Particular she didnt break instagrams revenue, but she said that they now have over 15 million businesses using business profiles and instagram joining the 70 million facebook business pages. I asked sandberg about concerns that the company would no longer be able to rely on higher ad load to drive growth and heres what she said. Our goal is for the ads to be really high of qualiquality. When you see a post from a friend, you want the ads to be as high quality as those posts and so weve been carefully tracking the exact of ads on the User Experience over the last several years. Ad loads up from a few years ago and weve been able to do this by improving the quality and the el are advance of the ads. And weve done it without significantly impacting peoples facebook experience. More relevant the ads, the higher the revenue for facebook, and the better experience for consumers. Now, i also asked sandberg about the companys projections that its Capital Expenditures would grow by about 50 this year. We remain very solidly in investment mode. We are going to invest aggressively you already see that were now at 20,000 employees, which is up 43 , year over year. We think we have a lot of opportunities to connect more people, to help people share more, to build more community, and youll continue to see us invest aggressively. It sounds like part of that investment will go to original content. Sandberg telling me that facebook wants to create a content ecosystem. Well be listening to the call, which just got started moments ago, and will well bring you, melissa, anything else that comes out of sheryl or ceo, Mark Zuckerberg julia, thank you. Lets trade facebook here, pete, and i know you got into this trade today, ahead of the Earnings Call. And it was a roller coaster ride guy and i were sitting there watching the numbers as they went past, they looked great, and all of a sudden we saw the stock down six points and then it started to make this march up he went out for coffee, by the time he was back, it was flat, now its up a couple of dollars. She focused on ads and thats exactly what everybody should be focusing on. And they talk about the quality of the ads, the relevance of the ads. That also adds to the ability for them to have higher pricing. And this is the place where people go for digital pip mean, right now, its facebook and its google. Thats where they go 77 . This is something theyre executing perfectly on, so thats why i think you would want to stay long this stock the pricing, though, is key, because you cant really increase the ad low anymore from where it is right now. Its almost fully saturated, but if they can charge more, that helps. He brought up google and the correlation to facebook and google on the ad revenue is about 93 . You watch google and youre going to figure that out the next time, too but they can get more into whatsapp and messenger and places where i think theyre starting to put ads and they may not be as dense or as or at least as fertile of a ground to put these advertisements, but the advertisements are totally growing and these guys are winning with advertisers on the engagement i think petes point that almost 80 of digital ads is between facebook and google. And so its, you know, one thing you just mentioned, saturate rates on their core offering, and what are they doing now . Theyre getting to, you know, theyve saturated mobile and theyve saturated their main feed and now theyve moved t instagram and have just said they have about 700 million users there. So when you think about it, what are they going to do at some point when saturation rates get high theyll move to whatsapp and figure out how to monetize that. Theres a lot of leverage here its really hard to knock these operating margins year over year so how do you trade it the stock just rallied 10 into the print. I suspect, not too different than google. You could see this stock kind of come back a little and consolidate a little bit from that recent breakout level i just dont know how or why you would chase it right here at an alltime high after this great news its up 45 on the year. I think the kneejerk was users came out, 1. 32 billion, which was expected and i think people sort of shot first and asked questions later. And then and dana hit it on the head when you parse through these numbers. Operating margins, 47 it was 43 , versus consensus, and it was up from last quarter, as well. So maybe theyre not growing as well as the street wanted them to, but their business is being run better, as shown in the margins. So i think you can stay long this name. You know, i dont think weve wavered all that much on facebook over the last years i think you stay wit in the interview with julia, Sheryl Sandberg seemed to really emphasize spending aggressively. In past quarters, they came out on the Conference Call and it scared people. Should we expect Something Like that there is no doubt that we could see this start to react and suddenly go to the downside. I have no doubts of that being a possibility. But i think it makes sense theyve got to spend and grow. They talked about adding the employees. Those numbers, year over year, thats a pretty incredible number when you think about what you put out there there. So i think what youve got to look at is, theyve got all of three levers and continue to move down the you were talking about that, with messenger, whatsapp, across the board, and obviously instagram, there are ways in which they can theyre saturated right now in certain spots, but there are other areas where theyve been growing that i think theyre going to be able to add those ads to it. I think you get to it 27 times. Instagram is going to be a billion in maybe a year and a half this is the story you want you want less growth in the core, more spending, but a lot of growth outside of that. What do you want to see in the Conference Call or hear in the Conference Call, dan, in terms of that turn to the other properties and actually selling ads successfully there so to me, it goes back to spending i want to hear more about how theyre going to spend and how theyre going to theyve actually gone out of their way to say, well, we dont expect to monetize occulus in vr space how are they going to monetize whatsapp this massive untapped property so these are things that could obviously help the stock on its way to higher highs, every time you get a dip. And i just want to make one other point. Weve talked a little bit about snap since its ipo this is like a 16 billion Market Cap Company facebooks about to cross 500 billion in market cap. When you think about it, this and twitter, theyre like a pimple on its you know what. They just dont matter at the end of the day to me, at some point, theres got to be a value in the fact that those guys each have about 140, 150 daus, daily active users. At some point, some other property will have to take a very had look at this. Probably google if they want to compete with facebook, in the social aspect. So occulus was the big acquisition they made, and they had to lower the praise on not real compelling not yet, but it could feed into things facebook does in the future in terms of the aggressive spend yeah, yeah, but they had to lower the price of the things earlier this summer theyre not flying off the shelf. But in terms of investing aggressively, if they are to invest aggressively in original content, do you think that is how they get more ads on to the other properties its not a terrible thought, right . I dont think thats a crazy idea ill say this. I think everything facebook does you could occulus, maybe they missed the ball on that you be, but whatsapp, none of us i think one person on the desk knew what whatsapp was. Turns out, it was pretty ingenious by them. And look at what google and youtube. Youtube seemed to be an afterthought i think people are now valuing youtube anywhere from 50 to 75 billion. So the guys and gals that are running these shops are doing a pretty good deal im not certain where facebook is going to go, but contents not a crazy thought. And one thing pushed by zuckerberg for a long time, video. Every quarter you hear him talk about video, video, video, so to had ad on top of that, all of thaez streams. Think about the ad generation they could get from that we got google, or alphabets earnings, excuse me, and now we have facebooks earnings now that we have both results and we can see where these guys monetize and what they monetize, dan, would you rather . I think google on a valuation basis, and also, i think the sentiment is not nearly as rosy in google as it is in facebook right now. I like the fact that actually google has been pretty volatile, has been trading in this range, fail eed at that prior high. The fact that it was down less than 3 yesterday, tells you there was no big problems there. Investors are fairly comfortable. I think theres some fast money in it as the stock run up 7 into the print to me, i would rather much google here, i think interesting for more on facebook, were joined by one of the companys earliest investors, roger mcnamee. Great to see you great to be back. Whats going to be facebooks next leg of growth melissa, i think the thick that every investor needs to keep in mind is that its been a huge stock this year, but there is literally no impediment to future growth. The way i think about facebook is they have 1. 3 billion daily users. Think of those people as essentially being like the customers of Phillips Morris in the heyday of cigarettes theyre addicted to this product. And there are no regulatory controls on facebook at all and what they do and, yes, they have a full ad load on the mother ship, on the facebook website, but there is a lot of leverage to increase price there. Thats enormous amount of opportunity in instagram, which is, you know, one of the most popular platforms anywhere and has the same kind of addictive user base that facebook has. And they havent even scratched the service on messenger of whatsapp yet so i look at the traditional ad business here and i see zero impediments globally to growing this business. And you know, i think that the reasons to be concerned about it are largely environmental. You know, i think whats going on in our own politics in this country is very scary for the market, because the challenge to the rule of law is obviously a challenge to property rights, which should be a huge issue for investors. But within the context of the market, i think facebook is an unbelievably well positioned unbelievably, really no barriers roger, youre a very smart guy. Youve heard a lot of pitches in your lifetime. If somebody walked into your office and said theyve got this company and there were zero impediments to growth, would you actually buy that . That sort of language makes me nervous. Melissa, im talking about growth, not stock price here right, right, right the issue on the stock price, there are a lot of environmental factors that i think should be causing investors to be much more cautious than they are today. What im saying here is, there is no antimonopoly regulation in the United States the European Union, which does have some, just put the record fine on to google, and it literally had no impact at all so when youre an internet monopolist, as google and facebook are, you know, youre literally sitting pretty, because you have essentially no constraints to growing your business, to taking new acquisitions, in facebooks case, like instagram, like whatsapp, and transferring the benefits of your monopoly power to those new properties. As google just did with its Price Comparison engine, the one that the European Union challenged for antitrust behavior and so i look at this and i dont see impediments. What i see here is ana stock market environment, where right now the Earnings Growth is fantastic, but youre also seeing big expansion multiples, so that does scare me. But so far as an investor, im personally very cautious im deeply long this stock, because relative to the market, i love it. But i have an outsized weighting in tbills right now, because i look around and i see things going on in the Global Business and political environment that i have never seen in 35 years as an investor. And which, honestly, im not sure anybodys seen in a hundred years. And which i think should be scaring investors more than were seeing now roger, its tim so let me extrapolate that it sounds like youre saying facebooks a Great Company, but this sounds bubblicious. Whats the valuation you want to pay for this company is 27 times too much to be clear, to be clear, i dont think the problem is facebooks valuation in the context of a Broader Market. I think the question is, one of these days, investors are going to wake up, somethings going to happen i dont know that somethings going to happen, but in all probability, something will happen, that will cause investors to reevaluate their enthusiasm for stocks in general. When that happens, therell be no place for facebook to hide. Its expensive on a p\e basis relative to the market, but i think its fundamental situation justifies the valuation. So i think the relative value is fine but my fear is something happens so its a Broader Market call, basically, roger exactly to me, thats the risk in the stock. And from where i sit, its the only risk in the stock i think that they they you know, theyre early enough in the growth curve on some very Big Properties i mean, what do they have three properties that have a billion active monthly users thats unbelievable. Right i mean, frame of reference, there are 2. 1 billion people in the world who would tell you that theyre notionally christian. There are 2 billion monthly active users of christian. There are 1. 3 billion daily users. This thing is so big that the monetization opportunities, particularly outside the u. S. , really havent been tapped roger, thanks so much for joining us always great to speak with you my pleasure roger mcnamee, evaluation partners managing director. An interesting broader call on the markets, being invested in tpi tbills and very deep, long facebook but in terms of facebook, do you agree . I think your question was an accurate one no impediments to business that is inherently scary, because theres got to be something out there that none of us thought of. By definition, it cant be have that big a moat but the market call is spregs, because if you listen to what he said, its everything dan said maybe he said it in a little bit more conservative fashion, but it echoes a lot of a lot of the same far more articulate, would you also say i didnt say articulate you know. You know, i think one of the things, and why if i did a would you rather right now with facebook, i would say, ill take facebook, because their revenue because its twice that of google the Revenue Growth is twice that of google. For that reason alone, and they own the space. Everything roger said, the on thing he said this exactly. He said, the only thing that drags it down is the market itself as we had mentioned, President Trump is expected to deliver an announcement about apple supplier foxconn opening plants here in the United States elan movie has got some details. We did get the twominute warning. Were within that at this point. Ian ylan, what should we expect . A factory in wisconsin is expected to create about 3,000 jobs right now with the potential for that number to grow to 13,000 jobs in the future local media is also reporting that foxconn will likely use about 1 billion to 3 billion in government incentives to make this project happen. That is very big deal for both wisconsin and for foxconn. N now, you can see there sitting in the front rows of the press conference treasury secretary steve mnuchin, wilbur ross, energy secretary, rick perry were also expecting that the chairman of foxconn, terry go, will be there as well. This was a deal that was negotiated in part with the help of Donald Trumps soninlaw, Jared Kushner. And so we will be expecting that announcement to come down very shortly. There was also some announcement by soft bank. Didnt he introduce terry go to President Trump . Is there any financial involvement, as well what were told is that this is a deal that the president was very personally involved in. There had been some question, when, if the president may have even helped select the site. And it is important to note that wisconsin is a state that he did win. So this is a deal that was very important to the president , but in previous days, this might have dominated the white houses agenda but today, it almost seemed so far lost in the shuffle, amid all of the other fastmoving news that weve had here out of washington on sessions, on health care, on even the president s own surprise tweet about transgenders serving in the military so well see if they can refocus the agenda in this moment. Absolutely. And im glad you mentioned the political importance of the state of wisconsin also, of course, the state of the speaker of the house so that could also be some Political Capital down the line. Thats exactly right. So, were told that foxconn will be announcing additional factories in the future, in other states the president s staff was asked in a Conference Call whether or not those would have to be in states that President Trump also won. He said that theyre focused on what States Foxconn would see the most success in. Not necessarily which ones had electoral victories. We just saw ivanka trump and Jared Kushner walk into that room again, were expecting the president to enter that east room at any moment were well within the twominute warning on this. Hell take the podium shortly to announce that factor, as elon had been detailing in the state of wisconsin you know, its interesting, because jim cramer talked to tim cook back in may and tim cook also seemed to indicate that he would be interested and willing to open plants here in the United States. This really seems to be sort of a turn hear in ter