stock is up a half percent, moving up. getting closer to the $3 trillion market cap number really approaching 2.9 trillion. outperformance versus the s&p as well tech check starts now. ♪ ♪ good thursday morning. i am deirdre bows. today, apple nearly $3 trillion in market cap. and early investors are cashing out on ipos. the window is open for companies to raise money

what about the retail investors? what poor performance in today's debuts may mean for the pipeline and returns. other high growth apparel stocks feeling the pain this year more to come on that group, carl. we start with apple. up 7% this week. inching closer to $3 trillion valuation. stock needs to get to 182.85 to reach that milestone joining us, bernstein analyst, stone ee sagalaki. >> good morning. you have written there's no catalyst for multiple expansion on this name what do you think is going on? >> i think it is a confluence of things many investors have been surprised at the magnitude of the recent run there's increasing anticipation and speculation about some vr or ar headset in the next year or so for apple

there's excitement about a potential apple car over time. i think we have been in an uncertain stock market and macro environment and people turn to apple as a stock in those cases because they believe that the company has durable free cash flow i think collectively all those things have been helpful to the stock. >> is that self fulfilling, does it get you off your neutral stance or do you think this in time does correct? >> i think we are in a self fulfilling zone for apple stock. we've seen it, we've seen options activity quite high. it has been in many consumer forums, traded there actively espoused stock we are seeing momentum begetting momentum i think the real question is

much like we entered 2021 where apple's multiple was north of 30 times earnings, the stock had a pause for the first half of this year as investors kind of digested that valuation. and i think that's our contention is sure, in the next few weeks potentially through $3 trillion there could be continued momentum in the name but apple a year ago traded north of 30 times earnings and despite really strong results underperformed the first half of 2021 i think there's a risk that that may also happen going forward. >> so what do you think are the catalysts or maybe i should say risks that could pull the stock down or could give people further confidence in what apple can do going forward >> sure, jon i think one of the things we haven't talked about, there's been mixed messages on, is the strength of the iphone cycle,

both in terms of how many units apple can deliver in q4 and also what is apple's characterization of demand for this cycle because there's obviously supply issue but there's also a demand question that will definitely shape investor sentiment if this is the strong cycle most investors are thinking for iphone to be flat if it was notable or worse than that, that's the most immediate driver of apple stock in the next 60 to 90 days. >> tony, good morning. it is deirdre. looking further out, do you believe ar and extended reality can be cannibalizistic to the iphone if the devices replace the smart phone? are you counting apple out in terms of building the hardware and operating system for such devices? >> i think we're pretty optimistic on what ar, sr devices can do over time

our belief is that at least initially the devices will likely be is he kreet i have to apple's businesses at the time, the functionality of an ar, vr, xr device is ultimately really enhanced and the form factor is one that's attractive, easy to deploy, think about something like glasses that perform 8 years from now, there's concern that it could cannibalize existing smart phones or tablets, it could be your primary access device to the westbound. and right now your primary access device to the web is your phone. ultimately if we get to where functionality and form factor of some kind of wearable allows you to access the web in a much

richer and arguably equally way, there's cannibalization could exist. near term, next three to five years, i expect it largely -- >> i wonder what you think the more acute risks are risk to asp because of input costs, maybe at some point weaker household consumer stance or eventual changes to the app store, recent stay notwithstanding. >> look, i think in the near term sentiment is going to be shaped on the strength of the iphone i think longer term the real question for investors is can a company $360 billion in annual revenue, an extraordinary figure, continue to grow at more than 3 or 4% more than gdp going forward. and i think that's the

challenge. that's why when investors see more transparency, they can get more confident about apple's sustainable growth rate being higher, you see the stock move near term it is about iphone longer term it is perceptions of sustainability of growth for such an enormous company >> it is an awfully big term that they might attempt over time toni, thanks for kicking off the hour >> thanks for having me. today with apple and take it from a different angle, new report out on the tech giant dealings in china, specifically highlights tim cook's agreement to address $275 billion in the country. the goal to try to squash any possible regulatory actions against apple. joining us, the reporter behind the story. wayne, good to have you.

to start, 275 billion is a big number how did you come to that >> well, that number reflects how much apple spends per year in china so the vast majority of apple products are assembled in china, money they spend on suppliers and logistics, warehousing, their own employees there. you take that number every year, multiply it for five years, that's how you arrive at that. >> that would include total economic contribution to china, something that you're saying tim cook estimated up front and agreed to or is that something that evolved other time? >> in the agreement itself it says that spending over the next five years is based on what apple spent in 2015. so apple arrived at that figure and had it with them when they went to the chinese government. >> do you see this as specific effort to stave off ill will from china how much of it is because apple not only has long seen china as

a growth market but also uniquely has assembly there and also has a lot of stores there it is just strategically important either way >> right when you sign agreements with the chinese government, they're nonbinding with the government, you try to make effort to commit to them. even though there wasn't a specific quid pro quo, many companies signed agreements hoping it will build good relations and goodwill with chinese government officials. >> wayne, good morning, it is deirdre. do you have indication these kinds of numbers or these kinds of nonbinding agreements, that they're unique to apple? you have to think that other successful american companies in the country like tesla, mcdonald's, microsoft made similar commitments. can you put this into perspective. is this part of doing business in china that investors sort of look past? >> yeah, definitely is

microsoft signed similar agreements with the chinese government cisco and sampson signed them. this is cost of doing business big difference between apple and those companies is the size of investments in china >> it is hard to draw lines between ongoing dynamics, but i wonder, do you think any broad diplomatic boycott of the olympics or the summit on democracy we are watching today gets them more riled up in ways they would consider american corporates some collateral damage >> i think apple's case has been smart to stay out of the fight, stay out of human rights abuses in china, it is not sponsoring the olympics apple is trying to stay out of the conversation from apple's point of view, other companies that sponsor the olympics, there could be issues

there. >> these ones are not public how do you know what they're agreeing to in terms of investments. the noncommittal agreements. in 2006, they signed with the same agency, spending 3.7 billion for five years that was 15 years ago, it is nothing like the 275 billion that apple committed to ten years later. >> i wondered about apple's leverage on one side, you could argue that china has a lot of it

then i think would you way was more on upward trajectory. right now, apple,number one smart phone brand in china, if china were to punish apple and apple backed away, it might suggest disengagement globally what's your take on that >> i think china does want to -- wants investment, friendly to foreign companies. that's one of the reason they haven't possibly retaliated against apple. at the same time, apple is a hit with chinese consumers one in four smart phones is an iphone in china. more than 200 million iphone users in china the country has to be hard hitting them too hard because of upset of chinese citizens. >> thank you cnbc reached out to apple. apple declined to comment on the story. jon, we are i.g. two things,

nubank and hashicorp having a tough year these two names will test appetite for the market. it has been disappointing in terms of ipo performances in the next few weeks and months. all but one listing have fallen into bear market territory the last week. some haven't bounced back. big names like rob in hood, coinbase, affirm, didi, down performance in weeks and months ahead may have implications for an ipo pipeline for instacart and stripe and two of the most volatile public sectors, fin tech and software, maybe a check on temperature of retail investors. these are the guys that have

overwhelmingly bought at peaks and felt the subsequent pain as we wait for these names to open, will we see the pop that we have seen through the year? >> i wonder what the right gauge is for so many of these things we show how farther down from recent peaks, but the peaks were pretty high and ran fast and in a lot of cases are still higher than where they initially priced and where they traded first days and weeks of trading i don't know plus, if the ipo pop comes off, is that such a bad thing i don't know >> none of us know, jon. cramer talked about an oversupply in new names, not enough research on the street to understand all of the new companies well of course, the risk would be whether the ipo market is a lens to see retail participation at large which would mean fewer

marginal buyers for stocks which would mean perhaps lower returns in the next few years which i might add, goldman, sachs warned is possible. >> we should note, ipo and direct listings have seen the same trend only difference is employees and insiders in a direct listing respect necessarily subject to lock up. some of the tech companies when they see stocks shoot up after ipo and fall more than 20, 30% from peaks >> if it falls from peaks but is higher than before, i wonder if discipline might -- >> keep from getting burned. >> folks pbuying at the peaks are. we try to think about valuation and what something is worth, where the growth will be we'll see. still to come, twitter getting a boost from comments from kathy wood

more on what she told cnbc earlier this morning. $14 billion software ipo the ceo of hashicorp will be here

let's get a gut check on game stop. they had a wider than expected loss and received a subpoena from the sec in august part of an investigation into trading activity gamestop is up over 700% since start of the year, thanks to main stock frenzy. total revenue grew to $1.3 billion from a billion dollars a year earlier perhaps most noteworthy about results, how normal it was a traditional earnings call. they talk about fundamentals of the business and don't take questions. unlike calls from tesla or other companies that embrace their new status, turn it into a spectacle which we love to watch but can be hard for investors to sift through. >> yeah, not as vocal as adam

aaron on twitter the flagship fund is up this week underperforming in the nasdaq and s&p. wood was on squawk and asked about the valuations of types of companies she's investing in now. >> we assume massive multiple compression, down to fang like multiples in five years in the five year projection we are assuming multiple contraction just to be conservative do we think that the stocks in our portfolio, companies underlying them are as mature as the faangs in five years no we're just being conservative, very conservative. i guess because of where we are today and the pe ratios, many think we're in nose bleed

territory. >> bring in mike santoli, talk about the nose bleed trade there's multiple contraction going on now. >> sure. it has been under way for awhile obviously worth noting there was a huge surge in multiples at the time when you had the greatest flow into the ark, into higher prices there's a lot of room between all of this, this was a bubble, it burst and is done forever and these are reasonably valued companies. i think by definition in a portfolio like that, if kathy is i am sure correct, they're projecting ahead they get to faang-like multiples does that mean 30 times forward earnings, does it mean under ten times sales, or if amazon way below that maybe. i think now the portfolio of ark innovation fund is ten times next year's revenues

bottom line is their own activity in their concentrated names got valuations to a point that made them a high hurdle rate to make money anytime soon. unless you're thinking of it as a venture portfolio or small handful of mega winners down the road, essentially pay for a lot of bets that don't go well, 300 plus stocks in the portfolio, 75 across the ark funds, how many of those are going to be the ones that are massive disruptive game changers. that's the big question. >> is the whole thing an attempt to sort of play through what we saw in the dot com boom, meaning you might end up with a union i phase but might makeup with an amazon. >> maybe not as much in excesses at the peak, it is hard to generalize in that sense all i know is $8.5 billion went into ark innovation december to february this year at prices

from 114 up to 155 it is trading at 100 a lot of people thought they were buying the future, and maybe they were, but they were paying too high a price in the short term >> mike santoli, thank you and instagram chief gave congressional testimony yesterday. ju ju julia boorstin has more. >> under fire for negative impact on teens, he defended instagram track record and pointed a finger at tiktok, youtube, snapchat. he proposed creating an industry body to create standards and endorsed the idea of federal regulation for all the platforms once again he denied that they're doing anything at instagram that manipulates teens to keep them

hooked >> have you not done things to get more teenagers interested in your product are you not worried about losing them to other platforms? you better tell the truth, you're under oath. >> absolutely, senator senator, we try to make instagram as relevant as possible for people of all ages, including teens. teens do amazing things on instagram every day. we also invest i believe more than anyone else in keeping people, including teens, safe. >> mosseri refused to shutdown instagram for kids which several senators pushed him to do. he said it is better to create a safe product for younger users that are going to be using technology senator richard blumenthal said after that he was deeply disappointed he didn't agree to shutdown instagram for kids. mosseri said they plan to introduce a feature to allow users to see feeds in chronological order rather than

filtered by algorithm. he said the standards enforcement report would be independently audited by ernst and young as he tried to reassure senators about efforts to address their concerns. >> julia, it is interesting. wasn't there a pause on instagram kids, not sure what the pause was for, i think they said to consider other viewpoints does this mean they're determined to actually do it, they're just determined to do it more slowly? >> well, look, they said it was a pause. these senators said come on, let's cancel it permanently, let's not have you continue to work on it in the background he would not commit to shutting it down permanently. but there's still no indication when they would launch instagram for kids he wanted to leave the door open this idea that maybe they're going to make instagram for kids for maybe 10 to 12-year-olds, not 7 to 12-year-olds. i think it was all about leaving

the door open and refusing to shut it down entirely. >> he certainly did that julia, thank you very much as we head to break, check out stairs to uipath shares down 2.75%. the street wanted more they all have price targets, cutting price targets. speaking of growth in software, hashicorp ceo joins us in a f mutewines

hashicorp is $80 a share, gives the company a $14 billion valuation. join us, ceo dave mcjannet good to see you. last time we talked, it was about rapid growth, how you were

doubling on a rapid crip cl your revenues let's talk about multi clouds, driving a lot of what you do to what extent are customers, enterprises moving to use multiple clouds, finding complexity how to manage that. >> hey, jon, thanks for having us most accidents by accident or design end up with more than one cloud provider you can see that of math from earnings they're all going fast it is an inevitable trend truthfully most application are built on cloud infrastructure sometimes on amazon, azure, google, something else, but inevitably, most companies end up being multi cloud. >> when we think about the devops group of which you're a big, important part looks like with the way you're coming into

the public markets, how do we think about growth of that as we also look at the growth of not just cloud infrastructure but demand for applications, demand for storage and analytics and ai. >> i think our people running cd infrastructure, the catalyst for that is new applications you talk about digital transformation they mean building out new applications in terms of sem lar trend, the last 18 months taught us anything, applications are more important to how we connect our lives together that's going to continue we're certainly committed to the long term view of enabling companies to adopt a consistent way of running infrastructure, support their application deployment objectives. i think we have obviously grown to date. that's really what we are doing

this for >> how much consolidation do you expect to see in this space, to what degree will funds you raise go to that and will your stock act as a currency to do more of that >> i think the catalyst for us really is i think first and foremost, the operational discipline of being a public company is good for us, number two, it is important for customers to see we are in the governance of public markets that's a reality of what we do i think that's really why we are doing this, what we're doing these are really big markets we have eight distinct products in our portfolio and we're present time very much focused on continuing to innovate those through the journey of open source, and transition those to commercial relationship with customers. we have a lot of work ahead of us on that particular path >> dave, i am curious as to how you thought about the ipo

process. was it important to you to allocate a proportion of shares to sofi or another trading platform that let's retail investors get in pre-ipo listing and prepop >> we ran at a relatively predictable process. infrastructure software is infrastructure software. it is one of the things that's our reality, we play a quiet, enabling role under some of the most important applications on cloud. that's not necessarily consumer oriented thing that people are aware of we take a traditional approach left it in the hands of our partners and advisers. >> dave, you have been a geographically distributed remote centric company for awhile and the pandemic posed its challenges how do you intend to grow and operate from here both in terms

of geographies and philosophy to keep the work force productive >> we have always been a remote oriented company prepandemic had maybe 80 people in a central location, another thousand geographically distributed. we run the company in a deliberate way, remote oriented. no two people are in the same location or office because it breaks the communication paradigm i think we are deeply committed to the reality of remote since the pandemic began, more than doubled the employee base. i think we're going to continue to have the remote orientation as we continue to add the next thousand people. there's something kind of super enlightening for me as we went through the process, how large and how successful you can be working remotely you have to think of how you run the company is slightly different. we talked about it, some of the principles and practice that

allowed us to do it at scale you'll see more companies like us that can access talent around the globe to tap into people where they happen to be and adopt this hybrid model that's inevitable for all of us. >> i wonder about stability of demand and the way you're accessing it because of a conversation we had just a few days ago with docusign ceo where he said there was so much demand coming in that their sales process got on the wrong cadence of generating demand heard something similar from c 3 ai before that given how much attention to the cloud, demand for multi cloud, how confident are you in the stability of that and the way you're accessing that demand through your sales force. >> i think the unique thing about infrastructure is it is a deeply considered decision by customers that take a long view of what they're signing up for when you move an app to amazon,

it will stay there we are oriented around that model, how do we partner with folks already using our products in the open source community, we have over 100 million down loads in the last 12 months, more than three quarters of the fortune 500 is where those go. those companies are there. but the decision to partner with us commercially like all infrastructure is a considered decision we have a measured model that is more familiar to enterprise software cycles. i really don't think that changes. that's how people need to consume this stuff we are people. we want to work for people we trust. our products are not things people buy by credit card. for us, it is relatively straightforward. >> we look forward to seeing that begin to trade. great milestone. hopefully talking to you every quarter. dave mcjannet. >> thank you very much thanks, everybody. after the break, rent the

runway down almost 50% since going public in october not long ago. we breakdown the first quarter and dive into the model of other retail companies stay with us back in two. jerry is here! j! mate, how are ya!? it's so good to see you. good to see all of you, yeah! why is jerry so... popular? it's been like this ever since we started using workday. what do you mean? it makes it easier to develop great relationships with our suppliers. now everyone, everywhere loves jerry. they sure do. they do. they really do. mmhmm. workday. finance, hr, planning and spend management for a changing world.

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rent the runway down almost 6%, losses widen for the third quarter. the ceo was on "squawk box" earlier. she cited ipo costs, not an issue with the underlying business. >> approximately half of our net losses in q3 were one time, noncash items related to the ipo. if you look at gross margins, they're up 20 points from 2019 >> obviously off the premarket low, jon, but the stock high was about 24 bucks in late october >> i believe there's something happening in apparel retail that will have long lasting implications not sure how quickly it is happening, whose model is best, but investors are certainly not exhibiting a lot of patience for that at the moment you look at rent the runway or at stitch fix, the question is

at what point is it being overdone to the down side. >> and there's another issue here like financial cherry picking, before that clip, andrew asked her what should investors do with stock performance. she said the company is more profitable than 2019 turns out not the case some of the companies, rent the runway is one of them, they want you to look at unit economics. but doesn't include product depreciation we talked about this before, the whole business model jennifer wants investors to look past cost of renting out clothing which is the business model. stock price around $10 is reflection of investors not buying that. >> i am not sure how long is a dress still good in their closet, right are you still, my wife, anybody

renting a dress, are they going to rent the same dress three years ago as now how do you depreciate. i don't know we have to see. >> there's wear and tear, stuff goes out of fashion, and that's one of the main risks of the business model yes, they're looking into consignment, that's one side of it another question there, does that cannibalize the business they have. same questions we had similar to stitch fix >> yeah. and a lot of the bold narratives behind names like this were about return to work, which is being pushed back. lyft is telling workers don't bother coming back until 2023. we want to check on lucid motors, announcing a capital raise of $2 billion and converts taking advantage of run up in stock. the street not responding, down 10%. more tech checafr isk teth

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- southern new hampshire university, it was just amazing experience. - [announcer] find your degree at snhu.edu. time for gut check on table providers. altice was downgraded. they see head winds for a few names in the sector. they say broadband is a great business but it is attracting competition, putting pressure on cable ads. they go from overweight to equal weight and shares of come tsa,

maintaining overweight rating, saying they see limited down side with buy backs overlooked jpm initiates fubo, call it a buy. 40% decline makes an attractive entry point. price target $28 had a conversation this morning on the space. >> it has been tough points out a simple basket of comcast, charler, and altice underperformed s&p 30% in the past few months. >> almost seems like it is acting in the inverse to growth stocks one wonders will that continue to happen, continue to work. the results eventually are what matter and the lowered guidance on broadband doesn't help >> that's been the narrative on

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as tech ipos test public market investors, the appetite for software remains white hot ai data bricks is joining us now, databrick's ceo ali gatsi. you raised a huge amount of cash, over $2 billion, and did your investors know that this is what you would put it to use to? >> great question and thanks for having me. well, what happened is basically start-up founders kept coming to us and knocking on our door asking do you guys do investments? do you want to invest in our series a and our series b and

they include this architecture of ours that is a lighthouse, and frankly speaking we were dragged there by start-ups who wanted us to invest in it. >> your investors like an dreesen and horowitz and others who do their own investments in the space and early investments, were they onboard? did they know you were going to use some of the money raised from them for this purpose >> they came to us also and we're hearing a lot of pitches about the databricks architecture and do you want to co-invest? they didn't see conflicts of interest they introduced us to many of these founders so it makes sense to us. we were one of these kids who were starting their own company and we know the struggles and especially if you're building it on opensource, how do you make that company succeed and we want to help them build their companies with investment and teaching them how we do things and so that's kind of how it

started so the vcs are all onboard. >> ali, is this an anomaly for the time we're in or is this a key component, do you think in ecosystem both creeiation and maintenance, the companies using your technology that perhaps might be a part of the platform that you're running that you invest in them at this relatively early stage >> yeah. i think you're going to see more and more of this i think what's going to happen in the future is that every software company you've seen in the past will re-platform into the cloud and they'll have a.i. capabilities that are super, super intelligent, right it doesn't make sense for the future platforms of the world, and we think data bricks and there might be others and that those companies might want to invest in the ecosystem over the top and there's so much money flowing into the start-ups in the data ecosystem so it's natural that, what do you want to do with that money? investment makes a lot of sense. >> there is so much money in the

public markets we have seen a number of these companies in a.i. and analytics come public and you have snow flashg and c3 a.i. and p palantier, and does that show how you value the start-ups in this space and how long until what's affecting in the private markets affecting in the public markets? >> inflation are going up and people are scared about interest rates and adjustments in high beta stocks, but for databrick, we're playing the long game. people say maybe i'll buy telemedicine online and maybe a.i. will be everywhere and maybe a.i. will eat all software so in the long run they're heavy, heavy tailwinds and this is a secular trend and in the

private market we're not seeing those crunches and there's still a lot of money flowing into private investments and it makes sense to invest in the companies, and today they might be small, but in the future they might be next week and the applications of the future and they'll all have a.i. capabilities built in the cloud. you don't expect money in private markets and valuations to cool and the valuation re-rating in private markets i also wonder, ali about becoming a private company eventually and you say you're focused on the long term gain without the scrutiny of public markets. we are going go public i get this question every day and it won't be in the not too distant future and the key to remember for us as markets as just and go up, you are more or less doubling your business every year it doesn't really matter if everything crunches and compresses 50% we'll grow through that

sometimes it doesn't matter that much ask it's nice to be private so we don't have to worry so much about what the stock market did on a day-to-day basis. >> we had a c3ai ceo on and he said everything would be fine after an 80% drop and clearly volatility in the public markets. ali, thank you for being with us ali ghodsi, ceo of databricks. >> if you missed part of the show, don't worry. download and listen wherever you download podcasts. tech check in a moment

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insurance. >> welcome back. take a look at some of the top gainers on the nasdaq 100. jd.com, pinduoduo and among them skyworks solutions also. peloton among the worst performers, carl, down more than 8%. >> indeed and on the s&p, twitter remains close to the top of the list after bullish comments from cathie wood. one more thing this morning, $1.3 trillion. it has fined amazon for alleged market dominance and one of the biggest penalties ever imposed

on a u.s. tech company it strongly disagreed with the regulator's decision and would appeal we should mention eu competition commissioner margarethe did will be here and she did work on it with the italian government. >> it's interesting how she looks at the regulation in europe versus d.c in terms of this fine, $1.3 million is a speeding ticket for amazon. amazon has spent fines and hasn't done anything to change the business model and it does add to the ongoing pressure and regulation that these companies are seeing. >> john, it's been a few weeks, actually a couple of months since we spoke to her at code, but she's definitely viewing regulation and trying to argue that there is a mind meld between u.s. regulatory frameworks and those that we

find in the eu. >> sometimes these fines, carl, get overturned so we have to keep watching it and sometimes even when there's a ruling somebody gets a stay >> tonight, oracle, broadcom, lulu, costco let's get to the judge and the half >> carl, thank you very much welcome to "the halftime report." front and center, apple approaching the incredible milestone and what a surge means to the overall market and the money. we'll debate that with the investment committee joining me, kari firestone, fran talkington, and jon najarian nasdaq, a lot of focus late down 121 and that's .25%. we'll get to all of that in a moment we'll get to the committee's new moves and apple's record run, first, my man jim cramer is re