Leaning on big cap tech. Once again ass an anchor s p 500 First Time Since february, microsoft, tiktok in the news schumer says the democrats in the white house have started to move a little closer on a stimulus agreement, and of course david disney tonight, which will give us all kinds of information about the progress of parks, studio entertainment, advertising and more as we have said many times over the last few months, disney in some ways a reflection of the economy, certainly the consumer side of it to some extent. I know julia is going to be following that closely after the bell expectations cant be particularly high but we are looking for a lot more data when it comes to the parks and the attendance, when it comes to directtoconsumer of course with disney plus and the exhibition of motion pictures, which is not something thats going on right now. Absolutely, david, i mean, i think it will be really interesting to get some more insight into the success of that streaming business, especially in light of netflixs earnings, you know, showing that subscriber growth, but i think the real question here, is this a tale of two different types of stocks we have seen this massive tech rally. Apple shares up 15 since those earnings last week, and then you have disney, which is in some ways really trying to transition to being a directtoconsumer company and also is stuck with these legacy businesses, which are struggling right now, like the theme parks as well as the movie business certainly something were going to continue talking about, david. Lets finish the market conversation with tony sakanaki. Thank you for joining us this morning. I mentioned apple shares up 15 since earnings last week, are investors buying apple in its fundamentals or riding this tech wave i think a little bit of both, investors are saying this is an improved company, were in a downturn, its not an eye zone cycle and earnings are going to grow 10 , and services, gross profits worth 39 of total Company Gross profits and so i think investors are saying this is a better company, a Different Company we can pay more for. I also think theyre saying look, you want to ride your winners in this marketplace. Apple has a forthcoming product cycle. It typically does well in advance of Product Offerings some investors are saying this is a Different Company, im willing to pay more. Additionally, investors are anticipating strong earnings going forward, and at this time of the cycle the stock typically does well. Now, in terms of that iphone cycle, this is a very different fall than apple usually has when it introduces its new phones not only are the phones delayed but many more people will be at home do you think the iphone cycle is going to look fundamentally different . We think it can be a strong cycle for a few different reasons. The first one is if we look at iphone unit sales over the last two years, they have been relatively weak, we estimate under 200 million. In the preceding four years, app apple was averaging 220 million phones per year. We have been below trend, and we think theres pent up demand associated with that the second is more just of a m timing issue, which is apple typically releases the phones at the end of september, and gets a bit of a surge thats the end of the fiscal year those are going to be released in october, and thats when apples next fiscal year starts so were going to have an Even Stronger start to the fiscal year and then the third thing i think as you mentioned, people are at home, and i think the hierarchy of needs today is shelter, food and iphone and, you know, people are spending time at home. They need devices. Theres been widespread, you know, evidence of increased spending on personal electronics and apple is likely to benefit from that as well. Our household is definitely one that has been spending more on personal electronics. A question about the Services Business this is one area that did not exceed expectations. Where do you see that Services Business going, on the new work from home, school from home, period in the fall starts up again. Yeah, the Services Business is now about a 50 billion business for apple its over 20 of the companys revenues, but its really a collection of many different businesses its apple music, its app store,commissions that they ge from selling apps on the app store. Its licensing revenue that they receive from google because google is the default Search Engine on ios. Its apple care, and so its a really diverse set of businesses its recently install base driven, and when something is install base driven, it doesnt have as much as a transactional element. Youre not going to see the big highs, and the big lows like you do on iphone sales, and thats part of the reason why you didnt see a beat this quarter on the transactional businesses, demand was better than the street had forecast. The Service Business is more install based driven its a diversified portfolio, it came in line with expectations we believe this business can continue to grow at double digits for the next several years. Tony, its david. You know, a broad question here, if i might we were speaking in the last hour to david katz, a long time value investor, and questioning multiples. I believe you downgraded tesla based on valuation what kind of conversations are you having with clients in terms of how you look at things and whether theres anything to be gained by downgrading on valuation, when it seems it doesnt matter given how much momentum is behind these names. Sure. David, i think you raise, you know, a couple of interesting points one is more broadly, the kinds of conversations were having with investors are, you know, when is tech overdone. Tech is out performed now seven years in a row this would be the 8th year its dramatically outperformed this year, and we are seeing multiples, particularly for growth tech stocks at very elevated levels versus history, and so i think investors are struggling with the fact that fundamentals are clearly better for tech but at the same time, valuations are much higher there is increased risk in technology, and i think investors are struggling with that theres also been this big rotation within the market, sort of the largest rotation we have seen in the last 20 years, Growth Stocks versus value stocks, and thats also a question specifically around tesla, we just had a disconnect. We believe in many of the attributes and advantages that tesla has, but we were really struggling to justify valuation that was more than 900 a share, so we had a disconnect with our rating, which was a neutral rating and a target price of 900, and we had to bring those in sign. We didnt change our view on tesla. We saw the stock run up an enormous amount and try to be true to valuation approaches and that resulted in an under performed rating. Yeah, well, its a lot higher than 900 bucks i mean, do you really believe its ever going to retreat to a level like that . Look, i think there are market factors that work, and execution factors that work. We, you know, as i mentioned had an enormous rotation, and out performance by growth oriented stocks and, certainly if we had a rotation away, we could see underperformance from a lot of Growth Stocks, and tesla is the poster child for growth. Manufacture, expectations are getting heavier and heavier. Thats certainly possible, but that expectation is now built into numbers, and the higher the multiple a stock is, the more penalized it might be if it does fall short of expectations tesla could continue to do well, if it ultimately executes and if the market continues to reward growth theres much more risk with the stock at these levels than there was three and six months ago. Tony, how much of that risk is around these new competitors getting into the market. We have been talking about niccola, how much does that play into your 900 price target . Not all that much the eb market, a little over 2 Million Units per year is going to go up 20 fold over the next 20 years theres lots of room for competition to grow and in parallel with tesla. I think where our valuation is centered is what you have to believe. To get to 900 a share, which is our price target, we have to believe that tesla sells 6 million cars per year in 2030. Thats more than the combined size of mercedes and bmw today, and we have to believe it becomes the size of volkswagen, which is the largest car manufacturer by 2050 and we would need to have 10 to 12 margins at tesla so tesla is basically saying were going to be way more profitable were going to be a mass market car dpacompany, and were going be may more profitable than a mass market car company by 2050, and that gets us to a valuation of around 900 a share thats purely our concern. Its not that, oh, tesla wont be a significant player going forward. Its that the market is baking in tesla being a very large player and having, you know, wildly profitable margins on top of that. Really putting that 900 in context. We really appreciate you joining us today. Thanks for having me. Well take a break here. Still to come, hes got the Third Largest follower count on tiktok Digital Content creator zach king is going to join us next to talk about you know what in a moment we love our new home. Theres so much space. We have a guestroom now. But, we have aunts. Youre slouching again, ted. Expired, expired. Expired. Thanks, aunt bonnie. Its a lot of house. I hope you can keep it clean. At least geico makes bundling our home and Car Insurance easy. Which helps us save a lot of money oh, teddy. Did you get my friend request . Uh, ill have to check. doorbell ringing aunt jonis here for bundling made easy, go to geico. Com. Hello . What happens whene easy, puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. The future of tiktok continues to be one of the key stories of the week. Joining us to talk about that, the platform and what a ban or a sale might mean for the Tiktok Community is zach king, a tiktok influencer, currently has the Third Largest amount of followers on the platform. Zach, its great to have you thanks for being with us today. Yeah, thanks for having me. Youre no stranger to how this all works you were already a king on vine, and clearly now on tiktok. Let me just start by asking what the community is saying about what may happen to the platform, whether its a ban or a sale yeah, so when the news first broke, you saw a lot of tiktokers, half of them started saying follow me on instagram, you tube, all these socials, because you dont want all your eggs in one basket for followers. You see people a little confused on why the ban i think a lot of the young generation doesnt understand the idea that there could be security risks and wondering if those are true or if its for, you know, other reasons. If it went to another large cap tech player. Microsoft obviously the most obvious example at the moment, would that mean a big migration in terms of content creators i think youre going to see, i mean, we love the platform tiktok, its got so much engagement on it thats where our audiences are, a large portion of them right now, and we hope the best for that platform. If it means going to a company like microsoft to bring that to the u. S. And make it more secure, then thats great. I mean, theres other worries, though, like can you do that transfer and have the management work with such an Innovative Company at the moment, which is tiktok, or will that actually be a killer in itself so theres kind of both camps there. Were looking at some samples of your work, and anybody who hasnt seen it already, should definitely its not the typical, you know, kid with their parent dancing on tiktok, you take a lot of care in this stuff. Is it your view right now that the technology or the platform allows you to do what you do better than any other platform yeah, the algorithm is incredible what its done is its levelled the playing field. If youre trying to crack into you tube right now, its such an impossible game. Its doable but would take so much work. You have tiktok allowing people, i have even had Staff Members at my studio who have created accounts and gone viral and have several million followers for themselves creating whatever their niche is i think thats the power you have people like kambucha girl, and that goes viral, and now hes got a whole career out of it, and can transition to other platforms like you tube. So i think the fact that the algorithm picks up a user, sends it out, starts testing it among other people, and if its good content, it keeps spreading it its got a different level of viralty than we have ever seen in a platform before. Julia boar sthere, a questiot transitioning from viralty, and youre also on all of these other platforms. Im wondering how your experience is on tiktok in terms of making money from these followers, in terms of these other platforms. It seems like that ability to make money is what would be crucial to the longterm success of tiktok. Youre absolutely right as a creator you have to be able to financially work a brand deal or commercial in there, like you tube has done so well, having a Partner Program that pays for ads, and thats incredibly important to the ecosystem whether it was in the conversation with tiktok getting banned if tiktok didnt get monetization in place this year anyway, i think you would start to see a migration from the platform, so it kind of comes at an interesting time where microsoft may be able to back them and help build that creator fund even better than, you know, they have announced now. And zach, i know some of your fellow tiktokers have left for a start up called triller, the number one app on the app store, similar to tiktok, same concept. What do you think about the idea of leaving for a start up where you might have more control of the money coming in . Ultimately all the platforms are a wash in that way to me as a creator, youre not in control of your audience i tell young creators, you have to come up with other ways to directly engage them, whether its emails or Tech Services where you can be direct communication to your followers. At some point, what facebook did years ago to make it their business was, we only have access to 1 of our audience, if we post without boosting it or incentivizing that post. Even if we have 45 million followers on tiktok, forever, it wont always be a direct to everybody like it is now thats why im encouraging the younger creators, mid tier to smaller tier to capitalize and bring their audience, even if its smaller to a dedicated place where they can talk to them hey, zach, its david faber tiktok may get shut down for the Chinese Government for lack of a better term, spying on its users. Do you have concern about that for yourself and the people following you . I dont have any concerns on that im not sure what access they have with the data i would be curious if microsoft bi buys it and theyre able to look into that. Im personally not im one of 300 million in the u. S. I dont think theyre tracking me specifically, but i think what i have noticed in myself and the younger generation, we dont care as much as privacy, we would rather have open information for people, and technology right and again, back to this larger question of where you would go, where do you think you would spend the bulk of your time so to speak in terms of a platform if tiktok were to get shut down . Well, theres two parts to that theres the creators time, and the audience time, and the audience attention does have to go somewhere, migrating, disney plus, netflix, hulu or social, and thats going to go to probably you tube attention or instagram reels theyre launching this at the perfect intersection theres a lot of interesting things in the ecosystem for creators im mostly going to be bummed because i think the space does need a lot more competition in it both to change the ad rates, to have options for creators, and where they can build their little ecosystems, and so i think thats out of the whole situation, if it gets banned, that will be the biggest bummer is that, you know, we lost a solid competitor in the industry right well, speaking of losing solid competitors, i wonder if you are as nostalgic for vine if i am, and if you ask yourself why some of these other ideas that seemed to have so much promise were taken away from us whats so interesting about vine was, you know, it was bought out by twitter a few years before it died, and i love the people at microsoft. I just spoke with them on a Virtual Event last week with trevor noah, and there are such innovative people there. It is the problem youre going to have, can the management let tiktok, whether microsoft or another tech company, can they bring that in house but allow them to do their magic and whats really working. Thats going to be the question. Yeah, i mean, we talk about that all the time, sort of absorbing different types of assets, keeping the culture in tact, rarely has it been with a public example its going to be fascinating to watch if it happens. Zach, we hope youll come back great insight into technology that few understood up until a few months ago thanks later carl, that question could tiktok go the way of vine. More on microsofts potential acquisition of tiktok. Straight ahead, Angel Investor, Jason Calcanis weighs in and tells us why the app should be banned stay with us welcome back, everybody. Im sue herera heres your cnbc news update at this hour. In north carolina, a tornado spawned by Tropical Storm isaias levelled a Mobile Home Park destroying at least ten homes and leaving only two standing. Meanwhile, isaias is speeding up the eastern sea board at 35 Miles Per Hour it is now approaching philadelphia sustained winds remain at 70 Miles Per Hour just below hurricane strength. In southern california, Authorities Say burning soot fr