Departmentstice launches its own facebook probe as the social network is the focus of a federal trade commission investigation. Story,st to our top peloton falling 9. 5 percent after raising more than 1 billion in its u. S. Ipo. It is the latest unprofitable startup to struggle in its trading debut, but the ceo john foley remains upbeat about pelotons future. He spoke with jason kelly at the nasdaq. We are playing the long game. Millionsis as building and millions of subscribers around the globe in the coming years. Now we have the money to do that. After fully funded todays primary, so we are feeling confident. When you think about the last couple of days and weeks, you mentioned the market. It is a tricky ipo market, to say the least. Do you have a sense of where the miscalculation was . Fundraiser a eigth fundraiser. There are people who believe, and those who dont. Those who have invested in peloton, they have been very, they will invest in us. You mention fully funded. What will you do with that money . We are building a 50 million streaming Television Studio in new york city, another in london, where we will hire Foreign Language instructors to stream toward german market, which we open in 50 days, so investing in new content, new verticals, the treadmill market, u. K. , germany. Investment mode. It is semantics, we are investing money and feel good about what we are doing. How do you feel about the Consumer Market . You sell a highend product. There is some volatility we are expensing. What do you hear back from your customers and your potential customers about their willingness to write a big checker chart something pretty big on the credit card . One of the most important things we think about at peloton is affordability. It is insane value visavis anything else. But fitness has been a recessionprove category for the last 15 years. More dollars went into fitness has008 and 2009, so there been secular growth for the last 15 years and if we crate the best value in fitness on average, our bikes are written 12 to 14 times a month, divided by 39, a couple of dollars for a workout, it is better than the boutique fitness world, and we will show it is better value than going to the gym. You have described the company in the s1 in the roadshow as a Media Company that does a lot more. Where will you be primarily spending money . Is this a content push coming . I would say we cannot Hire Software engineers fast enough. We are a software company, tech company at our core. Emmye have 13 awardwinning producers. One will build a special media ,ivision, but to your question the investment will go into technology. We were open retail stores, logistics, more markets, but certainly, Software Engineering is at our core. The peloton ceo john foley. To the first day of trading, im joined by two other people. Down 11 today, what was the biggest concern from investors, why didnt close a much lower . Roadshow, it has been a binary story. You have a bunch of people that believe peloton will change the fitness landscape and how people work out and think about workout, or you have people who think it is a Business Model they cannot sustain, that that has been a story in the investors mind. You either believe it or you dont. That has made for interesting dynamics in the pricing, because you have a bipolar set of feedback from investors, so that is why the deal is struggling this morning and were seeing the price fluctuate at the open at the end of the day closing below below, but more of the criticism has been the profitability of the company. It is still unprofitable. Toestors want to see an end that. Taylor was valuation a concern today . It was. It was double the last private funding round, and yet he wants to make it into a content company. Share left it at more than 8 billion, which is more than netflix based on 2020 sales, so it was quite expensive. My valuation professor believes it should have been 23 a share. Thatthat said, i say peloton, like smiledirectclub, is not a traditional tech company, so they have a harder time selling themselves as technology companies. Taylor crystal, the ceo touted the health of the Balance Sheet, citing cash, saying we are fully funded. After today, are there concerns about the health of the Balance Sheet . Hi spoke to the cfo just now. She was saying this is a funding event for him. Where does the stockprice end today, it doesnt matter. They have happily raised 1 billion. They will deploy the capital into content. Seen that actually much of a selloff in the market of where theyrms deploy their content, they mentioned international expansion, content, tapping the existing base, potentially rolling out new hardware. Taylor you heard crystal mention hardware, which is more important, a 2000 bicycle, 4000 treadmill, or 40 subscription revenue . The subscription revenue is recurring. As much a percentage as it was the last couple of years, so they have not seen that grow super significantly. People will want to see more of that. Not to mention the hardware. We have been talking about the cost, marketing, international expansion, but the hardware is also expensive. There are hundreds of mains of dollars poured into their, so the cost base has been rising from and that is not see him able to clamp on. For investors to bite on the story will be a challenge without that revenue. Taylor thank you both for joining me. Spike ind their shares the most in three months on thursday, after elon musk told his staff that the carmaker has a chance to top the vehicle delivery record set in the second quarter. In an email, elon musk says tesla has a shot at achieving the first 100 thousand vehicle delivery quarter. Tesla reported deliveries of more than 95,000 vehicles in the second quarter. Coming up, the clock is ticking for wework to raise money. We look at the struggles, next. If you like Bloomberg News to check us out on the radio, the number cap, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor it seems the hits keep coming for wework. The chief product officer is set to depart the company, coming after the cofounder said he would step down to salvage the ipo. The company has seen a rash of departures of other executives in recent weeks, then this comes amid a dash for cash. Wework is in talks about a new 3 billion loan. Mean returning to its biggest investor, softbank. Joining us now are our two guests. ,alk me through this new loan 3 billion. Who gives that money . From a will come likely consortium of banks, and is contingent on equity from a different funder, most likely softbank. The whole thing is this plan ,eing developed as we speak because there have been so many changes in the last four days. The ceo has stepped down. His wife left the company. She was cofounder and ceo of the education arm. There has been a lot of intrigue around executives employees at wework close to him. It seems like the new coceos cleaningested in house. Taylor who are they . Him . Do you know about if they are cleaning house, who would they turn to . Both executives at wework who notably have experience with Public Companies outside wework. One is from amazon, the other was cfo at time warner cable. ,hey have some ties to wework but not many. There were a lot of people who had been there many years, especially close to the founders. There were a lot of people who were personal friends of adam from his childhood, or relatives. , the reported recently person leaving the company is adams brotherinlaw. There are lots of connections there. They are interested in trying to strike a sense that this is a different era. Taylor let me bring you in here. Thank you for joining me. As you look at wework and the financials and they need more money soon, is that still the biggest concern, the financials of this company . You are right, taylor. They need the ipo to secure 6 billion in financing. They are burning 2. 4 billion in terms of cash flow. They were hoping to get 3 billion in cash on the Balance Sheet with this deal. That is the driving force from or them come the ipo, so they dont have to rely on softbank to fuel their growth. That is the driving force going forward, to push this ipo and get it done more than anything else. Taylor you talk about raising cash, the revenue, the left side of the Balance Sheet. On the right side are the expenses. They have to be cutting back on some of the fat. We had the coceos right and email to employees that we anticipate fiscal decisions ahead. What would you like to see from this company, more layoffs . How did they cut excess expenses . You are right, taylor. Biggest expense is the cost of the leases they have to take on. S1ed on the last data in the revenues. 285 of what we would like to see in this quarter in the coming weeks, steps from the ceos showing we are cutting costs, because right now, as you know, it is 1. 7. For every dollar they make, they lose money at a very fast pace. Just trying to show some discipline in trying to show they are trying to get to the end of the tunnel in terms of driving to profitability would be huge. Right now with the model, it is difficult. Taylor when we talk about wework, you can help but mention softbank. Are they the enablers . Andhat is a great question, one people will be examining for the next months, if not longer, this idea that money came so easily to wework. They had no shortage of funding available. Inemember interviewing adam april. He talked about softbank is amazing to me. They have given me 10 billion. The way they thought about it is they had given him the cash to build this incredible company, and now we are seeing how many ventures wework outside the regular business of renting out office space, those of the things on the chopping block as we go forward, including the Elementary School they run. They have two residential dorm buildings. They will have changes in these things, and i think as we reported, i think job cuts are part of that. It will be likely outside the wework core business. Taylor talk to me about softbanks role. Had they changed the vc landscape given the dominant force they are . Have they changed the way the private investing market works . I think so. The fact they have so much money , and like i said, the willingness to lend it out, not only to wework, but all these unicorn deals. It is just the fact there was so much money being put into their toious funds that they have distribute out to all these deals come so now you get this point like, wait a minute . What is going on . We have these other companies, stocks turning below the ipo prices. Some of these other ones, now people are starting to think, well, can this model continue for softbank . Can they keep giving this money away . The result is everybody will be happy and everybody gets their money back. The market is saying no. Taylor the Public Market seemed to be in charge. Thank you for joining me. Dan, you will stick with me. Microchip the Global Market is not yet in the clear. How global trade tensions are impacting microns future. That is next. Bloomberg technology is livestreaming on twitter. Be sure to follow our global breaking news network tictoc on twitter. This is bloomberg. Now that one is company is pulling its ipo. , which has a stake in another operator, lowered its price range from the previous range. Size to 15offering million shares from 19. 4 million. Shares of micron falling in after hours trading, after the company gave a disappointing profit forecast suggesting the memory chip industry slump is not over yet. Course toles on decline 20 year on year for a fourth straight quarter. There with me to discuss the forecast and microns fourthquarter earnings in atlanta, dan morgan. You know better than me. I dont care about the current quarter. I care about the future forecast. That was a disappointment. Do you agree that forecast was disappointing . Taylor, everyone was looking to this quarter, there fourthquarter 19 to be the low point in the valley, and that guidance going into their upcoming First Quarter for 2020, which shows some improvement now they did revenue of a little more than 4. 8 billion on the fourth quarter, five begin dollars, plus or 200 million, putting you on a high range from that perspective, but the real thing to focus and with this micron report was gross margin came in at 28 , and they guided 24 to 27 gross margin going into the First Quarter 2020, so it leads to the conclusion, like you were saying that everybody was looking for this to be the bottom of the valley, then start going back up the staircase starting the First Quarter 2020, and unfortunately based on the guidance and a it looks like its going to be somewhat flat or about the same, or even slightly down with regards to gross margins, so i think that disappointed people in terms of the Headline News out of micron. Taylor i want to show a chart im showing to our bloomberg audience inside the terminal i. Ave here at gtv we talked about memory chip prices, and this is why analysts were so bullish coming into the quarter, because they thought these prices were bottoming out. Does microns earnings suggest perhaps that quote was too early . You know, taylor, i think it might be, because, as you mentioned, we have seen dram prices in the last quarter were down, total dram revenue, and as you mentioned, ticking down from the last four or five quarters, and the expectation in terms of analysts was it would pick up again, and at least based on the remarks coming out from micron that they had with the results, it is not showing the type of improvement we were hoping for. You know what i mean . It is a continuation of the same , a lot of uncertainty around tariffs and huawei, so you could make the case analysts were a little ahead of themselves in terms of predicting that Inflection Point and things will start backing off again. Taylor what is the bottomline impact from trade and tariffs . Release,taylor, in the they talked about the relationship with huawei, concerns about getting an one department to continue to sell into that company. You have to realize microns technology, of all the semiconductor stocks, drives 50 of revenues out of china, so they are very, very heavily entrenched in that debate, so because of that that is a huge headwind for him in regards to being able to recover, along with the fact we had a mature cycle in smartphones and pcs, and a little indigestion going on in the infrastructure of the cloud space, so you have all these things coming against him but china tariffs are big part of those headlines. We some pretty negative on the company, but when we look at the general industry, im shocked at the relative resilience. Another chart showing on my bloomberg terminal shows the fact that dram prices have been bottoming out. The broader gauge has continued to climb. Are you surprised at the relative resilience of the sector . What is amazing, taylor, and you have the numbers in front of you, i believe up 36 , yeartodate, correct . The Technology Sector is up 28 come in both those numbers are double the s p 500 and the dow jones in terms of performance yeartodate, so you are right. There is a tremendous anticipation that things have bottomed and will start improving, so you have this huge runup in the stocks, and believe it or not, it is higher than it was before we hit the peak, then we dropped down as of last summer when we had this pullback from china and everything else, so it is interesting that enthusiasm for the sector. Taylor dan morgan, thank you. Thank you, taylor. Taylor coming up, all things about pelotons bumpy first trading day. That is next. This is bloomberg. Im all about my bed. This mattress is dangerously comfortable. When i get in, i literally say ah. Experience deeper rest with the awardwinning leesa mattress. This bed hugs my body. Im now a morning person. The leesa mattress is designed for every body. Providing strong support, pressure relief and optimized airflow to keep you cool. Hello bed of my dreams. Order online, well build it, box it and ship it to your door so you can try the leesa mattress at home. Love it, or get a full refund. And rest assured, returns are free and easy. I love my leesa. Today is gonna be great. Find out why so many people love the leesa mattress, then try it in your own home. Order now to get big savings but only for a limited time. Just go to leesa. Com today. You need this bed. Taylor this is bloomberg technology. Of the our top story day, it was a bumpy ride for fortine four peloton peloton. The opening was the third worst for a mega ipo since 2008. The process of picking an opening price took a little bit less than three hours. Remember, peloton, of course, still unprofitable. The ceo said the concern peloton is losing money is semantics. Withscuss, im here s founder. What happened with peloton . I think what you are seeing is a restructuring change in the way the ipo markets, and peloton is as good an example is any of the ipos we have seen over the last six months. What we are seeing is a story about demand and access and how that has changed recently as a result of an active late stage private security market, which pelotons case 13 months earlier when you saw two of the biggest hedge funds in the world, two of the biggest mutual funds in the world, they bought peloton for 14. 50 a share. Million 13sed 500 months ago. As a result of that, 4 entities that were historically big buyers of ipos not only have they already bought what they wanted to buy, they might even be sellers at this point. The ipos, looking at peloton and walking back over the last six months, thats a new dynamic. Taylor what are your thoughts on valuation . The question of what is and is not a tech company gets more interesting by the day for me. I heard your interview with the ceo of peloton earlier, and he was saying software is their biggest investment. He basically wants us to think of them as a tech company, but in reality, you could increasingly say the same thing or so manyr Disney Companies walmart. Just because a company uses a lot of software and has an app or screen, it does not mean that they are a tech company. This is basically a company that sells exercise equipment that is given being given an 8 billion lu asian. I think that is it logical. Taylor gene munster spoke with me earlier this week and said he was really reassured by the fact that the ipo and the filing, peloton was so transparent in their numbers, relative to a company like wework, which has been put on the back burner for now, which was not as forthcoming wi