Shares are down in after hours trading. We will have a report. And, libra grilling. Facebook Ceo Mark Zuckerberg is anticipated to face lawmaker questions on the social networks controversial cryptocurrency on wednesday. We cover what to expect. First, our top story. Snap fell as much as 10 in late trading after reporting thirdquarter earnings. The Company Reported revenue and user growth beating analyst estimates. It has been boosted by an increase in downloads to the revamped android version. But questions remain about longterm monetization. To break it down for us, i want to bring in Jitendra Waral from bloomberg intelligence. First lets talk about the third quarter, daily active users. I have a chart here that i am showing in my terminal. Seems like those daily active users knocked it out of the park. Jitendra q3 numbers were pretty strong. It is the q4 guidance that fell short. Looking at the backdrop here, the stock is up 154 year to date. The valuation, to sustain that valuation, the expectation was stronger guidance. But the user number is the hardest one to really beat. Everything else is in their control. They can rampup monetization, they can cut costs if they want, but the user growth is the harder metric. The fact that they are projecting better than expected user growth in 4q as well, it is showing that they are getting results and fundamentals should follow. But what you are seeing is a mismatch in what expectations were going into the quarter, which was much stronger guidance. Taylor part of the reaction, expectations had really gotten ahead of themselves Going Forward . Jitendra yes. The biggest question for snap is one of longevity. If you look at expectations for the company, revenue is expected to more than double. Bear Case Scenario doesnt really believe that, with ongoing competition from facebook, from tiktok. Obviously the user numbers are telling us they are fighting back pretty well. But to instill faith in the longterm expectations, user quarter after quarter they need to show User Engagement remains and continues to grow. Taylor instagram came out with a competing product called threads. Tiktok is increasing competition for snap. How much is competition a real headwind . Jitendra in some International Markets it is a big headwind. But in the core markets, the last two years they have been fighting with facebook and instagram, and have been pretty resilient. We saw the numbers. The average daily snapchat users opening the app 30 times per day. It shows you that the core audience engagement is still there. Now, they are focusing more on driving original content and localized content, more a. R. Features, filters, to keep the engagement steadily increasing. The monetization level is still below twitter, much below facebook, and things like that. As far as keeping a steady pace in user numbers and User Engagement, they can fall back on the monetization side. Taylor longterm revenue looks good, the margins, you said they are pretty effective at costcutting, not profitable yet. Did we learn anything about any update on when we could see the Company Started turn a profit . Jitendra there is a possibility that by 4q, on an adjusted basis they will break even. Cap profitability will take a couple years, but this is a big step since where we started. Margins ate gross the time of the ipo were close to 50 , so they are showing progress. But the overarching number to watch for, even longerterm, remains the user number. Because all the fundamentals follow that trend sooner or later. As far as keeping that up through innovation, original content, these kinds of things, then the longterm confidence in growth storyrm will grow and valuation will follow. Taylor that was Jitendra Waral of bloomberg intelligence. Thank you for joining me. Softbank is taking control of wework, resulting in founder adam neumann leaving the board of the struggling Office Rental start up. But he is not going away emptyhanded. He is expected to sell 1 billion of stock to softbank. He can also assign two board seats and will get a 185 million consulting fee. We are joined by leanna baker. Is this the beginning of what looks like the new wework . Leanna for weeks now, we were wondering how wework would keep the lights on and it looks like softbank is coming to the rescue. And adam neumann, the charismatic ceo and founder, is also stepping aside from the board. He will give up his board seat, he will have an observer role, able to appoint some board members, but the handson role is being given up, so the start of a new chapter for wework. Taylor can you talk to me about how realistic some of these numbers are when it comes to adam neumann . He is coming away with 1. 2 billion, a 185 million consulting fee, a credit line extension. Is that fair and normal . Liana it definitely raises some questions of governance, but remember that adam neumann owned a controlling stake in the company. So to get him out gracefully, softbank did have to pay up. He wasnt just going to go away. This was the company he founded and he did have that stake. It is unclear how the negotiations went down. Wework has not confirmed on the record any of these numbers. We are still waiting to hear what the company has to say. For sure, neumann has put in his work and he is getting a pretty package to get him out of the picture. Taylor shira ovide on bloomberg opinion, a pretty scathing column, talking about where is the board of directors and their accountability on management, particularly because they chose the softbank deal over the jp morgan deal. Which does dilute existing shareholders and let adam neumann walk away with however many millions of dollars. Where is the board of directors . To hirehey were careful outside advisors and a law firm and bank over which package makes sense. Jp morgan tried to put together a compelling rescue package of their own of some outside 5 billion. Investors had been reported like starwood. But the board did decide that this was the better route. And some might say that softbank is the more stable outcome for the company. Softbank had already invested 10 billion and they are coming to the rescue again with another almost 10 billion. They have deep pockets that could keep the company operating, but the board did hire all these advisors to make sure there wouldnt be any lawsuits or Corporate Governance crises, because there have been so many already at this company. Taylor pushing this forward, what can a new ceo and chairman do that adam neumann could not do . Liana there is another executive coming in, the ceo of sprint who executed a turnaround there. He will come in as chairman, replacing neumann, and he may lead a search for a new ceo. There could be even more fresh blood. The coceos running the company right now, they were there during neumanns era. The company could still have some major changes Going Forward. Softbank, if they ever want to exit this investment, they may have to figure out how they would do that. In 2020, we may be talking about an ipo then. Definitely it will be a different story. Taylor my thank you to liana baker. Now for some developing news out of the u. K. A u. K. Official has said the latest brexit delay means there will be an election as a result. The same official says this is the only way the country can move on. Now, Prime MinisterBoris Johnsons plan was derailed as members of parliament dramatically blocked his plan. Earlier, European Council president donald tusk responded by saying he would recommend the accept the u. K. s request for an extension. Coming up, Texas Instruments tumbles. The street not looking kindly at the chipmakers forecast and the numbers are knocking down others. Later, zuckerberg is headed to capitol hill to defend his cryptocurrency dreams. Something secretary mnuchin has said he has had multiple meetings about with representatives from facebook. Here is what he had to say. Sec. Mnuchin i have met multiple times with the representatives from facebook. We have told them we thought their launch was premature, that they have not addressed fundamental issues around money laundering, bsa requirements and others. Taylor shares of Texas Instruments are tumbling in after hours trading on tuesday. At one point, they were down more than 9 . This as the chipmaker posted a weaker than expected forecast for the quarter. It is another sign that rebound in demand for semiconductors will take longer than investors hoped. To tell us more, i bring in bloomberg technologys ian king. You have been covering this chip sector for us. So, coming into this, we will we were looking for top and bottom line declines through the end of the year. Does that look like it is playing out . Ian we were expecting things to continue to decline but at a if you like a better rate, the declines would be smaller. What we actually got from Texas Instruments was the reverse. Instead of being 3 , 4 revenue decline in the fourth quarter, they are predicting as bad as 14 . Taylor we thought a lot of their sales, 56 , came from stable markets. Industrials, auto sectors. Did any of that stability help them . Ian absolutely not. Communications equipment was arguably their worst market, down 20 . Automotive was one they cited as being considerably worse, pretty much across the board. Taylor they do also lead some of the sectors in communications. That is the one area they dont have a lead. What can we expect from the company in the sector moving forward . Ian their chips are an important component of cell phone systems. If you are looking for a readthrough on whether the big telcos are spending on their network, this would not be a good sign. Taylor i want to pull in some conversations we had about the trade tensions. We did hear from the cfo of the company. I want to take a look at what was said. The weakness is broadbased. It is due to macro events, and specifically, trade tensions. You think about when there are tensions in trade and obstacles to trade, what do businesses do . They become more conscious and they pull back. We are at the very end of a long supply chain. When the ones at the front pool back, it becomes a traffic jam. Taylor clearly, putting a lot of the blame on trade. Is that valid . Ian two ways to look at it. Up until now, they have not done that. They have been reluctant to assign blame. Now, they are saying the evidence, you cannot ignore it. On the call, they were getting a lot of questions along the lines of, look, the markets are not overall that bad. How can you prove to us this is not you losing market share . Their answer to that was that market share in these markets takes a lot longer to shift. Of course, it is the economy. It is the trade tensions. Taylor given the stocks index, all of these chipmakers have been a bellwether for sentiment on trade. I want to take a look at the chart here. Its the forward p. E. Ratio. The stock is surprisingly looking really overvalued at 17, 18 times forward p. E. How much more do we need to see to push the sector forward . Ian very good question. You have one of the worst years for more than a decade for what is going on in terms of the fundamentals. Yet, money has come flowing it on the expectation that we have seen the worst of it and things would get better. The actual analysts have not been believing that. Many of them have been scratching their heads and saying this does not make a lot of sense. I think we are at a point now where we are going to see that money come tumbling out. Or we are going to see other Companies Come in and say no, this is a Texas Instruments specific thing. We are fine. It will be interesting. Taylor latest thoughts on all the chipmakers. Thank you to bloombergs ian king. Now, embattled e. V. Startup faraday is aiming to raise 850 million by the First Quarter of next year. The ceo told bloomberg the company will use the proceeds as a bridge to an initial public offering, but did not set a timeline for a listing. Faradays chinese founder filed for bankruptcy last week and put his stake in faraday under the yrust of creditors. Ceo says fara is protected from debt but needs to go public to secure its longterm future. The company is also exploring a joint venture in china to Scale Production and shield it from tariffs. Coming up, big banks versus fintech. Who do you got . That is the question we will ask the head of u. S. Largecap Bank Research at wells fargo security. Securities. Our conversation with mike mayo, that is next. This is bloomberg. Taylor lyft surged tuesday after executives said the company would turn a profit by the end of 2021, one year earlier than analysts expected. Lyft has been cutting back on subsidies for riders and drivers that had been racking up costs. Now, the Digital Banking revolution is hitting one Financial Institution pretty hard. U. S. Bank will cut several thousand workers at its branches. Bloomberg has learned it is part of a digital push by the bank. Here to tell me more about that digital push and how banks are keeping up in the digital age is mike mayo, wells fargo security securities head of u. S. Largecap Bank Research and senior bank analyst. Mike, is now the time to finally believe that banks are embracing and integrating this digital revolution . Mike absolutely. We think that u. S. Banks are on the cusp of the biggest impact of technology on their business in history. That should be a winwinwin for the customers. Better service for the employees. More time to do what they want to do, talk to customers. And for shareholders, the most efficient banks in history at least a few years out. Taylor you are wearing a hoodie. If you are a bank analyst, you wear a suit and tie. Are you now a tech analyst . Mike i dont think i can be a bank analyst without being a parttime tech analyst. I dont think you can be a banker without having your tech analyst hat on. To have banking, you need to have technology. By the way, the biggest purchaser of Technology Services of all industries, the Banking Industry spent 150 billion over the past year just on technology. You know what . If it does not work for banks, it is not going to work for tech but we think this is the start of not only a beautiful friendship, but the most serious marriage that has ever taken place between banking and technology. Taylor on these analyst calls, i think of bank of america highlighting the increased use of payments. Mobile banking. What area within technology is really transforming banks . Is it peertopeer banking . Mike bank of america, you could say who was going to win . Banks or fintech . Fintech is going to win. That is bankamerica mobile banking. In seven years, bankamerica took from nothing to mobile banking where they processed a level of deposits equal to the seventh largest bank. Equal to 1500 bank branches. That is a phenomenal story. In addition, bankamerica over the past few years has increased throughput in a variety of ways. Mobile banking, ach payments by 50 or more. At the same time, they have reduced their Technology Expenses for their infrastructure by 2 billion. So you are growing the franchise without growing expenses. And it is due to technology. It is a fantastic marriage between tech and banks, such as at bankamerica. Taylor if bank of america is the winner, who is the loser . Mike a lot of banks are stuck in an old mindset, a last century mindset. You have the largest banks, scale providers jp morgan, bankamerica, citigroup, goliath s are winning. You have the Smaller Banks which have specialized services, facetoface relationships. Friendly with the town council. I think other than that barbell approach, those banks in the middle have a lot of soulsearching to do because they dont have the scale to compete with the biggest banks. And they dont have the one on one service of the Smaller Banks. Taylor we started off talking about a company, u. S. Bank, that is cutting back on some of its branches as it is transitioning to the digital age. Banks be increasing their presence, but hook me in via digital . Mike banks dont have a choice. The world is going in the direction of technology and banks are going along for the ride. They might not be leading. I think the Banking Industry, they have been a laggard. That is out of safety and security for the customers and dealing with regulators. But we forecast a loss of jobs in wall street and the Banking Industry of 200,000 over the next decade. That is due to automation. Any job that can be automated should be automated. Having said that, jobs such as advising or technology or anything dealing with customers, those jobs should be expanding while you streamline the backoffice. Taylor you know we love running marathons, so anytime i can read a Research Note of years that yours that combines the analogy of a marathon along with financial analysis, you are always welcome back. Saying that, why did you say we are only on the second or third mile on what is a marathon . Mike in new york city, we are about to have the new york city marathon. That is a very big event, as you can see. But when you look at artificial intelligence, big data, banks are hardly scratching the surface. It is an archaeological dig to unlock the data they have on customers. Bankamerica, they took a number of fields to fill out for a Mortgage Applications from 200 down to 10. That makes your life easier but that is just the beginning of using big data to make customers lives more efficient and effective. The whole payments revolution, that is changing. The reduced use of cash. Just generally, faster processing of computers should allow banks to operate much more efficiently. So you have a combination of softwaredriven changes such as a. I. And automation. You have hardwaredriven changes due to faster processing and more efficient data centers. Then, you have