revolution when it comes to what huawei is doing what samsung is doing. what has apple been doing? their phone looks basically the same as the generation before. >> and the generation before that and the generation before that so we're four years into people now still having an iphone 6 or even a 6s. at some point, that replacement cycle stops lengthening. so you don't have 15% declines foldable phones, but they're a $2,000 phone people are criticizing them for an expensive phone and then companies with $2,000 foldable phones a year or two what could be a 5g upgrade cycle. if the replacement cycle stops extending, which that potential exists for 2019, then that 15% decline in iphone revenue gets

closer to flat, maybe slight growth and then the opportunity for services revenue growth could lift overall growth to mid single digits makes this a much more attractive stock for growth investors. >> 5g could really help. thank you, tim lesko and walter piecyk sports going mainstream. >> espn is now betting to drive viewing. it's launching a one hour weekday show called daily wager having news and information about sports betting for the millions of sports fans who participate in sports wagering espn saying the sports betting environment has changed and interest is increasing at unprecedented levels now, this is espn's biggest move yet into covering sports betting. they do have other content on their platform about sports betting including a podcast, and a show on espn plus, but this is

really showing a big move how sports betting is part of the mainstream rival sports, fox sports 1 does have a show called lock it in, also about sports betting but tyler, all of these players are hoping that this is going to be something drawing real life viewing of sports content. >> exact right, julia. i'll put money on it, right now. i'll bet the under, i'll bet you within three years, there's a dedicated channel devoted to sports betting espn, nbc, fox i don't care the under is three years there you go. >> well, tyler, just remember, we have declining ratings, there's a lot of pressure on holding on to live tv subscribers and this is going to be key way to try to do it >> julia, thanks very much another biotech bounce today. the etf that sector this year. could it be a sign of a top?

plus, powerhouse we'll take you inside shaquille o'neil's $22 million florida estate it's shaq's, so you know it's big. imagine thsie ze of the closets. that's coming up on "power lunch.

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welcome back to "power lunch. i'm michael santoli. the biotech etf tracking for the best quarter since 2013. is this the beginning of an even bigger breakout or maybe a chance to lighten up joined by craig johnson and john, point view wealth management craig, obviously, this group accelerated in here. it's often a kind of gauge of risk appetites by investors and traders. is this the kind of rally that can be trusted >> mike, i think it is and a lot of investors are trying to play catch-up at this point in time the chart of the ibb, you can see a classic bottoming set-up here this close suggests we're going back to the old highs. we still see decent u side hepse to go.

high as 13% higher so we continue to like the ibb one of the names that looks pretty good to us is regeneron a good risk and reward on that, mike >> is biotech looking attractive and the sector fund the way to play it? >> i think the health care sector, the long-term fundamentals are really strong, right? you have an aging growing global population to put a lot of utilization in general and biotech clearly the fastest growing segment to support that market the problem is there's tremendous volatility within the sector and you have to be really be specialized to understand particularly the small and mid cap type of names to understand where companies are in terms of their pipeline with their drugs. we like to play the larger cap space, particularly gilead gilead is about 40% off its peak

from 2015. attractive from a valuation standpoint you have a 3.8% dividend yield, grown 20% per year over the last three years and a balance sheet with about $20 billion in cash so they're making a plan oncology and future acquisitions to really buy their top line growth so, you know, i would play it without having the specialty in the larger cap space and i really like gilead here. >> all right, yeah contrarian play in an otherwise hot sector john, craig, thanks a lot for joining us today appreciate it. for more "trading nation" on welcome back web sit tradingnation.cnbc.com >> i tried, we're here and i couldn't do it we need santoli. ahead on "power lunch," amazon opening groceries across

the u.s. how afraid should target and walmart be the ceo of douglas el man joining us live. musk tells they won't make any money in q1. we'll get into all of this when "power lunch" returns. >> the latest from tradingnation.cnbc.com and a word from our sponsor. >> position size and risk reward ratio are two important aspects of building a winning trade. you don't want a single position to be too big a percentage of tradeable assets additional, make sure there's enough profit potential to justify the risk you're taking consistently constructing suitable trades and adhering to your exit plan can help you build on trading successes

i'm sue herera here's your cnbc news update at this hour. the parents of otto warmbier, said kim jong-un and his evil regime responsible for their son's death. rebuking president trump who said he takes kim at his word that kim was unaware of the alleged treatment of warmbier. donald trump jr.'s defending his father's actions did not mention otto warmbier to

the conservative political action conference in maryland. >> sometimes you have to walk away and that's what people don't understand oh my god, like, you want to sign a bad deal that means nothing? that's what obama did. obama was great at signing bad deals that meant nothing or were terrible for the united states >> the nielson company said 135715.8 million people watched michael cohen, less than the 20.4 who watched the daytime subpoena of supreme court nominee brett kavanaugh. that's the news update this hour melissa, back to you. >> thank you very much, sue herera about 90 minutes until the closing bell rings get a check on where the markets stand right now. got the dow up 122 points. up by half a percent 2800 can we hold this level into the close? 2803 is where we stand right now up by 18.5 points. the nasdaq composite close to

7600 on the index, up by 1%. >> the oil closing for daddy. right now, 78%, about that big figure by 2% prices snapping at three day winning streak after economic data out earlier this morning, some fears about a possible slowdown the february ism manufacturing index falling to the lowest level since november of 2016 well also early in the afternoon got the weekly baker hughes 1:00 p.m. eastern time with a drop of ten active u.s. oil rigs down to 843 active rigs earlier this week remember, we did get government data to show america is pumping oil out at record levels tyler, back to you. >> thank you very much, dominik. amazon reportedly plans to open grocery stores across the u.s. kroger and sprouts farmers taking a big hit on that report.

walmart and target cutting into market share grocery chains and now amazon may be getting in, what does it mean for the space? andy wolf and covers food and drug merchandising and ed, with key bank, covers amazon, walmart and target did i get your name close to right? >> pretty close. >> since i embarrassed myself there, why don't i let you take the first question how big a question could amazon make in the world of grocery shopping >> i think it is a fool's errand to underestimate amazon, right out of the gate, my sense would be that we'll see the process using technology long-term, amazon has disrupted almost every market it's entered and i think grocery is no different. >> here comes this company that has been selling groceries for

home delivery for a long time and has gone into the brick and mortar world with whole foods and its own stores is this a big risk for them to go out and say, okay, we're putting a stake in the ground, we're going to go back into conventional retail with real estate and leases and all of that and make a go at it >> well, they've been running whole foods for over a year, so they probably have a good indication of what they're getting into now they're going to see how well they can do and the non-natural world, conventional groceries, still the vast majority of groceries. they want to get into the big pond, as i mentioned, they're the everything store if you want to sell all the food, you've got to be where people go, conventional grocery stores. >> whole foods has a higher margin generally than most grocers do i think they're in the 4% area

or were before amazon bought them talk to me about them. this is a low margin business. >> well, yeah. so is amazon right? they can absorb those kind of losses my colleague who covers it, anthony brings out that point that they can, you know, amazon can fund their losses as they grow their market share in different channels but ted ice poi -- ted's point, the journal article alluded to it. very incelt tarementaincrementa. dozens of stores a drop in the bucket $8 billion industry. it could be a precursor to something much bigger, you know, as they get more comfortable running physical stores and also, they've got to decide what they want to do in these physical stores. i don't think they want to just be a traditional grocer but hybrid stores that do shopping but also pick-up you could pick up all of amazon's products like walmart is doing

more of an omni channel. >> if i'm an investor or a target or walmart, so dependent on selling groceries at this point. i don't care if amazon will revolutionize the space over the next couple of years but care whether amazon is going to quote unquote invest in price, undercutting to gain their share and could hurt walmart as well as target. >> they have been deflationary with many markets they've entered and cut prices out of whole foods with the national organic players but walmart in particular is incredibly sharp with price and runs in very lean market with the grocery business so to think they'll be disruptive in the traditional space i think would be tough for them what you do have to watch is the idea that, will an amazon grocery store be a conduit for other things to allow them to sell other higher margin items

more efficiently and that has probably bigger long-term implications. >> thank you very much appreciate it. >> you're very welcome rick santelli is tracking all the action at the cme. hi, rick. >> reporter: hi, i'll tell you what if you're an avid follower of long rates and the spreads like 30s over tens known as the knob, this is your week. day of 30s, theoy are powerful four or five basis points but here's the real deal now, should they close here at 312, the highest close since december 14th of last year ten basis points on the week year-to-date of tens 275 closed at 265 and then right now, only about 3.5 basis points away from challenging its 2019 high yield close to 278. plus, even the dollar index was down close to half a scecent one

point ant weon the week. stocks aren't powering ahead it's been a good year-to-date and any out there that believe the pause is a dovish scenario, if you put the market activity in of late, i'm sure jay powell is doing the same thing. my guess is that he's going to be a bit less dovish but stay in realtime tyler, back to you >> thank you very much rick, coming up -- staggering stats on housing and what they could tell us about the spring selling season. and speaking of staggering and housing, we will take you inside shaq's florida estate when "power lunch" returns. okay, paint a picture for me.

uh, well, this will be the kitchen. and we'd like to put a fire pit out there, and a dock with a boat, maybe. why haven't you started building? well, tyler's off to college... and mom's getting older... and eventually we would like to retire. yeah, it's a lot. but td ameritrade can help you build a plan for today and tomorrow. great. can you help us pour the foundation too? i think you want a house near the lake, not in it. come with a goal. leave with a plan. td ameritrade. ♪

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this spring selling season about to get under way and big numbers out on the housing market median home price jumped from under $295,000 and more homes are coming online. it was the fifth straight month we've seen an increase in inventories and home ownership rates recently hitting a five year high. with us now to discuss the

market, ceo of douglas edelm, go have you with us. >> great to be here. >> what's the strength you're seeing in the markets and where are the weaknesses >> the average sales prices up, that's nationally and also in new york city. 5%, 3%, sustainable. in other words, if you go back to look at 2007 and prior to that, going up 7%, double digits, this and that, they go up and go down it's been kind of a fairly flat, a little appreciation kind of a market going sideways and pretty much like that across the country. however, sales have declined and part of that is because of very little inventory and now with these new numbers that you just

quoted, inventory is increasing, however, they are coming from such lows that, you know, the increase is not an over amount you'll have more choices if you're a buyer this year but not so much inventory it's going to flub the market. >> let me ask you about just new jersey, let's say. or new york city >> new jersey is fine with me. the state local tax eliminated basically for higher end properties it's not meaningful are the bidding wars we saw two years ago prevalent as they were then, as frothy as they were then or has the beer gone a little flat? >> they're not as prevalent and of course, at an entry level, you'd have that in the beginning but i think that, listen, i live

in new york but i'll speak for all the high tax states. jobs who does report put it as the new foreigner in florida is coming from a high tax state, okay, in the east. so i think, you know, there's a line and i think that last year, we couldn't, we didn't really see it because if you recall, you were allowed to take that one time, do it, file it ahead of time and do one more year so we had an overexcess of money. so this year is the first year you're actually seeing, you know, you're going to see the results and again, i think home ownership and the next generation of home buyers at peak age, 29, millennials, they want to own but as far as tax-wise, you've got to really, hard tax bracket, be more careful and figure out they don't want to be losing

people just because. >> those residents moving to tennessee or florida or texaso wherever >> i know. there was a whole article i read not too long ago i forgot how many people it was, a lot. some are just baby boomers that are aging and normally at a certain point if they have enough money, they buy a place in a warmer climate and they kind of stay but with taxes, it's a big thing and i think they have to be very careful with that. >> dottie herman with douglas elliman. >> time now for the powerhouse take you inside shaquille o'neale's florida estate. >> one of the greatest players in nba history shaq's front property in the orlando suburb of wyndmere everything inside this place is super sized including a

ginormous 6,000 square foot basketball court take a look. this lake front mega mansion just outside of orlando the home of nba legend shaquille o'neil everything inside the sprawling 31,000 square foot estate is giant sized and super man themed the 7'1" athlete has a hero sized bed 15 feet wide the baller's private man cave has a cigar room and a truck built into the wall with a giant fish tank inside of course, the mvp's home includes a basketball court with even more man of steel markings. and when it is time to cool off after a game, the three acre estate has a 95 foot long pool, a lake, and a life sized super hero standing guard at the dock. super sized price tag? just under $22 million >> so let's do a little shaq

math he bought the home in 1993 just under $4 million so if he sells it for 20, he will have quintupled his money >> is he likely to get that? >> it depends. there are three or four homes just in that little gated community of windermere already on the market above $20 million, and that's the story of luxury over supply we see over and over again, no matter the community, just too many of these mega homes, hyperpriced sitting on the market without buyers. whoever sells it at a desperate price will set that market. >> i can't believe you didn't bring shaq with you. >> there was no room >> shaq, you could come right here, make your pitch to the country why they should buy. giannis should buy it. he's the new super man that's what shaq said. >> it's a cool house, great location the super man theme, you know, i'm sprieurprised they didn't t it down for showings, but it would be cool. the pool, 15 feet deep

that's a shaq pool >> robert, thank you so much tesla tumbling today as the street reacts negatively after elon musk's big news last night. what does it really mean for the compy? wel g tot xt on "power wel g tot xt on "power lunch. no, i can't believe how easy it was to save hundreds of dollars on our car insurance with geico. we could have been doing this a long time ago. so, you guys staying at the hotel? yeah, we just got married. oh ho-ho! congratulations! thank you. yeah, i'm afraid of commitment... and being boiled alive. oh, shoot. believe it. geico could save you 15% or more on car insurance. that guy's the worst.

shares of tesla tanking off 20%. the company announcing store closures and layoffs and doesn't expect to make a profit in the first quarter. tesla slashing the price of the model 3 to $35,000 and still no word if tesla paid the $920 million bond payment due today wall street is divided with 40% of annualsts giving tesla a buy rating joining us is dan galves with a buy rating, of course. $420 price target. great to speak with you. >> thank you for having me. >> what is the bull case at this point? there's a lot of bearishness on the street coming out and it's so funny how polarizing the notes have been. but if you take a look at the big check they're expecting to write to pay off that bond payment, bringing effectively down margins with the lower price model 3 and spending a lot of money on top of it. profitability seems like a more

distant promise than before. >> yeah. well i think as far as the bond payment, i don't think it's too big of an issue. the company had $3.7 billion of cash on the balance sheet at the end of the year and actually generated really significant amount of cash in the back half of last year that analyzed at about $4.2 billion operating cash flow so i think the outlook is really good in terms of cash generation for the company going forward. >> but in terms of the impact of the model 3 at this point, i mean, it's funny because some may see this is a fulfillment of a long-time promise, the mainstream vehicle at a $35,000 price target but the bears will see it as, oh, you are dropping price you're losing the halo of exclusivity. at this point, dan, how can you walk us through the model 3 dropping these prices, dropping the gross margin and the outlook for the company here >> yeah. so i mean, it is not an

unreasonable view for the bears to take on this. this is actually been a series of price cuts on the model 3 over the last couple of months i think the $35,000 model is really fulfilling a promise and it's a landmark achievement. a landmark moment in the industry, the first time that a long-range no compromises electric vehicle has been priced below its competition. its competition, you know, starts in the high 30s and importantly its competition averages around the high 40s so i'm talking about the bmw 3 series and the mercedes c class and the tesla model 3 average transaction price in the fourth quarter about $55,000. we think that that will come down to around the high 40s over time as these lower price models come in. and importantly, we think that there's just a ton of fixed cost operating leverage as volume goes up from q4 and offset most

of the margin delusion from this lower price. >> what would happen to the stock and to your stock price models if elon musk were sanctioned by the s.e.c. or by a judge and taken out as -- in an operating role >> yeah. i mean, i think that that's unlikely you know, the most recent episode which was, you know, not what anybody wanted in terms of investors or even people inside the company, it happened after hours. frankly, you know, he did talk about 500,000 units on the q4 earnings call. so i think that's very unlikely. of course, if elon musk -- >> let's say the tail risk does occur, what happens? what happens >> yeah. i think the stock goes down. i think the company is -- it's no longer a small company. this is a company that does 21%, the revenue that general motors

does with nearly 50,000 employees. so i don't think one -- you know, obviously elon musk is very important to the company but i don't think one person, you know, leaving would take down tesla so clearly the stock would go down. but i think that the company, you know, came through a really challenging period like they have spent, you know, over ten years trying to get to this point where they can sell a vehicle that does hundreds of thousands of units a year and, you know, it's really running well right now. >> dan, thanks for your time appreciate it. >> thank you. check please is next ♪ you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse.

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check please. >> welcome back. the big news of the day is lyft filing to go public. could happen within a couple of week's time. they're giving the drivers to get a cash bonus or a share of the ipo. also, trying to maintain depending on how the numbers come out could be majority control. >> the s.e.c. did studies fining those with dual class structure without a sunset provision underperform within two years and important to understand the differences here. >> and what they're getting, what they're buying. >> exactly. >> what they're getting something but they're not getting the ability to control

the company. i think it's so funny. reminds me of 1999 when they said what apparently is in the lyft prospective of we have not made money and may never make money. >> it is a unicorn. >> oh yes. >> thank you for watching. >> have a great weekend, everybody. the "closing bell" starts right now. ♪ good afternoon and a welcome warm to "closing bell. i'm wilfred frost. >> i'm contessa brewer in for sara eisen shares of tesla tanking after elon musk says he doesn't expect the company to turn a profit in the first quarter. plus amc on pace for the best day since going public in 2013 the company's ceo will join us for an exclusive interview that also is coming up. first of all, market action. we have 59:3