we're seeing that owners are looking into their neighbors and saying, they got an incredible price and stock market is not doing as well and this is a great time to sell. >> all right robert reffkin, thank you for being with us. major averages are lower that will do it for us on "squawk on the street. "techcheck" starts now ♪ ♪ good thursday morning. welcome to "techcheck" i'm carl quintanilla with deirdre bosa and jon fortt. tough geopolitical take this morning but in the midst of all that, doordash shares are surging after delivering some strong results we'll get a deep dive on those numbers and why some pandemic trends might be here to stay nvidia takes a pause after massive run in '21

we'll break down why shares are down 8%. dan lo, his $1 trillion bet. what he thinks the market is missing on amazon in a moment, jon. >> yeah. but carl, we will begin today's feed with a check on delivery as doordash shares now up about 12%. taking us back to levels seen, well, couple weeks ago going through the numbers, gross order volume was up 36% with average order volume steady, meaning the reopening might not be as big of a head wind to delivery names as some assume. monthly active users, people who placed an order on the app within the last month growing double digits to a record 25 million. some analysts not thrilled with the cost guidance, though. ceo tony shu says they will continue to invest in expansion, geographically and into new categories including express grocery delivery with albertsons this morning they announced. who has the best strategy for last mile delivery, dee? and will the latest round of

costs pay off for investors? it worked for amazon certainly in the initial e-commerce era, but now this different fleet of companies investing for different reasons. we were just talking to shopify about this yesterday >> yeah. they're spending big or logistics. you mentioned public companies, but there's also a whole host of private companies backed by vc dollars in the space, jon and carl i wonder if this is another race to the bottom? some analysts think so, right, now that doordash is getting into convenience and groceries, the margins are difficult. you're also focussing on speed you have a host of companies promising 10 and 15-minute deliveri deliveries you saw that, carl, pull through in doordash's earnings adjusted ebitda increased as they invest in this space, which has yet to be profitable but it was so interesting the stock reaction i was scratching my head at first. the results they weren't that good, but as jon said, the shares really have been beaten down and the results also we should note did look quite good in comparison to uber and its

eats platform. >> yeah. that was the comparisons to what we have been through the last 48 hours is one potential reason for the positive stock reaction. along with, jon, the guide for the march quarter, at least in terms of gross order volume. it does appear that even though some remain skeptical, there are going to be some habits formed in covid that just will not be shook. >> yeah. and the real thing that i guess is troubling some investors looking at the nearer term is doordash is going to invest the cash that's being generated in the mature markets back into the business they're not going to let that flow through to the bottom line. and i guess it's similar to what i heard from toast was it yesterday morning, talking about, hey, they're going to continue to invest in restaurant expansion. there's an interesting thing here i'm not sure it's going to be a race to the bottom, dee, because the companies that have the most efficient platforms, the best

data, seem to be trying to form sort of this operating system, not only for restaurants, but for a lot of local merchants that need delivery services. so the question is, i think, if they can figure that out and deliver the right volume of local merchants in the various areas, the right volume of drivers and the efficiency of them being able to have the right share of wallet of the local consumer, i think the mature markets are showing that it can work. >> it's a great point. i also have the subscription business, right? which has been growing at a good clip i think, jon, what you talk about, too, when doordash sort of -- i still remember its ipo and s1 dropped it looked so much more profitable compared to uber's food delivery business and it was sort of this operating system, a different way of doing things that could have a little more profitable an for this quarter, carl, investors they didn't look at decelerating growth. yes, it was better than expected but growth at the mid point of what 17 or 18% and the current

quarter coming down from 200 gov gross order volume growth in the midst of the pandemic. you know, the higher premium that doordash has awarded, the fact that investors are able to look past slowing growth like this or decelerating growth is an indication, i think that the market believes in tony shu as well who founded the company and is up against competitor who is being led by an operator, perhaps. >> yeah. and of course we were reminded this morning in our interview just his humble beginnings and what he's built is truly incredible speaking of doordash, guys the company's price to sales ratio has plummeted over the last year, but one name that continues to see strength is nvidia that stock with a price to sales ratio nearly three times that of dash shares are down this morning, though, despite gross margins falling in line with investor expectations and that beat across the top of the bottom line leading some to wonder if expectations were too high after the meteoric rise last year. stocks down 7.5.

gaming up 37 data center up 71. not a surprise auto down 14 i guess that was the wrinkle, at least for some >> i guess but this is about as close as companies get to a perfect quarter. i think at a certain point you have to look at what is the impact of the expectation of rising rates, right? and what the impact is going to be on high valuation stocks and what the impact is going to be on demand overall. i've taken to asking dee a lot of these technology companies, including thomas currian which we had sound from yesterday. what do you expect to do if demand does, indeed, slow down even somewhat given all of the lofty expectations and his answer was, you know, quicker time to value for customers. in a way, probably going to be nvidia's answers too with the kinds of computing they're enabling. >> although all the chip ceos we talk to seems so bullish on demand

supply issue doordash, those shares have been beaten down leading up to the earnings result so they urged. nvidia, as we know commands such a high valuation relative to its peers. perhaps not all that surprising and doesn't say about the fundamentals the fact it is down and the market environment we're in. we're going to shift from nvidia and talk about another market cap, we're going to talk from earnings to earnings power. he sees 1 trillion dollars of untapped value in amazon the market is not recognizing the full value of the tech giant's two businesses, amazon web services cloud business and e-commerce operations. amazon is one of third point's largest holdings the fund increasing recent take in recent months $734 million end of the year loeb high light in letter saying, quote, amazon is at an important cross roads as new management considers its long-term strategic plan to move the company forward. the stock still down 5% this year

guys, what did he say? he said it was -- it's good discussion for investors at the water cooler what could be amazon's next big business we're certainly get some indications of that. i know at investor day, too, bezos, jassy is asked about that wa is going to be the fourth pillar, they have e-commerce, they have cloud, and they have prime. so what's the fourth thing amazon studios bezos hinted at we know the streaming service is spending a lot on contend and gaining traction or advertising which the company broke out last quarter $10 billion in one quarter business. >> yeah. that's the point is the contribution to cash flow from aws relative to its size of the company. but, jon, it's actually more interesting when you look at what's happening to activism in general. hasbro now and budding situation between mcdonald's and carl icahn and valuations coming in and the large investors will be more aggressive in seeking out

solutions to get them back up. >> lots of ideas, carl, as you mentioned from the investor side you know, when it comes to amazon, i think the answer from my perspective is clearly advertising. that's the next big business look at the size they seem to be using content mainly to keep people happy as opposed to actually make money. but anybody who is hoping that amazon is going to spin off aws as "techcheck" viewers know, i have this fun thing every year i ask amazon ceo andy jassy, going to spin off aws, he says no. i think there's less of a reason to do it now perhaps than there has ever been when you look at the amount f o profit that aws is throwing off and the amount of investment necessary for the other side of the business the e-commerce logistics where they're becoming the biggest employer in america, funded by aws. why would you, dee, break those things up, right >> i'll give you a reason in one word, anti-trust they face accusations all the

data they're collected on the cloud side could help it compete on the e-commerce side amazon says over and over again that it doesn't do so, but it does, jon, have this growing private label business that could theoretically benefit from aws. >> yeah. i don't think breaking off aws helps them at all since most of the criticism they're getting, carl, comes from the idea that they've got third party retailers on the platform and using that data for their own first party e-commerce most of the heat that they're getting is just right there within that e-commerce business. i think it stays on that e-commerce business whether you have aws attached or not. >> you mentioned the labor shortages or challenge in retention especially drivers there was a great conference call out of wells fargo yesterday looking at overall labor shortages. one of the staffing consultants they had on the call said a big reason for the trucker shortage is drug testing. you legalize cannabis in all these states and still a federal

mandate for drug testing some pointed out that's maybe why we have seen amazon get so aggressive in backing federal legalization of cannabis. >> huh, dee, you're from canada. it started up there. we thought the canadians were just nice and laid back. and everything was okay. i don't really know. i remember kids taking trucker speed, dee, to get ready for tests in college, but that's the most i know about truckers and drug tests >> jon, since you mentioned canada, i would be remiss to mention that the women's hockey team beat the american team, carl so that's -- jon just teed me up so i have to mention it. it's decades-long rivalry. but, yes, cannabis and hockey in canada two things we know. investors are not loving applovin

we'll talk to the ceo in just a bit. "techcheck" is just getting started. ♪ don't like surprises? [ watch vibrates ] proactive notifications from fidelity keep you tuned in all day long. so when something happens that could affect your portfolio, you can act quickly. that's decision tech, only from fidelity.

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let's get a gut check on cisco reporting earnings yesterday despite supply chain concerns cisco beating on the top and bottom lines the company also proved a $15 billion increase to their stock buyback program. issued up beat guidance for the year all following reports of $20 billion deal to take over software maker splunk. cisco shares up more than 4%, jon. all right, dee shares of applovin taking a hit in morning the stock is more than 40% off of its all-time high software maker for app developers delivering record quarterly revenue and adjusted ebitda, but 2022 revenue guidance coming in lower than the street was hoping for. applovin ceo adam foroughi good to see you. first, i want to talk about these google and apple identifier and sort of data privacy changes because i'm not sure investors understand applovin's structure i want your perspective on it.

you actually have first-party data as part of your structure you might be less affected by this, but what's your outlook on what google and apple are doing and how it affects your business >> yeah. thanks for having me and the apple changes that you're talking about, the privacy changes really rolled out six, seven months ago, middle of last year and google announced just yesterday they're going to follow suit and try to make privacy changes over the next couple years to remove an identifier that allows advertising companies to target consumers with better ads base on third party data. now, why we've been able to perform so well in the last year and why we're very confident about our business going forward is we have a games business that has 200 million plus monthly active users playing our content, giving us first party data and our own data is what's fueling our software business, our advertising platform to perform so well. this combination and this dependency on our own data sets us up really well as the marketplace goes to more

privacy-centric ways to do market. >> yeah. that was my take i was a bit surprised to see your stock specifically dipping. it seemed on the google privacy news but then valuations are what they are. so who knows why these things are moving now you get to the issue of you have this games apps business and also the broader software platform, it's the apps business, right, where growth was disappointing. so, what is your outlook for how you expect those things to balance out and certainly seems like the software platform business is the future >> yeah. let's talk about that and then the reaction to our earnings we had $3.7 billion revenue guidance versus 3.8 billion consensus, which on headline looks like a miss. and the stock got hit. but let's go a level deeper. the gaming business, which trades at three times revenue because the revenue is less margin than the software business, we guided down 400 million because the gaming business is a large mature business and we get the data that we need at the scale we're

at now the software business is ripping. it grew a ton last year and we guided up 300 million. so, guiding a 20 times revenue multiple business plus 300 million should have really added $4.8 billion of market cap or 20% up but people didn't look deeper to realize our software business, which is the core part of our business, the way we generate cash, is what's growing at crazy rates. we're projecting over 100% growth this year to it and once you really realize that, you realize this is a great buying opportunity in the stock. >> right so adam, if you have access to the first-party data, is there more you can be doing with it? you see googles results in light of the apple privacy changes i know it's at a much different scale, but is there something you're missing here that you would be doing or moving into with your unique position in having that data that many others don't have? >> well, let's talk about what we're doing. the software business in 2020 did 200 million. last year almost 700 million now we're projecting over 1.4

billion. and then next year we're projecting approximately 2 billion. so that's 10x growth in three years to a software business that's exceptionally high margin i think we're doing pretty well with the business right now. >> adam, are you looking -- i know you've been quite active in m & a over the last year or so are you still looking? do you think there's more consolidation to come? >> we're really focussed on anything that could expand our software offering in the market opportunity, we've got that first party data at scale with the gaming business. we like where that's at. and then the software business and mobile is doing really well. but we depend on video advertisements to consumers to really drive performance and engagement with advertiser products and in the earnings call we talked about expansion opportunities in that software business and one of those was in connected tv where consumers are seeing video advertisements and we think the capacity to bring performance advertising to television is a big opportunity. and those are the areas you might see us make the build

verse buy decision to try to accelerate market expansion opportunities. >> so, what is the biggest challenge, then, to you being able to fuel, continue fueling that expansion i mean, you've laid out i think nicely how the app's business, the games business is giving you the sort of data that you need to grow the software business despite the macro effects. but what about hiring? what about go to market and sort of reaching that end customer with the app that you want to serve? what are you doing that's going to give you perhaps an advantage there versus the competition >> yeah. i mean, ultimately comes down to execution, right but we were confident in rating that software business plus 300 million this year and giving that $2 billion number next year that's a lot of growth we're taking a software business again 200 million just two years ago to 2 billion zlrs in three years. that requires a ton of execution. but the advantages that we have in the marketplace and the success we're driving for our advertisers gives us a ton of

confidence that we're going to be able to be one of the fastest-growing and largest scaled software businesses in the world. >> yeah. three times as many clients using your platform versus just a year ago and aggressive growth targets that you're announcing will be excited to see with you where that goes quarter to quarter adam foroughi from applovin, thank you. >> thanks. when we come back -- roblox, metta and nvidia all three names down double digits since the start of the year head of the metaverse weighs in on how to play it next when "thcckrerneche" tus. ♪ trading isn't just a hobby. it's your future. so you don't lose sight of the big picture, even when you're focused on what's happening right now. and thinkorswim® is right there with you. to help you become a smarter investor. with an innovative trading platform full of customizable tools.

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pivotal ventures is betting on innovation in elder care, julia. >> well, it is a nearly $400 billion market opportunity and some 55 million people are 16.5% of the population is currently over 65. that's projected to increase to 74 million people by 2031. pivotal worked with tech stars to coach ten startups over 13 weeks part of an accelerator program to help develop tech driven products and services to tackle challenges facing the ailing population. now, today, those founders are presenting to potential investors. and despite the stereotype of founders being young and predominantly male, this cohort is half female and the average age is 50. >> one of pivotal ventures biggest goals is to advance women's power and influence. and we know that care giving is a barrier to full participation in the work force and society,

especially for women so we've made several investments in this care-giving space to address these challenges that women face >> these startups presenting today address a wide range of medical and care giving issues from wave therapeutics, smart cushioning technology to prevent bed sores to bright's light therapy for brain health matches families with care givers and a company called kinumi to connect older adults with a social worker to help them manage their needs and remain more independent. my fit pod is a platform that helps older adults find fitness trainers she says she sees other investors starting to identify this massive opportunity pitch book tells us that $17 billion was invested into companies developing technology to help the elderly up 74.7 billion the year before. guys >> does this represent any kind

of a shift even marketing wise in how melinda french gates is talking about her investmentso no >> well, no. i actually think this is an extension. what she's doing is pivotal ventures it invests in both companies and also in non-profits. and it also helps incubate them. what she's trying to do is specifically with this is help women in particular. and you heard wittemeyre talk about this what's interesting when you talk about the pressure on women and the responsibilities they feel in terms of care, it's not just about caring for children, it's also about caring for the elderly. and there are many people who are in this sandwich generation and having to take care of two different sets of people, both children and say their parents and because of that that is keeping a lot of women out of the work force and by addressing these issues, offering more tools, this should help more women have more of an opportunity, especially right now when we have seen so many women leave the work force due to the pandemic help more women in particular. >> indeed. julia, thanks. a.i. lender up start is

getting a rare double up grate this morning bank of america is taking from buy to sell. after some strong fourth quarter results. and forecasting more growth in the company's personal and auto loans. shares have almost doubled in a week don't miss a check in with ceo david girouard later this hour don't go away. ♪ (doorbell ringing) - [woman] then lift those legs, ladies. back and rest and- - [announcer] chewphoria: the exact moment the only thing you're craving meets your mouth. ♪ oh yeah - [announcer] on time, lowest price, or we'll make it right. grubhub. alright, so...cordless headphones, you can watch movies through your phone? and y'all got electric cars? yeah. the future is crunk!

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♪ welcome back to "techcheck." here is what's happening at this

hour record revenues helping walmart top estimates. comp sells up 5.6% the retailer also raised quarterly dividend by a penny to 56 cents a share walmart stock up about 2%. walmart and cisco only stock in the dow with significant gains right now. auto nation giving up free market gains and some. handily upped estimates for earnings and revenues from used cars shooting up 55% from last year auto nation shares are down 2% after being up 5% earlier in the day. weekly jobless claims rising unexpectedly however, the 248,000 new claims still reflect tight labor conditions as the first increase in jobless claims in a month. and freezing temperatures during january put a chill on home building. overall housing starts fell more than 4% and single family home building sank more than 5.5% but that decline may be short lived. building permits rose last month to the highest level in 16

years. that's the very latest carl, back over to you. >> frank, thanks for that. nvidia the latest disappointment in the metaverse and roblox up this morning q4 miss on the top and bottom line and metaist, the company formerly known as facebook lost quarter trillion dollars in value over the last month. biggest market wipeout for any u.s. company ever. will the metaverse see a big bang or fizzle out and how does nvidia factor? joining us to discuss that the co-founder of the round hill ball metaverse etf former amazon studios head of strategy matthew ball is back great to see you, matthew. we haven't been talking about the metaverse as a widely known conversation for very long now but do the meta and roblox results get us off on the wrong foot >> evaluating any performance or transition on a quarterly basis

is to mislead us to overall arc. in this case, we're seeing a little recoil from the fact that in 2021 everyone was talking about this theme reorienting their strategies and yet the world didn't seem that different. i would certainly agree that the narrative at this point has outstripped the product. >> on the other side, i was going to bring this up as well, we had the nfl deal with roblox last week. nike already been in the space for a while now. very nice review of disney's new metaverse chief mike white whom some people call one of the best ctos around. is the onus now on corporates to demonstrate how they're going to use this technology that we really don't understand yet? >> well, you're precisely right. what we're seeing is the positioning to build products to take advantage of this opportunity. yesterday mcdonald's filed a number of different patents and trademarks for virtual restaurant experiences we're kind of at the early app store moment we said a few years after the

app store launched that there's an app for that. but of course that depended on experiences being built, consumers providing feedback and the market figuring out how to build these. it's very clear that everyone is now trying to build metaverse experiences, but they don't quite exist yet. mike white's efforts with disney is an endeavor to do that but to that point it will take a few years for us to really start to evaluate whether this is substantial. >> yeah, matt. a lot of these companies that are promoting metaverse narratives, i just wonder, do they really belong together? and some of the ones with the strongest narratives and the strongest ip have been demonstrating what the market is for their ip i think for a long time. so i just wonder if metaverse itself is the right narrative or if there's sub narratives that make more sense? >> i would certainly agree with that the best analogy here would be to the talk about the intranet the past 25 years the companies at the forefront of internet

services have changed in the early '90s the leading providers were hardware and connectivity prov providers. it took another decades before facebook emerged to that point it's not practical to say the internet. we're talking about content, compute, about hardware. right now we're lumping them all together because everyone is using the term but certainly we can't evaluate what mcdonald's is doing or panera which announced the paer in ra verse alongside enterprise computing platforms such as omniverse. >> it's deirdre, good morning. so your etf looks at public companies playing in the metaverse. that's what we often look at as well because people are trading them but what if we're looking at the wrong companies in meta and roblox and microsoft is it more likely the companies are still public or still being built in basements at the moment how do you capture that? >> it's a mixture of companies certainly if you take a look at the top waitings in etf, you'll

see that unity in roblox are some of the top allocations. we have seen significant appreciations from their ipo price. roblox less so over the past few days our expectation is over the coming decade the composition of the index and etf does transform. we have saw five types of instruction. we see microsoft in computing. some adapted such as disney from the legacy era to streaming. but for the most part, leaders were all together new. tiktok, google, facebook and so forth as this unfurls over the next 20 years we'll see a lot of that happen. >> so, matt, since the etf began, how would you characterize flows right now relative to the short history and when would you expect that to take a leg higher, which i assume you do? >> certainly we always got into this game

expecting it to be a decade plus trend. when you take a look at 2021 performance, td ameritrade said we were the number one equity based sector etf launch of the year following june 30th, through to the end of december 31st, we were in the top 3% of inflows for all etfs inflow have been a lot more modest year to date, of course, interest rates have altered that, compression across the constituent parts have not helped either. but i think when you put this in context of 2021, we never expected it would grow as quickly as it did. we're expecting a cooloff for the next little while but over the next decade we expect trillions of dollars to accumulate to the theme and therefore aum should increase as well. >> fascinating and it's a really nice tool for us to gauge sentiment around the space matt, always good to talk to you. thanks so much. >> thank you >> matt ball we have been waiting tohea from the secretary of state and he is just now finished speaking at the u.n. security council on russia, ukraine tensions kaylee is monitoring and has

some headlines. >> carl, good morning. at the united nations security council, russia's foreign deputy accused ukraine's government of stubbornly refusing to comply with the minsk agreement where separatists are aligned with moscow the minsk was reached among dozens of countries and was meant to stabilize the region. secretary of state antony blinken responding to russia said russia is fabricating such frustrations and has deceived the world on its true intentions we were supposed to have the sound bite from secretary blinken there saying that the russians have, in fact, been building up their military forces on the border with ukraine. i believe we do have that sound bite now let's go to it >> our information indicates clearly that these forces,

including ground troops, aircraft, ships are preparing to launch an attack against ukraine in the coming days >> secretary blinken then went into blistering detail how an invasion would unfold with the kremlin staging possible terrorist bombings or mass graves or chemical warfare to justify an attack which blinken says would begin by air and be followed with tanks and troops advancing on ukrainian targets and people that have already been identified. blinken delivered this message in closing to moscow >> the russian government can announce today with no qualification equivocation or deflection that russia will not invade ukraine state it clearly state it plainly to the world. and then demonstrate it by sending your troops, your tanks, your planes back to their bare ricks and hangers and sending your diplomats to the negotiating table. >> the russian diplomat responded to secretary blinken

by thanking him for his remarks. carl and deirdre and jon, back to you. >> kayla, thank you for that we know that you will continue to monitor meantime, bitcoin is under pressure in today's trade. "techcheck" is back in just a moment

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♪ john jones -- >> from intel. >> snap. >> board director hp and nordstrom. >> we really want companies to think and to search more widely so that c suite itself is more reflective of the world around us. >> if we can get these companies together to work on the same goals and create some standardization and what we call diversity, equity and inclusion, could that accelerate the pace of change? >> when you look at how silicon valley has progressed or not progressed, is the valley making good progress? >> do i think we have a long way to go? 100% i have seen a lot of great leaders step up to focus on diversity. leaders who focus on it in an intentional way have seen the progress that they will want to see and those who have not been intentional about it haven't made that much progress. >> we talk about increasing more women in the tech industry

and yet every company basically has a different definition of what leadership is >> it really is about how do we get the resources through our collective action into those communities that we sit most. >> where you sit in this hot bed of innovation, what's our opportunity? >> this is about telling a story about why we matter. why the diversity of experiences why we all have matter why our skin color is different and that matters and that means something. >> thanks to nordstrom, stacy brown phil pots, intel's dawn jones for those insights actually brown on a lot of boards now going deeper our frank holland joins us with a look at the consequences of underrepresentation in tech leadership frank? >> hey there, jon. black developers, programmers and engineers hold less than 5% of those jobs at many companies and institutions are addressing the real world consequences of underrepresentation in the digital world. the aclu and harvard both published research find tag a.i.

can lead to discrimination in housing, education and hiring. after the killing of george floyd, ibm, amazon and micro softd halted sales of facial recognition technology to law enforcement over concerns about racial discrimination. ibm exited that business all together black americans are 12% of the population but only 8% of the tech work force. and even smaller percentage of decision makers at big tech companies. a nonprofit that helps companies find black tech talent says there's an urgent need for diversity in development and decision making. >> the very technology that is often designed to help and support communities can do real harm when we don't have black leaders and historically marginalized leaders at the table but to shape and build and create the future. the very issues that we're trying to solve cannot be solved in this same ways with the same conditions and sometimes with

the same people who created them >> change starts with creating a culture that values diversity. recent survey by the nonprofit found 85% of black tech workers would switch jobs just to feel more valued. also black male tech workers make less than 11% than the typical tech worker. black women 26% less deirdre, back over to you. >> frank, thanks for a comprehensive look at that we hope to hear more from you. time for gut check on palantir the stock is taking a hit after earnings fell short of wall street estimates fourth quarter revenue up 34% from a year earlier. shares are down more than 10%. "techcheck" still ahead. stay with us ♪

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♪ markets are off the session lows on these additional developments on russia, ukraine. the deputy attorney general lisa monaco with a sharp warning on cyber zurt from munich where we also have our eyes tuned eamon javers has that for us >> reporter: carl, that's right. lisa monaco speaking at the munich security conference within the past hour and issued a warning reiterating what the u.s. government has been saying to american companies for a while now. which is that any russian incursion into ukraine could also be accompanied by a cyber war that could have significant blow back for american companies mooch here is what she said. >> given the very high tensions that we are experiencing, companies of any size and of all

sizes would be foolish not to be preparing right now as we speak to increase their defenses, to do things like patching, to heighten their alert, to be to monitoring in real time their cybersecurity. they need to be as we say, shields up >> lisa monaco saying american companies need to be shields up in preparation for anything that could happen carl and jon, she also announced a new effort by the department of justice, a national cryptocurrency enforcement team importing a new director for that new unit suggesting that they're going to go after all sorts of cryptocurrency, frauds, tumblers, mixing and tracing assets across the global web in an effort to cut down on fraud in the cryptocurrency space. back to you. >> we're beginning to see that happen, eamon. thank you. >> one of yesterday's signature

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the a.i. lending platform posting a massive beat in its latest quarter and issuing upbeat guidance for the quarter ahead. shares are higher on top of a 30% surge yesterday. joining us now upstart founder and ceo dave gerard. dave, it's great to have you with us. before we get into the quarter, perhaps you can walk our audience through your model and how a.i. underpins your underwriting standards and how your modeling rates this year. >> so we're an a.i. lending platform, and that means we help banks and credit unions originate consumer credit by using more sophisticated risk models powered by a.i. and a lot of training data, et cetera. when our models get better they more accurately decide to make an offer of credit and at what price, and that helps our banks, you know, grow their businesses and grow responsibly and profitably and prove more customers.

it's the combination of the right price, the right product and really making it an instant frictionless process and it's why we're thriving right now. those have been developed in a period of low-interest rate, and how do you model it this year? >> that's a great question, deidre over time we put more sophistication into the models to understand the macro environment in which they're operating. for example, where are unemployment rates today and where are they going things like inflation and just understanding the sort of background macro and that's the thing you can do with a fairly sophisticated model and not only evaluating an individual who is applying for a loan and understanding the backdrop of where we sit today and potentially where we're likely to be over the term of the loan and making sure you appropriately compensate for that we aren't macro predictors and

it is important that we understand exactly where we sit today and then as soon as we have new data and there's a new reality that's emerging and responding appropriately covid was certainly for the last couple of years a real exercise in understanding exactly what was going on out there and the way that credit performance can be impacted. >> dave, my question really is about delinquencies, rising delinquencies. you guys talked about on your earnings call. you said in a way that that's not bad because you've opened up the universe to people who otherwise might not have gotten credit, but is your a.i. good enough to offset lower credit quality with actually predicting that and not ending up in trouble. how can we be sure how can investors be sure? >> our a.i. models are trying to improve their ability to predict

risk our bank partners can mitigate what risk appetite they have and what sort of returns are they looking for and can they put limits on the system in the way that they have a lot of degrees of control and it's important to say, john, in any a.i. system what the system doesn't know, and it needs to treat that very cautiously it's like a self-driving car that suddenly has no history of going to a particular part of the country or something would have to be extremely careful just like that, an a.i.-lending platform that has not seen a consumer or applicant before will be conservative and cautious and over time it will begin to gather data and have a more informed opinion with a particular loan and will do the right things, but you have to be smart and sort of bring your model slowly to understand more parts of the population that you aim to serve over time >> well, i wonder, did you test this model on kind of historical

events also? because i'm thinking back to the housing crisis there were a lot of things that were going on there that we hadn't seen before would a.i. have helped or would it have been stumped and wow that's a new one >> good question you certainly do as much back testing as you can in sampling of back data in the past and trying to understand the relationship between unemployment and default which aren't certainly a one to one and what people are more likely to be impacted so the models are always getting a little better. it learned a ton during covid, but of course, the next economic event will be very different and we wouldn't expect it to be perfect, but it's important to say it's the relative capability that mattered and relative to the rules-based model and the jury of sophistication is significantly beyond that. in our view it's five times as

predictive so it's not going to be perfect and in the next economic event we will see at some time in the future we certainly don't claim it will be perfect and rising unemployment results in higher loss rates in any system and that's just a given and who can navigate that, who can predict that and who can do the right thing with it and obviously a sophisticated a.i.-based software, we think has the best chance to do that right. >> dave, thank you very much for being with us. we'll talk to you again soon >> thank you >> guys, one more thing. cathie wood is going to join the half exclusively in a few moments. as you know by now she went all in on roblox yesterday picking up 450,000 shares at the close can't wait for the guys on the half to talk to her about other activity in the ark fund lately especially selling a bit of twitter and tonight we'll get roku earnings, dropbox and shake

shack. in terms of market activity, we have come off the early morning lows and dow's down 400 and energy has managed to go green for now and the s&p, guys, will remain green for the week so long as it stays above 4101, right now, i have about a 20-point cushion and let's get to the judge carl, thanks so much welcome to "the halftime report." i'm scott wapner front and center this hour cathie wood, live and on the record in a cnbc exclusive her stocks, her performance, her response to the critics. we'll cover it all today the investment committee here with me, as well and they'll join the conversation in just a few minutes. with me, bryn talkington, brenda v vingiello, jim lebenthal, and jon najarian >> it's a loss of near 54. nasdaq under pressure by more than 200