Good thursday morning. Welcome to squawk alley. I am Carly Fiorina with Morgan Brennan and jon fortt. A busy day of earnings, some tech, some not to sort through today, microsoft, paypal, ebay and others on the tape two biggest movers going the opposite way, tesla is surging, twitter is tanking Julia Boorstin and phil will he be lebeau is with us. This is a stock having a rough day, one of the worst days ever as a public company, on pace for the worst month since july, 2018 shares down almost 19 lower despite growing the user base to 145 million active users. The reason it is tanking, revenue and earnings fell short of expectations as technical issues keep them from Fourth Quarter ads. Jack dorsey looked to reassure investors. Unfortunately we had some missteps in our map ads in july and august despite that, saw strong september results and good advertiser momentum. He stressed the commitment to clean up the platform and eliminate abuse. 2020 elections and integrity of the conversations around them is our First Priority within how we think of health we are paying a lot of attention to all of the dynamics at play, specifically looking at misinformation and misleading information. Analysts are starting to weigh in as we see stock selloff. Mkm saying we view twitters issues as internal, self inflicted, probably fixable over the near term, however, amplified impact on revenue due to a technical bug wonders whether one can have confident have a view on twitters long term potential. Moving the opposite direction, tesla, posting a surprise profit, sending shares surging. Phil lebeau has more on that quarter from chicago phil morgan, this is what happens when you post a far better result than many were expecting. Tesla earning 1. 86 a share in third quarter. Most on the street expected them to lose 42 cents a share they did it with lower operational expenses, higher automotive Gross Margins combine those together, you get positive free cash flow. The numbers across the board, little to complain about if a tesla investor they affirm the 2019 delivery guidance year to date, delivered over 255,000 vehicles they say theyll get to at least 360. Model y, next big model, moved up the launch date to next summer it was the end of next year. Heres elon musk talking about the model y. We are confident about with summer 2020. I recently driven the model y candidates, think it will be an amazing product, well received i think it is likely to just my opinion, but i think it will outsell sx and 3 combined. Look at shares of tesla, Cfra Research who had a strong sell on tesla shares, today said well, you know what, move it back up to hold. Lots of positive comments for tesla after the q3 report. Guys, back to you. Phil, dont go anywhere we want to talk to phil, julia, and mike santoli with the earnings season. Since last nights close, guide downs are outpacing ups by 2 to 1. They are. The market is administering punishment in isolated cases, on the whole not grabbing for excuses to sell off a lot. I think numbers have been good enough in areas that have been pressured enough going into earnings season that the markets say fine, were looking at leading indicators of upturn semiconductors up a half percent. Texas instruments warning was kind of a one day effect, bouncing off that. Caterpillar would have been a great reason to back off right now, can say it is hopeful. You can have accumulation of guide downs where it compromises First QuarterEarnings Growth pace, still expected to get to high Single Digits percentage. Julia, getting back to twitter. The problem this quarter is the opposite of what were used to were used to they cant grow users but are managing to monetize in this case since about the past four years, they have been in this range of 300 to 350 million monthly active users does this problem on the revenue side point to a fundamental breakdown in the story theyre saying this is a bug. A bug they fixed and the process of fixing it makes them stronger overall. The bug they had to fix was about targeting advertising which was crucial to their growth the story we have been talking about with twitter, this is a country able to grow slowly, they returned to growth after stagnating, and we know theyre not growing as quickly as facebook, not going to be the size of facebook, but have shown they can make substantial revenue from those users i think the question about this quarter, is this a blip. Are we going to continue to see accelerating user growth effecting user growth. At the same time, able to fix revenue issues which they have to to keep the train on track. Phil, investors very much welcoming numbers in the news out of tesla today as evidenced by how shares are ripping higher the pull back we have seen in spending and profitability that was reported, how sustainable is that for the Company Moving forward . Great question. Your guess is as good as anyone. Listen, on the Conference Call last night with elon musk, he made it clear he believes they can build sustainable profits from here. But we heard this from him in the past they have a number of hurdles they need to clear while commentary was encouraging last night, they have to make sure it is a clean launch of vehicles out of the shanghai plant, just because it is up and running doesnt mean it is a clean launch the model y middle of next year, will that be a clean launch, will it have as much success as tesla is expecting you heard elon musk saying he thinks it will outsell the s, x, and 3 combined if thats the case, huge surge in production and delivery for tesla. He believes that they can be sustainable in terms of profitability from here on out, but we heard that from him before mike, how do you square teslas quarter with fords quarter, renault guiding down, now solidified notion that we hit peak auto. Obviously, tesla they basically met on revenue after release of deferred revenue. I dont think it was an auto demand story as much as on the cost line for tesla, being perfect than expected in dialing down cap ex. Does nothing to dissquad the auto cycle peaked, it is struggling to maintain plateau level when growth in the rest of the world is in question. In terms of social stocks, we had snap numbers and twitter numbers this morning is there a theme emerging from this what can we glean for this looking forward to facebook and others. Theres a question on guidance the companies show significant progress getting Business Models on track, showing what niche their serving, both showing improving monetization with twitter, declining ad Revenue Growth with snap, questions on the Fourth Quarter it is crucial, it is important for advertising for all of the retailers. Huge focus on Fourth Quarter and interesting to see what facebook says. Thats off the zuckerberg testimony on capitol hill, questions are how much are the costs to protect the platform. And distraction weighing on results. Snap up 3 this morning are investors viewing this as either or between twitter and snap, zero sum gain . Theyre different demographics maybe for investors it is either or, for advertisers i think they serve very different purposes. Snap distinguished itself with professional content, which it puts in the section. Showing there are different stories. Interesting to see what happens when we hear from facebook next week but theyre certainly the giant. Phil, havent mentioned airlines talked about gary kellys comments on boeing and airbus. The macro picture on travel according to southwest, despite what fares have done is pretty so solid. They havent dropped off. You hear it from southwest and other Airline Executives if you travel much, i do, i know you do, most flights are comploe to capacity. Theyre filling the seats. Were not seeing that slowdown in the economy in terms of demand for travel on the leisure side or corporate side mike, is this emerging theme more broadly from earnings season still consumer, strength around consumer versus industrial, weakness around some of the Big Industrial manufacturing names, thats kind of whats playing out in terms of whats leading the dow and whats the biggest laggard it is confirming the way the market was postured before we got here, reflects all those things i would point out, microsoft up a little today, would have been not surprising to see it sell off a bit, shows you what a great quarter, a stock thats strong and hovering needed to have a little extra on the up side, what microsoft and p g were able to do. On the industrial side, it is confirming things werent great in august, but stocks got down there to account for that. Can you put to bed the igb concerns and software . I dont know if you can put that to bed so far high growth stuff within that sector, you still have a premium pulled out of the stocks. Talking about disruption in it spending, microsoft plays both sides, growth story in cloud is not Just Software but service side i wonder what it means in the setup for amazon given that microsoft had the quarter it did, argue about the azure number, growth is still pretty darn good what do we have to see from amazon and to what extent are people going to read that into the overall the stock is treated tentatively, well below the high maybe thats part of that story as we wait for the numbers it is amazing two of the names we are talking about today, julia, tesla and twitter, are run by ceos who also have other ventures theyre running at the same time i wonder whether we heard it before in the past, i wonder whether given numbers from twitter that chorus in terms of jack dorsey, is going to get louder. Interesting, morgan past several quarters as twitters Business Model showed theyre on growth trajectory, there werent as many questions whether it was a problem for him to run square and twitter. He showed he was doing a good job at both. This quarter may change that conversation we have so many Tech Companies controlled by their clooes in addition to led by them. I think dorsey is unusual, he has two different ventures he laid out how he does it, explains his routine but well see what happens especially with those Fourth Quarter numbers, see if that changes the conversation. A lot of ground we covered, guys thanks when we come back, shares of paypal are surging after their own big earnings beat. Cfo john rainey will sit down, talk about the quarter, why they left the Libra Coalition and more but were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Welcome back shares of paypal are surging off the back of a beat on the top and bottom lines it is up better than 7 . John rainey, paypal cfo joins us now from San Francisco john, good morning good morning, jon good to be on the show plenty to talk about as far as earnings are concerned. First, have to ask about libra thats been in the news. Paypal was the first arguably major brand to drop out of the libra association. The statement you put out said at this time that youre not participating. Is there something wrong with libra itself or the political and regulatory heat around it at this stage i think it is important to understand, jon, that we were never actually part of the libra association. We signed a nonbinding letter of intent as expression of interest because we share facebooks mission to democratize Financial Services for those underserved around the world were very much aligned there. Our decision to pull out or not go forward with the association is based solely upon our focus and decision to focus on priorities at paypal let me ask you the quarter. The full year guide that you guys adjusted is still below what analysts hoped for. What changed in this period of time, could it adjust higher depending how overall conditions improve . John, did we lose you it appears we lost john for the moment well try to get him back. Paypal had a solid quarter on the back end back in july, the stock tumbled when they not only missed but guided lower for the full year part of whats happening here, they talked about their checkout button having improved ebay exposure that theyve had isnt hurting them as much questions also about the overall ecosystem, names like apple which we see theyre surging when youre looking at transactions that are done at retail, theyre pushing now with the credit card. Bumping up against venmo how much are they worried about that venmo and further monetization of venmo is a key part of the questions. They grew last quarter, promoting it as a Payment Method at merchants, that theyre 400 million in annualized revenue, 35 of users being monetized longer term, what does the bucket look like within the broader paypal ecosystem as you mentioned, also going to be an interesting hopefully get him back to talk about the libra stuff and the idea of unbanked, what it means for paypal. Were going to do that on the other side of the break. Hear from john rainey, cfo of paypal going to take a quick break. Be right back. About medicare and 65, ysupplemental insurance. Medicare is great, but it doesnt cover everything only about 80 of your part b medicare costs, which means you may have to pay for the rest. Thats where Medicare Supplement insurance comes in to help pay for some of what medicare doesnt. Learn how an aarp Medicare Supplement insurance plan, insured by United HealthcareInsurance Company might be the right choice for you. A free decision guide is a great place to start. 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A Medicare Supplement plan may help pay for some of the rest. Two this type of plan allows you to keep your doctor as long as he or she accepts medicare patients. And three these are the only Medicare Supplement plans endorsed by aarp. Learn more about why you should choose an aarp Medicare Supplement plan. Call today for a free guide. Welcome back to squawk alley. We want to check on defense stocks with north rop and raytheon reporting raytheon delivering a beat and raise, up 2. 5 the aerospace and defense has been overperforming. Why . Earnings a time when manufacturing is contracting or seeing signs of it, broader industrial sector lowering global growth, this group has sales growing. Key area to watch, albeit limited fashion, classified, restricted work. This is a theme on some calls we have gotten this week. Going faster than outlays for defense dollars more broadly north rop, building the building that stealth bomber, and raytheon are examples, so is lockheed martin, work on missiles is fueling Big Development deals that continue to grow into next year it speaks to how the u. S. Is thinking of future threats, the idea of strategic competitors in china and russia, how closely it is guarding some of the new technologies, but it would really seem on some earnings calls that it is increasingly turning into less is more, especially with a name like north rop grumman, almost a third of their sales are classified were going to try to complete the transaction with paypals cfo john rainey in San Francisco. John, we got you back. Good to be back all right we got you back. I was asking about the adjustment in your full year guide. The mid point, a little bit higher from my read than a quarter ago, still below what analysts were hoping for walk us through whats improving in growth areas, whats still not quite working as well as some hoped we see acceleration in several aspects of our business. As i was saying earlier in the quarter, volume and revenue both accelerated. We had 27 increase in tpb, our measure of payment volume in our business when we look across the globe at our various products, really theres consistent growth in all aspects of our business. It gave us confidence to go out and give an early indication of how were thinking about next year were pretty excited about what were seeing in the business theres strong gr