good morning it is 11:00 a.m. on wall street. "squawk alley" is live.

♪ good thursday morning, welcome to "squawk alley." stocks did take a leg lower at the open the s&p bounced right off of the 50 day we'll watch that closely but we're off of the low levels of the early session. here is the president yesterday on oracle's deal with bite dance stands >> you said it was important that a u.s. company buy tiktok. >> we're going to find out about that we're looking at that from the standpoint of bitedance. we don't like that

conceptually we don't like that. that has not been told to me yet. that has been reported but not told to me >> speaking of reporting, david faber has more of that for us. >> not a lot of insight on that key question siting a source close to the deal, the conversations, that have been ongoing for awhile now. the president is most likely to make a decision in the next 24 to 36 hours. not likely today, but prior to the weekend, i'm told, by someone familiar with the situation that he will make a decision as to the future ownership of tiktok here in the united states. that is, of course, what we refer to as the oracle deal. people say that they would own

about 20% of tiktok here in the u.s. moving the data to hit's servers you would have a huge new customer and i'm told they would have access to all of the source code to all of the artifical intelligence and they would be able to review that regularly, and walmart would also be part of this. we heard reporting along those lines. it was part of the microsoft bid that did not make it to the line here i'm told walmart will be part of the deal, but it is unclear because of the economics how the business is being valued i don't have a an far you. walmart will have a seat on that as well.

a lot of it will come down to the president and what he feels is, at least, the national security concerns and whether or not they have been fully addressed even with the sign off, apparently. the committee signing off on it or being satisfied that it would meet their national security concerns, carl >> david, i am picking it up here, i heard similar things about walmart and questions about how it will be valued and what percentage a company like v walmart would be getting i have been hearing about whether or not bitedance or u.s. companies would have a majority is a key sticking point for the president and approval i'm wondering if there would be any other investment changes if the other companies would perhaps be increasing their stakes to increase the overall

percentage that u.s. companies own. >> i do and the reporting on this, i think i voiced my frustration on the past. getting people who were able to talk and now are unable to it is a hedge fund, and general atlantic, they would be participatin participating. i'm not sure jim cramer raised the idea that it would be followed by a public offering and it would massively dilute bite dance. i'm not sure it has been confusing given the sides in the last 24 hours, as well >> great insight into how the sausage is being made. thank you. we're also getting additional

reporting on this from the treasury side. sarah eisen joins us now with that. >> this adding to a development, speaking of sausage making, we're all trying to work our sources on what is going on there was a major address, and that bitedance has agreed to it in full. so a development potentially pointing this into firm. the treasury secretary himself trump will need to be briefed, but that is a new development of what is going on behind the scenes that got us to this point that jives with david faber's

reporting that president trump is set to make a decision on this in the next 24 to 36 hours. the treasury sent major revisions to the term sheet, addressing physically the security and data issue which is is what this whole thing is about, and why president trump raised this issue to begin with. that is new and that could bode well for the chances of this deal i can also confirm that walmart will be on the ford. they are addressing some of their security and data concern that's have been in the administration >> thank you so much, question for you about one piece of this which is my understanding that oracle being the technology partner addresses where the data lives, making sure it is on a cloud here in the u.s. rather than being sent back to china.

there is two pieces that are persisting concerned one is an issue of sensorship or mad niplation that it would have power to sensor or manipulate people through the content on tiktok >> oracle has positioned itself as a good and trusted technology partner that it will see the source code or the algorithm, have access, and monitor it if is known as not just a number four or five cloud provider, but has expertise in securit the name comes from their first client was the cia and that was the project name they will be able to manage some

of the security concerns as it relates to that algorithm. we don't have the specifics on what the revisions were to address these data and security issues but i know they have been agreed to from the treasury secretary himself, from bitedance, and oracle late last night that is how oracle has been positioning themselves not just because it is a cloud provider with close ties to the administration, but has expertise and security and specifically security engineering. >> sounds like a decent chance to get some of the details and a call from the president on this before the weekend sara eisen, thank you as well. now from a big partnership to a big ipo. snowflake, was it's insane debut good or bad for the market when the world gets complicated,

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welcome back to "squawk alley. the dow is just about at break even erasing a 284 point drop. s&p and nasdaq still in the red back at session highs. you see them off about half a per cent on the s&p.

let's go back to snowmake the and a question was it's stratospheric debut good or bad for the market the largest ipo ever priced at $120 and doubled by the close into is the traditional ipo back or did snowflake leave too much money on the table is it's valuation at 100 times annualized value a red flag for investors. here is what we said after the open of the stock. >> as frothy as it looks today, this is just a hot deal. we will just have to live with the consequences of that >> still a hot deal, carl. a little below doubling the ipo price. a little off of yesterday, but come on still $236 a share,

right? >> of course, when it hit $319 and that market cap at that moment of about $88 billion, john, that is bigger than $431 other s&p components it was fascinating to hear you talk about the price action. hearing his agnostic take on it. >> here is the first rodeo, it is his third taking data domain and service now. i wonder how much this changes the narrative for tech ipos. we're talking about they have to be profitable in is a growth and a scale story all around >> it is a growth story and it is also in the sector of software and the cloud that is particularly hot right now i want to point out something that our college, bob pisanni has been talking about there is a number of ipos that have doubled on their opening day. the retail investor doesn't

necessarily get to participate in that growth we saw the companies buy in ahead of time. we had sales forth and berkshire hathaway get in there. my question is long term what does this mean for retail investors and their perspective and their approach to these tech stock that's are high flying but don't necessarily hold up because the valuations are so high >> we have some great voices to address the question of whether or not the ipo and high valuation debut are good for the market reid hoffman and mark pincus is going to join us

deirdre bosa has our next guest. >> thank you todd, for being here >> it's great to be here. >> so todd in tweet storm of yours last night, you laid out the drawbacks, you said they length of time money on the table. you continue to move up. so my question to you is if you had to do it all over again would you do it the same way by an ipo? traditional? >> it is interesting to think back the three years since we have been public we're about connecting companies to the employee at the world, the companies at fed ex or nordstrom, they log in to get into the organizations

it is more visibilitievisibilits so that was a big benefit. the other thaing going through the minds of the ceos is they are taking their companies public there is a big, big incentive to not do anything out of the ordinary do you want your ipo to be as smooth and seamless and predictable as possible. i think that is a pig force to keep things predictable. >> right, so what you're outlining is perhaps a little pressure when the company is going through so much change, taking the traditional route but in terms of leaving money on the table and what bill gurley said last night, and one of the most value kal critics, he said it was the final proof of how broken the process is. it may be comfortable, but is it broken >> i think if you think about leaving money on the table, it's

the last price of a trade. not what you can sell a big chunk of stock for so if they want today sell in big blocks to the investors, that's different i think that is left out of the equation i think there is pros and cons of each approach direct listings you don't raise money, right a lot of companies need money. a traditional ipo raises capital for the company. so i think a lot of the conversation has important points. >> a question for you, todd. one of the issues that you raised in your tweet storm about the big risks.

from a company that is trying to innovate and grow and really push the ball forward, the risks seem very meaningful how do you think that has played out. what would you advice be to other start ups trying to maintain that intensity and participation in light of the fact that the ipo could change things >> it is a big concern for ceos thinking about their drive for innovation the big thing about the ipos is there is a scoreboard every day for employees. the last thing you suspect when the price goes down for your employees to be unmotivated. that's why there is a an incentive to try to make sure the shares trade up, right the employees see a positive score board. that is a big incentive to try to get things to go up and into the right. far before the ipo, a year

before the ipo, we worked hard on resetting the goal. the goal is no longer to be public the goal was to build an iconic technology company to help customers continue to grow along with the ipo. moving the goalpost so to speak further out beyond the ipo worked very well for us. >> todd, we're going to leave it here we'll talk soon about the incredible year. shares up nearly 65% year to date >> thank you so much great to have that perspective in the middest of all of the software ipos. when we return why stocks like stitchfix and the realreal are urarndndat a tn ou a wayfair isn't.

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>> it could be a long road to recovery for retail. what stocks are best for a turnaround and what might you want to avoid? scott, welcome back. >> your question at large, basically, following the q2 peak is will it stick. >> it could not have been better for e commerce companies in that

three-month window e commerce and the u.s. penetration went from 16 to 22% in that three-month period there was a component that was shifting back to stores pretty quickly. buy online and pick up in stores calculated also in e commerce. then you have various other aspects that we believe will lead to normalization. a portion of that will definitely stick >> are you delineating between a return to the office, return to the school, or is this more about the lingering effects of the pandemic on a macroeconomic front. lack of additional stimulus, or a combination of the two >> it's all of the above you had stimulus checks in the second quarter we don't know if you'll have that coming in the third quarter. you have a long term tail wind

of offline to online shift in retail that is accelerated by the fact that bankruptcies are elevated at the moment store closure vs. exceeds have that you have significant performance in the group in that three-month window as well typically momentum like that could certain i will be a correction very optimistic about the group long term. there is possibly a buying opportunity to approach as data becomes more apparent that we're in a decelerating trend now. >> i wonder, i could make the argument that snowflake was good for tech, maybe for some of the stocks it forced the narrative back to growth, perhaps, and the

potential of a company versus just how profitable is it right now at this moment >> i they is a fair assessment i think that all-time low interest rates certainly hope growth ath sets as well ssets. low rates that possibly won't last forever nap could be a problem for higher multiple securities but for the moment there is a scarcity of growth an interest rate level where they are that is beneficial for the internet sector. it is inclusive as well. >> you're bullish on the growth of these new platforms, and also these new models like the realreal and stitch fix. an idea that you let someone else shop for you. where do you see the platforms

as well as the new shopping models, the realreal and stitchfix benefitting from the fact that people have more time and home and fundamental changes to shopping that may change. >> i throw carvana and vroom in the mix as well there. the pandemic being more lasting acceleration of that trend as well specifically on stitchfix and the realreal they experienced demand declines because the products purchased on those services are usually used at work or outside of the home going to dinners and things of that nature so the realreal and stitchfix also had challenges where the density had to be reduced due to lockdown constraints so interestingly stitchfix and the realreal are almost counter

cyclical demand trends for them should improve from here. we like those names as more traditional turn around type of names. or as they're referred to now, recovery type of names relative to the name that's we typically talk about that we also like for other reasons welcome like the carvanas and the vrooms >> speaking of amazon, scott, it was hard not to notice amazon's announcement that almost 400,000 people applied for a job at amazon this week i just wonder, i know it is a name that you think well positioned here post covid, but at what point are they too big at what point does the thought of them being top heavy start to enter the conversation

>> i don't really believe that if you're referring to regulatory and those type of things versus the large company or both, you know i think amazon as it is becoming a bigger company has continued to be very well managed because it is still a founder led company. so it still is highly efficient and you don't have the issues that some companies have when they get large nap is o that is one topic. on the regulatory front, nobody knows. what i lean on is that this company treats it's consumers so well that certainly there are issues that happen with suppliers and others in the supply chain that are highly competitive. but from an anti-trust standpoint, it is hard to conclude that amazon has a problem given the relationship that they have with their customers nap is my view on that so i think on both fronts, you know, they're fine in the fundamentals of the

business they have never been stronger they're the prime beneficiary of what is happening in retail. the carnage and the shift long term and they're a significant player in web services that experienced an acceleration in it's trends as well. >> we appreciate it, scott, see you soon >> it is half past the hour, time for a update. >> indeed, i do, john, thank you so much. >> for a second time, new york city is delaying the start of in-person learning for most of the one million public school students elementary schools remote only until september 29th the city says they need more time to prepare before students can return as the coronavirus pandemic continues

new jersey's governor phil murphy has agreed to a millionaire's tax. about 800,000 lower and middle income families will get a $500 tax rebate and china is warning that it may retaliate as a second top u.s. official visits taiwan. under secretary of state arriving today to meet with taiwan's president they made a high profile trip last month china claim that's taiwan is part of it's territory and opposes any official contacts between taiwan and other countries. you're up to date, i'll see you back here in an hour ju julia, out to you. >> sue, thank you. as we go to break, take a look at shares of gamestop. that stock up over 5%. moving higher again today and on track for the best week ever, up 50%. they have a slate of positive

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>> there was a lot of winners from the pop at the open one investor's stock turned into $12 billion yesterday. what he thinks is next, only on cnbc.com stay with us silicon valley legends reid hoffman and mark pincus are with us after the break we're back in two. when the world gets complicated, a lot goes through your mind. with fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. that's the clarity you get with fidelity wealth management.

and tailored recommendations. ♪ ♪ ♪ the big events are back.

xfinity is your home for the return of live sports. another ipo today choosing the traditional route over a direct listing or spac waiting the first trade ceo ramen sayer joins us now your company is part of the

theme that we have been talking about the importance of data to drive smarter decisions in the cloud era. snowflake certainly played into that yesterday as well i wonder what kind of demand shifts for technology you're seeing particularly in this pandemic >> i think it is pretty clear that a lot of people are understanding now what cloud provides in the opportunity. it is also pretty clear that digital transportation is not just a buzz word, but it is a environment. we are architected for the new similar to others. we call it machine data. >> has the conversation with investors shifted away from profitability and thwart scale and growth on balance? it sure seemed to yesterday. >> i don't think so. if you're playing the long game

like most growth companies you're always playing close attention to the balance there i think the difference is, in particular for sumo, we have always, every time we raised another round, we diversified our investor base and looked for those to help take us to the next level in doing so, naturally you have to pay attention to growth and balance that particularly on this day and going forward for us >> ramin, julia here a question about the part of your business that security intelligence, i'm curious how the demands of that part of your business have changed in light of so only many of your customes work from home where are the threats and the solutions that you can provide to them going in the future. >> that is an interesting thing that we didn't know once covid hit how that would impact. and the work from home implication actually created more data for sumo

particularly with bad actors, bad nations, trying to take advantage of the situation and the crisis we're able to detect a lot of those and help with a transition to the workforce going from home happening to make sure that you not only secured the experience of all of the employees but also the inform i think it is early, and everyone likes to talk about post covid, and we're still in it we're confident in what we built with the other cloud native security ecosystems to help drive the change to the new. help secure, and be compliant. >> i didn't mean to imply that profits are not important, but you're spending more on sales and marketing and r&d than you're bringing in in revenue. are they more interested in you

being disciplined or is it more about growth, scale, and product or repeated questions to the path to profitability. >> every company in that balance is a little difference if depends on the market that you're serving in particular for us in our market, we're driven by that $2 trillion shift from the shackles of the data center to the cloud is what we're going after. absolutely the time is now to continue to invest and grow in scale with the commitment to getting to break even. >> you see snowflake's debut yesterday before yours, what do you think? >> i think they're an archetype of the new like sumo, they continue to drive that change that is necessary. for too long we have been

shackled and limited by what the data center by what tools create complexity and silo. we're unlocking that, and this is a category that we have created to help do so. >> looking forward to that first trade on sumo logic ipo today, thanks for being with us >> reid hoffman and mark pincus are on the other side of the break. stay with us when the world gets complicated,

a lot goes through your mind. with fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. that's the clarity you get with fidelity wealth management.

we're getting into the thursday ession. the dow session is down 384 in

line with the early morning futures, jon then we hit that 50-day moving average on the s&p we managed to bounce off with that intraday today say the averages appear to have found minor support at those levels. that is ncouraging some of thegk >> yeah, i'm taking a look at what is fairing better micro and qualcomm among the better performers this morning raising questions about semi conductors and if there is optimism around what might be made in the coming months and quarters >> yeah, you look at it and it is not nearly as bad as the

tape we'll brun into this if the rotation in tech happens with more frequency if people start taking a look at things like industrials and transports and keying off some of the data. the modernaceo saying when they could improve efficacy would be october, not likely but possible that is certainly in line with the optimistic turn of the white house. >> yeah, i think yesterday there was some argument that snowflake may have been causing rotation away from other tech bob, your insights were something to be hold

>> i think there is something to the idea that tech took some money from tech. but remember, john, these stocks, the big mega cap names topped out at the end of august and the beginning of september now they're trading at their lows of five weeks ago or so yes a little bit, but not a lot. so i think what i would say about snowflake is it is not the $120 price that the institutional investors got the day before those that could even buy this then, and the 231 now it is down if is a trend we have seen with big, big ipos. a big pop and most of the money is made on the first day we had this happen a number of times this year. we had 11 ipos, 11, that popped more than 100% just this year. just in 2020 you can see some of them here. they're all biotech or tech

companies. and a cloud computing company. lemonaid is an insurance company. they all popped more than 100% on their first day if you look at what happens after that, after we're getting a bigger first day pop this year because of the interest in tech and bio tech thang there is historic norm go a bit further beyond that you look at the 11 ipos that popped 100%, here is what hapd after that the first day average return has been a lot lower here the 11 ipos were up more than 100% on their first day. after the first day the average return is down 1%.

for those of you interested in snow flake, a lot of people loved watching how many rich people there are the average insider price for snow flake was $5.82 i got that watching and looking at the s1 yesterday on page 47 i like looking at the insider prices you want to get an idea of how much big money is being made the big money made on the first day and after that it's tough for the average investor to make a lot of money on that t that's part of the problem >> yeah, if you're a retail investor and just because we add cnbc focus on it, doesn't mean we are hiyping it we tail investor be ware back on the issue of the ipo structure itself i've heard a lot of a argument

that the way snowflake went is an argument in favor ov the traditional ipo. it gets too much attention to this argument all of this money has been left on the table as if the high mark of what somebody was willing to pay for the tok is what everybody would have paid for all of the stock. >> it wouldn't have happened that way the question is, is there anything that's a lot better what are the alt tern tifernati. there's real problems with direct listings as well. the spat game that bst played.

it's a game being played by people who don't want to be subjected to scrutiny of the capital markets. it's a little annoying to have people criticize your idea tell me what the alternatives are before you start criticizing the current system by in large i think the ipo process works and helps protect a lot of people against people who my not be able or willing to disclose all the information you want it's pretty onerous to go public there's a reason for that. you're selling a will the of stuff to the public. the question is what is the alternatives and let's discuss them i still see ipo process the most effective way to go public

how do you think we'll see those ipos be priced differently >> everybody thinks there's some noble thing going on with the direct listing the company wants to get the highest price you get for their company. there's nothing wrong with that. that's not evil or strange it's perfectly understandable. wouldn't you take this deal. let's not have a bunch of fund managers the day before decide to tell us how much we want it for the price. let's try to get an indicative price that's higher and let's not have any lock up sounds like a good deal for the people floating the company, guys >> thanks so much, bob our next two guests are silicon valley legends today launching a $600 million spak. a vehicle that plans to private one tech unicorn to go public.

thaupg both so much for joining us why did you decide to do a spak and why now? >> we see over 400 private companies are unicorns already they need to look at how do we build a technology company that grows and compounds for decades. the thing that we think is really essential to that is having kind of venture capital partners at scale. people who have done this before such companies such as air bnb and others that presents an alternative and very compelling way of saying how do we build long term tech companies. we think there's an interesting

new opportunity here for putting these companies for how they do the next decade. >> interesting i'm curious, mark, when you think about next decade and wa we heard from bob about taking companies public the fact this is still a good route for many companies why does it make sense for you to target this right now as an alternative to taking companies public i think we'll see more innovation in how they go to mark and how retail and other investors get access to these amazing companies. we thought that a spak is a perfect way for us to identify a

great company at scale that has a greater opportunity to deliver a venture like 10 to 100 return and we're really excited to be highly active in helping that company achieve its vision >> i'm curious what types of companies you'll be most interested in. mark you have so much experience in gaming. reed i know you love platforms and social what are the categories that you think have most potential for this type of partnership right now? we have games and marketplaces a lot of internet investing that we have done i've also spent some realtime in the last five years in artificial intelligence and applications, the way that we look at it is we're looking what the are major platform changes

that are ready with some venture capital skill to go to the public market and transform industries it's not just one area but which are th