mark mahaney joining us from san francisco. mark, so you still have a big call on amazon where you say it's outperformed. you did take down the price target after their numbers yesterday missed estimates. you're now at 715 on amazon. why? mark: that's right. there was a negative surprise in the print last night. and we lowered our estimates accordingly. the big negative surprise came in the cost side not the revenue side or unit shipped side but in the cost side. these fulfillment cost, all of the costs they incurred to pick pack and ship products to consumers, that came in materially higher than expected. the question is an investor for us, the stock picker is, that something that structurely changed in the model or temporary? we think it's the latter. the fundamentals can recover and the stock can recover. that's the big question. we think had he this a surge of demand by third party vendors who wanted amazon to do the fulfillment for them. that surge in demand jammed up their expense when is they weren't expecting it. that's

ali an's portfolio manager walter price and lead analyst mark mahaney. od to have you. >> good morning. >> mark, in a neighborhood here now where everything seems to pivot upon the price of commodities, on chinese regulators overnight, and in the end, some would argue, really doesn't matter what amazon's operating margin is going to be going into earnings season. do you agree? >> amazon is a bit of a bellwether for the internet groups of a whole as is facebook and alphabet. probably more than any other stocks in the group. amazon, what people want to see are operating margins rising in the north american retail business. and secondly, is that momentum we've seen in aws sustainable that top-line momentum? we think the answers to both of those, we have a bullish bias on answers to both of those questions, so we like the stock, and it will matter for amazon stock and for the sector. >> walter, there's been this idea that as some appetite for risk goes away, there's going to be this shift that we've been thinking about and talking about for a long time. the s

. >> joining us from one market in san francisco, rbc's lead analyst mark mahaney.d morning, carl. >> stocks had dhistoric gains. how much of this is deserved? >> we'll say fully deserved. there is one number you need to know about the facebook print. 66%. that was advertising growth year over year. if you take out foreign exchange. that was the ebitda margin the company printed. both were records we had not seen in at least two years. when the size of the business was half what it is today. this was a breakout quarter for the company. both because of its core business and because of this ramp up of modernization on instagram. the pop in the market we think is well deserved. we think shares go higher. >> there were fireworks on the call last night. your reflections on that? >> i don't know if they were fireworks on the call. one of the things i tried to drag out from the company or ask the company to comment about was the ability to start tapping in two large platforms. facebook messenger and they are completely unmonetized to date. we think this is part of that for