Nvidia's Slide and Apple's EU Fines | Bloomberg Technology
ANNOUNCER: FROM THE HEART OF WHERE INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. ♪ ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE HYDE IS OFF. THIS IS "BLOOMBERG TECHNOLOGY." NVIDIA SLIDES FOR A THIRD CONSECUTIVE DAY.
ALMOST $400 BILLION WIPED OFF THE MARKET CAP. FULL COVERAGE AHEAD. APPLE FACING FINES UNDER THE E.U.'S DIGITAL MARKET ACT. COST SELLERS WARN OF A POSSIBLE MATERIAL HIT FROM THE CYBERATTACK. WE HAVE ALL THE LATEST FROM OUR EDITORS. THIS IS WHAT FINANCIAL MARKETS LOOK LIKE TO START THIS WEEK.
HAPPY MONDAY. THE S&P MODESTLY HIGHER. WE WILL GET INTO THIS SHORTLY. NVIDIA, THE MOST EXPENSIVE STOCK ON THE S&P 500, IS A REAL DRAG. THE NASDAQ DOWN .3%. YIELDS PUSHING A LITTLE HIGHER ON THE 10 YEAR. BITCOIN HAS BEEN A REAL STORY. GOING TO DIVE INTO BITCOIN
HALFWAY THROUGH THE SHOW WITH OUR ANALYSTS. WE ARE COMING OFF ONE OF THE WORST STRETCHES OF THE YEAR SO FAR FOR MANY DIGITAL ASSETS BUT MOSTLY BITCOIN. LET'S LOOK AT NVIDIA. THE DECLINES HAVE ACCELERATED. WE ARE DOWN MORE THAN 5% IN THE SESSION. THREE STRAIGHT DAYS OF DECLINES, WHICH HAS NOT HAPPENED SINCE EARLY MAY, WE HAVE WIPED OUT MORE THAN $380 BILLION OF MARKET CAP. NVIDIA HAS GONE FROM BEING THE WORLD'S MOST VALUABLE COMPANY BRIEFLY, DROPPING BELOW BOTH APPLE AND MICROSOFT.
THERE IS CONVERSATION AROUND VALUATION. ONE OF THE METRICS WE ARE LOOKING AT IS THE PRICE TO SALES RATIO. IT IS TRADING AT MORE THAN 20 TIMES THE EXPECTED SALES OVER THE NEXT 12 MONTHS. I WANT TO GET TO LONDON. IN HER COLUMN LAST WEEK, SHE
ARGUED NVIDIA IS A CLASSIC CASE OF "THE BIGGER THEY ARE, THE HARDER THEY FALL" AND THE OTHER TECH LEADERS SHOULD BE LOOKING AT WHAT IS HAPPENING WITH NVIDIA AND WINCING OVER HOW RAPIDLY IT HAS TAKEN THE AI WORLD. GOOD TIMING TO HAVE YOU ON THE PROGRAM. EXPLAIN YOUR THESIS TO MEET. >> I THINK A LOT OF PEOPLE LOOK AT NVIDIA AS A BELLWETHER FOR AI SUCCESS BUT IT IS ALSO A REFLECTION OF A LOT OF THE HYPE IN AI. IT IS PROFITING FROM THE SHORT-TERM SUCCESS OF
BUSINESSES BUYING CHIPS FOR SERVERS, CLOUD COMPANIES LIKE MICROSOFT AND AMAZON. IF YOU LOOK DOWNSTREAM AT THE BUSINESSES BUYING THE GENERATIVE AI TOOLS FROM THE LIKES OF OPENAI OR MICROSOFT AZURE, WE ARE SEEING SIGNS OF DISCONTENT. I HAVE SEEN MULTIPLE SURVEYS IN THE LAST FEW MONTHS SAYING THEY ARE NOT GETTING THE PRODUCTIVITY THEY WERE HOPING FOR, THEY ARE NOT SURE HOW TO USE IT. THERE HAS BEEN A DECLINE IN PLANS TO SPEND ON AI. I THINK THERE HAS BEEN A DECLINE FROM 93% LAST YEAR TO 63% THIS YEAR, IN SPITE OF THE FACT THESE TOOLS ARE GETTING BETTER.
I THINK A BIG REASON FOR THIS IS THESE GENERATIVE AI TOOLS HAVE BEEN MARKETED AS GENERAL-PURPOSE TOOLS LIKE A SWISS ARMY KNIFE OF TECHNOLOGY THAT IS GOING TO MAKE YOUR WORKFORCE MORE PRODUCTIVE. OF COURSE, THESE TOOLS ARE NOT NECESSARILY GENERAL PURPOSES. THEY ARE CAPABLE IN SOME AREAS BUT THEY MAKE MISTAKES.
THEY MAKE HALLUCINATIONS. THERE ARE ISSUES WITH DATA SECURITY. STRANGELY, OUR PERCEPTION OF COMPUTERS AND AI AND HOW IT WAS MARKETED TO US BY SCIENCE FICTION AS BEING THIS ROBOTIC, FACT-BASED MACHINES IS NOT HOW THEY ARE IN REALITY. THEY ARE GOOD AT ARTISTIC ENDEAVORS AND GENERATING IMAGES, POETRY AND STORIES. THEY ARE NOT SO GOOD AT GENERATING FACTS THAT YOU CAN RELY ON. THIS IS SOMETHING BUSINESSES
ARE REALIZING, SOMETIMES TO THE DETRIMENT. THERE HAS BEEN A RAINING AND OF SPENDING -- THERE HAS BEEN A RAINING AND OF SPENDING. WE ARE SEEING THAT HIS SHARES OF NVIDIA. ED: THEY WILL SAY NVIDIA IS SUPPLY CONSTRAINED. IT GREATLY EXCEEDS THEIR ABILITY TO SUPPLY.
WE HAVE BOTH COVERED TECHNOLOGY FOR A LONG TIME. YOU MADE THE POINT HISTORICALLY IN PHASES OF PROGRESS, ALL CAMPAIGNS HAVE A CLEAR NORTHSTAR, SOMETHING TO WORK TOWARD. YOU ALSO MAKE THE POINT THAT WITH AI, IT HAS BECOME SUCH A BRAND VISION LED BY SPECIFIC INDIVIDUALS THAT IT HAS LOST ALL MEANING. WHAT DO YOU MEAN BY THAT? >> THIS WHOLE ARMS RACE FOR AI WAS SPARKED BY TWO MEN, SAM ALTMAN OF OPENAI AND THE FOUNDER OF DEEP MIND, GOOGLE DEEP MIND NOW. BOTH WERE TRYING TO CREATE ARTIFICIAL GENERAL INTELLIGENCE, THIS AMBITIOUS GOAL TO CREATE A MACHINE THAT CAN DO EVERYTHING. IT IS MORE LOGICAL THAN HUMANS. IT CAN SURPASS OUR OWN
COGNITIVE ABILITIES AND IT HAS GENERAL KNOWLEDGE MEANING IT CAN DO CREATIVE THINGS BUT ALSO MATHEMATICAL CALCULATIONS BETTER THAN HUMANS. THE OBJECTIVES WERE NOTHING LESS THAN CURING CANCER AND SOLVING CLIMATE CHANGE. THERE WAS A SENSE THAT IF YOU HAD THIS ALMOST GODLIKE MACHINE THAT CAN SOLVE EVERYTHING FROM A GENERAL CAPACITY THAT IT COULD SOLVE ALL PROBLEMS. WE HAVE A VISION THAT IS SO GRAND AND THEN IT TRICKLES DOWN INTO THE MARKETING AND SALES CHANNELS OF YOUR TECH COMPANY, AND THEN THEY ARE TRYING TO SELL THIS TO BUSINESSES, YOUR AND CUSTOMERS -- END CUSTOMERS HAVE ALMOST A SENSE OF PARALYSIS. WHAT DO YOU DO WITH TECHNOLOGY THAT CAN DO EVERYTHING? WHERE DO YOU START? THE MISTAKE SOME TECH COMPANIES HAVE MADE IN MARKETING AI HAS NOT BEEN IN SAYING THE CAPABILITIES ARE HIGH, BUT IN MARKETING THEM AS GENERAL-PURPOSE BECAUSE THEY CANNOT DO EVERYTHING EVERYWHERE ALL AT ONCE.
THEY CAN ONLY DO A FEW THINGS VERY WELL. THAT IS WHY I THINK BUSINESSES NEED TIME WHEN THEY BUY THESE TOOLS TO EXPERIMENT WITH THEM. IT IS LIKE WITH MOBILE REVOLUTION. INDIVIDUALS WHO WORKED FOR COMPANIES BROUGHT IN SMARTPHONES AND TOLD THE I.T. PEOPLE, SET UP MY CORPORATE EMAIL TO MY LIKE VERY, AND COMPANIES -- TO MY BLACKBERRY, AND COMPANIES WERE FORCED TO DO THAT BECAUSE PEOPLE WERE USING THEM AS PRODUCTIVITY TOOLS FOR THEMSELVES. RIGHT NOW, THIS TOP-DOWN
APPROACH TO LET FORTH THE ENTIRE STAFF TO USE THESE TOOLS IS A RECIPE -- LET'S FORCE ENTIRE STAFF TO USE THESE TOOLS IS A RECIPE FOR DISASTER. IT NEEDS TIME TO PERCOLATE FOR INDIVIDUALS TO FIND THE WAY IN HOW THESE TOOLS WILL WORK FOR EVERYBODY ELSE. ED: PARMY OLSON, FANTASTIC TO HAVE YOU ON THE SHOW. I STRONGLY ADVISE YOU READ HER COLUMN FROM LAST WEEK. LET'S KEEP THE CONVERSATION GOING WITH AYAKO YOSHIOKA. THIS IS WONDERFUL.
THERE IS THE FUNDAMENTAL ANALYSIS YOU CAN MAKE. THERE IS THE OPTIMISTIC VIEW AND THEN THE ROMANTIC VIEW OF WHAT AI CAN DO FOR MANKIND. VERY DIFFICULT FOR YOU. WHERE DO YOU START, WITH THE FUNDAMENTALS OR WHAT YOUR HEART TELLS YOU? >> WE ALWAYS GO BACK TO THE FUNDAMENTALS LOOKING AT SECURITY. WE LOOK BACK AT HISTORY. SOME OF US WITNESSED THIS IN THE 19 90'S AND EARLY 2000'S WHEN THE TECH BUBBLE BURST, SO WE ARE WELL AWARE OF THE RISKS THAT SURROUND NAMES THAT GET HYPED UP FROM THE SENTIMENT STANDPOINT, EVEN THOUGH HE FUNDAMENTALS MAY BE THERE TO SUPPORT SOME OF THE OVERALL ENTHUSIASM AROUND THE STOCK. ED: THE POINT THE BLOOMBERG STORY AT THE WEEKEND MADE IS IT IS REALLY HARD TO FORECAST OR PREDICT TOPLINE GROWTH FOR NVIDIA RIGHT NOW. IF YOU GO BACK TO THE AUGUST QUARTER OF 2023, REVENUE EACH QUARTER HAS COME IN ON AVERAGE 13% ABOVE WHAT MANAGEMENT GUIDED. AS YOU KNOW BETTER THAN ANYONE,
MANAGEMENT TEAMS CAN BE CONSERVATIVE EVEN AT THE MIDPOINT OF THE RANGE IS WHEN THEY GUIDE, BUT IT IS STILL THE MATTHEW HAVE TO DO. THEY POINT IN THE PIECE OF THE PRICE TO SALES RATIO BEING ABOVE 23. IN ANY OTHER CIRCUMSTANCE, PEOPLE WOULD BE MORE CAUTIOUS WITH NVIDIA. WHY ARE THEY NOT BEING MORE
CAUTIOUS, AT LEAST UNTIL THIS MORNING'S SESSION? >> IT IS DIFFICULT TO ASCERTAIN WHAT THE TOTAL ADDRESSABLE MARKET IS FOR ARTIFICIAL INTELLIGENCE. YOU CAN SAY IT CONTINUES TO BE GROWING, SO TRYING TO ASCERTAIN WHAT THAT NUMBER IS GOING TO BE LONG-TERM IS WHAT IS SO DIFFICULT ABOUT VALUING NVIDIA RIGHT NOW. IT IS TO BE A RULE OF THUMB WHEN I WAS GROWING UP IN THIS BUSINESS THAT ANYTHING OVER 10 TIMES PRICE TO SALES WAS TOO EXPENSIVE AND AT 23 TIMES, IT IS WELL ABOVE THAT. IT DOES BECOME VERY DIFFICULT. IT BECOMES MORE OF A SHORT-TERM GUESSING GAME IN TERMS OF SUPPLY AND DEMAND.
RIGHT NOW, DEMAND OUTSTRIPS SUPPLY. IF DEMAND STARTS TO WANE AND THE EQUILIBRIUM COMES TO FRUITION, IT COULD BE PROBLEMATIC FOR NVIDIA. ED: DO INVESTORS GET DISTRACTED FROM OTHER OPPORTUNITIES BECAUSE OF THE MYOPIC FOCUS ON ONE NAME? >> PART OF THE REASON UTILITY COMPANIES HAVE DONE SO WELL RECENTLY IS ALL OF THE ELECTRICITY DEMAND BEING FORECAST FOR THE DATA CENTERS TO UTILIZE THE POWER AI BRINGS TO ALL OF THE SERVERS AND DATA CENTERS AND YOU HAVE SEEN THE SECONDARY AND TERTIARY DERIVATIVE PLAYS OF ARTIFICIAL INTELLIGENCE AND NVIDIA COME TO THE MARKET. WE WILL HAVE TO SEE WHERE THE TRUE OPPORTUNITIES ARE GOING FORWARD NOW THAT SO MANY SECONDARY AND TERTIARY FACTS HAVE PLAYED OUT.
WE LOOK BACK AT HISTORY AGAIN WITH NVIDIA, AND THERE HAVE BEEN PLENTY OF TIMES THE STOCK HAS COME DOWN OVER 50%. IT IS PART OF THE VOLATILITY FOR THE STOCK LONG-TERM. ED: AYAKO YOSHIOKA PORTFOLIO MANAGER AT WEALTH ENHANCEMENT GROUP, GREAT TO HAVE YOU ON "BLOOMBERG TECHNOLOGY." WE HAVE BREAKING NEWS CROSSING THE BLOOMBERG TERMINAL.
BLACK SUIT CYBERCRIME GANG IS BLAMED IN MAJOR RANSOMWARE ATTACK. THIS IS A HACKING GROUP CALLED BLACKSUIT. ACCORDING TO THE RISK ANALYST, THEY ARE BEHIND THE CYBERATTACK ON CDK GLOBAL. THAT IS THE HACK THAT HAS CRIPPLED A NUMBER OF AUTO AND CAR RETAILERS. THE NAMES ON YOUR SCREEN RELY ON CDK'S PLATFORM FOR INVENTORY MANAGEMENT. THAT IS THE BREAKING NEWS WE ARE GETTING.
THERE IS A GROUP CALLED BLACKSUIT. THE CYBERCRIME GROUP HAS DEMANDED AN EXTORTION FEE LEAVED TO BE IN THE TENS OF MILLIONS OF DOLLARS FROM CDK -- BELIEVED TO BE IN THE TENS OF MINDS OF DOLLARS FROM CDK. WE WILL GET A MUCH MORE DETAILED PICTURE OF WHAT IS GOING ON. COMING UP, APPLE IS RISKING NEW FINES OVER THE RULES IN THE EUROPEAN UNION. THERE'S A LOT OF APPLE NEWS TO DISCUSS. STAY WITH US. THIS IS "BLOOMBERG TECHNOLOGY."
ED: THERE IS A LOT OF APPLE NEWS TODAY. THE COMPANY RISKS BILLIONS OF EUROS IN NEW FINES AND THE E.U. AFTER ANTITRUST REGULATORS ESCALATED A CONFLICT OVER THE COMPANY'S APP STORE RULES. AND APPLE HAS ADDED CHINA'S TWO BIGGEST ONLINE RETAILERS TO A GROWING LIST OF APPS THAT WILL SUPPORT THE MIXED REALITY VISION PRO HEADSET WHEN IT GOES ON SALE IN THAT JURISDICTION FRIDAY. WHO ELSE DO WE GO TO?
MARK GURMAN. LET'S START WITH THE E.U. IT IS AN ONGOING AND DEVELOPING ISSUE FOR APPLE. WHAT IS THE LATEST AND HOW DOES IT CHANGE THINGS? >> THE E.U. SITUATION HAD A LOT OF NEWS OVER THE LAST FEW DAYS. LET ME TAKE YOU BACK TO FRIDAY, A COUPLE WEEKS AGO, APPLE INTRODUCED APPLE INTELLIGENCE, THE NEW AI SYSTEM. IT ALSO INTRODUCED A COUPLE OF
HOT NEW FEATURES FOR THE IPHONE AND IPAD. ONE IS MIRRORING. THE OTHER IS SCREEN SHARING FROM ONE IPAD TO ANOTHER AND CONTROL THE OTHER IPAD.
THOSE THREE FEATURES ACCORDING TO APPLE WILL NOT BE COMING TO CUSTOMERS IN THE 27 COUNTRIES THAT MAKE UP THE E.U. LATER THIS YEAR BECAUSE OF THE DIGITAL MARKETS ACT AND THE INTEROPERABILITY REQUIREMENTS, WHICH MEANS APPLE MAY HAVE TO LOWER THE PRIVACY OF THOSE FEATURES TO MAKE THEM INTEROPERABLE FOR THIRD PARTY DEVELOPERS AND MEET E.U. GUIDELINES. THIS MORNING, THE EUROPEAN UNION ANNOUNCED CHARGES AGAINST APPLE RELATED TO ITS COMPLIANCE, OR ACCORDING TO THEM BLACK OF COMPLIANCE, WITH THE DIGITAL MARKETS ACT RELATED TO STEERING USERS TO PAYMENT OUTSIDE THE SYSTEM. THEY WANT THEM TO LOWER THE COMMISSION SIGNIFICANTLY, WHICH IT DID.
AT THE SAME TIME, APPLE IS STILL TRYING TO COLLECT REVENUE FROM APPS THAT ARE SIDELOADING BUT NOT BOUGHT FROM THE APP STORE, SO THE EUROPEAN UNION DOES NOT LOVE THAT. ED: ALIBABA NJD ARE BIG-NAME COMPATIBLE ACTS. IT IS AN IMPORTANT LAUNCH. WHAT IS THE LATEST?
>> THE VISION PRO GOES ON SALE IN HONG KONG AND CHINA AT THE END OF THE WEEK. I DO NOT THINK IF IT MATTERS IF ALIBABA OR OTHER APPLICATIONS ARE ON THEIR OR NOT. IT HELPS. THE BIG STORY IS SALES ARE NOT GOING TO TAKE OFF UNTIL THE COMPANY IS ABLE TO MAKE A VERSION ABOUT HALF OF THE PRICE.
I REPORTED OVER THE WEEKEND APPLE IS STILL PLANNING TO RELEASE A CHEAPER MODEL AS EARLY AS THE END OF NEXT YEAR BUT THEY ARE STRUGGLING GIVEN HOW EXPENSIVE THE COMPONENTS ARE. AND IF THEY START REDUCING FUNCTIONALITY, YOU ARE DOWN SOMETHING ON PAR WITH A COMPETITOR IN META. APPLE HAS A LONG WAY TO GO WITH THE VISION PRO TO MAKE IT A SUCCESS. ED: MARK GURMAN, THANK YOU. THERE IS MORE WITH APPLE WHICH WILL BE WITHHOLDING NEW TECHNOLOGIES FROM MILLIONS OF CONSUMERS IN THE E.U.
CITING CONCERNS TO REIGN IN BIG TECH. AT THE SAME TIME, REPORTS OVER THE WEEKEND ABOUT ITS PARTNERS. IT IS GREAT TO HAVE YOU IN TOWN. I WANT TO GET TO THE REPORTS
FROM THE WALL STREET JOURNAL. IT IS THAT APPLE WOULD LOOK AT META'S AND GOOGLE'S UNDERLYING TECHNOLOGY. WHAT DO YOU MAKE OF THAT? >> THEY HAVE BEEN CRITICIZED FOR PICKING A WINNER AND NOT GIVING USERS A CHOICE. THAT IS GETTING THEM IN REGULATORY TROUBLE. IF YOU GIVE ME CHOICE FOR SEARCH, THERE IS A HIGH LIKELIHOOD I WILL GO WITH GOOGLE. USERS WILL DECIDE WHERE THEY
WANT TO GO. I THINK THAT PROTECTS APPLE FROM EIGHT REGULATORY POINT OF VIEW. IT HAS BEEN CRITICIZED FOR A LOT OF MONEY AND THERE ARE WAYS YOU CAN REDO THE DEAL. ED: THE REGULATORY COMPLIANCE IS INTERESTING. THEY PROBABLY DO NOT WANT TO MAKE MORE DIFFICULTY FOR THEMSELVES. WE OUTLINED SOME OF THE DIFFICULTY THEY ARE HAVING IN EUROPE. I ASK YOU THIS PROBABLY EVERY
THREE MONTHS FOR A FEW YEARS NOW. I STILL DO NOT KNOW IF THE ANXIETY REGULATORY RISK IS REFLECTED IN THE STOCK OR WHETHER INVESTORS REALLY HAVE CONCERNS. >> WE HAVE A CONCERN ABOUT IT. THAT IS A BIG PAYMENT GOES FROM GOOGLE TO APPLE THAT HAS HIGH MARGINS TO IT.
APPLE HAS ALWAYS BEEN A CLOSED ECOSYSTEM WHICH IS WHY THEY ARGUE IT IS A BETTER OPERATING SYSTEM. IF THEY ARE GOING TO OPEN IT UP, THE QUESTION IS WHETHER YOU WILL GET THE SAME LEVEL OF SAFETY OR NOT. THAT IS THE ARGUMENT THEY ARE MAKING. I THINK IT IS TRUE FOR BOTH SIDES. THE QUESTION IS HOW LOW THE FEES CAN GET.
IN ONE CALL, THEY SAID IT ONLY ACCOUNTS FOR 7% OF APP STORE SALES. FINANCIALLY, IT IS NOT GOING TO DING THEM. BUT IF THAT RULING COMES TO THE U.S. AND CHINA, IT WILL BE A BIGGER ISSUE. ED: MORE BREAKING NEWS THIS TIME OUT OF CANADA. CANADA HAS ANNOUNCED PLANS TO CURB IMPORTS OF CHINESE MADE EV'S. CANDIDATE IS CONSIDERING --
CANADA IS CONSIDERING IMPOSING A SURTAX. THIS COMES AS THE FINANCE MINISTER HAS BEEN MEETING WITH REPORTERS. ONLY FOUR MODELS OF CHINESE EV'S AVAILABLE IN THE U.S.. WE WILL BRING YOU MORE AS WE ED: IT IS TIME FOR TALKING TECH. A BLOCKBUSTER HIT FOR TENCENT. THE MOBILE GAME BROUGHT INTO HUNDRED $70 MILLION IN 30 DAYS, TAKING THE TOP SPOT IN DOWNLOADS AND REVENUE IN CHINA.
THE PERFORMANCE EXCEEDED ANALYST EXPECTATIONS AND MARK THE BIGGEST DEBUT OF THE YEAR FOR TENCENT TO DATE. AMAZON AND F1 WILL DEBUT THE NEW AI FEATURE TO KEEP VIEWERS WATCHING. THE NEW FEATURE AIMS TO PROVIDE CONTEXT AND TRIVIA DURING BROADCASTS BY PASSING THROUGH RACE ARCHIVES AND REAL-TIME DATA. IT WILL BE ROLLED OUT LIVE SUNDAY IN BARCELONA. THEY SAY THEY ARE NEARLY DONE DESIGNING THE NEXGEN NUCLEAR REACTOR. BLOOMBERG SPOKE WITH MITSUBISHI'S PRESIDENT FRIDAY. HERE IS WHAT HE HAD TO SAY
ABOUT A NUCLEAR FUTURE. >> I BELIEVE IT WILL BE COMBINED WITH CARBON CAPTURE, HYDROGEN COMBUSTION, AND SO ON. NUCLEAR POWER IS ALSO A VALUABLE POWER SOURCE IN THE CONTEXT OF CARBON NEUTRALITY.
I THINK IT WILL BE NECESSARY TO A CERTAIN EXTENT AS WELL. ED: COMING UP, WE WILL BRING YOU THE LATEST ON BITCOIN AFTER THE TOKEN SUFFERED ONE OF ITS WORST WEEKS OF THE YEAR. THIS IS WHAT MARKETS LOOK LIKE AS WE START THE WEEK THIS MONDAY. S&P 500 MODESTLY HIGHER. UTILITIES, ENERGY IN THE GREEN. INFORMATION TECHNOLOGY IS FIRMLY DOWN. YOU SEE THE STORY ON THE SCREEN. NVIDIA DOWN 5.7%. OVER THE LAST THREE SESSIONS, NVIDIA HAS GONE FROM BEING THE WORLD'S MOST VALUABLE COMPANY DOWN TO BELOW APPLE AND MICROSOFT.
THERE YOU SEE BITCOIN AT A MORE THAN ONE MONTH LOW. SOME OUTFLOWS FROM ETF'S. ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY."
ED LUDLOW IN SAN FRANCISCO. I AM MICRO FOCUSED ON BITCOIN. THIS IS AN ASSET THE TRADES 24/7. OVER THE LAST SEVEN DAYS OR SO, WE HAVE HAD ONE OF THE WORST WEEKS OF THE YEAR SO FAR. IT IS INTERESTING. BITCOIN JUST ABOVE $61,000 PER TOKEN, HOVERING AT A MORE THAN ONE MONTH LOW. THE OTHER DATASET WOULD LOOK AT IS THE OUTFLOWS ON DEDICATED BITCOIN ETF'S IN THE UNITED STATES. BY ASSOCIATION, WE ALSO LOOK AT THE EQUITY MARKET.
WE SEE SOME CRYPTO RELATED STOCKS ALSO UNDER PRESSURE. COINBASE DOWN 4%. AMERICAN DIGITAL HOLDINGS HAVE PAIRED SOME LOSSES WE SAW. THERE ARE A NUMBER OF THINGS IN
THE MARKET, SOME PSYCHOLOGICAL. WE ARE BACK TO THE DEBATE ABOUT THE BIGGER PICTURE. IF BITCOIN IS DIGITAL GOLD, WHY IS IT NOT BEHAVING LIKE GOLD? THERE'S A LOT TO DISCUSS. JAMES, GOOD MORNING. WHERE DO YOU WANT TO START? FOR ME, THE OUTFLOWS DATA IS KEY. THAT IS THE VERY LITTLE I HAVE GOT TO GO ON.
>> IT IS THE ONE AREA WHERE WE CAN KNOW EXACT WHERE MONEY IS MOVING. THAT IS ONE OF THE BENEFITS OF ETF'S. OVER THE LAST 10 OR SO TRADING DAYS, IT HAS BEEN ABOUT A BILLION DOLLARS IN OUTFLOWS.
ETF'S ARE BUILT TO TAKE IN MONEY AND SEE MONEY GO IN AND OUT. THEY WILL TRACK THE UNDERLYING ASSET. SINCE THEY LAUNCHED IN JANUARY, THEY HAVE STILL TAKEN IN ABOUT $15 BILLION. A BILLION DOLLARS OUT IS A BIG DEAL BUT NOT ENOUGH TO CAUSE THE KIND OF CORRECTION WE ARE SEEING WITH BITCOIN TRADING UNDER $62,000. ED: I JUST GOT BACK FROM A VACATION. WHILE I WAS AWAY, I WAS BRACING FOR THE IDEA THAT THERE MIGHT BE MORE TRACTION ON NEWS AROUND ETHEREUM SPOT ETF'S.
I CAME BACK AND NOTHING HAD REALLY HAPPENED. WE CONTINUE THE STATUS QUO THAT WE ARE EXPECTING SOME MOVEMENT IN THE COMING WEEKS. WHAT KIND OF CONSIDERATION IS THAT RIGHT NOW? >> OBVIOUSLY, BASED ON WHAT WE ARE SEEING IN THE MARKETS WITH PRICING, I DO NOT THINK ANYONE IS PAYING TO THE ATTENTION WE WILL GET ETHEREUM SPOT ETF'S. THE OVER/UNDER DATE RIGHT NOW
IS JULY 2. WE THINK THE SEC IS GOING TO GET THE FILINGS OFF THEIR PLATE BEFORE THE JULY 4 WEEKEND. THAT IS JUST OUR GUESTS, NO GUARANTEE.
THEY WILL LAUNCH AT SOME POINT THIS SUMMER. IT IS ONLY A MATTER OF TIME. PEOPLE ARE NOT FOCUSED ON THE FACT THAT IS HAPPENING BECAUSE ETHEREUM IS ALSO DOWN. THEY ARE GOING TO LAUNCH IN THE NEXT COUPLE OF WEEKS.
WE THINK IT WILL HAPPEN BEFORE JULY 4, BUT THERE IS NO GUARANTEE. I WOULD ADD ALL OF THE ISSUERS HAD TO FILE A BUNCH OF AMENDMENTS TO THE ETF'S. THEY HAD TO SUBMIT NEW DOCUMENTATION TO THE SEC. THOSE CAME IN AROUND MARKET CLOSE. IT COULD TAKE TWO WEEKS AND THEN WE WILL KNOW FOR SURE WHEN IT WILL LAUNCH. ED: IF WE TRY AND MARRY THOSE
POINTS OF DISCUSSION TOGETHER, THE OUTFLOW DATA FROM BITCOIN AND THE LACK OF ACTIVITY IN GEARING UP FOR ETH ETF, IS IT A CASE OF IF I AM AN INVESTOR AND OPEN-MINDED TO PUTTING MONEY TO WORK IN DIFFERENT PLACES, I AM HOLDING OUT TO WAIT FOR ETH. IS THERE A CONNECTION BETWEEN FLOWS AND THE ANTICIPATION OF A NEW PRODUCT? >> A LOT OF PEOPLE I PUT MONEY TO WORK IN THE BITCOIN ETF'S. ARE PEOPLE GOING TO SAY I WOULD RATHER HAVE AN INDEX, DO I BELIEVE IN ETHEREUM MORE THAN BITCOIN OR BITCOIN MORE THAN ETHEREUM? WE WILL SEE WHAT THE FLOWS DO. WE HAD STRONG CONVICTIONS THE BITCOIN ETF'S WOULD BE SUCCESSFUL. STILL THE NUMBERS SINCE THEY LAUNCHED BLUE OUR EXPECTATIONS OUT OF THE WATER.
WE ARE ABOUT $15 BILLION. WE THOUGHT THAT WOULD BE THE FIRST YEAR OF FLOWS. IT LOOKS LIKE -- WE DO NOT KNOW WHAT WILL HAPPEN BUT IT WILL BE INTERESTING TO SEE WHAT PEOPLE DO WHEN THEY LAUNCH. WE VIEW THESE THINGS AS SATELLITE POSITIONS IN PORTFOLIOS. WE ASSUME PEOPLE ARE NOT PUTTING SIGNIFICANT CAPITAL TO WORK IN 50% OF THEIR PORTFOLIOS.
IF THEY ARE DOING 3% TO 5%, MAYBE THEY ADD A COUPLE OF PERCENTAGE POINTS ONTO ETHEREUM. WE WILL NOT KNOW UNTIL THESE LAUNCH. EVEN THEN, WE WILL NOT KNOW EXACTLY WHAT PEOPLE ARE DOING. WE CAN JUST GET AN INKLING OF WHAT IS GOING ON. ED: YOU ARE GOOD AT READING THE TEA
LEAVES. ON THE BEACH, WE WERE TALKING ABOUT INTEREST RATES, WHEREVER. WHEN I LOOK AT CRYPTO AS A MARKET BROADLY, IN THE PULLBACK OF RECENT WEEKS, THERE SEEMS TO BE CONCERNED ABOUT RATES AND THE SENSE THAT WE LOOK AT THE CRYPTO MARKET AS A REFLECTION OF RISK APPETITE. WHAT IS YOUR MATH ON THAT? >> THESE ASSETS, THERE IS A LOT OF UNDERLYING BELIEF PEOPLE HAVE IN THESE ASSETS. BUT ALSO, THEY ARE PURE MOMENTUM. THERE IS A LOT OF MOMENTUM AT PLAY BEHIND THIS. I WAS LOOKING AT SOME NUMBERS
FOR THE 2017 BULL MARKET FOR BITCOIN AND CRYPTO IN THE 2020 BULL MARKET. IT IS VERY COMMON TO SEE MANY PULLBACKS OF 10% OR MORE. IN BOTH CASES, WE SAW PULLBACKS OF 25% OR 30% BEFORE WE HIT THE ALL-TIME HIGHS. THIS IS A VOLATILE MARKET. THE ONE THING HITTING IS THE CRYPTO EXCHANGE THAT WENT BANKRUPT IN 2014, WE JUST GOT ANNOUNCEMENTS THEY WILL START RELEASING THOSE COINS. PEOPLE ARE WORRIED ABOUT THE POTENTIAL OF $9 BILLION OF BITCOIN HITTING THE MARKET AND GETTING SOLD.
THERE ARE A LOT OF CAVEATS ABOUT HOW MUCH MONEY IS GOING TO GET DUMPED ON THE MARKET. WE WERE ALREADY IN THIS SIDEWAYS TO DOWN TREND ON BITCOIN, AND NOW WE ARE GETTING THE NEWS OF THE RELEASE NEXT MONTH POTENTIALLY, AND THAT IS SPOOKING MARKETS. ED: GREAT TO HAVE YOU ON THE PROGRAM. WE APPRECIATE IT. COMING UP, WE WILL BE JOINED BY THE COFOUNDER AND CEO OF VOODOO TO DISCUSS THE ACQUISITION OF THE SOCIAL MEDIA PLATFORM. WE WILL TALK ABOUT IT. THIS IS "BLOOMBERG TECHNOLOGY." CAP OUR PODCAST -- CHECK OUT OUR PODCAST. THIS IS BLOOMBERG.
♪ ED: VOODOO RECENTLY ACQUIRED THE SOCIAL MEDIA PLATFORMS BEREAL IN A 500 MILLION EURO DEAL. IT HOPES TO FURTHER ITS DIVERSIFICATION INTO CONSUMER APPS, BUT IT ALSO OFFERS BEREAL A PLATFORM FOR GROWTH. DELIGHTED TO SAY CEO ALEXANDRE YAZDI JOINS ME TO DISCUSS. I AM FAMILIAR WITH SOME OF THE MOBILE GAMING SIDE OF VOODOO. I AM NOT A BEREAL USER. I KNOW MY PRODUCER WAS. WHAT WAS THE IMPETUS? WHAT MADE YOU WAKE UP AND THINK, THIS IS THE ONE FOR US? >> SURE. THANKS, ED. SORRY. BEREAL IS AMAZING.
IT IS THE MOST SUCCESSFUL SOCIAL APP CREATED IN THE LAST EIGHT YEARS. IT SHARES CONTENT WITH TRUE FRIENDS. EVERY SINGLE USER IS POSTING CONTENT AND NOT JUST A PASSIVE USER. UNLIKE OTHER SOCIAL NETWORKS, USERS SHARE THEIR REAL LIVES WITHOUT THE FEAR OF BEING JUDGED AND WITHOUT EFFORT TO CRAFT THE PERFECT FAÇADE. THEIR SUCCESS SHOWS USERS CRAVE THIS KIND OF CONTENT. THEY GREW TO 40 MILLION USERS. WHILE WE ACQUIRED BEREAL IS BECAUSE WE THINK WE CAN PUSH THEM TO CREATE AUTHENTIC CONNECTIONS TO MORE PEOPLE IN THE WORLD.
VOODOO'S MISSION AND WHY WE EXIST IS TO HELP PRODUCTS AND GREAT IDEAS TO HAVE THE BEST POSSIBLE LIFE AND SCALE BY LEVERAGING SYNERGIES OVER THE PAST 10 YEARS. FIRST, WITH GAMES AND THEN NON-GAMING APPS, SPECIFICALLY SOCIAL APPS IN THE LAST FOUR YEARS. ED: INTERESTING EXPANSION. HOW IS THE DEAL STRUCTURED? >> THE DEAL IS STRUCTURED IN CASH AND SHARES.
THERE IS A PORTION IN CASH AND A PORTION IN VOODOO SHARES. A PART OF THE 500 MILLION IS A NET FRONT CONSIDERATION. IT IS NOT LIKE THE FULL 500 MILLION IS A FULL 500 MILLION UP FRONT. ED:
I DO THE MATH ON VOODOO PLUS BEREAL. YOU HAVE 150 MILLION ACTIVE USERS MONTHLY ACROSS THE ENTIRE PORTFOLIO. YOU ARE INSTANTLY ADDING 40 MILLION MORE WITH BEREAL. IT IS AN INTERESTING USE OF CAPITAL. YOU HAVE BEEN TALKING ABOUT HOW YOU THINK YOU CAN HELP BEREAL SCALE AND FIND GROWTH. THEY ALSO HELP YOU FIND GROWTH QUICKLY AS WELL.
>> YES. WE DO NOT AIM AT USING BEREAL GAMES TO DO MASSIVE CROSS PROMOTION. WE LIKE TO HAVE OUR APPS STANDALONE. WE WILL LEVERAGE OUR TECHNOLOGY AND SKILLS TO GROWTH BEREAL TO WHAT IT SHOULD BE, AN ICONIC GLOBAL SOCIAL NETWORK, BECAUSE THE NEED IS GLOBAL TO SHARE CONTENT WITH FRIENDS.
WE TAKE THIS GEM AND INVEST OUR INFRASTRUCTURE TO GROW BEREAL. IT IS NOT LIKE USING GAMES TO TAKE USERS INTO BEREAL. ED: I THINK WE SHOULD TALK ABOUT THE SOCIAL MEDIA LANDSCAPE BEFORE YOU PREVIEW WILL BE AWARE OF WHAT IS HAPPENING WITH TIKTOK IN THE UNITED STATES PARTICULARLY WHEN IT COMES TO IMAGE OR VIDEO BASED CONTENT. IN EUROPE, SNAPCHAT STILL HAS A STRONG PRESENCE. MY QUESTION IS WHETHER YOU FEEL THERE IS A DEMAND FOR SOMETHING NEW AND THAT BEREAL IS REFLECTIVE OF THAT.
>> DEFINITELY. I THINK SOCIAL MEDIA IS GREAT AND THERE IS A LOT OF SOCIAL MEDIA THAT PROMOTES WHAT YOU WANT TO SHARE THAT IS CRAFTED, MODIFIED, IMPROVED. BUT AT THE SAME TIME, USERS ALSO NEED TO HAVE A SOCIAL NETWORK THAT MAKES THEM ABLE TO SHARE THEIR AUTHENTIC LIVES. IT IS TWO DIFFERENT PROPOSITIONS. BEREAL ALLOWS THEM TO SHARE THEIR AUTHENTIC LIFE. WITH A SMALL CIRCLE OF TRUE FRIENDS.
UNTIL NOW, NO SOCIAL MEDIA HAD THAT. BEREAL GREW WITHOUT REAL MARKETING STRATEGIES BECAUSE THERE IS A HOLE IN THIS SPECIFIC NEED. ED: IT IS USER BASED ENGAGEMENT. WHERE DOES THIS COME FROM? DO YOU SAY THIS IS AN ALLERGIST TO SNAPCHAT OR WE THINK IT IS ANALOGOUS WITH CURRENT FACEBOOK USERS? WHAT ARE YOUR TARGET AUDIENCES? >> OUR TARGET AUDIENCE IS EVERYONE HAVING A SMART PHONE. AS I SAID BEFORE, EVERYONE ON THE PLANET NEEDS TO HAVE AUTHENTIC CONNECTION WITH FRIENDS. THAT IS OUR TARGET AUDIENCE. TODAY, IT IS MORE FOR
GENERATION ZED USING THE PRODUCT. THAT IS GREAT BECAUSE SOCIAL NETWORKS CAN GROWTH WITH THIS GENERATION. I THINK WE CAN DO A GOOD JOB WITH THEM. WE THINK ADDING RIGHT FEATURES CAN BRING IN NEW USERS AND WE CAN GROW TO MORE USERS IN MORE COUNTRIES WITH MORE TARGETING AT LATER AGES LIKE 40-PLUS. BEREAL DID NOT MOVE THAT FAST
ADDING NEW FEATURES TO CREATE NEWNESS AND LIFE AND PRODUCTS. WE WANT TO GROW BEREAL BY GIVING USERS MORE OPPORTUNITIES TO SHARE AUTHENTIC CONTENT. WE THINK THEN PEOPLE WILL COME BACK AND WE WILL GET MORE USERS. ED: VOODOO'S ALEXANDRE YAZDI, IT IS GREAT TO HAVE YOU ON THE PROGRAM. IF YOU ARE A BEREAL USER AND HAVE A THOUGHT ON VOODOO BUYING THE PLATFORM, REACH OUT. BUZZFEED IS LOOKING TO SELL "FIRST WE FEAST," THE MEDIA COMPANY BEST KNOWN FOR ITS YOUTUBE SHOW "HOT ONCE" WHICH INVITES CELEBRITIES TO EAT HOT WINGS WITH THE HOST.
SEVERAL HAVE SHOWN INTEREST BUT ARE UNWILLING TO MEET THE ASKING PRICE OF OVER $70 MILLION. IT COULD NET BUZZFEED MONEY TO HELP PAY OFF ITS DEBT. LET'S STICK WITH THE WORLD OF VIDEO GAMES. COMING UP, THE CYBERATTACK CRIPPLING THE AUTO INDUSTRY IS CONTINUING. WE WILL TALK ABOUT THAT WITH
OUR EDITOR. SORRY, I GOT SO EXCITED. THERE WAS SOMETHING THAT CAUGHT MY EYE THIS MORNING IN THE WORLD OF VIDEO GAMES. THIS IS BIG. LOOK AT THE SHARES OF THE POLISH VIDEOGAME MAKER. IT IS UP MORE THAN 5%. THERE IS A NOTE OUT FROM HSBC WHICH HAS CHANGED IS CALL TO HOLD. THE HEADLINE IS AROUND THE POLARIS PROJECT, THE NEXGEN WHIITCHER GAME.
THEY THINK THE NEW TITLE WILL COME OUT 2027, SO 14 MILLION UNITS. I HAVE SEEN A LOT OF EXCITEMENT. IN THE SHORT-TERM, IT WAS A REAL BOOST TO THOSE STOCKS. STAY WITH US. WE WILL BE RIGHT BACK.
ED: HACKING GROUP CALLED BLACKSUIT IS BELIEVED TO BE BEHIND THE CYBERATTACK ON CDK GLOBAL THAT HAS PARALYZED CAR SALES ACROSS THE U.S., ACCORDING TO A THREAT ANALYST AT THE SECURITY FIRM. LET'S BRING IN OUR TECHNOLOGY EDITOR DANA WOLLMAN. TELL ME ABOUT BLACKSUIT AND WHAT WE KNOW.
>> IT IS A KNOWN GROUP OF HACKERS IN RUSSIA AND OTHER PARTS OF EASTERN EUROPE. THEY HAVE NOT NAMED CDK AS A VICTIM ON THEIR WEBSITE. THAT COULD MEAN A COUPLE OF THINGS. IT COULD MEAN CDK PAID A RANSOM. WE DO NOT KNOW IF THEY DID OR NOT. OR IT COULD MEAN THEY ARE STILL IN ACTIVE NEGOTIATIONS WITH CDK.
YOU SENT THE SOURCE WAS NOT BLACKSUIT BUT A SECURITY RESEARCHER. ED: THINK BLOOMBERG REPORTED ON FRIDAY IN TERMS OF THE EXTORTION FEE CDK WAS PLANNING TO MAKE A PAYMENT. THAT IS KIND OF THE TECH SIDE OF IT. IT WAS CDK'S PLATFORM COMPROMISED. ONE OF THE THINGS YOU HAVE BEEN WRITING ABOUT, IT HAS BEEN FIVE DAYS OR SO NOW. THIS IS MATERIALLY IMPACTING SOME OF THE AUTO AND CAR RETAILERS. WHAT HAVE YOU LEARNED? >> AT LEAST FIVE PUBLICLY TRADED AUTO DEALERSHIPS HAVE FILED WITH THE SEC MORNING INVESTORS OF A POSSIBLE FINANCIAL IMPACT. THE WORDING HAS VARIED FROM ONE
COMPANY TO ANOTHER. SOME HAVE SAID IT IS TOO EARLY TO GAUGE THE EXACT IMPACT. ONE OF THEM SAID IT IS REASONABLY LIKELY THE IMPACT IS MATERIAL.
THE COMPANY THAT SO FAR SEEMS THE LEAST AFFECTED OF THE ONES THAT POSTED FILINGS WAS PENSKE, ONLY BECAUSE IT'S AUTO DEALERSHIP VISION DOES NOT USE CDK SOFTWARE. IT DOES USE CDK BUT IN A MORE SPECIALIZED DIVISION. OF THOSE COMPANIES, PENSKE IS THE ONLY ONE WHOSE STOCK IS UP SINCE THE HACK BROKE WEDNESDAY. ED: NEVER BEFORE HAVE MANY OF OUR AUDIENCE STOPPED TO THINK ABOUT THE SOFTWARE MANAGEMENT PLATFORM ANY GIVEN CAR RETAILER USES, BUT WE HAVE LEARNED QUITE A LOT ABOUT CDK. EXPLAIN ITS PLACE IN THE INDUSTRY. IF YOU WANT TO TRY TO BUY A CAR THIS PAST WEEKEND, THE END OF THE QUARTER, YOU MIGHT HAVE STRUGGLED.
>> YOU AND ME BOTH. I HAD NOT HEARD OF CDK BEFORE THIS STORY BROKE. I DID NOT KNOW ONE COMPANY HAD A STRONG GRIP ON THE ENTIRE MARKET FOR DEALERSHIP SOFTWARE. I DON'T THINK ANYONE HAS THOUGHT MUCH ABOUT THE TYPE OF SOFTWARE DEALERSHIP SHE IS -- DEALERSHIPS USE. AROUND 15,000 DEALERSHIPS IN THE U.S. AND CANADA USE CDK SOFTWARE. THEY USE IT FOR ALMOST
EVERYTHING THEY DO. THAT INCLUDES SCHEDULING APPOINTMENTS, TRACKING REPAIRS, AND CLOSING TRANSACTIONS. WITH THE SOFTWARE DOWN, AS IT HAS BEEN SINCE THE SERIES OF ATTACKS, DEALERSHIPS EITHER ARE NOT SERVING CUSTOMERS OR THEY ARE RESORTING TO OLD-FASHIONED PEN AND PAPER WHEN POSSIBLE. IT IS NOT ALWAYS POSSIBLE TO DO THINGS USING PEN AND PAPER. ED: WHAT IS THE NEXT THING THEY ARE WATCHING FOR IN THE STORY? >> ASIDE FROM LOOKING TO SEE IF BLACKSUIT TAKES RESPONSIBILITY, WE ARE LOOKING FOR A COUPLE OF THINGS. WE WOULD LOVE TO KNOW THE EXACT AMOUNT OF THE RANSOM.
WE HAVE REPORTED IT IS IN THE TENS OF MILLIONS. WE ARE LOOKING FOR A MORE SPECIFIC NUMBER. WE ARE WAITING FOR CDK SOFTWARE TO GO BACK ONLINE. THE 15,000 DEALERS ARE AS WELL. EVERY DAY THE SOFTWARE IS DOWN, THESE COMPANIES ARE LOSING MONEY. ED: BLOOMBERG'S DANA WOLLMAN, IT HAS BEEN SO BUSY FOR YOU AND THE AUTOS TEAM. THAT DOES IT FOR THIS EDITION
OF "BLOOMBERG TECHNOLOGY." A FAST START TO THE WEEK. THERE'S A LOT TO RECAP ON THE PODCAST. YOU KNOW WHERE TO FIND THE POD. IT IS ON ALL OF THE BLOOMBERG
2024-06-25 16:46
