continues to go on but as we mentioned earlier, major averages are all lower off lows of the session, though, so we'll see where we go from here after the whiplash-inducing ride that was monday, david. >> yup nasdaq down 2.5% that'll do it for us on squawk on the street. "tech check" starts right now. ♪ good tuesday morning welcome to "tech check." today, the tech sell-off does rear its head after the nasdaq fell and recovered more than 4% yesterday. market is declining once again meantime, microsoft and apple kicking off mega-cap earnings this week, both ticking down this morning as microsoft is set to report after the bell later this morning, tom mckinnon

is going to join us and talk about the state of software names amid this sell-off nearly $30 billion company, one of the biggest laggards on the nasdaq today, john. let's start with value in the midst of the sell-off. clearly, some investors bought the dip. we saw the intra-day reversal. nasdaq closed the day in the green after being down nearl ly5 at one point we're down a bit again today analysts trying to pick the winners. two ideas for different reasons. luke capital upgrades snowflake. two bullish notes on coinbase. let's start with snowflake and the debate over whether a stock like that is cheap or expensive right now. mike, i don't know if it is cheap by any measure, but what's your take? >> yeah. i mean, the debate is around whether down a lot equates to cheap, and whether cheap is related to a stock's own history or, in fact, outright, absolute value. that's a big question. now, if you take a look at

snowflake and the broader cloud, etf, since snowflake's etf, yes, it is down from the peak a bit, but not as much as some stocks it is only down 35%, snowflake palantir is down 70% from its peak valuations, price to sales, peaked above 100 after the ipo it is down to 40 luke capital today saying they believe fairly valued would be something on the order of 24 buy rating right now and 25 times, effectivelycalendar year 2023 revenue. i actually went back and tried to see if microsoft, if salesforce, if adobe, any of these marquee kind of bellwether software names ever traded for 40 times sales it does not seem to be the case. back in 1989, microsoft had $800 million in revenue snowflake will have a little more than that this year, but it was a few billion dollars in

market value it's a high hurdle, even if things go perfectly as planned even if snowflake, because of the business model, can grow multiples faster than the companies. interesting synchronicity, microsoft, adobe, and salesforce, each of them since their respective ipos, annualized appreciation in their shares is 25%. almost exactly the same since the ipo. tremendous amounts of kind of booms and busts along the way. but it is interesting that, top-quality software, that's what it's given you over the longer term. >> yeah. a lot of new screens being drawn today on software, in particular we'll pay more attention to the luke call later on, mike thanks. for more on the volatility in tech and possible opportunities that it may present, we're joined by plexo capital's tony thanks for joining us. >> thanks for having me. >> people are trying to establish new lines on the valuation reset. others argue, look, nothing is really going to matter until we

know whether or not the fed comes to some kind of realization about the damage done to these names through the path of higher rates is this an area where you can start to get selective or not? >> well, i do think that given that we've seen a massive sell-off, and just the tumultuous environment we're in right now in the markets, i would advise a little caution. i think we're excited to understand the true direction for the fed. the one thing we do know is that the -- you know, this administration has not been as focused on the stock market as the prior administration now, we have continuity with the fed chairman, however, given what we've seen in the first few weeks, the early indications are that the fed will move to have some rate increases. i think that will give some clarity. you know, however, this is the context for the market in the area of tech, we have a couple different types of

investors. we have the multi-sector investors who are moving out of tech because, with a rising interest rate environment, they typically move over to other sectors that benefit from rising interest rates, right? those would be financials, insurance. then on the folks that do focus on tech, they're moving into some of the more bellwether, big tech names that's because what we see is that high interest rate environments really punish the growth stocks, the tech stocks, in particular, that are the main drivers of growth. and, in particular, you know, we have a lot of these companies that are out there that have gone public recently, that have really been trading off of their revenue growth as opposed to profitability. now, if we take a look back, and we even saw this starting back in last year in '21, really the market started to shift more to benefitting and rewarding those that actually have the free cash flow, right, the actual profitability of the margins and those are the larger tech names. we see that reflected in how

those names, like microsoft, like salesforce, like alphabet, google, have been punished but not punished as much as some of the newer entrants to the public markets, which are thinly, thinly margined, right they have thin margins some of them might not even be profitable you know, i think that's what we're seeing when we think about how these investors value these growth stocks, they're basically looking out into the future and discounting back so when a rising interest rate environment happens, there's a higher cost of capital therefore, compressing some of those margins that they're valued on. >> sure. i want to read you webbush this morning. they write, the underlying growth drivers of the tech space remain unmatched to anything we've seen since the mid 1990s they're not being priced into stocks what is on the line tonight, say, with regard to microsoft, in that they could come out and

say, look, things look a little soft on the margin, or they could say, things continue to be on a tear. how much is going to drive sentiment in the days to come? >> amazing story look, microsoft is one of these unbelievable companies that has been able to maintain an impressive growth rate a lot of that has come through the cloud. you know, what we're expecting is that we'll still continue to see, you know, double-digit growth, mainly driven by their cloud business i guess one of the questions that we have with microsoft, in particular, with regard to their cloud business, is when we think about the big drivers of the pandemic, and particularly this move toward remote and distributed workforces you know, that benefitted microsoft's business, as well as a lot of other company's businesses in particular, for microsoft, how much of that demand was actually pulled forward from '22 and '23 into '21 you know, we'll need a better understanding of that. i think, also, another question that a lot of investors are

going to have for microsoft is, with this acquisition of activist blizzard, what is their strategy moving forward around consumer, as well? >> right lo, i think there can be a tendency to get sort of overexcited, both one way and then the other, when it comes to how companies get valued i understand we're hearing a lot of hedge fund folks come on and say things like, hey, only companies with this amount of cash flow and that have profits. but if there is a company that has the right vision and the right technology and the right amount of revenue growth, and they're investing aggressively in that growth, doesn't that make sense for a longer-term investor, especially if the prices come down >> it does i think, again, we have to separate these from the companies that have the ability to have a more efficient use of their capital when they're spending towards that long-term

growth and for profitability that's what we see with the bigger tech companies like the microsoft and the google they have the luxury of having the cash on their balance sheet, as well as these very stable businesses that do continue to drive growth, which give them the free cash flow and their ability to be able to invest that efficiently will benefit them long term we remain bullish on the large tech company names in the short term, for some of these newer entrants, you know, we've had almost 70 companies in the software space that went public in this past year for those companies, they're newer. they don't have the same margins. some of them haven't even achieved profitability yet we just don't see the same efficiency within their ability to be able to generate that growth since so much of their valuation, by both the institutional investors, in particular, to a degree the retail, is driven off of their ability to be able to have that future growth, you know, that's what's really hurting them right now. investors are looking at this

macro environment and saying, number one, are we going to continue to see growth within the economy, and, number two, with higher interest rates, you know, that's going to put pressure on their ability to have these high prices, given that there is a higher cost of capital to be able to pay for that growth. >> hey, lo, i wanted to ask you, of all the mega-caps, amazon is the least profitable it's always preferred to invest most of the cash back into the business it is already, in terms of share price, underperforming the other mega-cap names i wonder if you think that investors are going to be looking for more profit, more fiscal discipline, from the company, and could andy jassy bend to that in a way that bezos did not? he took over as ceo last year, and the stock price underperformed what could it mean for the long-term story. >> yeah. we are also bullish on amazon. that's correct i mean, look, amazon has, you know, been punished a little bit more within that big tech name i think, partially, to a degree,

it's because of, you know, number one, are we going to continue to see the consumer staying at home and buying products, right? increasing interest rates kind of making consumers pull back on spending the opening up of the economy, maybe consumers start to take the money they would spend on goods, as they have been doing since the pandemic, maybe that shifts back towards, historically, they spend it on services that's put pressure on amazon. however, that said, look, gain amazon has also been a beneficiary of this move towards the distributed workforce, the increasing use of cloud for these tech companies when we look at their core cloud business, you know, amazon still is performing extraordinarily well you know, i think this combination of all these other businesses that are a little bit more dependent on the consumer, that's been a little bit of a drag on amazon but the fundamentals of their enterprise-focused cloud business, i mean, are just as impressive as some of the other names. >> that's a name we look forward to seeing the print, as well,

with the dow now down 450. lo, thanks for the help today. see you soon. >> thanks. take care. check out shares of ibm, posting q4 results last night. beating street estimates with $16.7 billion in revenue that's up 6.5% year-over-year. the increase attributed to software and con suting. eps of $3.35 on the quarter, as well, narrowly beating the consensus, as well big blue also offering some guidance for the year ahead on its earnings call last night forecasting mid single-digit revenue growth, free cash flow between $10 billion and $10.5 billion. shares are up 2% on the numbers. that is, you know, down from the more than 5% it was up initially on those results yes, it gave guidance, but the earnings call was kind of hard to listen to analysts kept asking for more from ibm they wanted an eps guidance. they haven't really provided that since before the pandemic

and ibm was sort of doing this thing they like to do, saying, look at this we're going to kind of withhold some of this other stuff from you that analysts really latched onto they wanted to know where they got the free cash flow number. they wanted eps. they wanted to know about the broader trajectory this is a company, of course, going through a major transition, spinning off. >> you can find a cloud in every silver lining. i think it is interesting off of the conversation we were just having with lo toney, about what investors might be turning their attention to ibm, certainly, profitability. you talked about the cash flow there, above $10 billion projected. it's got a, what, 5% dividend yield? >> mm-hmm. >> so i think investors are going to ask, what's the downside risk here there is some. but versus the possibility that this is turned around with the technology background, focused on hybrid cloud, willing to make some bigger moves. you know, i was saying yesterday that i think that the earnings

will be interesting in that one, how the reaction is to them based on where investor appetites might be going maybe it is a little inconclusive, but, still, after earnings, up almost 2% not bad. >> yeah. i think, you know, krishna is doing it differently than predecessors we know ibm for the last decade or so has been a value trap. the stock has traded within this range, versus some of the other bigger players in cloud, john. you know, the execution, though, which has been a challenge for the past three ibm ceos is now on krishna's shoulders i know you talk to him often, and he has a path. we'll see if he can deliver on that i think that, in the analyst community, there is some skep skepticism, especially in understanding the numbers that they put forward yesterday, as they spin off that legacy business. >> while there should be, i mean, over the years, the past decade plus, there's been a lot of financial engineering going on and how ibm has structured,

restructured, what they report and what they focus on the mid-single digit revenue growth, what happens to profitability, if they deliver that, is going to go a long way toward answers now, checking in on nvidia the chip maker down more than, let's see -- it's at 4%, just a hair over 4% this morning, following reports the company has told partners it does not expect its $40 billion acquisition of arm to close. we'll see. meanwhile, arm owner softbank reportedly preparing to take arm public again both companies pleading their case to regulators they told "bloomberg," apparently, no final decisions have been made meantime, coming up this morning, goldman sachs internet analyst names its top picks amid the market turmoil. as we said earlier, todd mckinnon joins us to talk about the state of software valuations. and we break down how options trading has played into all this volatility.

record number of contracts yesterday. a big hour of "tech check" is just getting started inner voice (kombucha brewer): i'm dramatically holding this bottle, >> announcer: "tech check" sponsored by comecast business, powering possibilities intuit quickbooks helps you manage your payroll taxes. cheers. 100% accurate payroll tax calculations guaranteed.

commerce department, as expected, releasing this important on semi shortages. we have details, including some of the day's inventory of key chips. >> the agency has been studying this issue for several months. put out a request for information in this fall 150 companies, or thereabouts, responded with information, giving the commerce department a line of sight into just how acute these shortages are. average inventory for the industry down to less than five days that's down from about 40 days just two years ago the commerce department also seeing the primary bottleneck as a way for production capacity. seeiing especially acute price gouging in chips for cars and medical devices. companies who responded to the commerce department's request do not see improvements in the supply chain before mid-2022

even so, the secretary of commerce telling reporters just a few moments ago that there are not plans at this time to invoke the defense production act to force the participation or provision of information from companies who did not submit it, or to force business changes to alleviate some of these bo bottlenecks. secretary acknowledging there is little the government can do in the near term to alleviate this. again, calling for the passage of incentives for manufacturing to be brought back to the u.s. and for new production to come online we will see if congress goes forward with that. certainly, dire statistics released this morning by the commerce department. back to you. >> thank you now, we saw it with netflix, this could be a pivotal quarter for many tech stock microsoft report tonight amazon thursday. both have seen out performance julia is here with more on that. hey, julia >> yeah, that's right, don

microsoft and apple have both far out performed the broader tech sector. over the past year, microsoft is up 25% in the last 12 months apple up 11% they're down from the 52-week highs. with momentum expected to continue, microsoft with its cloud business and apple with its iphone upgrade cycles, analysts do see buying opportunities going into their earnings big tech's pullback this year, apple and microsoft's trailing pes are down apple now 28 microsoft is now 32. both less than the nasdaq 100's ratio of over 35 going into earnings, 93% of microsoft analysts have a buy rating 7% have a hold for apple, 77% of analysts have a buy. 18% have a hold. 5% have a sell now, this afternoon, microsoft will be closely watched as a key indicator for the rest of the tech sector. analysts expect 18% revenue

growth and a 14% increase in earnings per share as demands from microsoft's azure cloud business is expected to continue to grow. continue at the momentum we saw last quarter now, in addition to the growth of azure, teams could be up. they're also looking for exchange rates and tough comparisons. goldman with a buy rating on the stock, writing their believe that i know investors will focus on the sustainability of the cloud growth and accelerating demand for digital transportformation. >> interesting you mention the trailing pes i think you said 28 and 32 i mean, those might be lower than the nasdaq 100, but by historical standards, those are huge, especially for companies of the size and supposed maturity, at least in some ways, of these two i am going to be watching how

the market investors respond even if microsoft hits the published expectations, how good do the azure numbers, year-over-year, have to be to move the immediatneedle to the >> they have to show the sustaining growth. also, what will we hear about other potential growth drivers how much can teams continue to grow it was a year ago that we heard from microsoft about how massive their security business is that is another one that could continue to grow john, we haven't even talked about the activist blizzard deal and games. i haven't said the word metaverse once yet we do expect to hear a little bit more about that. also just getting the deal approved you know, they laid out a timeline, maybe 18 months, $3 billion fee if it doesn't happen the question is sort of, what insight do we get there from how

the future o gf gaming is viewe perhaps the intersection of workplace and teams and some of the virtual worlds and more immersive technologies. >> julia, thank you. you have to get it in there, of course, inevitable the question is how many times will we hear it on the call tonight? as we look ahead to alphabet and met, but snap, pinterest, and twitter with lower revenue goldman sachs managing director now. we just got a preview of microsoft and some of the other mega-caps from julia what does this group need to show to perhaps attract investor interest once again, show their fundamentals are in tact what do you think happens to them if they're able to do so, are they attractive entry points for investor or could they be m&a targets for companies? >> in the high revenue multiple, i'm not ready to be out there talking about m&a just cycles, a

correction, you see a ton of m&a on lows. i would be loathe to pull out an edge on that we've been telling folks since the fall to stay away from some of the higher revenue multiple type stocks, especially elements of post-pandemic normalization for example, we weren't bullish on netflix going into last week because we think there's still an element of management, teams, that benefitted from the pandemic struggling still to see what demand knnormalization looks lie we'd point you to names where we feel we have a better edge on the fundamentals like digital advertising, there has been a strong commerce bac backdrop you have a cyclical recovery around travel, media, and local. as highlighted in a segment before this one, an auto recovery as you get supply right-sized and move into '22.

those are all backdrops for digital advertising that we like sentiment is negative across the digital advertising landscape right now. and to the point of multiples versus the nasdaq, alphabet and meta trading well below the multiples we were just talking about. >> we're in a period with a lot of the sell side points out valuations valuavaluated there still may be tackty actta upside to the earning reports. is there names that might apply? >> trying to play defense, stay large, stay liquid in terms of cap. amazon, uber, on elements of uber of a reopening dynamic. amazon underperformed since july of 2020. it's been quite pronounced u

underpeun underperformance for amazon since the initial pandemic peak in the stock in the first couple months the digital advertising names which are trading well below the nasdaq we have a lot of free cash flow. you have authorized announced buybacks from the companies. relatively steady growth in the high teens, low 20s. much closer to a market multiple or lower that's where we would point investors to do the work >> eric, amazon and uber, these are interesting callss as noted amazon, the least profitable on a mega-cap you don't think the business models are going to get hit in a rising rate environment? >> so amazon is taking a hit right now in this environment, but interestingly, over the underperformance we've seen in amazon almost the last two years, most of my investor conversations pivoted to valuing

amazon on a multiple of operating profit and multiple of revenue. it is dramatically, given the scale of its business, absorbed a lot of valuation compression in the last 12, 18 months. we're having a very different conversation with investors about amazon today than 18, 24 months ago it is a fair point on uber, but we do think, as we look at the model and the profitability and all they've pulled out of the business through the pandemic, this analyst day on february 10th, we think uber management team can lay out a path to profitability at a long-term profit narrative that is very different than what is in street numbers over the next six months that's the catalyst unlock we're looking for on uber, is the longer-term profit narrative, which can get people more comfortable. you're paying a relatively low revenue multiple for uber today compared to a high fly multiple revenue. it is this pathway to profitability investors want to see the next three to five years. >> eric, what are you hearing,

seeing about, you know, strategies for deploying capital versus not in this environment it's one thing to say buy this, but there's the buy where you put all your chips on the table, and then there's the buy where you put a few on the table because it is unclear what the overall environment is going to do what are you hearing >> yeah, great question. i think people are going slow. no one is trying to make an all-in bet here on this market i would tell you, we have two types of conversations buying large liquid and quality, and we notice a lot of people willing to do the work on the type of names we've been talking about in this segment. but not going very far afield of that, into either demand normalization or high revenue multiple there are not a lot of conversations i'm having with investors of people willing to go too far stretched there's another conversation where, frankly, i can't add a lot of value for investors, which is, you know, does the fed get this right

do we have a soft landing, or do we tip into a recession? that's well above the type of fundamental work i do on the internet sector. those are the two types of conversations. go slow. play defense raise the quality in your portfolio. i think some of the large tech names, the trade growth at a reasonable price multiples have screened well for that, versus a broader conversation about the macro environment, which is beyond my purview. >> reasonable price. you hear it more and more. eric of goldman sachs, thank you very much. meantime, nasdaq is back down, closing the lows of the day down 2.5% at this point. you see just above 13,500. more "tech check" is after this quick break.

your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

(doorbell rings) (family chattering) - [announcer] meat-itation, a sense of calm that comes from being transported to your umami place. on time, lowest price, or we'll make it right. grubhub. ♪ chicka-chicka - [announcer] at southern new hampshire university, we never stop celebrating our students. from day one to graduation to your dream job, that's why we're keeping your tuition low for the 10th year in a row. - [student] the affordability and the quality of education, it can be enough to change your life. - [announcer] as a nonprofit university, we believe in making college more affordable for everyone. - southern new hampshire university, it was just amazing experience. - [announcer] find your degree at snhu.edu.

let's reset here this morning. welcome back to "tech check. we'll take a look at how options trading might be fueling today's

sell-off certainly was a factor in yesterday's action first, a news update. >> good morning. here's what's happening at this hour american express actually surging despite the broader market sell-off. it is leading the s&p with a 7% gain rising credit card spending drove strong fourth quarter results, despite lagging travel spending, especially by businesses. general electric getting slammed on weak revenues, hurt by supply chain problems earning guidance for the years is below estimates ge shares down 7%, the worst performer in the s&p 500 today. consumer confidence slipped in january but remains at high levels and came in stronger than expected 113.8 up consumers plan to buy cars and homes, despite surging inflation. and growth at home prices slowed slightly in november, but they're still up nearly 19% over the last year. phoenix has the biggest price gains for the 30th straight month. prices there are up more than

32% on an annual basis i cannot even imagine. back to you. >> rahel, thank you very much. how many tech volatility is tied to options trading? new data shows options volume did jump to a record last week joining us this morning, cnbc contributor of the "wall street journal" has been writing about this, the options, and the meme names and wall street bets in the piece yesterday, i think the headline was "the thrill is gone "seems to sum up a lot of sentiment. >> certainly seems to be the case among many individual investors my colleague and i spoke to they said, hey, wall street bets used to be the cool place to be. you could find great diamonds in the rough, like gametop and amc. now, these people are still talking about gamestop and amc a year later these are some of the most talked about tickers on the forum. they're like, we want to be hunting for the next big thing what is the next gamestop? what is the next amc they're saying, we can't find it on the wall street bets anymore.

>> walk me through why you think options are interesting here, and are there calendar effects where we need to start paying closer attention to expirations, for example? >> so i think everyone is trying to figure out what led to this giant intra-day reversal in markets yesterday. what is leading to this insane volatility that we've been seeing the broader picture is, of course, uncertainty around the fed. all these other macro things on the table right now. some traders i was talking to yesterday were saying that options activity might have been playing a role in that giant intra-day reversal and potentially exacerbating some o the volatility we've seen in markets. options activity hit a record on friday options volume hit a high. they're saying maybe hedging activity by professional traders is exacerbating some of the moves as a secondary factor. >> just to look at the situation for retail investors, want to go back to your story about reddit

and wall street bets, but reddit writ large are you aware of any star amateur analyst to come out of the reddit revolution? that was sort of my internal gauge a year ago on the value of this overall would there be people who build reputations on writing about, you know, having researched cotenot just about one or two stocks, but about sectors overall? you know, ways of looking at the market, would they draw a following? is that happening as a way of arming retail investors with information, from what you've seen >> so i think it did happen with keith gill as we saw with the gamestop phenomenon last year he was one of these power users. he hasn't posted in quite a bit. but my sense is that certain people have tried to build followers. a lot of people i've been speaking to when they're on reddit, they want to remain anonymous. some people i've spoken to don't want to share their names with the "wall street journal" or with the world because they love, you know, this intimate online community they have they can be totally anonymous and say whatever they want

i've spoken to people who say there are career run cushion re if i put my name on this and give my name to the world. that's a factor to consider when we think of analysts building followings off reddit. >> as we watch the nasdaq, near session lows what do you think the newer retail investors are going to be taking away from this period of volatility, this shakeup they were pulled in by the memes, but that led to greater participation in the stock market do they know move on to the fundamentals, and could that be a good thing i mean, yesterday, i was just looking at the forum, and one of the top posts was a chart of the arc etf versus berkshire hathaway i don't think you can imagine seeing that last year. >> so one of the most endurant trades of the past two years has been buying on every small dip in the market. i think some people over the past weeks are concerned, is that going to go away? is that fading is that removing one source of key support for the market i think yesterday was really

telling when the nasdaq was down 4.9% everyone decided, hey, i'll smash the buy button right now we saw the incredible rebound in tesla, nvidia. i think that's the question. do they stick to the trade how are they positioning in this environment? >> but do you think, though, on the same vein, i know that there's participation in the market that can be loud on these forums, and we did see the huge reversal yesterday, but do you think there is a sector that is maturing a little bit and looking at fundamentals? i go back to the chart on the screen right now berkshire versus ark, your classic value versus growth. the fact that this crowd is looking at that, do they eventually go into value >> it seems like actually in recent weeks they have turned to those value sectors and bought, you know, some of the energy, financials names, and that's helped those sectors investors i was speaking to for this reddit piece recently, it didn't seem they were giving up on stocks because of the volatility it seemed like they were

sticking around. meanwhile, selling continues. the nasdaq, i think, now eyeing about a 3% drop. again, low on the s&p yesterday was 4,222. interesting mix, i would argue, last night of those looking to argue whether or not yesterday was a tactical bottom or not one believed it was because it was close to 40. the two-year auction was a catalyst others called it a head fake and said that unless you get big u-turns in the fed at least acknowledging the damage they'd do by hiking rates and quantitative tightening, that it is unlikely we're going to be out of this pain for a while. >> yeah. i mean, i've been speaking to investors who have said the same thing. we're not out of the woods yet it is because of this meeting tomorrow you know, i think a lot of investors have kind of thrown in the towel and said, we think the fed is done. we're not counting on the fed so

come to the rescue sometimes other people have said, you know, maybe they will be slightly more dovish in their question and answer session. maybe they'll hint at something that could give us a little bit of a reprieve here it certainly seems we are not out of the woods, and we're going to see that more volatility until after the fed. >> it is interesting you know, the nasdaq is down more than 3% at the moment as we have learned this week with this market, it can change minute to minute i'm looking at tech stocks that are particularly effective we have spotify, down about 9.5% big commerce down nearly 9%. a firm d affirm down 9% doordash down a bit more than 8% f and all those have commerce from one angle or another in common it was interesting to me that a number of these, spotify, for example, hadn't gone back to its

pre-pandemic level quite yet while we'd seen some other stocks in other areas do that. peloton, for example, we had seen zoom, also. so i wonder, you know, when we see stocks behaving this way, particularly within the nasdaq, the movement is a lot more mild in the dow and the s&p how does that factor in, perhaps, to the reporting that you've been doing on options and the risk that a number of retail investors, in particular, have been taking on >> it certainly seems like a lot of those retail favorites have taken a big hit. you know, people are trying to figure out what does the world look like six months, a year from now they've fled those kind of stay at home trades netflix is a big example of that peloton, as you pointed out. maybe some of the commerce names. so i think the tricky thing right now is that earnings haven't really been a reprieve for us there was a morgan stanley analysis that showed that

companies that beat earnings expectations were falling around 0.5%, while companies that were missing were falling more than that that makes this environment much more challenging at the moment >> appreciate that as we see energy, really, the only sector in the green today, helping to keep some prices elevated talk to you soon thanks >> thank you as we see tax sell-off, others reaching new heights. we have asia's highest company by market cap, tsmc leapfrogs ten cent to take the top spot, holding off the tech giant since december 16th. ecchk"etnsig aer this new jelly bean vitamins. good-for-you nutrients in a tastier for you form. more sweet dreams. more flavorful immune support. new nature's bounty jelly beans. live bountifully.

municipal bonds don't usually get the media coverage new nature's bounty jelly beans. the stock market does. in fact, most people don't find them all that exciting. but, if you're looking for the potential for consistent income that's federally tax-free, now is an excellent time to consider municipal bonds from hennion & walsh. if you have at least 10,000 dollars to invest, call and talk with one of our bond specialists at 1-800-376-4376. we'll send you our exclusive bond guide, free. with details about how bonds can be an important part of your portfolio. hennion & walsh has specialized in fixed income and growth solutions for 30 years, and offers high-quality municipal bonds from across the country. they provide the potential for regular income...are federally tax-free... and have historically low risk.

call today to request your free bond guide. 1-800-376-4376. that's 1-800-376-4376 welcome back software names are continuing to fall in this broader market sell-off the igv is down more than 3% down more than 16% to start 2022 our next guest is here to talk valuation swings hitting the sector, the underlying fundamentals joining us is okta ceo and co-founder todd mckinnon good morning okta being a younger company is the very kind that investors are messing with quite a bit in this environment. let's see, last quarter, i believe you guys said total revenue grew 61% subscription revenue, 63%. generated $33 million in free cash flow.

how is the business underlying what are you hearing from customers in this environment? is it as volatile as the market? >> hey, thanks for having me back on "tech check. it's great to be here. customers are having a tremendous amount of success, and they're faced with a bunch of really important pressures. one is that they have to get the most out of their employees, and they have to employngage employ give them the best tools they have to get businesses online they have to have a great log-in process for customers. they have to have products delivered online or a mobile app. that's what it takes to be competitive in their industry. if they do that, they'll succeed with their strategies and make their companies super productive you're seeing that translate to success in our business. we published our eighth annual businesses at work report, which you can check out at our website, www.okta.com.

it shows just this it shows companies using more and more apps, more and more cloud infrastructure, and having more and more success. >> todd, the okta stock is about the levels where it was in may of 2020, and it had been on an upward swing well before that. so i wonder if you have a view on what the most important metrics are that you're pointing to in your business, and does the move in your stock affect your ability or strategy in running the business at all? perhaps even when it comes to m m&a. >> we try not to look at the stock, but we look at the stock. it is emotional when it goes up and goes down. but our orientation is on the $80 billion total addressable market for identity. it is a massive market, split sw between workforce identity and customer identity. we're an independent and neutral identity platform, so we connect our 14,000, and growing quickly,

customers to every piece of technology they need, whether for employees or customers, to make them sucsuccessful. that is what will drive our growth in the $80 billion total adjustment market, what happens week to week and day to day doesn't change the fundament l thats. the funda fundamentals there's more needed for the business strategy, and we can connect those in a neutral and independent way, which is what investors want. >> good to see you there is this idea of bubble versus balloon in the market, and investors are trying to figure out which high growth names need to deflate a little bit, or a lot. what would you point to in terms of okta's business, and perhaps across the sector, to show that the fundamentals are, in fact, in tact, and also this idea that some of the tech giants like microsoft could infringe on those fundamentals >> well, it's really interesting question i'll go back to this report we released today our businesses at work report. there's some really interesting things in here you hear a lot about microsoft

and microsoft's success in the cloud. well, if you look across our 14,000 customers, of all the customers that use office 365, 45% of them also use zoom. 33% of them also use slack in fact, zoom and slack usage in terms of users and customers is growing year over year quite aggressively after the salesforce acquisition and google force is using 38% of the customers. whether it's most, whether it's slack, zoom, salesforce have tremendous opportunity to deliver great new technology to customers and you're seeing that bear out in the imperical data if you think of the long term, tech, transitioning and every economy giving workers great tools and technologies, these companies are great long-term bets. >> todd it can be an important part of an earlier stage, even public company's growth and you know, i think stock prices can even play a part in the

recruiting process so what can you tell me about how this overall market has shifted the way you're able to approach or are approaching private companies for conversations and even perhaps the opportunity that potential okta hires see in a stock. >> it's an insightful question, john the way we think about it is, m & a is driven by what the customers need what is the right solution for the customers trying to solve their technology challenges and in an independent neutral way. last year when we joined forces to bolster our business in customer identity management customers want this platform across both workforce and customer identity and the same is true for every deal we look at on the other side, how employees think about compensation, it's something that's interesting in high tech it seems like

salaries and compensation is always going up, no matter what the market's doing i've been working in this industry for 20+ years now and i don't ever remember a time when tech compensation was down so with technology, the future of so many industries and so many industries being transformed by it, compensation is always aggressive for tech talent and the best companies have to pay up for it. >> all right todd, thank you for the insight. todd mackinnon of okta gm this morning unveiling a new $7 billion ev investment that story's coming up next. event planning with our best business unlimited plan ever! with 5g ultra wideband now in many more cities and up to 10 times the speed at no extra cost, the downloads are flying fast! verizon is going ultra, so your business can too.

(inspiring music) - [narrator] at southern new hampshire university, you can reach your goals faster. that's because you can transfer in up to 90 credits towards your online degree. - i was able to cut my time in half. - [narrator] apply free at snhu.edu

the nasdaq down 2.6% right now. it was down as much as 3%. earlier we talked about ark, the flagship fund down 4% this morning, but how about one winner in the recent market sell-off and that is sark. cathie woods ark innovation fund the short ark etf has soared 60% since its inception in early november talk about timing. it is no surprise it is off to a good start since ark pummeled. teledock, roiku and coinbase,

tesla has held up remarkably well it has lost roughly 10%, carl? >> meantime, guys, we are just shy of that 3% down session low on the nasdaq and the 2.8% session low on the s&p meantime, we've talked about the theme of a corporate capex move this year and sure enough, gm unveils a new $7 billion investment as parts of its push into evs our own phil lebeau has more on that. >> there was a time when this would send gm shares higher. not today. not in this market in michigan, it's $6.5 million strictly dedicated to evs and helping a couple of other plants there. 4,000 jobs will be added, a third ultium battery plant will be built so they can build the silverado ev and sierra ev

it knows it has to work faster to catch up in the ev rates. take a look at market share in the united states last year. this is the u.s. ev sales forecast gm fourth in the u.s. in terms of market share, but when we talked to the president of general motors he made it clear today they realized they have to move quick in terms of ramping up production. >> we continually monitor consumer acceptance and adoption and consideration for evs and it's gone nothing, but upward as you indicated and so, it's coming and it's coming fast and we're going to hit the sweet spot of this as we add this capacity here. >> and again, gm shares not really doing anything on this news today it is down with the rest of the market we will get gm's fourth-quarter results next week and that's when we will hear from gm ceo mary barra speaking of evs tomorrow after the bell and it is when tesla will report fourth-quarter

results and the product road map that elon musk may discuss or is expected to discuss during the company's conference call after the earnings come out. guys, back to you. >> phil, thanks so much. our phil lebeau. >> and finally, the volatility in thintech stocks in crypto has one prominent start-up founder i spoke with klarna ceo yesterday one-on-one he told me he's glad not to have the distraction. >> some people ask me, like, when are we going to ipo at the end of last year i said i think we're getting closer than what we have been, but i is also suggested i was slightly closer about the velocity in the markets and i feel slightly more confirmed in my worry, but i do also think to

some degree we are one of a few thinteches that have not supported and i think if i look at some companies like square or paypal, it seems now that suddenly due to the massive exposure to bitcoin, there's a correlation between the price of bitcoin and the stock and i think it's challenging for them. in the firm's case, hopefully if i look at the numbers that some of the investment banks have represented i think maybe, maybe there is a conclusion that was on a massive rise as the leader into this market from a market share perspective is, you know, maybe affecting the view on some of our competitors, but again, like, i still judge a lot of this as noise and it makes me nerve about listing if i see what's happening in the market in the last few days i can i imagine the people watching the

nasdaq every minute as opposed to building long-term great products for their customers. >> the perspective from todd mackinnon, carl. >> we've talked about the space all along, and some of the risks that are just now coming to light. we'll find out more in the days to come along with microsoft tonight. let's get to the half. carl, thanks so much welcome to "the halftime report." i'm scott wapner front and center the latest on the market volatility whether the great reversal is a sign that the worst of the selling is over and the investment committee debating where we go from here and where the best place is for your money right now. joining me for the hour shannon saccocia, jim lebenthal, josh weiss. sliding, but not at the lows of yesterday and that's an important point to make. jim lebenthal, i will begin with you because it was a pivotal call