And a 2020 launch. Facebooks Cryptocurrency Libra is set to debut next year. We will hear how the head of libra and the facebook coo touted this big promise. But first our top story. Recordbreaking sales for amazon. The ecommerce giant posted its largest advance on the s p 500 index on thursday. Amazon didnt release specific sales figures, but the statement backs up broader reports that Online Shopping picked up this year. I want to bring in spencer and darren baker. Spencer, talk to me about what we learned from amazon this holiday season. Spencer in terms of their statement, we didnt learn much. Every year is another record for amazon and ecommerce. What we did see was that this was the first year, one that they rolled out their oneday shipping pledge on millions of items, and that they handled so much of their own delivery on their own. I think a little bit of the boost is that amazon got through christmas without any disasters. Everyone was wondering how they would do this year. Taylor and darren, every year is a record year. Is amazon just riding the wave of ecommerce or are they doing Something Special . Darren a little bit of both. The department of commerce came out with the statement that said ecommerce was up 17 yearoveryear. That period that we call cyber five in between thanksgiving and cyber monday was up 20 yearoveryear and amazon is dominating the holiday season. They drove 15 times more purchases online than the second biggest competitor, walmart. In all aspects they are , dominating the season. Taylor i think what was interesting, and if you look at the chart inside my terminal, is really in the last quarter, it was trading around that 200 day moving average. Not doing a lot. A lot of this concern from analysts was that heavy investment in sameday shipping and one day shipping was yesterday the clarity analysts and investors needed that the investment is paying off . Spencer we know investment is bringing in the revenue. We dont know how quickly the revenue is going out the door. That is what we will find out in january when they report, we will find out we know that they had another good holiday quarter. They sold a lot of things. Shoppers went to amazon for their products. We dont know how much it cost amazon to deliver those things. Especially since they are doing so much on their own. That is the Million Dollar question now. We know amazon brought in a lot of revenue. How much did they shove out the door to pay for delivery . Deren, you have been nodding your head. What is your take on the battleground that is sameday, oneday shipping . It was only a few years ago when twoday shipping was a big deal. Deren i dont think amazon really cares whether it is driving margin longterm. They cared about that a year ago when they saw results that showed ecommerce was highly profitable. They invested in one day shipping because they know the next battleground is not holiday purchases but the things you need every day. Groceries, stuff you buy at the pharmacy. Those kind of products are the things that oneday shipping really satisfies. I think with walmart and other brickandmortar retailers investing in buy online, pick up instore, amazon had to match that. They had to come out with something that trumped even pick up in the store by offering oneday shipping. The more products they offer that on, the more of the wallet of the consumer they are likely to get. Taylor you mentioned other retailers. We seen a divergence with target and walmart in many ways leading amazon when it comes to the grocery business. Other retailers, macys, really struggling. Where do you see amazon being a leader versus a lagger versus brickandmortar . Deren i think theres a couple areas. The two you pointed out are the biggest risk. Where they are becoming a leader is offering other products, advertising, and basically other ways to monetize all that traffic coming to amazon. They are driving billions of dollars per quarter through their advertising business. If they can figure out how to that ecommerce experience into more of a whole foods experience, oneday delivery, then theyve got a really good shot at taking a lead in the grocery space. Taylor spencer, you talked about the reduced dependence on ups, fedex, and focusing more on amazons own delivery services. What do we know into 2020 about how much more they are reducing their reliance on some of the shipments externally . Spencer i think we are going to see more of it. Amazon basically is doing to the Logistics Industry what happened to retail over the past several decades. Amazon wanted to have its delivery operation constantly at work, just like a factory. They want to use that capital. They want to use their delivery machine constantly. Logistics traditionally has been more of a batch system. Waves of things coming to a distribution center. Waves of trucks leaving. Those trucks not going to the same neighborhood twice. Amazon is sending multiple trucks to the same neighborhood. It is breaking a lot of rules in logistics. Sunday delivery was a good example. Things were simply dormant on sunday for most carriers. Amazon is saying people should be able to get things on sunday. We are going to see them doing more and more because they have to. The best way for them to lead is by doing it themselves and doing things other carriers are not willing to do. Taylor deren, you were writing that it is not only about amazon, but some of the downstream effects. Some brands are being very successful getting their brand out on amazon. Others like nike have said, we are good on our own. What brands are doing well on their own . Deren that is the really interesting story. Theres a million ways to quantify amazons dominance in the ecommerce category. The interesting question is, how are brands going to navigate this . Nike made a stark decision to pull everything off of amazon. There are only a handful of brands that can do that. We looked at other brands like lego, which is a really interesting story. Amazon doesnt sell privatelabel toy products, but they sell a lot of toys. Lego generated over 2 million unique visitors and shoppers. Lego. Com probably isnt the first place most parents think of going. Half of the people ended up buying their product on amazon. If you are a brand like lego, you have to have a dual strategy. You need to have your own website and you need to perform well for the consumer to want the lego product. You have to do everything you can to be at the top of the amazon shelf. That is where the majority of people are looking to buy toys. Taylor outside of just retail, as you look at amazon in 2020, what would be the biggest battleground for them . Spencer beyond ecommerce, you have Cloud Computing. You will see more between them and microsoft and google. That is another market, Cloud Computing is growing tremendously, a big horse race is to keep trying to gobble and amazon has an early lead in that. They are trying to maintain that early mover advantage. Taylor we are also getting some news that amazons deliveroo deal at about 500 million or so is being scrutinized in the u. K. Is there a real threat there or is this more antitrust chatter . Spencer i dont know that you can just dismiss it as antitrust chatter. The antitrust chatter keeps building and building. The question is, where is this needle going to get red hot and prevent amazon from doing some things it wants to do . It is hard to dismiss it as just noise given all of the attention on amazon. The other thing i would note is that the folks paying attention to amazon are getting smarter and learning more about its business. Previously, i think a lot of them didnt understand it. How do you regulate something you dont understand . The greater scrutiny is definitely a threat. Taylor for all things amazon and the Holiday Shopping season, thank you to deren and spencer. Coming up, we go through 2020 predictions with gene munster. What he has to say about apple and tesla in the new year, that is next. And if you like bloomberg news, check us out on the radio, the lumber cap, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Taylor apple is likely to continue outperforming its peers next year. Gene munster wrote that the iphone maker could chase its 80 rally in 2019 with another gain in 2020. To discuss this and all the other predictions, gene joins us from minneapolis. I want to take a look at a chart here inside my terminal. You know this better than anyone else. The share price which is having a massive runup relative to the street, which actually hasnt caught up to the shares. 350 on the stock. Why is 350 your fair value . Gene i think fair value is somewhere between 350 and 400. I wanted to have a target that i felt comfortable putting out there as a prediction. It also is representative of a Consumer Staples company. Think of cocacola or procter gamble. Those type of multiples. 400 suggests a multiple similar to facebook. Typically apple hasnt gotten that multiple because it is a Hardware Company. Investors in the last decade have been concerned about Hardware Companies and sustainability. When we think about what the proper multiple is, i think this view that a Hardware Company is a great business, defined by what is impressive cash flow if you look at apple, they generate as much cash as faang combined. If we use that as the goal stick here, the cash flow should drive the multiple. I think it is a Fair Assessment to give apple a fair value similar to what facebook would be. That yields a 400 target. To answer your question, 350 is based on Consumer Staples. 400 is based on a multiple similar to facebook. Taylor i wonder, as they become less dependent on iphone sales, do you start to look at this company more as a software, services, wearables business . What is your take on that . Gene it is not just hardware. It is hardware, software, and services. Hardware is still 75 of apples business next year. It is clearly an important segment. But i think if you look at how the hardware is performing, it is performing more like a services business. Every three years, people upgrade their phones. Now we are starting to introduce the wearables. The wearables segment is included in the hardware, but that is starting to take on characteristics similar to the iphone with upgrading. Think about what happened with air pods. To answer your question, you need to look at this holistically and how the products operate and how they impact consumer buying trends. When we look at it through that lens, this is a Hardware Services and Software Company that performs like a services company. My view just quickly, this justification for a higher multiple, they took a large step back last year with the dip in the iphone business. It will be down called 9 for 2019, but importantly, this should rebound and stabilize in low to midsingle digit growth. I think that will be reassuring for investors. Taylor you mentioned the cash flow that this company generates. I want to fold that into some other income statement and Balance Sheet analysis. , theu look at the chart outstanding net cash, the cash minus the debt, 100 billion. What is the best use of cash for this company . Gene best use is to continue to give it back to investors because i think the stock is undervalued. The company has so much resources to make big acquisitions. Thats probably not the best use. Theyve talked about this. The net cash position is right around 100 billion. Their goal is to be net cash neutral. That means they need to give back. This is on top of the cap return policy theyve announced. That is a challenge because when you are generating 50 billion a year, it gets hard to knock that down. They havent given a timetable of when they are going to hit that target of net cash neutral. My sense is we are probably two or three years away. The simple answer is, the best use for apple cash is to be net cash neutral. It will reward investors by doing that. If they use the majority of their cash, that stockpile we were talking about, to buy back stock, that should generate about 7 upside. Taylor i want to flip to another stock, tesla. Bulls and bears have come to the same conclusion, that tesla is dependent on china in 2020. Is tesla really set up in china appropriately for 2020 . Gene i would disagree with that. I think china is important, 11 of sales today. Having a china factory there is going to lower the cost of buying a tesla for chinese citizens probably by somewhere between 15 and 25 because of the way the tariffs are structured. But this is important. They are going to be manufacturing teslas, they just started in shanghai. But that is not the whole story. The whole story around tesla, we dont have a specific price target, we think it is worth much more than the 77 billion market cap, but as we think about how the story progresses, there is undeniable truth that tesla plays into. To reach that undeniable truth or escape velocity, the stock would suggest that we are moving in that direction but we are not there yet. To reach that, i think there are still some bumps in the road. I think china is going to be a positive factor, but ultimately the company has a much bigger ambition beyond china. Essentially capitalizing on the 90 million vehicles sold every year. Taylor one of your other predictions for 2020 is the rise of the direct listing. If i dont have to raise new money, do you assume that we direct list instead of ipo . Gene yes. That is the simple answer. If you dont need to raise money and the late stage markets are flush with capital now, i think theres an opportunity for free for threee direct listings in 2020. There was one or two in 2019. Yes, i think the theme of direct listings is for real. Ive seen talk of other methods for companies to come public. I believe this will live up to some of the hype. One important aspect right now, the way direct listings are structured is the companies cannot raise money themselves. They can sell secondary shares but they cant sell primary shares. They cant bring money into the company to help investment through the process of the direct listing. That likely will change in the next couple years. Some of those rules will be relaxed. I think once those rules are changed, you are going to see a material shift to direct listings. That is probably two or three years away. Taylor gene munster, always wish we had more time. Thank you for joining us. Coming up, mounting pressure. What lies ahead in 2020 for youtube . That is our conversation next. This is bloomberg. Taylor increasingly impossible tasks for youtube. The google video giant spent 2019 with drastic changes. With each task, youtube gave people more reason to attack its freewheeling user generated business model. Joining us to discuss the challenges ahead is bloomberg technologys mark bergen. Mark, when you look back at 2019 for youtube did they do a , good enough job policing the content, working on data privacy, as much as both regulators and investors wanted . Mark i think the pickle they are in is that regulators and investors want different things. Regulators, you are seeing regulators putting unprecedented pressure and forcing youtube to change how it moderates its entire site with kids. Starting in january, no more targeted advertisements for kids. Investors are looking at google and alphabet. You want youtube to be as handsoff as possible. It is valuable in the streaming wars. Youtube as an advertising business is pretty phenomenal but has a major liability if the laws change. Investors want you to continue to be an open platform. Taylor talk to me about that liability. Do you see a time in the coming years when youtube becomes liable for the content on their site . Mark what is happening in europe and now in the senate in the u. S. , talk about changing copyright rules, that would mean that youtube would be liable for a music video or a video posted that violates the copyright holder. That would be something that would have huge technical and legal challenges. There is a bipartisan push now to repeal parts of section 230, which is an issue for youtube as well as twitter and facebook. Any user generated content. Taylor and as we look at 2020, do we think it is privacy issues or content moderation that will be a bigger issue for the company . Mark i think the Biggest Issue for youtube and 2020 is around kids privacy and how they are going to solve that. Theyve told creators, some of the childrens creators might lose a majority of their revenue. It is going to fundamentally change how youtube operates. It may change a lot of the content on youtube. Going forward, creators are going to be liable, but it is certainly something that regulators are looking at more closely. Taylor you and i talked about taking over alphabet and having more responsibilities than just google. Any sense that he has a unique view on this, or will take a bigger role than before . Mark youtube, google cited it as the second fastest growth. Not as big as search but it is fastgrowing. They have talked about responsibility, about content moderation, and about fixing their problem around kids issues. I expect it to be a big focus in 2020. It is just an increasingly bigger part of googles growth. Taylor bloombergs mark bergen, thank you for joining us. Coming up, we will bring you the best of 2019, which includes endless facebook coverage, our interviews with the head of libra, and facebook coo, Sheryl Sandberg. That is next. This is bloomberg. This is bloomberg technology. Im taylor riggs in san francisco. Despite losing seven partners for its cryptocurrency, facebook got the remaining 21 to sign on the dotted line in october. We spoke to david marcus. In the last week there was a lot of pressure mounting and i respect the fact that those businesses and leaders have a responsibility to their shareholders and employees and stakeholders. Given that you dont need to be a member of the association to build on top of the Libra Network these companies will , still have the ability to build on top of libra. I understand that they dont want to do the heavy lifting by our side at this moment in time and that is ok. We will move forward, were going to add more members going quartersn the next two and we are going to work really hard together to address legitimate concerns raised by stakeholders around the world. A lot of the companies that did leave late last week are payments companies, Financial Services companies. They are theoretically familiar with the road ahead. Are you worried that they know something that you are unaware of . No, and i want to strongly state i dont believe we are unaware of anyt