we have to see how the market me tap lies that. >> we did see strength in the banks and as was said at the top of the show you can rally to record highs without feaang. >> the choreography has to be good but it is possible. >> we're out of time that does it for "closing bell." >> have add goo evening, "fast money" begins right now. "fast money" starts now. live from the nasdaq market site, i'll melissa lee traders are guy adami, steve grass owe and pete najarian. facebook reporting after the bell that stock seeing a bis reversal as the conference call is getting under way. julia boorstin is standing by in los angeles. we will get to the red phone in a few minutes. we get started with the big after hours mover so far and that would be tesla. look at that down 11% right now let's get to phil lebeau in

chicago for what is moving this stock. phil >> reporter: melissa it is not just that the q2 loss was greater than expected, tesla losing 1.12 per share. the estimate was for a loss of 1.40 a share the estimates were all over the map, a wide range there. revenue coming in at 6.35 billion, a little shy of expectations it is the automotive gross margins that will get a lot of attention here they came in at 18.9%. remember, the concern was those margins were going to be squeezed as they were pushing out the model 3, was that push to make deliveries of more than 90,000 going to hurt margins coming in at 18.9% when many people were looking for them to be at least 20%. by the way, that's down not only compared to the second quarter of last year but also compared to first quarter of this year where both of the quarters, the automotive gross margin topped 20%. they do reiterate their guidance of delivering between 360,000 and 400,000 vehicles this year

the shanghai plant is on schedule to open by the end of the year guidance on theed mo model y, s scheduled for fall of 2020 when you look at the automotive gross margins, that will get a lot of attention coming in at 18.9%. by the way, free cash flow, $614 million positive. back to you. >> yes that was compared to what was expected which was 136 or so million dollars. >> yes. >> it was much better. also the cash at the end of the quarter, cash and cash equivalence, $5 billion, highest in tesla history. >> right and that cash flow speaks to higher deliveries. that's what you would expect. >> sure. >> when you have deliveries topping 90,000, coming in at about 95,000, they added a couple hundred more compared to what they said when they initially reported deliveries. >> right, the wrinkle is that this shareholder letter which we pars through as soon as it is released, this is the only thing we have until a conference call at 6:30 p.m. eastern time. after we are long gone at

home -- >> they don't even do the show. >> then they get under way >> i know. >> you could get ford -- you get ford i suspect they wanted to make sure the automotive analysts could do ford and then do tesla. >> okay. >> that's why you have it in that order. >> that makes sense. all right. so much for my conspiracy theory, phil thank you. phil lebeau in chicago for us. >> you bet so a lot of misses cash flow better they say in their outlook section, we believe our business has grown to the point of being self-funding is this 11% decline in the stock in your view, is that warranted given the results? >> i'm going to let tim talk about the free cash flow because it is a staggering number, but is the move to the down side warranted given what phil said and everything we will probably talk about i think the short answer i think is yes this stock was $177 on june 3rd up to today $267 they needed to crush in order for the move to continue i think. so is the move warranted yes. if you are looking for an entry point, and mind you that i think we did a good job?

june identifying a low carter worth and dan specifically we did a good job on the way up. i thought the stock would fail at 225 or so i happen to think it might be the entry point to get back in on the long side so, yes, i have gotten it wrong for the last couple -- month or so, but i think you will get a shot to buy it again and that comes in the form of a 50% retracement of the june low and the recent high. >> look, they lost $400 million in a yaquarter with record deliveries this to me sets up a worse third quarter. remember the first quarter the trend here to me is awful. again, the gross margin at least begins to tell people i think people that didn't think this, this is a structurally unprofitable car i am talking about the model 3 the bad news is that the model x and model s continue to see slower sales those are the cash cows, the higher margins we saw last delivery round they were down roughly 30% in terms of those delivery numbers. growth company doesn't cut cap x, don't take restructuring

charts to me it is exactly the story that i have seen for a long time yes, i'm impressed by a free cash flow number and i think that the balance sheet is different than a quarter ago the question always is, can this company -- i don't know they can sea th say they are self-funding when you are building on -- >> it sounds positive when you say self-funding it makes you want to buy the stock when it says self-funding. that's been the major problem. >> right, except you see an 11% decline in after hours. >> yes all of the averages it has broken through, the 50-day moving average around 220, that's when you step in and buy it margins are getting worse and the tax credit is cut in half july 1st and going away completely at the end of the year that will crimp margins further. >> what if i told you guys two weeks ago the stock was trading exactly where it is today? i think we have to keep it in perspective, right july 10th, july 11th it is trading at 235 yes, it has pulled back probably for the right reasons given what they delivered in terms of the

margins and everything else. the free cash flow is interesting. i tend to be more bullish than bearish on this stock. on june 4th is when we talked about stock was 180. they bought 10,000 of the july 2nd, '50 calls. those went into the moddy deep today. i took some off today and rolled up to get a little more, mel, because i expected they might be able to squeeze out something this quarter that would be positive for the markets they didn't. but i'm still owning i own the 275s out in august so i will be waiting to see if we ever get to that level again. i think this is a great trading vehicle. to your point, guy -- >> got a 31% short interest right now. >> right. >> you can have more volatility. for a person like you that plays options, it could be -- >> tomorrow morning the stock might be trading different than it is tonight depending on what happens further into the evening. >> i agree with that 100%. listen, absolutely right in terms of the stuff that pete said, you know, playing it through options is something you have said for quite sometime the interesting thing about this, and i don't know if people at home would agree, i think this gives some people on the

bull side a lot of ammunition and conversely i think if you are bearish in name -- >> what is the bullish case out of this result >> free cash flow. >> the free cash flow. >> i think with that number -- i'm not an accountant. >> and the production. those two things i think. >> and the cash flow -- >> and they were profitable third and fourth quarter they said that they went right back to a loss in january, but they said that these quarters were going to be challenging ones this one is definitely a surprise to the down side, but they're supposed to -- they've already said that they look to be profitable next quarter that remains the question. >> they had record deliveries though. >> right. >> and, again, they lost this kind of -- it makes no sense to me this is a company that has to work, and we have seen the different ways in which they can try to get the model 3 out there and -- >> let me ask you, in what way does it have to work does it have to work in that it can self-fund itself to the pound so maybe it has a shot as being profitable some day? are we looking at amazon in the growth stages where we shouldn't care about losses necessarily? i'm just wondering.

>> good question it has to work means i think at some point tesla no longer has that base of investor support. we have seen some of the biggest investors in the world leave the shareholder book of these guys, but when i say it has to work, really what i meant is the model 3 has to work. that's -- that's the story of this company, not the model x and the model s. those are great car has are high-margin cars that did very well the reason you own this company, or at least some is for the model 3. other investors and we've had them on the show, that don't talk about deliveries, don't care about auto. they care about some of the technology they care about the data and the leadership that they have in driverless and what that means for this company and the value inherent. >> for more reaction to tesla earnings let's bring in gene munster of roloup ventures. what do you make of the results? there seems to be a little bit for everybody here. >> well said tesla is always an emotional story. melissa, i'm going the try to go down the middle and look at the results unemotional.

i think it is an overreaction and i want to step through why that's the case. the stock should be down as a starting point because the expectation was that they would increase their gross margin from 20% to slightly higher i recall a couple of quarters ago i think phil mentioned that it was 24%, so it would be the third consecutive quarter of a decline. but i would put from a 20% to 19 pi 19% as a modest decline especially because of the mix, the big 78,000 delivery number of the model 3 was driven byth cheapest versions of model 3, the lowest profitable margin on those model 3s so i think that that 19% actually is somewhat respectable given the way the mix was in the quarter. i think you can argue that 19% is not zero or a loss. i want to just shift gears and talk about putting the loss into perspective. $408 million, big number we are looking for a lot of 110 million, 117 of that loss was a one-time restructuring i suspect, and they will talk about this on the call, that a

large portion of that -- so to answer tim's question about how do you have that big of a loss and you have those record deliveries, they spent on other things, in particular shanghai giga factory i would encourage anyone to do a google search, a youtube video of where that's at right now most impressive how quickly it is coming together they're spending a boat load of money to advance that. so i think of this- -- the fact they continue to expect demand, moving in the right direction. the fact they've really got their arms around manufacturing, is generally moving in the right direction. one last thought to your point, melissa, about amazon and thinking about this relative to almost this hidden valuation question i don't have a good support, even though i'm a believer in tesla and think that this stock can go much higher i don't have a very clear avenue when i talk about valuation because it is obviously difficult or impossible at this point to try to value this

company off current financials. >> how do you know that the stock is going to be higher, gene >> well, when you look at the market opportunity, we think that there are just a handful of what wewould call undeniable truths of the future one of those is the electrification of cars. as we look at the pricing of the different cars and availability, we think tesla has an inherent advantage today, specifically around range versus price, and will in the future around some of the data being collected, some of the things i think tim was talking about and some of the advances i am not talking about a robo taxi fleet to drive the valuation but simply safer cars. >> when you say inevitable truths of the future, it sounds a ways out it doesn't sound like stocks could be higher in a year. if your time frame is shorter, the conviction is lower it sounds like. >> i think -- well, my conviction is still high i just don't have the framework around valuation. >> right. >> i would say this. if model 3 units increase in the

september quarter, which is what they're saying is going to happen, the stock will rebound >> okay. gene, thank you. we're going to let you hop on the facebook call. >> thank you. >> which is going on right now we will check in with you later on they're always, by the way, commenting in the outlook letter by the model y preparations for production began in the second quarter. they're able to leverage some of the costs from model 3 because the parts overlap, et cetera, so that will be theoretically a lower cost car to produce. >> we remain on track to launch local production in china by end of the year. i will say it gep. i think there's something for bull and bears you don't have to be in the stock, let's be clear. this is the way i would look at it today if you are looking to play it, i think if it gets down to the 225 level it makes sense in terms of risk/reward. i don't know if it is going to get there. if you want to play from a long side with only stock, that's your entry point. >> we are just getting started here on "fast money" tonight coming up, shares of facebook higher in after hours session, up 2%.

we will tell you what is moving the stock, what to watch for on the earnings call going on now plus, check out paypal and las vegas standards all on the move after reporting results. we will see what execs had to say about the quarter. we're live from times square, more familiar right after this for your heart...

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. ♪ welcome balk to "fast money" check out shares of facebook jumping in after hours, up as much as 4% at one point. now it is up 2%. beating on the top and bottom lines, revenue rose 28% compared to last year this results come of course after the company struck a $5 billion settlement with the ftc. what should we make of this, pete >> think when we look when it comes up to the 5 billion number, yes, it is a record number and all of the rest, but look at the cash flow of the company. they have 46 billion in cash the cash flow somewhere around 10.5, $11 billion, you know. so there's a lot of different reasons why, yes, it is a penalty on anybody yes, it is a penalty on facebook but they digested that, mel, before we came into the earnings when you look at the earnings numbers and you see they still are putting out growth had is a company everybody said, oh, we're all leaving. we want to leave this platform i'm going to zbreinstagram.

facebook happens to own instagram. >> sounds like you are laying the case for the government here for antitrust. >> if they choose to and that will make facebook wealthier if they put it out there to the public, what is instagram worth now today as they're growing, at the pace that they're growing? >> could be the best thing they do for shareholder. >> could be best in the world. >> out of the 47 analysts that cover, you have 40 buys, six holds and only one sell. sounds like a crowded position. >> sounds like herd mentality. >> it is. >> but they didn't flip up until about 190 on the stock most of the guys at 140 and 150 were like, you got to stay away. >> when you look at the closure of this, i saw your interview today, it couldn't preclude further action on the antitrust front but people are getting numb to a lot of the headwinds this is a shocker, up 56% year-to-date it is a being shoer tos mo 'cket people, but you can't bet against them. >> when it comes to the quarter, all that it matters is that advertisers are ticking by facebook at this point

regardless of what the headlines are, you want to see the basis of the business keep going in this quarter what did you like >> the advertising revenue didn't show a sign of weakening. this is a trans national company that it will be difficult for the world's governments to team up on this, too. to be clear, steve talked about the headwinds, people are becoming somewhat inured to. i think you still have to pay attention to expenses. i think the down side for the stock is, you know, gross margin as well. i think you have to watch where they are because it is still a question of whether they can truly measure what the expense load is going to be going forward. meanwhile though, the revenue side of the balance sheet right now is extraordinary >> yeah. guy. >> everybody said everything on that, so let's add one more sort of arrow to the -- >> superlative. >> that's arrow to -- >> whatever you like. >> we are going to shoot all of the arrows at some point. >> you don't have to shoot them. put them in your quiver and hold on to them. >> tell me what the arrow is. >> something i said for a while of i don't want to like facebook

for a number of reasons. with that said, with that move to 164 on june 3rd was textbook and the stock set up extraordinarily well to push towards the all-time highs from last july. it is pretty much exactly what has taken place. you know, 211 and change was last july's high here we are now. ask the question, i mean pete talks about discipline all the time do you stay with it here for the breakout i guess you could. or do you start taking money off the table in light of the comments we had at top of the show last night? >> i think the prudent thing to do is start to layer out of some of this. >> i got to tell you, i own it and i'm not thinking about that right now. the reason is when i see numbers going up, growth in different areas, and we all know instagram is growing very rapidly and soon will be about 30% of the revenue that comes in. how about the fact the average revenue is over $7 per user. these numbers -- i want to put it out there. >> our pool. >> i didn't want to say our pool but when you look at the things and what was expected? 20 or 30% less than they came

out with it tells you how much power these guys have. >> how about the fact it is not over bought on a relative strength index we are holding in on the old highs and you want to buy old highs. you want to buy new highs. you want to buy them when they're running towards it the momentum is to the side of the bulls. >> when you look at a fundamental side of this thing and see a pe trading at 22, 24, something like that going forward, it is still very cheap yet it has incredible growth you look at the balance sheet, she don't have debt, have a lot of cash. you take 5 billion out of it and they put 5 billion right back in there. >> shouldn't there be a discount for the headwinds it faces, all of the regulatory clouds >> everything pete is saying is absolutely right what we're saying is we are talking about a company that has no issues with the regulators though that's a company with no issues with the regulator. >> right. >> i think we had a couple of chance, and june 3rd we talked about that that was the bottom in which the stock is up 32% off that low by the way, the headline, the nasty headline served to put in a bottom under the stock so, yes, mel, and i have been saying it for a long time.

i think facebook traded at a discount for a reason. i think people don't think that despite obviously the jean yups of the management team in creating what they created, actually this management team has not been ahead ofthe curve in terms of security issues and the cost to the business and really how the cost of their product off the assembly line is what it is data that's something that i think is an issue obviously it is a sensitive issue. >> the conference call is going on right now we have been in the position where we sit here, waiting for the conference call. everything looks fine. you want to hear what the company says about op x. >> last july. >> that was the day. >> you go back -- and we're in july it is fascinating -- >> no, we're not. >> categorywe are in july. >> we are. you talk about history repeating itself i'm not suggesting another move to the down side, but we're set up for exactly what we saw a year ago today. >> to another mover here align technology down more than 20%. rahel solomon is at headquarters with the latest.

>> hi, down more than 24% on after hours. this is the company that makes the invis align products they are lowering the outlook forrest of t for the rest of the year the ceo saying given the uncertainty in china, our outlook for the third quarter reflects a more cautious outlook for the region as you can see, it is now down more than 24% after hours. melissa, back to you. >> rahel, thank you. rahel solomon back at headquarters another victim of the china trade war here anybody trade in this stock? >> not trading in this stock, but it is stock that really if you think about a time when we would be concerned about high multiple stocks, there's nothing cheap here but it is a $21 billion company that's involved in essentially medical devices and orthopedics, et cetera, that truly has a global franchise seeing some of those price pass-throughs to the consumer is something i'm sure we have hae not seen yet. >> much more on the other big earnings movers after hours

including tesla, las vegas sands and paypal amazon gearing up for its own report tomorrow. one trader reporting could see a pop in the stocks. we will see much more "fast" right after this (lively music) - [student] my degree from snhu has helped me tremendously. the flexible class schedules allow me to run my catering business and be a mom and parent. breakthrough at snhu.edu.

i inadvic ♪ well cull back to "fast money" time for earning we have full team coverage contessa brewer standing by with las vegas sands and we begin with deidre bosa who is monitoring paypal. >> paypal coming down-to-earth

in after hours it has been one of the hottest stocks and sectors this year an important theme for the company has been venmo and efforts to monetize it which have been slow on the call the co dan shellman says they continue to find ways to make the popular peer-to-peer app more engaging and profitable have a listen. >> with another quarter of outstanding next newactive growth, venmo continues to offer significant opportunity for merchants to attract a valuable, engaged consumer base. in addition to adding fandango, stitch fix, 1-800-flowers, today ticks and ticket network to our growing list of merchant partners, offering venmo as a way to pay, we continue to enrich the venmo experience by making it even more engaging and personalize it >> reporter: guys, here is the thing. while paypal figures out how to make money from venmo, competition is only

intensifying you have zelle, square cash moving in and perhaps taking some of the groepgt. the amount of venmo process this quarter was $4 billion lower than the street was expected the app has long been pointed to as an important future growth engine for paypal. also, guys, on the call, this is interesting. schulman said that they're adding bit mojis to the venmo app. if you use venmo you know emojis are necessary, but i have to admit i had to text my gen z niece to ask if bit mojis are still school she said definitely not. >> i let the whole thing pass me by thank you, deidre. >> you don't even know what those are. they are the characters that are meant to look like you you can pick the hair and outlook and then you have different emotions, like that's cool. >> ahh. >> exactly i think that the decline in venmo is telling, especially as

you have zelle, you can do it as a bank of america customer and it is free. >> at 28 times -- you can say it is not terribly expensive but when visa and mastercard trading, it envies it. a lot of people say venmo should have been better it is a case where they needed to crush it on this. venmo up 55 to 60%, not doing it based on where we have come with the stock, up 45% this year. >> it is venmo, it is square, the competition just brought up. lo at the stock, up 44% year-to-date it has been screaming to tup side i remember when it got close to 100 and i thought it was topee went through 100 here it is trading at 114, 115, something like that. i think it is way in front of itself and there was no room for error, and the error this time was venmo is fine just not growing as quick as they need to from a profitability -- >> that's why it was rallying on digital payment. but to melissa's point, if there's so much competition how

will it continue to grow that might be a negative, a canary in the coal mine as well. maybe it is a sign that the writing is on the wall. >> let's turn to las vegas sands. for that we get to contessa brewer . contessa. >> hi, melissa they missed on top and bottom lines, head back by disappointing results. the company says volumes were normal but it missed because of hold or what the house wins and it missed in the premium mass segment. the vip segment is under pressure these were the high-roller junkets. las vegas sands highlighted insaid its mass business and future of gaining premium mass clear though, competitive pressures are having an impact this quarter in macau with taking market share. it has a big, sparkly new building and vip gaining opportunities that are new harry curtis points out that sands properties are older, in need of more renovation cap ex and it makes it harder to

compete, makes them vulnerable to continue to losing share. the coo points out they have the new projects he insists the property portfolio will look very different in macau next year the returns in singapore lower than expected. las vegas beat expectations. david cats is looking at the overall bright side seaing they have by far the strongest balance sheet in the industry so they can return a lot of cap 258, they brought back 180 million of okay, they can fund their growth is macau, singapore, and respectively in japan. once again, sheldon atelson said he is fine they expect him to rejoin in october. >> thank you, contessa >> where do you get in the stock? not crazy at 18 times. yes, disappointing macau numbers, absolute live it's been the growth driver. las vegas a little better. again, like facebook or like

tesla, there's something for everybody. however, $48 on the trouf gh in the middle of december, basically traded up to 70. you are playing for the 50% replacement of that as well and it comes in at 60. if you can buy it at $60, the risk/reward sets up well. >> wynn resorts down by more than a percent perhaps on the back of this. >> the indictment on macau i think is not fair. i think macau has recovered. june ggr gross gaming revenues up almost 6% year over year. i think the trend is better. what i heard was that melco is outperforming them and they're a major local competitor you know, again, i don't know if there's substitution going on, but even just in terms of -- i don't think it is a macro trade. i think it is a bottom-up execution story. that's what i heard. >> if melco is beating lvs, could melco be beating wynn? >> sure. again, i don't want to read trade war into this. i think these have been trade war stocks though. let's be clear. >> yes. >> these were total proxy plays

for the trade war. >> steve >> i would agree i think wynn, if they get the thing hit down a little too much, mel, i think it is the better opportunity between the two, las vegas sands and wynn. i love that stock. >> but what level peaks your interest >> if trade 140, call it, give or take 139 right now. if we get towards 130, mel, i think it is a great opportunity but i still miss steve wynn being the guy running the show there. because of that i have looked at it less and less and less. i was just in las vegas sands, sold it just a week ago. doesn't mean i sold a top or anything like that, but it was just time. i decided to take some money off the table. maybe i should have in facebook. i see it moving down a little bit now. >> you know what you get in las vegas? you get singapore. it was a headwind this earning cycle but it probably will become a tail wind i will take the opposite wynn definitely the outpir forming but las vegas, singapore, macau and vague an, you have all three coming up, facebook and tesla on the move in the after

hours. pete mentioned the turn around in facebook, down 2.1% a big reversal on comment ceo mark zuckerberg said about user growth what has investors hitting the sale button. steven mnuchen taking aim at amazon as the retail giant gets ready to report results tomorrow we will tee you fupor the big report much more "fast money" right after this

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♪ welcome back to "fast money" facebook making a big reversal in after hours that's all coming down by as much at 1.2%, now down about half a percent the conference call is under way. let's get to julia boorstin for details. >> reporter: melissa, facebook shares moving into the red on cfo saying that the company expects advertising revenue to decelerate in the fourth quarter and going into 2020. he is saying it is partially driven by ad targeted related headwinds and uncertainties. saying they expect full year expenses to grow 53% to 61%. that is adding the 2 billion additional cost to the full ftc fine to the expense outlook from last quarter waner saying that the price per ad dropped 4% while the number

of impressions grew 33%, saying that's due in part to growth of instagram stories as well as facebook stories now, earlier in the call co mark zuckerberg focusing his comments on his commitment to protecting user's privacy, say it was an important quarter to have a clear path forward, both in terms of regulation and facebook's new business focus. >> this is a major shift for us. we built services that billions of people trust every day to communicate with the people they care about privacy has always been important to the services we provide, and now it is even more central to our future vision for social networking. it is critical that we get this right, and we're going to build it into all of our systems >> reporter: coo of facebook -- ceo cheryl sand burg talking about how the new focus on privacy and transparency will support facebook's revenue growth >> we're making significant investments in safety, security and privacy while continuing to grow our community and our business

we know we still have a lot of hard work ahead of us, but this quarter, once again shows that we can do both we are committed to earning back trust through the actions we take >> reporter: sandberg and zuckerberg also talking about their new focus on commerce near term with shopping on instagram that sandberg says is gaining steam and longer term with libre with encrypted payments which zuckerberg spoke about quite a bit, answering questions about it melissa. >> when you said headwinds and uncertainties that was said, what does it mean exactly? >> reporter: that's a direct question, melissa. i think he is talking about there could be uncertainty to understand how all of the privacy regulation, all of this regulatory scrutiny could impact the way they use data to target ads. the less targeting, the less data they use in advertising, the more that will hinder growth ads are more effective, they're more valuable to facebook if facebook can use more personal

information in targeting them. if people opt out of targeting, that could be problematic. >> reporter: julia, thank you. >> julia boorstin in los angeles. more reaction to facebook earnings let's bring back in gene munster of loup venn ters. i want to start there. what do you make of that is this an indication of that all of this whirlwind around privacy and data use, it is actually catching up to its core business >> melissa, i don't think so i think the company is doing what they always do, which is be conservative keep in mind they talked about these decelerations before and in fact revenue continued to be good i think that played part of it i think there's a bit a gamemanship that came in specifically with the targeting comment. this gamesmanship is straightforward. they will ask questions about how are you factoring the new regulatory environment into your guidance they can now say they've talked about it i want to emphasize one other piece. what i think is actually

probably more at play with this guidance for revenue deceleration is that basic concept of the growth from stories coming from markets outside of the u.s. that tend to have lower revenue per user. so the simple math is that in combination of what were strong numbers last year creates this effect where you will return to some deceleration. so i think that the comment on target was more of a strategic comment. i think the comment more broadly about deceleration is more about a mixed shift in where they're getting ads from. >> the deceleration is separate from the commentary provided in first quarter about revenue decelerating on a sequential basis in 2019? >> yes, they said expect a return to deceleration for the back half of this year and into 2020 so we reverse the trend now, expect it to return again. i think those comment about the targeting and the return of deceleration can at first glance be taken together, but i think

that they have different objectives. >> got it. gene, how would you grade the quarter so far >> so i'm going to give them a b-plus the user growth, 9% year over year for four consecutive quarters is most impressive given the headwinds that they have had second is they continue to increase the monetization within their core products. the reason i don't give it a higher grade and a lot of people would vote for a higher grade is because there's the inherent regulatory risk. ultimately i think that shares of facebook are not a good investment because i think that the regulatory environment will eventually cap some of the outside. i think there's better ways to make money in large cap tech. >> all right gene, thank you so much for your analysis gene munster of loup ventures.

>> what do you think >> what do you mean? >> i thought it was a great quarter. >> i would take that b plus, sure i tell you what, the operating systems issue though, it gets back to higher open ex, lower cap ex they reported it will be 2 billion lower. changing operating systems means new costs associated with regulatory headwinds. >> you have to be careful. you can't bang the drum. gene was spot on when he said they have to tread lightly based on the political environment we're in. >> by the -- >> it is not their fault you know -- >> it is not their fault. >> -- dinged me half a great for something that's a factor -- >> no, but it is about the regulatory headwinds, i hear you. i think it is a buy. people were gauging maybe the way he was defining the environment. >> so you like first part of it of, pirs pa first part of what but not the second part which he

doesn't think it is a good investment, there are other places to make money. >> i liked what gene said. >> up to that point. >> i liked what he said. i think he is too nervous about the regulatory headwinds and he has to brush it aside. >> most important is user growth, and if it is going up that's why you own facebook. >> deidre bosa with uber. >> reporter: two board members stepping down. you might remember that matt cooler took girl burlybill gurl, he is stepping down, as is ariana huffington who says she needs to focus more on her company. it is now a board with several vacant seats it was greatly expanded during the turbulent time when the founder was forced out we have seen ryan graves, uber's first ceo, he left in may shortly after the ipo. i want to note as part of the deal with soft bank, the big investment before the ipo, they

were supposed to fill two seats on that board. that never happened because they did not get the government agency that approve's corporate deals for national security risk, they didn't get their approval guys, uber has come a long way and a long way back in a few years. it was a board that expanded and now shrinking. >> five basic seats is the tally? >> yes. >> who is left >> and the company had no comment so i'm not sure there's a timeline as to when and how they will fill the seats i would add these are more challenges for kazir shahu, whose honeymoon i think has ended since taking over. >> deidre bosa, thank you. for a company with corporate governance issues in the past, you want a full board. >> yes, you want a full board and people that weren't part of "the insider" group. that's the case. i think the issue here is still you have lockups, you have people affiliated with the

company from a different life when it wasn't a public company with the rules they have now a check on tesla shares. it is down a solid 10% it hasn't moved too much in the after hours session which is no surprise since the conference call is not for another 45 minutes we will tell you the single most impoanthg wrtt intoatch for when the conference call kicks off. much more "fast money" right after this ♪

welcome back to "fast money" amazon ripping higher this year and one options trader is betting the retail giant could hit a fresh all-time high. mike khouw is in san francisco with the action. hey, mike. >> hi there. amazon is applying about a 3.9% move when they report earnings tomorrow, slightly below the 4.8% it averaged over the past eight quarters one of the trades we saw was a purchase of the 20/65 call spread somebody paid just over a buck for a couple hundred of those. that is going to be profitable if amazon rises by 4%. the interesting thing here is taking advantage of the somewhat lower than average options premiums and using a spread to do it. they're able to get quite a lot of leverage on a relatively small move for amazon of 4% to the upside payout of about four to one. >> you probably saw this action, pete >> yes. >> how are you positioned?

>> i love that kind of thing i'm not in amazon but i love that spread because it is a great risk/reward as mike was pointing out you are investing a dollar which you could lose the entire thing or if you hit a nice number and go up to push it higher, it could be suddenly $5. >> great leverage. >> great leverage. >> or more leverage as it is known here. >> on this side of the pond. >> please, sir. >> i'm going to give you one. >> okay. >> no doubt they will report a great quarter. however, is the setup as good as it was a month, month and a half ago when it was $1,800 stock. >> same thing about facebook. >> same thing that happened. facebook bounced against that level and seems to be selling off. i think the same thing could happen in amazon tomorrow, up against last august high of about 2015. >> mike khouw, thank you more "options action", check out the full show friday at 5:30 p.m. eastern time. meantime, another check on shares of tesla, down 10% still. that conference call is about to kick off

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welcome back to "fast money" let's get another look at tesla. tesla shares down about so10% o earnings results let's bring back loup ventures gene munster what do you still want the hear on the call? >> melissa, it is all about demand they've got enough cash where it is not an issue for the next several years, and so this demand number, they reiterated the 360,000 to 400,000 number for the full year but did not talk about the sequencing of the number between september and december from the call i would love to see some clarity about do they expect demand deliveries to be up in the september quarter. >> all right finally, what is your grade for tesla? >> better not be a b plus. >> b minus. >> don't want in that class. >> b minus a lot of people would expect it should be a c minus. from my perspective it is really focusing too much on the headlines. yes, it was a disappointing on the 19% margin, but it is still

a profitable -- or gross margin is still positive for the vehicles i think ultimately demand is there. the gross margin is not as bad as people think and cash is no longer, at least for the next few years, not an issue. so to me it is a b minus. >> all right gene, always great to have you thanks so much for your time today. >> thank you. >> we appreciate it. gene munster of loup ventures. again, the conference call kicks off in about 35 minutes time grasso, what do you think happens? >> i think it will be the opposite of facebook i think they have a vested interest in talking up the stock, in talking up the potential. i don't mean lying about it, but painting it with rose-colored glasses versus facebook that's at a political environment -- >> where they have to sort of -- >> they dress it down. i think it will be more positive when we her that conversation. >> ford is down 6% second quarter results missed expectations so we will watch this closely tomorrow,

tim, concerned at all about gm on the back of this? >> no, i think a lot of this is china, too i think a lot was not corrected properly i think gm's exposure there, look, ford and gm we have seen as companies can die verge in terms of the story gm if anything has made difficult choices in terms of closing down unprofitable businesses doesn't change my view. >> here is a would you rather. >> is it a pick your poison? >> no, i said would you rather because it is a would you rather i didn't say pick your poison. >> okay. sorry. >> ford or tesla here. >> ford or tesla here? >> tesla. >> geez. >> tesla it is crazy, i know, but given the choices of the two, tesla. i mean ford has been grim death now for the last six years there's no reason it shouldn't continue to be so. tesla. >> i bet with my wallet, it is tesla. >> you guys are crazy. >> ford does nothing. >> it is barely double digits,

right? >> first of all we know ford will be in business in a couple of years, i'm not sure about tesla. >> we don't know that. >> by the way, the free cash flow i think is a function of inventory -- ed mccabe is a research analyst that sent me a note that's whaths.t is i >> name drop. >> up next, final trades

final trade time pete >> we've been talking about tesla. how about neil huge call buying in there today. i bought nio gitty up. >> tim. >> a lot of tap on las vegas and wynn i think wynn is the play here and you have a case where wynn's numbers are better than those at lvs. >> steven grasso. >> can you imagine next week if general electric tries to the upside what would the stock do? it has been building a base for the last couple of weeks/months. i'm on ge, final trade. >> the longer the base, the higher in space. >> the higher in space two days in a row that the great louise i maumada has been discu

on the show. hope she is watching. >> i'm sure she is. >> feels like it is about to break out to me, financial prudential. >> that's do it for us thanks for watching. t e you back here tomorrow a 5:00 for more "fast money" in my mission is simple, to make you money i'm here to level the playing field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now hey, i'm cramer. welcome to "mad money. welcome to cramerica other people want to make friends, my job is to make you money. my job is educate, teach and put it in context. call me or tweet me @jimcramer there is the people. there is the corporations and then there is the government right now the first two are doing extremely wellut