Is not quite there yet when it comes to backing ryan who has been critical of trump. President obama is commuting sentences of 214 federal prisoners, including 67 serving life. It is the most in more than a century. Almost all were serving time for nonviolent drug offenses. Most will be released december 1. Michael phelps, the most decorated athlete in olympic history will carry the american , flag for the opening ceremonies in rio. Michael phelps is heading into his fifth olympics with 18 goals and 22 medals overall. Global news 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. I am Mark Crumpton and this is bloomberg. Bloomberg west is next. Emily emily i am emily chang, and this is bloomberg west. Coming up, a major miss for tech club, but investors do not care. Shall we call it the elon musk effect . We will take you through all of the numbers. Shares of square surge. What is propelling this mobile payment company. And we asked two toptier vps about the appetite for risk amongst a gloomy, global outlook. Plus, what they think about peter thiel backing donald trump. But first, to our lead, investors shrugging off the day quarterly miss from tesla. The electric car and battery maker posting a loss and share of 1. 06 much wider than most analysts had estimated. Sales rose 31 from a year ago but also missed estimates. Tesla missed on deliveries the last two quarters, but is still on track to deliver 50,000 cars in the second half of the fiscal year. That and improving gross margin is encouraging tesla bulls after hours. Joining us for more perspective, auto analyst and bloomberg do columnist in portland and cory johnson with me in the studio. Would you call it the elon musk affect . There is a steve jobsians effect. People look at the future. Today is the day we can look at what the company is doing. I think one of the interesting things we can do is look at the number of cars may have sold in the quarter or delivered in the quarter. They changed the numbers from of thekend release fourth of july holiday. They released them at a time where no one was there to see them. They changed the numbers a little bit. Just a few more here and there. You can see that you see the terminal. Number of deliveries. You can see the numbers coming down. In the Fourth Quarter, bunch of tax deals that expired at the end of last year. The Fourth Quarter is always bigger. The fact is the numbers are , coming down. When we look at a yearoveryear basis, it is one way to look at it, it was the biggest european year. This is sequential. That is yearoveryear. Growth was still getting bigger until it is smaller and is worse. It is also sequentially as well when you see the decline in the sales quarter after quarter. The bottom line is that growth for this company and the number of cars they sell is not happening. They are selling fewer and fewer every quarter. Talk about how many they they make they made 27 more cars , than they could sell over the last quarter. That is disconcerting when it comes to an Operational Efficiency standpoint. Emily and yet, shares are going strong after hours. Investors seem to be pretty excited about these potential delivery numbers for the second half of the year. They did miss the last two quarters. Do you believe it . Cory well look, i think this is a , company that if you really invested in it, you are investing in it for the longterm. That is why, for me, i tend to look more the fundamentals anyway. I dont think a miss or two will shake or even several in a row will really shake the people they need in the longterm vision as elon musk laid out. What is important is there is 18 months before model threes get to be delivered. I think that is the tipping if point. You believe in elon musk, that is what you are looking to to maintain your bullishness. When i look at what the company said in its releases today, and also the last quarter, the issue is not so much, did they make their guidance, did they hit analyst estimates, did they build credibility . They have 18 months of what the questions are going to continue to increase, even amongst people who really believe in the vision can execute it. Like thinkngs things like sticking to the old number for the model three deposit, and they were asked about it on the call today. They did not give a new number. It screams credulity to believe that number has not changed and yet they have not given an , us update. For me, the real issue is credibility and i think the earning reports are an opportunity to become more transparent and build credibility in the company as it goes towards the model three launch, and that is the opportunity i think they are missing. Emily part of that big longterm vision is of course elon musks master plan where he laid out for new vehicles, as in a semi a pickup truck, a , small minibus. What we learn about the model x and how the newest model is actually selling . X sold a dozen more than the numbers from july, but they have not being gangbusters. This is the second full quarter this company has, really fantastic. It points to the issue of Gross Margins. The Gross Margins, the more cars s in full model production, model x in full production and yet the collapsing Gross Margins are a concern. You would think, the more they run the factory, the more efficiently they run the factory, and that would show itself in the Gross Margins. The Gross Margins are actually coming down, basically flat the last quarter, which is ok, but a lot worse than what they were. You can see the effect of the fact that they are not getting as many subsidies from the government. Some of those have expired. If you look at the yearoveryear change, you can see the climb and decline in decline. Maybe that is getting a little bit better for these guys, but i think it is a concern that the pace of change in the Gross Margins is on the wrong side of change. Emily we have been listening in on the Earnings Call and musk has proposed a merger between tesla and solar cities. Shareholders and regulators still have to approve that. He just said there was no reason for tesla and spacex, the other company that he runs to merge. ,investors who might have been worried about that can rest easy. He also spoke a little bit about autopilot cars, self driving cars. Take a listen to what he had to say. Elon we estimate a truly enormous number of Autonomous Vehicles for there to be any demandaturation. Basically the only car that anyone wants to buy. Musk is sticking to this idea that the tesla autopiloted car could be the safest car on the planet. It is a very differing view from the self driving cars over at google, where they are focused on fully autonomous cars, and tesla is focused on sort of semiautonomous cars where the driver can remain engaged. You know as we know, there was , that accident in florida where someone died. Safety investigators are looking into that. Do you think that was a oneoff or could we see more issues to come . Ed yeah, i think google has made it very clear that they do not want to even mess with semi autonomous. They want to go to fully economist because the research that is out there shows that anytime there needs to be a transition between human control and the vehicle, autonomous control, is a very dangerous situation. Essentially in that period the driver is impaired at the level of a drunk driver. So that is really dangerous. I think the tesla has created a lot of questions about the true capability of its autopilot in the way that it presented it, in the way that the media sort of took some of the things they said about it and ran with it. I think there are issues. We obviously still have to wait for the investigation to understand that whole situation better. Emily we are anxiously awaiting the results of that investigation. The Bloomberg View columnist joining us portland. And editor at large cory johnson , with us as well. Thank you both. Coming up, square reporting better than expected secondquarter revenues. We will look at the numbers in the play vince Payments Company and the news it may expand its partnership with starbucks. Plus, a billionaire entrepreneur who is making space history. And no, we are not talking about elon musk. Richard branson or jeff bezos. It is an interview you do not want to miss. This is bloomberg. Mark emily turning back to tech earnings, shares of square popping 10 in extended trading. The Payments Company reporting a loss of shares but revenue beating analysts expectations. The company had an adjusted revenue of up 54 yearoveryear 171 million, and increased its yearly outlook. Gross payment was valium by 12. 5 billion. What are investors reacting so positively to . We have selina wang of bloomberg news. What are they reacting positively to . The numbers were pretty good across the board. This was a very good quarter for square. You saw them raise forecast, they beat analyst estimates. Not only did they grow their business, you mentioned gdp numbers and some of their with data and software lines. You saw that jump as well. That number is very important to analysts and investors because they see that highmargin as the futureness driver of growth for the company. Emily profitability has been jacks here. Of how important a milestone is that . It is important because Public Markets have changed their perception. I think right now they are measuring them on true. It is inevitable at this emily point. At are the big takeaways for you . You have watched the business launched newve business is like square capital, giving food delivery what is the real promise of square . Keith i think the market is beginning to appreciate the unique aspect of square. It is all across United States. Small businesses. The only company in the planet that has more paying in Small Businesses is intuit. Square over time turn these relationships with small. Usinesses these businesses are already running the most important part of their business on square, and just add services. The pain of running a Small Business is still there, and there are plenty of opportunities to make life easier for people who are the sole providers or so business owners. Emily how does the delivery fit into the picture . Keith that is a good question. I am not going to it answer that. Emily what do you think . Selina something that both touched on was they had an increase in large businesses. This is very important, because it means their numbers get better, gdp increases. Something that has been a concern of investors is there whole addressable market, the Small Businesses that need this payment processor. But the fact that larger businesses appreciate them as well, and as keith was mentioning earlier, they have this whole ecosystem. They integrate software and hardware, it shows that their total market is larger than what may be what had been previously thought. Emily they said they are working to extend the starbucks partnership. This has been a kind of controversial deal. Some have disputed whether it was really a Good Business deal for square to get into bed with starbucks anyway. What do you think . Keith i think it had a lot of benefits. One is the increased reliability Safety Perception as square of the ecosystem. They had boosted in various other places in terms of brand. Secondly, i think it was a shot to make square wallet successful, which turned out not to work, but there is no problem with a start up taking a risk. If it had worked, it wouldve made them a more valuable company. Third of all, i think actually andthird of all, i think actually the process of serving a Large Customer is not paying now paying dividends. I saw the Earnings Call thats where is moving up market. There was a lot of product work that went into being able to serve starbucks, which will pay dividends to other customers. I noticed the margins are increasing and the revenue rate is also stable and slightly increasing even, though the customer segment is getting larger, so that is a promising sign. Emily a Strong Quarter quickly, it was a Strong Quarter for square capital. Severaled 889 Million Dollars in capital. Up 123 yearoveryear. This is a new business growth, but what more can we expect . Selina everybody is asking this , is the young company. There are a lot of different levers they can pull. Are they going to extend their antiquary business like or are they going to look internationally . I asked this question to the cfo and she said, yes, you should be expecting more types of products that are going to help Small Businesses grow, and theyre also looking at global expansion. There were rumors about the u. K. She is not commenting whether they are pushing their in the immediate future, but she says it is a very interesting markets , so i will be keeping my eyes on that. Emily keith, another question that always gets asked and probably will be asked quarter after quarter as jack dorsey leads square and twitter. Obviously, you know how hard it is to run square. Jack is under a lot of pressure at twitter. How long do you think he will continue to do this, and would you recommend it . Keith square is obviously performing well, up 80 metrics. Emily twitter is a different story. Keith twitter is a different story. I am not a user of twitter. I think twitter has got one or two problems. If they fix the adoption aspect, important, more impact on the world than facebook, snapshot, instagram combined. It is fundamentally, can you get new users on board that is easy , intuitive, does not feel like a chore . If not, twitter is like a quagmire, and they are not fun. We just witnessed it with yahoo i think that is more of a drive more of a drag them square. Square looks like it is finally firing on all cylinders now. Emily former ceo of square, youll be with us for the second half of the show for our special series. Selina wang also, thank you. Be sure to tune in for my exclusive interview with the square cfo sarah frier. We will have the extended full interview at 3 00 p. M. Pacific. Up next, the billionaire entrepreneur who is making space history with the first private company cleared for a lunar mission. This is bloomberg. Emily a milestone for space history. Aviation officials have granted the private Company Permission first to leave earths orbit and land on the moon. Remember, we see spacex launches all the time, but knows Nation Company has gone above the International Space station and landed. I started by asking this man of all the milestones he is aiming for which is most important . , going to the moon is least symbolic of what a small group of people and the dedicated entrepreneurs can achieve, so of course we are going to the moon and yes, it is a literal moonshot, but it really means is that the thing that could only be done by the superpowers, to imagine there were only three superpowers that have ever landed on the moon. No private company has ever done it. When we land, we are not the First Company to ever do it, but we become the fourth superpower. To me, that is more than anything else. That shows and inspires people to say, if the man who grew up poor in india can come to this country and achieve the big things of landing on the moon, what is my moonshot . Emily you have your eyes on elon musk, dont you . Elon musk is still doing suborbitals, but we love him. When you go down, leaving the earth, orbiting and going beyond that and become the First Company ever to do so, so what we are announcing today is actually is really interesting. We became the First Company and the only company ever to have received the permission to leave earths orbit. So think about that. People think everybody is going to space. What they do not realize is everybody is coming to a space station. That is the lower part of it. We will become the First Company to ever leave earths orbit as a private company. Emily give me the timeline here. What do you plan to do once you get there . We plan to go next year, the second half of next year is when we plan to go to the moon. It will be sometime i would say fall of next year. We are starting to look for the minerals on the moon. Whether it is looking for the platinum grade material, the rarest elements or looking for helium three. Helium three is the best resource for clean energy. The small quantity of helium three could power the planet for billions of years. Emily why is it important for Space Exploration and the future of humanity . Become ae if you multiplanetary society, you have to learn to live off of the planet. If you if you want to go to mars like elon musk wants to do the best place to get your , training is living on the moon. Because once you learn to live off of the planet, you have to learn how to live without all of the facilities we have, in radiation. All of the structures we have here. And once that, you can go beyond the moon to mars. We know there is plenty of water on the moon, so what if we can take the water and hydrogen and oxygen and that becomes feel for fuel for the rocket and fuel for humanity . Emily do you want to start a colony on the moon . I really want to learn to live off the planet, live on the moon create a colony on the moon , and that becomes the basis for , us to live on mars. More than that, we also want to create and reduce the cost of going to space, and one way to do that is getting all of the fuel from earth, what if we had a fuel depot on the earth orbit and a fuel depot on the moon orbit see you do not have all of the fuel you need to get to mars. You can refuel on the way. Emily you are planning to send robots first, but you do plan to send humans . When do you plan to do that . We initially went to send a robot. Think about what we are doing as opposed to building a self driving car. There is no gps on the moon, so we are building a spacecraft capable of landing and doing ever