Transcripts For CNBC Fast Money 20171101

These Earnings Calls Julia Boorstin is in l. A. On the facebook call, phil lebeau is getting ready to jump on the facebook call. Were tag teaming both of those Conference Calls on the red phone. Tesla turned to a bear market after hours. Lets get to phil lebeau for all the details. Phil, the details are in that shareholder letter, there are a lot of details when it comes to the model 3 reporter a lot of details about the model 3, well talk about that in a little bit the Free Cash Flow for the quarter, melissa, listen to this, negative 1. 4 billion for tesla. They ended the quarter with 3 35 billion cash on hand as you mentioned, when it comes to model 3, the company has issued new guidance in terms of its production schedule. It says it expects to build 5,000 model 3s per week by the end of the First Quarter bottlenecks had to do with the battery modules being built, they could not get those into production as quickly as they would have liked what we know is that 5,000 per week by the end of the First Quarter, with an update on full year production coming in january when they release their full year delivery numbers as you take a look at shares of tesla, this Conference Call at 5 30 will be chockfull of questions from elon musk, mostly about the model 3. The companys cash position will also get a lot of questions, melissa. We knew how many model 3s were produced in the quarter because of the timing of the delivery numbers i guess the question is how many were produced to this date will we see how the progression toward that ramp is . Reporter no. I would be surprised because theyll say, look, its very lumpy, you might have a little bit of a surge over a couple of days and then some downtime thats just my conjecture at this point i dont think theyll give us that kind of detail. Certainly the questions will be, where are you right now, where do you expect to be by the end of the year. Theyre also talking in the outlook section of that letter, phil, they plan to produce 10 fewer ss and xs for the Fourth Quarter, shifting that production to the model 3, which will bring down Gross Margins by four Percentage Points versus the third quarter. Was that expected, or is that a bigger shift than expected reporter im not sure anybody had it modelled in for that much of a shift, with that much specificity people did expect some of that shift. Im not sure people were expecting that much, melissa phil, well check with you later on phil lebeau in chicago for us. 15 in the Fourth Quarter is what they see for gross margin thats almost a 4 percentage point drop what do you make of the drop in the stock . Kudos to bk, number one, because over september or so he started talking about the potential for a double top we had talked about that for a long time, the need for tesla to get through that sort of 390 level, which it failed at. Now here we are, this is a replication we saw back in june. Stock went from 385 basically down to 310 and bounced. We talked about this a week or so, steve and i were sitting together, tim was over there theres a good chance this shut back down to 280 for two years, in 2014 and 2015, becomes support. Theres enough in this quarter to push it to the downside if you parse through this thing, its a mix now theyre going from one, theyre going from the s to the x. I think theres some slippage involved in terms of margins, margins will reaccelerate. I think early next year. So you do think theres enough for everybody. The big concern is going to be this cash burn is significant. What do they need to do . Guy was on point. Tim was negative, bk was negative, guy was talking about a 280 level in the charts. I didnt think we would break the 200 day, which was 318 this is extremely bearish to me. Youre long im not long. These are may levels i think you could see some support ahead of guys levels. You do think that every time you look at it as a car company, you get disappointed and the bulls come out and say its not just a car company. So i think you have the potential here to balance the stock around these levels where we are right now karen, what did you make about what they said its kind of a Hope Company Hope hasnt been doing so well to me, the idea that production, okay, they have the reasons why it was slower this quarter but weve heard this production story. More than a couple of times. The idea that by the end of january, theyll really have it figured out and be able to give the full year production guidance, thats sort of a stretch to me. So i dont know if you know, i think when you have a multiple like this, and hope starts to crack, i mean, whats the right multiple i dont know timmys been bearish on this for a long time. I just found it too expensive, wouldnt short it, wouldnt be long it. I dont get it being short it has been a danger and you say painful thing. The guys who are short the stock, im not sure theyre able to hold at these levels. Hope stock to me is an understatement if you think about the builtin multiple from autonomous, from automation, from the gig factory, from the grid, all these things are from part of why tesla are not an auto company, fine. But you cant refute the fact that theres a growing chasm between their deliveries and their cash burn or what theyre supposed to deliver, forget the cash for a second. Were going sideways in terms of deliveries you concede, though, at least, when it comes to ramping up production of a brandnew vehicle, that up front is going to be the majority of the cash burn and there could actually be it could be step function in terms of once they get those bottlenecks nailed down. I say that i think part of the problem for tesla is theyre trying to launch five new things at once. I think this company is way too distracted in terms of their focus. Its helped them raise capital right im trying to not to so you people a jerk when i say this. All the reasons you just stated on the bear side could have been said a year ago and this stock has ramped up to a high of 386, basically, just a few months ago. Who cares its at 307 right now. No, but when you say that, though, guys that were short, you started off 100 correct, being short this name is a painful process. Theres a 20 shortage, and thats why the stock can still rally. Okay. I mean, again, i dont care that the stock got to yesterday that was yesterday, man. But there were people that were short, there were people that were negative, there were people that were negative at 200 in the stock you should care. Im not saying you should wear it im not wearing it at all the same points could have been made a year ago but at every point, the story breaks people didnt want to believe that the story got broken and they stock with them what if this is the beginning of the break . I dont think its the beginning of the break i think you can make a very compelling argument that it is i dont think it is. Ill tell you whats going to be fascinating for me is to see what analysts come out, what does adam jonas say tomorrow about tesla, some of the analysts weve had on the show for a while, what do they say about this name . Theres enough for the bulls to hold on to some hope theres more for the bears to push i think youre going to see price targets get racheted down. You do think theres a very real chance that over the next couple of days we get 280 if youre looking for an entry in tesla, do you go in now . In a few weeks there will be a semi truck unveiled. I cant imagine there wont be a lot of analysts who rethink their numbers. Analysts are always late on this theyre always reactive, not proactive. This is the moment where you either decide do i want to step in and buy a quarter position, do i want to add to my long . You have to decide now thats fair youve been in and out so, in i dont know. When you stick me with a would i, how long were you short the name when it went up 200 . Why are you talking about yesterday . I would rather talk about the fact that people talked about tesla for the last two years as if there were no composition in the ev auto space. The fact is, gm is rerated, ford is rerated, the german autos have gone through the roof this is not tesla whats exclusive domain thats part of the reason why the stock you dont want to answer in or out tesla ill ask you this question would you rather right now gm or tesla . Hmm tick, tick, tick. This is a tv show with limited time tesla tv is very bullish. Tesla. Stock is in bear market territory. The Conference Call is under way. Meantime, coming up here, facebook is hitting an alltime high after hours, although giving back some of those gains. The Conference Call is under way as we speak. Well hear from Ceo Mark Zuckerberg on the quarter, on russia, on everything, basically, and get instant reaction from gene munster papa johns blaming the nfl for a football problem you will not believe what he had to say about commissioner roger goodell. And the moment wall street has been waiting for, the most important decision President Trump will make to date. Who will be the chair of the Federal Reserve . Reports are flying it could be evlime powell. Ste esman is working his sources. Well get you the latest after this stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. This s electricity. This is a power plant. This is tim barckholtz. Thats me this is something he is researching at exxonmobil using fuel cells to capture Carbon Emissions at power plants. This is the potential. Reducing co2 emissions by up to 90 . While also producing more power. This could be big. Energy lives here. Shake shack surging briefly, touching a 52week high in the after hours session. Kate rogers has more reporter hi, melissa shake shacks sales declined less than expected during this quarter. The Company Opened nine new locations in the quarter, also increased their guidance for the year, saying theyre going to open between 24 and 26 new domestic companyowned shacks in 2017 18 new licensed shacks next year will be its biggest yet, the company increased its guidance from 32 to 35 domestic owned locations for the year, 16 to 18 licensed locations during that time period on the Conference Call they said theyre actively testing cashless kiosks and increasing personalization of the menu which consumers really like. Despite being pleased with the quarter, they were of course impacted by weather, add that go hurricanes led to nine shacks closing temporarily with a sale Loss Estimated at 300,000 the stock reacted nicely, up more than 4 in the after hours trade, also up around 4 year to date kate, thanks, kate rogers in the newsroom Short Interest on the stock is pretty high, 44 of shares outstanding short. Moving towards 50 , huge valuation in the stock we talked about 40, its been a level that its been unable to get through now for the last couple of years. You have to ask is this quarter good enough to get the shorts to cover. I think its good. I dont think its good enough margins are hanging in there, a good sign. When you talk about a company with a valuation like that, you need growth to accelerate a lot faster than it currently is. I dont think it breaks to 40 on the upside i think whats tough for investors right now is the best thing for this company and this is a theme, is to invest in their future in the short run thats very ditch at a valuation thats very expensive, with comps that are based upon at least right now what we think are the best locations they could possibly comp off of. I think thats the issue i will say this, the chart has spent a year basing, and if you look at charts and the price action, this is constructive we should note shake shacks ceo will join us monday for his first post earnings interview. He and guy will have a special surprise for the traders we hope its shake shacks. What would it be, tim its going to be a surprise were not going to brings you something from whats that place you used to work at . Quick snacks in the garr gala mall if it its still in business. Pointing fingers at the in them for slipping sales on a Conference Call this morning the nfl, by not resolving the current debacle to players and owners satisfaction, this should have been nipped in the bud a year ago were optimistic that the nfl is ahead good or bad leadership starts at the top and this is an example of poor leadership papa johns is a sponsor of the league is the nfl to blame or does papa johns have a real pizza problem, steve theyre down 27 year to date and if you look at dominos pizza, theyre up 11 year to date theres definitely a problem with pizza for the last month versus burgers you could see shake shack versus mcdonalds, i dont know if its a nfl problem or not i would say that if theyre blaming it on the nfl and it gets better, then you could buy these stocks because that support. But i would wait a little bit before we decide this is the time to rush in on pizza i would think they have excellent data as to whether this correlates with the nfl they have data, what time every order came in, right you buy it, you believe them. Absolutely, i believe them. It might not be all of it, maybe its ceding some share to dominos. I believe it that was pretty striking, that very clear shoutout to roger goodell. Thats interesting and so are they that reliant on the nfl how good does that make you feel i dont think they are, just to be clear, the pizza industry in this country, guy probably owned a pizza place at one point theres a lot of room for the big boys including dominos to consolidate, theres a lot of that to go international, a third of their sales, they have a heavy runway there. If youre looking for growth in this company that trades roughly 19 times forward, its not terribly expensive especially when you look at the others in this space the multiples in the entire fast food space will go higher. I would be careful i know that you may be biased because of your time at dominos my heritage, i thought i was going to hear the word heritage. No, why i even youre an american. You spent time working at dominos, see, look. No, thats you at shake shack. Hey, the surprise is being blown. I havent even thats a tease. We wouldnt have done that. I spent time at dominos. First of all, i dont like the fact that he, theceo, went so hard after the nfl dont bite the hand that and allegedly feeds you, no pun intended when things were great, i didnt hear him trumpeting how great the nfl was, now hes taking the other side not a fan. At 19 times forward earnings, i dont think its crazy expensive. The Short Interest is such, maybe people start to get squeezed bite not the hand that feeds the nfl. Circular hands. Still ahead, check out shares of facebook and tesla, facebook giving up after hours gains while tesla is changing. Were following those Conference Calls, teslas will begin shortly. Well bring you the latest details, next. Im melissa lee, youre watching fast money on cnbc, first in business worldwide i mean time here is whats coming up on fast. Our Long National nightmare is over. Thats what some investors are saying about rebounding Energy Stocks. But theres one stock that traders say you can still buy. Plus the future of the fed begins tomorrow. When President Trump picks one of these people to lead the Federal Reserve. And a top blackrock strategist tells us which would be best for stocks we have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Tomorrow President Trump is expected to announce the next Federal Reserve chair. Reports are flying that the president is leaning towards powell Steve Liesman has more reporter all the kings horses and all the kings men saying President Donald Trump will choose powell as the next fed chief. Why powell the 64yearold native of washington, d. C. Is a republican, appointed to the fed by president obama hes seen as a compromise candidate, continuing the policies of chair janet yellen that said, he has backed most of those reforms, certainly more than the president has powell a former partner at Carlyle Group where he amassed a fortune, were told. Here is what he said months ago about the Global Economy and the outlook for u. S. Rates youve got for the first time in quite a while synchronized growth around the world. Youve got a dollar that is flat to down. Youve got Commodity Prices up and you have really significant reduction in downward pressure on the chinese currency. All of this is taking place against a backdrop where as long as this backdrop sustains, its likely that the process of normalization will proceed without significant disruptions. Reporter worth pointing out that powell stands opposed by some republican fed critics. Hes called the easy Monetary Policy a success that sets up for some fisticuffs or whatever you want to call it at the hearings, not a lot, maybe. Hes also said he doesnt think the fed ought to do a lot of tinkering with the economy steve, thank you, Steve Liesman in washington, d. C. , what does this mean for the markets . This is the consensus view in terms of fed picks steve is very plugged in, great to get that insight. You said it on the leadin to the lasting block, this is the most important decision that donald trump has made yet. If thats the case, there should be some fear no matter what, changing continuity at the fed is something that the market should not be blase about i agree, this gentleman has proven to be as dovish as the status quo, thats ultimately good i want the fed to be independent, not a puppet of donald trump people are too complacent on the impact of the fed. A number this morning showed there is an enormous amount of pressure in terms of labor the job market is something theyve missed pce is not a good gauge of inflation. Im always surprised how complacent everybody is on the fed, considering that theyre embarking on getting off the easy money path, what would go wrong, right a lot could go wrong inflation could go wrong. Especially if we have tax in the mix. Right i guess we could have infrastructure somewhere in there too, i think thats way down the road, if at all i dont know, i think inflation is really the most important thing here, more important than the fed chair, more important than i mean, i think the policy will probably be similar. Theyve done a great job of laying out what theyre doing, why theyre doing it, and when but if inflation starts to tick up, which i think will happen, thats the risk. For more on which candidate will be best for the market, terry, good to see you good to see you guys again. Tomorrow jay powell is announced, what do we do i think the markets will actually like that so powell basically represents continuity from the current board of governors if we were to get a john taylor nomination, that would surprise the markets and that would be a worry for the market john taylor is not going to run market policyoff his famous rule, but if you look at his rule, right now its indicating, depending on what variables you put into the formula, 150 to 200 basis points higher than what the fed rate is. The markets will take powell because thats the gradual, predictable manner lets say he chooses powell, lets say we have some sort of tax cuts, not even putting infrastructure in the mix. Is the risk to the markets to the downside or the upside the risk to the markets is the upside if we get tax cuts. The fed, as karen said, is independent. If were an overheated economy, were growing about 2, 2. 1 . Long term gdp is 1 3 4 were probably going to get the inflationary dynamics, the fed raises Interest Rates quicker. We should see a knock on equity markets, that would be the challenge there. This flattening yield curve which quietly or not so quietly is atlevels we havent seen in a decade, when does that matter, if at all . Its interesting, if you look at Interest Rates right now, both two and ten years have been shifting up in the last month or so the fundamental story is that markets are accepting that when you look at the curve, we think well have a steeper yield curve. To have the back end move up, you have to have inflation one of the elements for Interest Rates is having a premium for inflation risk if you dont have inflation out there, bond investors, im a bond investor, say we dont need that premium so we can bid down the price. Where do you want to be right now, the markets right now, in your outlook obviously multiasset. My team works on multiasset strategies we still want to be invested in equities relative to bonds we like equities, we like being exposed to cyclically oriented sectors. We like technology, given its strong run thats where we want to stay invested equities relative to bonds in terms of worldwide asset location, where do you put the rest of the world versus the u. S. The big worry for emerging markets, tim talks about this as well, if the fed goes a little more, the dollar moves higher. Weve seen a mini correction right now in the u. S. Dollar were going to write about the dollar this week in our commentary, thats a spoiler we still think the dollar is going to move relatively muted so emerging markets would stay on this move mere. Terry, thanks, good to see you. The market hasnt really digested rates moving up in december everyone thinks theyre going to move up in december. I wonder what it does to the marketplace if we dont see rates move higher in december. Everyone has factored in this trade, so much so that there is the there is a case to be made that they could sit on their hands. What would that case be you talk about inflation, i get it, theres inflation, if you know where to look theres inflation. But i dont think theres an overwhelming amount of inflation that it would leave the fed susceptible to just skip out on one this one sort of everyone knows its going to happen the markets have digested it, why not go ahead and do it and be able to have something later if things turn around. Weve seen the implied implication that rates will go higher, weve seen it go up to 85 , dive down to 70 . I dont think thats an indicator of inflation no. Thats what youre saying, thats consistent. I think right now, i dont think i think they have the ability to sit on their hands one more cycle through and i think that would but theyre trying to normalize, theyre not trying to be in a rate hike cycle. Theyre but normalize. Youre not in a position to say, hey, its okay now they have to move. I think the great thing weve all said here, this fed has been as transparent as they can possibly be. At one point we thought this was blasphemous from the fed the first two or three years from bernanke, thats why weve had this volatility, theyll do what they say. I think the Global Economy benefits from this i think if they did nothing in december, that could be a selloff a selloff for the market. I would say what do they know that i dont know and what do they see that were not seeing i do think they move, know coming up, facebook giving up all its after hours gains, now down around 1 well tell you what was just said on the Conference Call that has investors hitting the sell button check out Energy Stocks, surging in the last week our traders say theres one name you can still buy. Much more fast money right after this Energy Stocks on fire as oil nears its highest level since july 2015. Lets get to bob pisani at the New York Stock Exchange. Reporter hi, melissa opec has stuck to its production cuts for the most part and is now talking about extending them second, this is important, the demand growth has been pretty decent so earnings have been coming in for many of these Exploration Production companies and oil service companies. Cabot, devon, all have traded up since their earnings report. Big oil names like exxon, especially bp earlier this week, theyre also trading up in the days since their earnings release. So Oil Companies are benefiting from two trends. First, obviously, higher Commodity Prices thats the big story but second, more discipline on Capital Spending thats an important part of this as a result, the Trading Volume in the energy etfs, like the exploration and production etf, the oil services etf, theyve been much higher volumes in the last week or so. But this oil rally hasnt really translated into an oil stock rally, at least not yet. Many tried to buy into the oil rally earlier this year. But when oil fell apart in the middle of the year, and it fell apart twice, investors just gave up and the big oil etfs fell apart and they never really recovered. One exception is the refiners, up over 36 this year, far outperforming the e p and the oil service names. Refiners have notably outperformed, partially because gasoline prices started rising in the middle of the year against oil and rose knonotably after the hurricanes phillips 66 was up more than 10 in september theres talk we could be staying in the mid50s, maybe even move towards the obvio60s, that woule the saudis happy would the u. S. Fracking industry ramp up production or show some discipline we should have these problems, melissa, thank you bob pisani at the New York Stock Exchange thats the cycle they always go in the last part is critical do we see a lot more supply and the whole thing just unravels. Except for the fact that rate counts have been down since july if you think about it, what he talked about is ultimately a case where capex has been totally cut over the last three years. If i had checked the health of all the people who said not in my lifetime, we should be running around looking for a lot of dead bodies people dont understand that opec has got solidarity. The fog has been lifted going into the vienna meeting on november 30. If you look at the drillers, Diamond Offshore is up 70 in the last whatever. I think the best place to play is oil services, these guys it actually starting to see some capex. And some support from thear anco ipo thats the ramp, thats the tailwind but these are huge levels in wti and in brent that we havent seen in quite some time. So we have to get over those on a technical basis. But i do think its too attempting for opec to cheat, brent at 60, forget aboutit, ussr supply comes on you look at valero, a tenyear high or something in valero the last time we traded this was 06 or so. These levels, very important we hold these levels in vlo we have been consistent in exxonmobil since august. Karen and i were talking about this last night. 76 held, bounce, bounce, bounce here we are at 84. Exxon is at a significant down trend. Weve said theres a good chance it remains in that down trend. Thats where i think thats going. Ahead, facebook and tesla, facebook giving all after hours gains while tesla flirts with bear market territory. The Conference Calls are under way. Well hear from Mark Zuckerberg and elon musk in a few minutes much morft moye asne on this very busy night straight ahead i mean, think of all the things that think these days. Thinking planes. Thinking cars. Thinking phones. Businesses are thinking. Factories are thinking. Distribution plants are thinking. Plant plants are thinking. Even your toaster is thinking. Honey, clive owens in our kitchen. Im leaving. Oh never mind, hes leaving. Theres so much thinking. Even this thing is thinking. Is this thing thinking . This thing is thinking businesses are up to their necks in knowledge. Let me illustrate that for you. Scratch that, terrible idea. But what if a business could turn all that thinking. Thinking. Thinking. Endless thinking. Into doing . To make better decisions. Make a difference. Make the future. Make all this make sense. Not tomorrow. Not next week while you think about it a little more. But right now. This moment. This second. Is there a company that can help you do all that . I can think of one. [vo] progress is an unstoppable force. The season of audi sales event is here. Audi will cover your first months lease payment on select models during the season of audi sales event. Welcome back to fast money. Facebook giving up all its after hours gains. Julia boorstin is listening in on the call, shell tell us what zuckerberg had to say. Julia . Reporter melissa, Mark Zuckerberg jumped straight into the growing controversy over russianpurchased ads on facebook take a listen to what he said. Ive expressed how upset i am that the russians tried to use our tools to sow mistrust. What they did is wrong and we are not going to stand for it. Reporter zuckerberg saying the company is going to prioritize protecting its communities over profits to that end the cfo says 2018 will be a significant investment year, guide that go next years total expenses will grow 45 to 60 . That acceleration in expenses is thanks to sizable security investments in people and technology the company is also investing in video contend and making long Term Investments in Artificial Intelligence zuckerberg stressing the importance of making the investment in security in particular i am dead serious about this. And the reason im talking about this on our Earnings Call is that i directed our team to invest so much in security on top of the other investments were making that it will significantly impact our profitability going forward. Reporter zuckerberg as well as ceo Sheryl Sandberg stressing their focus on the community of users, stressing that phrase throughout sandberg says theyve reached 6 million advertisers on facebook. Julia, thats an increase in 18, 45 to 60 on top of a year that saw an increase in 40 to 45 year on year reporter yes its interesting, if you look at the operating expenses for this past quarter, they came in a hair lighter than expectations but theres been a lot of talk on facebook how theyre going to continue to invest in dry growth now their operating expenses are projected to grow significantly more than what the Company Previously said. Some of that is about the content investment theyre making, which by the way i want to note that zuckerberg stresses is not supposed to be about passive content but the kind of content will talk about, he noted that people tend to talk about sports video, hinting they might make some video investments there. But its really about this investment in security people and technology, theyre going to prevent this kind of situation from happening again is it your understanding that the spending will also include, when it comes to protecting our community, include tools, people, to protect political ads or to make sure that theyre from the proper sources or disclose where theyre from . Reporter its going to be about transparency and also about sort of oversight. This is going to be about everything, both political ads and issue ads. Issue ads are often the harder ones to monitor. But this is going to be about people and the algorithms, both the humans that you need to hire and the technology to help them as well. Julia, thanks Julia Boorstin who was on the Conference Call. Gene munster, fast money friend, hes been on the conference wall on that red phone. Gene, we were joking in the green room before the show started, facebook puts up good numbers, theyll get on Conference Call and talk about spending next year and the stock will go down thats what happened whats your interpretation of what theyre saying and what theyre outlining for 18 now . Like you said, its kind of their textbook i want to put context around why this is a little bit different if you take the low end of their expense guidance, they said, as you just had mentioned, 45 to 60 expense growth, that would imply 4 billion in incremental investment basically the street was looking for close to 20 billion for next year. So 20 to 24 billion 4 billion, this is a huge number that theyre going to be spending on. Now, not all of that, as you were just talking about, its not going to be around privacy and transparency and kind of mitigating some of this divisiveness some of it will be around content. Still, just outrageous amounts of money that theyre spending you can tell this whole issue has really got under the skin of Mark Zuckerberg, and hes going to do anything he can to stop it so i want to put some context, it is different. That explains the pullback in the stock but ultimately this is a good thing for the plat for me gene, its karen. Let me ask you something even with expenses going up, you can cure a lot of margin problems with big revenue in a company like this. Whats your take on not just this quarter but looking forward for revenue from them . Reporter this is the part that i kind of roll my eyes at their cfo talked about that expense spending but also said to expect Revenue Growth to decelerate in the quarters to come now, thats almost a cut and paste from his prepared remarks every quarter. And so they say that every quarter, and the Revenue Growth continues to be strong and importantly, theyve got some big pools that they can monetize which theyre not monetizing now, most notably messenger and whatsapp and instagram is probably halfway through. I think that Revenue Growth for this story is going to remain a bright spot for the next couple of years but the expense side is going to be a little bit of a jab to earnings for the next few quarters all right, gene, thanks for your analysis. Well see you a little bit later on for your take on tesla. Meantime, lets trade facebook here on the desk, shares are down more than 1 . Gene mentioned messenger they did say messenger would be sort of a medium term monetization these are sort of layers of monetization levers down the road and theyre going to be huge levers down the road gene, i dont think gene danced around anything, i sort of wont dance around this. A lot of what facebook said they had to say in terms of security spending they have to say theyll ramp it up well see if they actually do. I think the quarter was outstanding. Operating margins were close to 50 . The street was at 44 . But i understand why the stock is selling off i mean, when they say that 2018 is going to be a significant spend year, that scarce people i totally agree, this sounded like a capitol hill testimony versus an Earnings Call. The stock is up 58 year to date i think you have to be in this name regardless of what hes saying, hes saying it to placate whatever voices are butting up against his or trying to push the latest Headline News on top of him. He has to do this. But i think ultimately facebook is still a buy yeah, i mean, look, 29 times next year doesnt make the stock expensive for the growth youre getting. The ad Revenue Growth is unbelievable, even if it scales down in the third and feathourt quarters as gene said, they do it all the time he was expecting this even before he knew it had to be said i dont think the stock is reacting in a big way, normally it would have reacted a lot more this was a gigantic quarter, i agree with everything youre saying, they have to say this. They have to increase the spend, i believe that the only problem with this quarter is that it came out a week after alphabet and last weeks so it rallied in front of it and now here it is so it was about standing quarter. Im hanging on carrying his losses down 80 right now. Tesla dipping to bear after hours territory. Well hear ceo elon musk getting a little bit feisty. Well bring you those comments plus one trader who more than tripled his money in alibaba this week says the stock has more room to run hell tell us how high much more fast money after this zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Shares of ecommerce giant alibaba are up this year lets get to mike khouw in austin with more hi, mike reporter hi there. I traded over 300 today. Traded at over double its average. One of the notable trades we saw was a buyer of the november 200 calls bought 4,000 of those then sold 4,000 each of the 15 calls in the 20s basically this is somebody who is betting this stock is going to make a move about 15 to the upside within the next two weeks thanks for that, mike, mike khouw in austin. Check out options action, friday 5 30 p. M. Eastern time. Grasso the stock is up 112 year to date im still long it. This is a stock thats beaten on revenue for the last two years theyre making a heavy push in cloud and Artificial Intelligence theyre investing. Its still at a great multiple the average price target on the street is 210 im still long it. I think the path of least resistance is still higher up next, tesla sinking after hours. The Conference Call under way. Elon musk getting a little heated well bring you the comments after the break. I think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to fast money. Tesla dipping into bear market territory in after hours phil lebeau in chicago has been on the Conference Call reporter melissa, lets get right to elon musks comments regarding model 3 production here he is talking about the production issues and his optimism that at least they know what the problems are and can solve them the vast majority are doing incredibly well. There are some problem areas after i give this overview, ill do a deep dive into the biggest problem area reporter and that biggest problem area, the production of the battery modules. They are now pushing out model 3 production to 5,000 per week by the end of q1. Theyll give us an update on whether they hit 10,000 per week by the end of 2018, at the beginning of next year thats when they will give us an update with regard to that pushing out production to the end of q1, here is musk talking about, eh, in the grand scheme of things, he doesnt think its that big of a deal. I mean, i think in the grand scheme of things, its a relatively small shift the model 3 is a tenyear program. And so were talking about a few months out of a tenyear program, in the grand scheme of thin things, is immaterial. Reporter were going to hop back on the call, melissa. You mentioned hes getting fairly heated. He went after journalists that wrote those stories about mass firings after performance reviews at tesla, saying they ought to be ashamed of themselves well have more obviously tomorrow on squawk box. Back to you. I saw the twitter feed, he didnt elaborate on exactly how many were fired. Did he talk at all about another report he may have panned on this Conference Call, or maybe he didnt, about parts of the model 3 being produced and finished by hand is that still going on reporter to my knowledge, melissa, he hasnt addressed that he came out two minutes ago to sit in the chair so that might be going on right now, but so far he hasnt talked about that. Thanks, phil. Lets get back to gene munster, shares now down by 4. 8 in afterhour lows. It looks like the stock took a leg lower here in the past ten minutes, gene. Reporter by the way, i can answer your question you just had for phil about are they making these by hand while you were talking to phil, i loved the question from an analyst, elon musk had previously said its going to be manufacturing hell building model 3, he said that back in the summer the analyst asked how hot is it in hell right now, he said its 9 out of 10. I think theyre making these model 3s by hand right now and will continue to do that over the next months or so and gradually ramp up. Just maybe this combative approach that hes taking, maybe isnt sitting too well with investors. Its his style, but i think that probably has had an impact on the stock. Youve been a huge bull on the stock, gene. Does your outlook on the stock change at all based on what hes saying about model 3 production, pushing that 5,000 target to the end of q1 . Reporter my outlook that this is going to be the Top Performing large cap tech stock in the next five years hasnt changed. The news tonight and the pushback is a disappointment and i think that im in the camp betting that hes done this in the past and he will ramp. I would just caution investors too, again, im fully behind the story, none of that has changed, but were going to see other disappointments. And its just a bigger opportunity and hell capitalize on that. Gene, thanks for your analysis, always good to see you, gene munster of loop ventures were getting an unveil in the next couple of weeks do you like where the stock is right now . No. I still think over the next few trading sessions, ill stick to my guns. Final trade time qualcomm. The stocks valuation is interesting, obviously there are some issues. Mattel puts i dont think this toys r us story is over by a long shot alibaba looking for a pop on earnings mel, what are the best two words in sports . Game seven. Woo rattled that right off. Brilliant nucor. Thanks for watching see you back tomorrow at 5 00 for more fast money. Mad money with jim cramer begins reince. My mission is simple, to make you money im here to level the Playing Field for all investors. Theres always a bull market somewhere, i promise to help you find it. Mad money starts now hey im cramer welcome to mad money, welcome to cram america. My job is not just to entertain by to educate. 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