Transcripts For CNBC TechCheck 20220809 : vimarsana.com

Trade. Flying stock prices including the ceo of 23 and me on the heels of those results we are going to start with the deal of the day right up our tech check alley applovin announcing a proposal to merge with unity valuing unity at 29 billion or nearly 50 bucks a share i was on yesterday but i was watching you said applovin might be in the market for consolidation have a listen. The type of company i have my eye on, applovin up more than 10 today. 15 billion market cap roughly it is down about 57 year to date you might not tend to think of this as a fintech play but in a way it is because the app ecosystems and how smaller businesses and developers balance between advertising and discovery, appearing in app stores, those are Financial Issues and perhaps investors can think more broadly about the types of companies that are available out there. It is also worth noting iron source is looking to be taken out by unity with some help from what was it, slipping my mind, but private equity is helping out there too. Silver lake. The lesson there watch tech check right john . A revenue of more than 700 billion by the end of 2024 if this goes through looking to give App Developers access to unitys design tools unitys would take over as ceo of the combined company. Gaming meets monetization. Ad network and app mediator. There is also a deal trying to take place between unity and ironsource you could argue here applovin had no choice. The threat of the unity ironsource combo threatens their business right if you have one fly wheel why would customers use applovin when they could get it all from a combined unity ironsource . The way im thinking about this is it is kind of like what adobe did a decade plus ago when they went from mainly a focus on content Creation Tools for desk top publishing and eventually the web branching into Digital Marketing and now what theyve got as i was saying yesterday, sort of a fintech play now they have insight into what is happening with ecommerce and inflation and the data serves as a financial tool potentially for customers. I think thats whats possible to build if you put together unity and, hey, either ironsource or applovin that combination for the app driven economy which is today primarily mobile but tomorrow could be what a lot of people are calling metaverse. Its there its real. What happens to an app lovin if this doesnt happen and unity and ironsource does go through all three companies have been hit by sort of the selloff in Growth Stocks but applovin more than others. The 90 plus growth profitability as well is kind of an expensive acquisition target. Who would be able to do that deal without a certain amount of dilution there are a number of companies in the digital creation space that could look at the possibility of more data, more Marketing Tools and creation as being important here does it force adobes plan is the real question. This is a space when you talk about 3d design, talk about immersive environments, adobe has been organically moving into that but will they make a bolder m a type move into the space eventually they probably would i dont know if this is the type are you saying unity might make sense for an adobe . No. I was saying applovin might make sense for an adobe because adobe is already still stronger when it comes to content Creation Tools across the board but if they want to move more data scentric into a space that is sort of a move whether applovin or Something Else could potentially make sense for a larger player like that for more on the mechanics of this potential deal lets keep talking about it with david faber. Youve been talking about this as well. I was talking more from the strategic product side but we dont see this type of proposal every day. No. Interesting listening to you talk about it from the perhaps more important side in terms of whether it fundamentally makes sense, john but from the m a perspective, its a tough one. Youre talking about an unsolis ided all stock unsolicited all stock offer from one company to the other who is already in a deal to acquire another company. They want to Exchange Stock not yet listed as part of the consideration. They are c shares. They are also going to be converting b shares to a shares. The b shares have a 201 vote. But theyll get rid of that. All of which is to say it is somewhat complex not to mention that unity shareholders would end up owning more of the combined Company Stock than would applovin, although less of the vote there you see it right 55 of the economics but 49 of the vote they are saying, though, hey your ceo can run it and they are willing to have board representation be a more favorable toward unity but a key part of the overall pitch is as well that you dont buy ironsource that was an interesting deal in and of itself of course. Sequoyah and silverlake both in support there of what was the spak that decided to sell out to unity. You know, we dont see this kind of thing very often on paper its not clear that its got a great chance, john its not clear what unitys perspective is going to be here. We got some sense in the background to the ironsource deal that there had been some conversations. But i have not been able to sort of fill in any blanks there in terms of whether they were with applovin as we assumed they were and whether or not they came to any sort of point where they basically said, no thank you you could assume that was the case and then perhaps applovin said, well, well give this a shot and put an offer on paper here these kinds of offers, dont often come to fruition perhaps unity will be interested sequoyah and silverlake will be key voices kkr on the other side owns 20 of applovin. Yes this speaks to the environment weve been talking about over the last couple weeks where private equity has been hunting around in the sub 20 billion, sub 15 billion market cap a lot of these stocks that have taken a haircut isnt drastic enough to talk about the sort of repricing thats gone on here. The ironsource deal potential deal, there was private money in there. Potentially it seems making it easier, more palatable if you were to go the applovin route the execution would be really tough because these are two companies roughly the same market cap you have bigger work forces, more employee comp concerns to deal with. Does it distract you yeah. All good questions, john all reasons why you might expect unity at this point has said nothing more than we received the offer and well consider it. But well have to pay close attention here its rare indeed that they would say, okay. Sure well take it. That would seem to be an unlikely outcome by the way, important to point out applovin also warned, they reduced their total revenue guidance for the full year this morning as well. That kind of got lost in all of this, also i guess you can see it in the share price as well. Talking of share price, david, unity was up a lot more. Kind of hovering around the flat line now what kind of position does that put its Share Holders in to either push for this deal or not . Well, listen. Obviously if youre applovism n you want to see the market react very positively. The combination sends your stock higher that has not been the case and given that is the consideration being offered it is bringing unity down well below what was the 58 plus dollars that they said this was worth. You know, it doesnt put a lot of pressure on unity shareholders is the best way to put it. Yeah. I guess well dig in, too, on which may be the better deal, ironsource or unity. Lets bring in cnbc contributor, founding manager, Capital Partner at plexo capital it is great to see you good morning to you. Lets start right there. What do you think the better deal for investors, ironsource or applovin . What is unity, their shareholders deciding right now . It is important to provide context for why these deals are even in play when we think about what is happening with the gaming space in general, weve seen the mobile usage of games surpass the traditional console based, pc based gaming. With a market expected to be in excess of 200 billion this year about 60 is mobile gaming thats largely driven by the casual gamer, right . When we think about games like farmvale that really kicked off casual gaming. So what the developers and publishers are looking at is a makeshift of revenues. Historically most of the revenues come from a very small percentage of the users. It can be as small as 1 of mobile gaming users that are making inApp Purchases. So the shift happens when a new revenue stream has an opportunity to emerge and that is advertising much more broadly based across a wider user base but the key is for both in App Purchases and advertising to have a really engaging game to keep people on the platform both for that small percentage to make inApp Purchases as well as for the larger base to see apps. And the combination of these two makes a lot of sense whether it is ironsource or whether it is going to be applovin, both of those platforms offer the ability to monetize applovin, you know, i think, does in your words see this as a threat enough to actually push them forward because developers could look at this as a onestop shop. I can create engaging games using the unity engine and then layer on top the ability to have monetization and i get a better feedback loop if both of those are together because i can understand what tactics theyre then using to develop the games to make them engaging is translating into the revenue another reason were talking about monetization and consolidation has to do with apple just completely upending and changing the Advertising Market on their devices over the last year or so. So, you know, why do these companies have to do this now . Give us that backdrop and also where else could we see this happen kind of what i was talking to john about as well, we know who is at play but who do you think could be doing the acquiring other than sort of unity, applovin, could a google get involved, could a microsoft even though it is looking at another massive target yeah. You know, microsoft is an interesting one just kind of thinking about the actual games that theyll have once the if the Activision Blizzard deal goes through and already having good dna with the xbox and success there. This could be an interesting point for microsoft to consider. Although john points out they are pretty busy as it is and anything in addition would raise the eyebrows of the regulators to understand is this going to be anticompetitive . Yes, all of the advertising players could actually have a look at this as john points out, thinking about where the other creator aspects are, and what tools theyre using, so adobe could even be an interesting play. But look what we do know is that a lot of the learnings from gaming translate very well into other applications so i think we could see a much broader suite of services that could plug in gaming as one aspect and really advertising is the core so i think, yes those players that are deep in the advertising space could actually look at this and at least keep track of it to see whether or not it might make sense. Yeah, look at the end of the day these moves by apple to be able to really focus in on privacy really limits the amount of data if there is an easier way to bake in the analytics and monetization into the core game itself that is going to be helpful. I think another piece of this, id love your take on, is really the fintech piece we dont tend to talk about gaming and fintech together about Digital Goods and Digital Services and fintech together unless we either are talking about crypto or, you know, the metaverses new fangled stuff. Really i dont think we spend enough time talking about b2b fintech and for a good segment of the market dealing in eco Digital Ecosystems, what applovin and ironsource are dealing in is fintech. How discoverable is your app not only placing ads inside your app but placing ads on behalf of your app to get it discovered in other places, right . So that is something that as facebook is trying to construct this Digital Ecosystem so it is not controlled by apple and googles whims, as others are trying to build this out it is going to be an important ecosystem to build out in part these are assets that need to come together in a way to enable that yeah. That was a really interesting insight. I heard that on the replay i think thats actually spot on. If we think about what these ecosystems are doing in separate instances at the moment but for applovin an ecosystem that is a platform for development will be able to monitor there are a lot of aspects with fintech when we think about the ability to monetize, manage ones business you can obviously see the ability to expand out into other areas as well. Maybe there is an opportunity for a buy now pay later financing of virtual goods i was wondering that, could it put fintech players in play clearly this deal has so many ramifications. We discussed it in light of so many Different Industries and it will be fascinating to see how it plays out as always great to have your insights talk to you soon. Thank you one deal or the other well see. After the break micron the latest chip maker to warn of a slowdown in demand bubbles bubbles so many bubbles as an expedia member you earn points on your travels, and thats on top of your airline miles. So you can go and see. Or taste or do absolutely nothing with all those bubbles. Without ever wondering if youre getting the most out of your trip. Because you are. Shares of snap are lower in todays session and snap is in the early stages of planning for layoffs the cut coming after the company missed estimates in the latest results sending shares plunging. You might remember that. It was a big plunge. It is still unclear how many of the more than 6,000 employees will ultimately be let go. Of course this is a company that is waging a war on many fronts amid the broader slowdown in digital ad spending. The stock hitting near all time lows this year down 80 in 2022. John, has not seen the kind of rebound other tech names have seen in the last few weeks. Has not well see where it goes from here with these macro head winds. Speaking of President Biden signing the chips act into lawless than an hour ago but what does it mean for chip manufacturers . Bank of america analyst joins us now to discuss some of the latest headlines having to do with micron and this inventory correction that we see happening in the chips we heard, we saw the big impact on intels quarter but then some variations in the impact on nvidia now on micron how clear is it . How quickly the chip makers will be able to work through this correction and how much of an inventory impact can we expect two or three quarters out . Thank you so in the last decade the demand for semiconductors has more than doubled even though every three to four years weve had a correct. Usually the cyclical corrections and long term trend tend to be rolling in nature. You start with the consumer then you get into enterprise then you get into data center and then you finally finish with auto industrial and through that process estimates get adjusted very aggressively and then even though the sales can decline the stocks can continue to do well so to answer your question i think we are in the middle of the period of inventory correction, investment adjustments by september or october we think the process will be done so we are very positive on Semiconductor Stocks heading into next year but we are still in the middle of the rolling correction that started with the consumer. We saw that with micron, intel, some of the smartphone makers, nvidia, consumer graphics hitting about some of that spilling into enterprise and data center perhaps even into auto and industrial. We think this is what happens every three to four years. We are very bullish on Semiconductor Stocks heading into next year. Lets talk about the impact of the chips act it seems to be it is nothing near term. Were talking two, three, four semiconductor cycles out and is it more on perhaps leading Edge Process Technology or more general edge maybe not to have an impact on over all Global Pricing and supply but supply of those critical chips youre absolutely right, john the demand for semiconductors will not be impacted by whether we make it in the u. S. , china, europe, japan, or korea. It doesnt change that in demand it is obviously very good to have a more Domestic Production of semiconductors in the u. S. And europe im all for that but the other two goals of the chips act which are to do with reducing the reliance on taiwan, i think it is too early to make that claim because there is no manufacturing in the u. S. The same as tsmc and i dont think the chips act in any near term will be able to reduce our reliance on taiwan then the third aspect of the chips act which is to help on the shortage side in auto semiconductors i think that also is more prosed to take place over the next three to four quarters, so my view on the chips act is that, yes, it is an incremental positive yes it brings more high tech manufacturing to the u. S. But i dont think a Silver Bullet in terms of reducing reliance on taiwan any time soon. I think you hit the nail on the head especially what some of the skeptics are looking at is in the short term it is unlikely but in the long term may also be unlikely and there are also questions on whether the money is spent in the right place to onshore manufacturing. Is there an argument to be made the u. S. Should be friend shoring instead putting money into places like south korea and japan that may have a better chance of doing this where the labor issues arent as great as here in the u. S. I think that is a good point. This is a first step it is an important step. It might not take us all the way over there you know, each of these steps gradually makes a dent you know, it is more a case of number one of course funding is important but number two i. T. Intellectual property is also important. Along with putting more money into place we also have to find a way to encourage companies such as samsung to put more of their leading Financial Issues<\/a> and perhaps investors can think more broadly about the types of companies that are available out there. It is also worth noting iron source is looking to be taken out by unity with some help from what was it, slipping my mind, but private equity is helping out there too. Silver lake. The lesson there watch tech check right john . A revenue of more than 700 billion by the end of 2024 if this goes through looking to give App Developers<\/a> access to unitys design tools unitys would take over as ceo of the combined company. Gaming meets monetization. Ad network and app mediator. There is also a deal trying to take place between unity and ironsource you could argue here applovin had no choice. The threat of the unity ironsource combo threatens their business right if you have one fly wheel why would customers use applovin when they could get it all from a combined unity ironsource . The way im thinking about this is it is kind of like what adobe did a decade plus ago when they went from mainly a focus on content Creation Tools<\/a> for desk top publishing and eventually the web branching into Digital Marketing<\/a> and now what theyve got as i was saying yesterday, sort of a fintech play now they have insight into what is happening with ecommerce and inflation and the data serves as a financial tool potentially for customers. I think thats whats possible to build if you put together unity and, hey, either ironsource or applovin that combination for the app driven economy which is today primarily mobile but tomorrow could be what a lot of people are calling metaverse. Its there its real. What happens to an app lovin if this doesnt happen and unity and ironsource does go through all three companies have been hit by sort of the selloff in Growth Stocks<\/a> but applovin more than others. The 90 plus growth profitability as well is kind of an expensive acquisition target. Who would be able to do that deal without a certain amount of dilution there are a number of companies in the digital creation space that could look at the possibility of more data, more Marketing Tools<\/a> and creation as being important here does it force adobes plan is the real question. This is a space when you talk about 3d design, talk about immersive environments, adobe has been organically moving into that but will they make a bolder m a type move into the space eventually they probably would i dont know if this is the type are you saying unity might make sense for an adobe . No. I was saying applovin might make sense for an adobe because adobe is already still stronger when it comes to content Creation Tools<\/a> across the board but if they want to move more data scentric into a space that is sort of a move whether applovin or Something Else<\/a> could potentially make sense for a larger player like that for more on the mechanics of this potential deal lets keep talking about it with david faber. Youve been talking about this as well. I was talking more from the strategic product side but we dont see this type of proposal every day. No. Interesting listening to you talk about it from the perhaps more important side in terms of whether it fundamentally makes sense, john but from the m a perspective, its a tough one. Youre talking about an unsolis ided all stock unsolicited all stock offer from one company to the other who is already in a deal to acquire another company. They want to Exchange Stock<\/a> not yet listed as part of the consideration. They are c shares. They are also going to be converting b shares to a shares. The b shares have a 201 vote. But theyll get rid of that. All of which is to say it is somewhat complex not to mention that unity shareholders would end up owning more of the combined Company Stock<\/a> than would applovin, although less of the vote there you see it right 55 of the economics but 49 of the vote they are saying, though, hey your ceo can run it and they are willing to have board representation be a more favorable toward unity but a key part of the overall pitch is as well that you dont buy ironsource that was an interesting deal in and of itself of course. Sequoyah and silverlake both in support there of what was the spak that decided to sell out to unity. You know, we dont see this kind of thing very often on paper its not clear that its got a great chance, john its not clear what unitys perspective is going to be here. We got some sense in the background to the ironsource deal that there had been some conversations. But i have not been able to sort of fill in any blanks there in terms of whether they were with applovin as we assumed they were and whether or not they came to any sort of point where they basically said, no thank you you could assume that was the case and then perhaps applovin said, well, well give this a shot and put an offer on paper here these kinds of offers, dont often come to fruition perhaps unity will be interested sequoyah and silverlake will be key voices kkr on the other side owns 20 of applovin. Yes this speaks to the environment weve been talking about over the last couple weeks where private equity has been hunting around in the sub 20 billion, sub 15 billion market cap a lot of these stocks that have taken a haircut isnt drastic enough to talk about the sort of repricing thats gone on here. The ironsource deal potential deal, there was private money in there. Potentially it seems making it easier, more palatable if you were to go the applovin route the execution would be really tough because these are two companies roughly the same market cap you have bigger work forces, more employee comp concerns to deal with. Does it distract you yeah. All good questions, john all reasons why you might expect unity at this point has said nothing more than we received the offer and well consider it. But well have to pay close attention here its rare indeed that they would say, okay. Sure well take it. That would seem to be an unlikely outcome by the way, important to point out applovin also warned, they reduced their total revenue guidance for the full year this morning as well. That kind of got lost in all of this, also i guess you can see it in the share price as well. Talking of share price, david, unity was up a lot more. Kind of hovering around the flat line now what kind of position does that put its Share Holders<\/a> in to either push for this deal or not . Well, listen. Obviously if youre applovism n you want to see the market react very positively. The combination sends your stock higher that has not been the case and given that is the consideration being offered it is bringing unity down well below what was the 58 plus dollars that they said this was worth. You know, it doesnt put a lot of pressure on unity shareholders is the best way to put it. Yeah. I guess well dig in, too, on which may be the better deal, ironsource or unity. Lets bring in cnbc contributor, founding manager, Capital Partner<\/a> at plexo capital it is great to see you good morning to you. Lets start right there. What do you think the better deal for investors, ironsource or applovin . What is unity, their shareholders deciding right now . It is important to provide context for why these deals are even in play when we think about what is happening with the gaming space in general, weve seen the mobile usage of games surpass the traditional console based, pc based gaming. With a market expected to be in excess of 200 billion this year about 60 is mobile gaming thats largely driven by the casual gamer, right . When we think about games like farmvale that really kicked off casual gaming. So what the developers and publishers are looking at is a makeshift of revenues. Historically most of the revenues come from a very small percentage of the users. It can be as small as 1 of mobile gaming users that are making inApp Purchases<\/a>. So the shift happens when a new revenue stream has an opportunity to emerge and that is advertising much more broadly based across a wider user base but the key is for both in App Purchases<\/a> and advertising to have a really engaging game to keep people on the platform both for that small percentage to make inApp Purchases<\/a> as well as for the larger base to see apps. And the combination of these two makes a lot of sense whether it is ironsource or whether it is going to be applovin, both of those platforms offer the ability to monetize applovin, you know, i think, does in your words see this as a threat enough to actually push them forward because developers could look at this as a onestop shop. I can create engaging games using the unity engine and then layer on top the ability to have monetization and i get a better feedback loop if both of those are together because i can understand what tactics theyre then using to develop the games to make them engaging is translating into the revenue another reason were talking about monetization and consolidation has to do with apple just completely upending and changing the Advertising Market<\/a> on their devices over the last year or so. So, you know, why do these companies have to do this now . Give us that backdrop and also where else could we see this happen kind of what i was talking to john about as well, we know who is at play but who do you think could be doing the acquiring other than sort of unity, applovin, could a google get involved, could a microsoft even though it is looking at another massive target yeah. You know, microsoft is an interesting one just kind of thinking about the actual games that theyll have once the if the Activision Blizzard<\/a> deal goes through and already having good dna with the xbox and success there. This could be an interesting point for microsoft to consider. Although john points out they are pretty busy as it is and anything in addition would raise the eyebrows of the regulators to understand is this going to be anticompetitive . Yes, all of the advertising players could actually have a look at this as john points out, thinking about where the other creator aspects are, and what tools theyre using, so adobe could even be an interesting play. But look what we do know is that a lot of the learnings from gaming translate very well into other applications so i think we could see a much broader suite of services that could plug in gaming as one aspect and really advertising is the core so i think, yes those players that are deep in the advertising space could actually look at this and at least keep track of it to see whether or not it might make sense. Yeah, look at the end of the day these moves by apple to be able to really focus in on privacy really limits the amount of data if there is an easier way to bake in the analytics and monetization into the core game itself that is going to be helpful. I think another piece of this, id love your take on, is really the fintech piece we dont tend to talk about gaming and fintech together about Digital Goods<\/a> and Digital Services<\/a> and fintech together unless we either are talking about crypto or, you know, the metaverses new fangled stuff. Really i dont think we spend enough time talking about b2b fintech and for a good segment of the market dealing in eco Digital Ecosystem<\/a>s, what applovin and ironsource are dealing in is fintech. How discoverable is your app not only placing ads inside your app but placing ads on behalf of your app to get it discovered in other places, right . So that is something that as facebook is trying to construct this Digital Ecosystem<\/a> so it is not controlled by apple and googles whims, as others are trying to build this out it is going to be an important ecosystem to build out in part these are assets that need to come together in a way to enable that yeah. That was a really interesting insight. I heard that on the replay i think thats actually spot on. If we think about what these ecosystems are doing in separate instances at the moment but for applovin an ecosystem that is a platform for development will be able to monitor there are a lot of aspects with fintech when we think about the ability to monetize, manage ones business you can obviously see the ability to expand out into other areas as well. Maybe there is an opportunity for a buy now pay later financing of virtual goods i was wondering that, could it put fintech players in play clearly this deal has so many ramifications. We discussed it in light of so many Different Industries<\/a> and it will be fascinating to see how it plays out as always great to have your insights talk to you soon. Thank you one deal or the other well see. After the break micron the latest chip maker to warn of a slowdown in demand bubbles bubbles so many bubbles as an expedia member you earn points on your travels, and thats on top of your airline miles. So you can go and see. Or taste or do absolutely nothing with all those bubbles. Without ever wondering if youre getting the most out of your trip. Because you are. Shares of snap are lower in todays session and snap is in the early stages of planning for layoffs the cut coming after the company missed estimates in the latest results sending shares plunging. You might remember that. It was a big plunge. It is still unclear how many of the more than 6,000 employees will ultimately be let go. Of course this is a company that is waging a war on many fronts amid the broader slowdown in digital ad spending. The stock hitting near all time lows this year down 80 in 2022. John, has not seen the kind of rebound other tech names have seen in the last few weeks. Has not well see where it goes from here with these macro head winds. Speaking of President Biden<\/a> signing the chips act into lawless than an hour ago but what does it mean for chip manufacturers . Bank of america analyst joins us now to discuss some of the latest headlines having to do with micron and this inventory correction that we see happening in the chips we heard, we saw the big impact on intels quarter but then some variations in the impact on nvidia now on micron how clear is it . How quickly the chip makers will be able to work through this correction and how much of an inventory impact can we expect two or three quarters out . Thank you so in the last decade the demand for semiconductors has more than doubled even though every three to four years weve had a correct. Usually the cyclical corrections and long term trend tend to be rolling in nature. You start with the consumer then you get into enterprise then you get into data center and then you finally finish with auto industrial and through that process estimates get adjusted very aggressively and then even though the sales can decline the stocks can continue to do well so to answer your question i think we are in the middle of the period of inventory correction, investment adjustments by september or october we think the process will be done so we are very positive on Semiconductor Stocks<\/a> heading into next year but we are still in the middle of the rolling correction that started with the consumer. We saw that with micron, intel, some of the smartphone makers, nvidia, consumer graphics hitting about some of that spilling into enterprise and data center perhaps even into auto and industrial. We think this is what happens every three to four years. We are very bullish on Semiconductor Stocks<\/a> heading into next year. Lets talk about the impact of the chips act it seems to be it is nothing near term. Were talking two, three, four semiconductor cycles out and is it more on perhaps leading Edge Process Technology<\/a> or more general edge maybe not to have an impact on over all Global Pricing<\/a> and supply but supply of those critical chips youre absolutely right, john the demand for semiconductors will not be impacted by whether we make it in the u. S. , china, europe, japan, or korea. It doesnt change that in demand it is obviously very good to have a more Domestic Production<\/a> of semiconductors in the u. S. And europe im all for that but the other two goals of the chips act which are to do with reducing the reliance on taiwan, i think it is too early to make that claim because there is no manufacturing in the u. S. The same as tsmc and i dont think the chips act in any near term will be able to reduce our reliance on taiwan then the third aspect of the chips act which is to help on the shortage side in auto semiconductors i think that also is more prosed to take place over the next three to four quarters, so my view on the chips act is that, yes, it is an incremental positive yes it brings more high tech manufacturing to the u. S. But i dont think a Silver Bullet<\/a> in terms of reducing reliance on taiwan any time soon. I think you hit the nail on the head especially what some of the skeptics are looking at is in the short term it is unlikely but in the long term may also be unlikely and there are also questions on whether the money is spent in the right place to onshore manufacturing. Is there an argument to be made the u. S. Should be friend shoring instead putting money into places like south korea and japan that may have a better chance of doing this where the labor issues arent as great as here in the u. S. I think that is a good point. This is a first step it is an important step. It might not take us all the way over there you know, each of these steps gradually makes a dent you know, it is more a case of number one of course funding is important but number two i. T. Intellectual property is also important. Along with putting more money into place we also have to find a way to encourage companies such as samsung to put more of their leading Edge Production<\/a> in the u. S. Because intel today at least does not seem to have what it takes to match those companies and intels Business Model<\/a> does not really enable it to be a foundry of choice to Many Companies<\/a> who are today competing against intel. I do think it is, the chips act is an incremental positive but by no means a Silver Bullet<\/a> i think sometimes it is being projected to be. Intel certainly hopes that were saying Something Different<\/a> about their capabilities two or three years from now but a lot to prove between now and then. Vivek, thank you. Thank you after the break, the stocks caught in the meme trade the wrong side of it today though well look at the trend and an interview with the ceo of 23andme. Stay with us good morning welcome back to tech check here are the headlines at this hour one of the greatest players in the history of tennis today said she is evolving from the sport she loves. In an Instagram Post<\/a> highlighting a vogue cover article Serena Williams<\/a> doesnt use the word retirement but says, quote, there comes a time in life when you have to decide to move in a different direction. She plans to focus on her family and business interests williams is scheduled to play in the u. S. Open later this month and it appears that will be her last tournament. Ag again, quoting, the countdown has begun. I am going to relish the next few weeks. Wont we all today nancy pelosi defended her visit to taiwan that prompted Chinese Military<\/a> maneuvers in the area we cannot allow the Chinese Government<\/a> to isolate taiwan they may say to them you cant go to the World Health Organization<\/a> but theyre not going to say who can go to taiwan and, yes it was worth it. And what the chinese are doing is what they usually do. And nbc news reporting mike pompeo president trumps secretary of state as the former president tried to avoid leaving office will meet remotely today with the houses january 6th committee. I just cant imagine tennis without serena im so focused on that vogue cover there was one i dont know if it was photo shopped with her daughter holding the end of it it was a beautiful picture thank you. We want to turn to the meme trade. Volatility returning to names like bed, bath, beyond, gamestop over the past week. Taking a look at what is driving these news, dom, a lot of high Short Interest<\/a> things havent changed all that much theyre coming from a lower base. High Short Interest<\/a>, coupled with a lot of internet chatter and mentions on places like reddit and you get some of that volatility mix weve seen. Take a look at gamestop, amc entertainment, bed, bath, beyond, gamestop is the one really out per foreforming up at 8 bed, bath, beyond despite the massive moves the last couple weeks still off about onethird of it value over that time period it is this volatility here were focused more on. Some of these names especially the original meme stocks have seen quite a bit of shortages in their shares if you take a look at the shares that they have short or bet against it versus the number that they have of shares out standing, gamestop roughly 20 of its shares outstanding is held short bet against, right about 19 for amc entertainment. A whopping 36 for bed, bath beyond among these three 3ed, bath beyond could have the most volatility if people decide to push this around covering the shorts and what not. If you look at russell 2000 index where many of these stocks live that is perhaps where you could see even more Short Interest<\/a> that could drive some of the action there. Other names besides some of these meme stocks that have seen some interest there are the ones youve known about or weve talked about quite a bit over the time period. Take a look at evgo on the alternative energy side of things beyond meat and fis kerr, each of these stocks is in the russell 2000 index and each has roughly 34 to 36 of their shares out standing held short these could be more volatile ones as well ill end with this one the russell 2000 stock with the highest amount of Short Interest<\/a> is none other than microstrategy the stock that many have seen as a proxy for bitcoin because it holds so much on its balance sheet. Roughly 39 of its shares out standing are Short Interest<\/a> there. Keep an eye on microstrategy alongside the bitcoin it could have that as well. Dangerous positions, dom. Thank you. Speaking of rollercoaster weeks take a look at shares of 23andme. Investors piled into the stock ahead of results shares were up 45 in a few days then the Genetics Research<\/a> Company Posted<\/a> a wider than expected net loss sending shares lower this morning 23andme is up 30 this month but lost roughly twothirds of its value since going public joining us now 23andme cofounder and ceo welcome. I want to start off with the impact of this economy on your business as consumers have less to spend on discretionary things what is the impact there then you did also call out inflations impact on some of the companys costs. For sure. I think a couple things. Theres no doubt, you know, consumers are tightening their wallet that they are definitely being conservative about how they want to think about spending at the same time one thing we did see during covid and i do think that trend continues is that people are very, even more mindful of their health. And you definitely start to see that more and more as people are thinking about how they can be proactive about managing their health, how they can stay healthy longer one of the key things genetics does for individuals is helps you understand your risks and helps you be healthier longer and understand if you do have a condition how can you better optimize that . So we definitely do see increases in costs you see that with labor costs. We see that, we have not seen a huge amount through suppliers but we definitely see that with labor. My sense and correct me where im wrong here is that there is a certain population of people, the people wearing their apple watches and checking this and that metricevery day and perhaps who proactively signed up to 23andme and are participating in those studies but to reach the mass market do you need more partnerships with health care providers, with doctors walking people through the genetic reports and the implications in helping them to understand it and how much of that is part of your strategy . Look, i think that the trends and again if you look at the data more and more there is a consumer element of health care. People are really, it is more about a partnership between things that you have to do on your own and things that you get from your physician. More and more people are stepping up and i disagree strongly like the 23andme is on the quantified selfindividuals. This is absolutely a product that will, that does appeal to the masses and will appeal more and more to the masses as genetics becomes a core part of health care. So one of the key things we did last quarter is we hired two individuals who are incredible leaders in the genomic medicine space. What we see is this opportunity to integrate Genetic Information<\/a> in all aspects of primary care and i think one of the big disconnects here is that theres all, we see personalization in the entyreky but you dont have that largely in health care you look at your prevention recommendations. Were all told to get a colonoscopy at the same time, all told to get mammograms at the same time. There is a whole opportunity for us to actually start to personalize that and that is exactly what 23andme is going to be leading and were developing that expertise that will be applicable to all aspects of health care. That is a compelling case i want to ask you a broader question in the Health Care Space<\/a> especially among competition. With amazons planned, announced acquisition of first medical what kind of player do you think they will be in the space . You guys rely so heavily on amazon things like prime day to sell your kits. Do you have any worries that amazon now knows who your customers and could eventually compete with you i am thrilled to see more individuals getting into health care in a serious way. If you think about it health care is a 4 trillion industry that everyone agrees is relatively dysfunctional no one raises their hand and says i love the experience if amazon is coming in and they can provide care in a new way, that is going to be more efficient and better for individuals, that is great but going back to what i just said, 23andme is going to be the genomic medicine experts here so we will be able to partner with all those various groups to say we can help you really understand how to apply Genetic Information<\/a> to those individuals to see whether there is an application and whether that can be better managed with genetic data. All right well leave it there the ceo of 23andme, thank you. Thanks. You can hear more from anne at this years disruptor 50 summit on october 20th register today by scanning the code on your screen or visit cnbcevents. Com if you are not able to get your Smartphone Camera<\/a> out fast enough. You have to be quick. As we head to break a look at the intraday tape for the nasdaq it is over by more than 1 up next the tech sector. One fund manager is buying on dips like this stay with us give your business e right now, with nationwide 5g from tmobile for business. Unlock new insights and efficiency, with leading ultracapacity 5g coverage. Tmobile for business has 5g thats ready right now. The nasdaq is under performing today but is up mthan 7 over the past month have we seen the lows of the bear market . Our next guest thinks so saying he is telling clients to buy the dips not sell the rips bullish on software and semis with fintech joining us the head of Technical Analysis<\/a> rich ross great to have you with us. Are you too late for this i wonder semis and softwares the two etfs you liked have already bounced 18 and 21 from 52week lows. That is a very fair question and one clearly ive gotten from about every one of my clients here which is only natural after the strong surge off the lows. But i think theres two set ups here and the structural set up is quite compelling. When you look in the short term we talk about the surge off the lows which left us into resistance in this seasonality in a down trend with cpi tomorrow how could you possibly buy stocks ill tell you how. Zoom out and look at the weekly chart. Look at a longer term chart. This is exactly where you have been paid to back up the truck on technology at every major market low since the financial crisis and by that i mean those longer term weekly moving averages that have defined the post financial crisis bull market in addition you have a compelling set up from the top down macro, peaks in gasoline, baeks if crude oil and bottoms in high yield credit we have tops in the top down which created the bear market and bottoms from the bottom up in stocks, 1 years of support with buy signals 12 years of support with buy signals for the first time there is always room for improvement at the major market turning points but there is plenty of up side. The three most dangerous words are i missed it. You have not missed it we talk to a lot of people that argue this is a bear market rally and when we saw the dot com bubble burst there were many of those what makes you so confident . You said energy has peaked what makes you confident of that and also that valuations have settled . Theres a lot to unpack here. Ill start with valuation which means very little to nothing to the technician admittedly you can still make the case this is a bear market rally. The risk here is to the upside from the standpoint of not being there when the market goes up rather than being there if it goes down again. Keep in mind where sentiment and positioning are. They border on draconian myself included until just last week. Im not trying to pretend ive been a big bull here in fact been quite bearish until this last turn here on thursday. But what im telling you is that who is left to sell . I dont mean to jinx this burgeoning bull off the bottom here but only to suggest that we know that positioning is at its lowest levels in quite sometime. We know sentiment is at its lowest levels in quite sometime. The narrative of the fed has to keep going everybody including myself until just recently can tell the same tale of woe and that is the type of backdrop from a sentiment of positioning standpoint that occurs at major market lows when youre sitting there on the same structural support that has defined this bull market and is likely to do so again. With this new cyclical bull phase. What about demand weakening i get all of the things youre saying and the technicals and seeing this impact of the bounce off the lows and m a activity and, yet, weve got this inventory overhang in chips. We have the fed speak from last week so many coming out saying, look. We dont see ourselves actually having to lower Interest Rates<\/a> in 2023 like the bond market is betting. As a matter of fact, we see the need to hike and stay up there longer to be sure inflation is under control. We got the strong jobs report. So, i mean, isnt demand and weakening demand potentially the thing that up ends your new thesis these are all fantastic points and i cant stand in the face of any of them only to suggest this that prices turned before the headlines. It is not all rainbows and unicorns out there by any stretch. We know that significant risks remain what im telling you is that when it is rainbows and unicorns when no significant risks remain it is going to be too late it is already too late for some when you think about this rally off of the bottom. What im telling you is you look at some of these larger megacap stocks like a meta for example which is a chart only a techniques could love down 60 off the highs peak to trough starting to work its way back here there is still plenty of room to work your way higher i would say youve gone through a protracted bear market here over the last seven to 18 months depending where you look the longer duration side which peaked january february of last year, software in november, indeckes in january. What im telling you is a lot of that narrative has played itself through the market it is playing itself through today in terms of semiconductors and the arc side of the tape but this is not new information for the market, john what im telling you is that it passed the prologue and this is where you have been paid to buy technology for the last 12 years and that is the hand im going to play. We like a strong call, rich well see if it works out or not. Thanks for being with us well talk to you again soon. Thank you. Still to come how should you think about coin base ahead of earnings stay with us to adapt in a fast changing world, you could hire a professional pit crew. Go, go, go. Sorry. Nope. Okay. Fresh donuts hot coffee they deliver Real Time Data<\/a> and business forecasts when you need it. I think it was fine how it was. air tool sound to help you stay ahead of the curve. Or you could use workday. The finance, hr and Planning System<\/a> that helps cfos make better decisions faster. On the other hand, we had a great fourth quarter. For a accelerate your decisionmaking world. Workday. For a changing world. lighthearted music best thing ive ever done. Thats what freddie told me. A person like me needed to get a reverse mortgage to change my life. It was the best thing ive ever done. Really . Yes, without doubt [tom selleck] joanne said just about the same thing. It absolutely is the best thing i ever did. Jack put it a different way. To him, it was about having his grandkids over. You want to have the kids over, you want to have the grandkids over. Yeah. You want to have the family over. You want to say, this is my place. Great people, different people. Thats for sure. And all of them had Different Reasons<\/a> for getting a reverse mortgage. But you know what . They all felt the same about two things. They all loved their home, and they all wanted to stay in that home. [announcer] if you are 62 or older and own your home, find out how you could access your homes equity to give you cash now. And when you need it in the future. A reverse mortgage could put more money in your pocket by eliminating your monthly mortgage payments. It could also pay off higher interest credit cards, medical costs, and give you some extra cash to help your retirement lifestyle. I dont have any anxiety about money anymore. It allowed me to live in my home and not have to make payments. A whole lot of families have gotten tax free cash from a reverse Mortgage Loan<\/a> for a better retirement. I dont have to worry about a mortgage payment every month. Its a good thing. [announcer] call right now to receive your free, no obligation info kit. The kit will show you how you may get the cash you need using your homes equity as a reverse mortgage from aag. Call the number on your screen. Look, why dont you call aag and find out what a reverse mortgage can mean for you . [announcer] call aag, the countrys number one reverse mortgage lender. Call the number on your screen. Lets get a quick gut check on sofi, an attempt to cut costs, shares moving lower by nearly 8 this morning that move coming after soft banks vision fund posted more than 21 billion loss on the quarter sending the company on the defensive to try and right the ship or heightened investment discipline. Well be right back. For your consideration, the worlds most innovative eyewear, turboflex. 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For kids like us, and all the Amazing Things<\/a> were gonna learn. Through projectup, comcast is committing 1 billion so millions more students can continue to get the tools they need to build a future of unlimited possibilities. Take a look at applovin and unity shares unity now just above flat. Applovin down 9. 5 this after applovin launched sort of a hostile bid for unity. Weve talked about so many of the dynamics at play at the beginning of the show. Theres also a metaverse angle both companies produce the type of Immersive Technology<\/a> or data on an ecosystem that would be used in the metaverse and they are at the forefront of gaming our Julia Boorstin<\/a> joins us now with the next in her series on the metaverse, one celebrity transitioning into the new dimension. Julia . Well, paris hilton may have first become famous for her role on reality tv and has produced all sorts of content for platforms ranging from peacock to youtube now she is betting big that the next frontier of entertainment will be in the metaverse hey guys. Its paris hilton. Welcome to the neon carnival and paris world the hottest after party in the metaverse reporter dubbed queen of the metaverse paris hilton built her own world inside roblox where her avatar dejays headlining a neon carnival festival timed to coachella and virtual new Years Eve Party<\/a> i was playing, there were more people at paris world than in new york at times square. Reporter today she is announcing her expansion into another metaverse platform the sand box here shell sell paris inspired nfts and host parties. Right now were mostly focusing on the experiences and not the monetization because that is just not the focus right now but we are going to be doing digital wearables and working with dichbt brands. Reporter she is bringing her real life apparel line into the metaverse by selling digital track suits. Ultimately imagining ways to link virtual and physical items. We want to be able todo where people could buy the track suit and then also get a digital version for their avatar to wear. Reporter hilton says she started investing in crypto in 2016 long before cryptos meet orric rise and fall. Shes been selling nfts since last april before that market dropped one sold for over 1 million during peak interest in the metaverse last year she invested in a number of startups in the space including bob iger backed genies which creates customized avatars. While hilton continues to dejay in the real world she sees new Virtual Worlds<\/a> including from mark zetterbergs meta becoming the future of entertainment. Not everyone is able to go to tomorrow land or these shows it makes it accessible to so many people who arent able to do that. Roblox tells us hiltons experience on its platform has been visited by 544,000 fans paris hiltons company does not share financials but they do tell me the Media Company<\/a> is set to double its business from 21 to 22 and is on track to generate tens of millions of dollars in annual profit hilton did promote nfts and crypto before those markets pulled back dramatically and of course it is still uncertain how the tech giants investment of billions of dollars in the metaverse will all play out but tonight is going to be so interesting to get those earnings from roblox and see how over all spending in these worlds is reacting to inflation and whether consumers pull back there. If it is anything like the Gaming Companies<\/a> itll follow a similar track. We will see that pullback. Thank you, julia meanwhile nasdaq is down about 1. 1 still under performing the industrial average on the flat line tech check is back in a moment one more thing before we go. Coin base set to report after the market closes today. We have more on what to watch for. A lot of stuff could be an ugly quarter. That is the expectation not looking good for coin base wall street expects a bad Second Quarter<\/a> for coin base. The question is how bad . Coin base trading volumes are pretty much disclosed in real time in the crypto prices crashed, jmp estimates down more than 30 account growth is expected to be light thanks to the lower prices Slower Growth<\/a> and trading activity is often a signal of lower transaction fee revenue which tends to drive the bulk of coin bases bottom line. Investors will look closely at what they call the mix the breakdown of retail versus the institutional side of the business retail tends to bring in higher fees usually up to 2 while the institutional side has lower fees but is getting a bit more attention lately after coin base announced the Big Partnership<\/a> last week with black rock. Then the take rate the spread coin base earns per transaction. Coin base has been one of the most shorted stocks in recent weeks and there are fears around nfc crackdown as well. The bull case has been the Company Moving<\/a> beyond trading and diversifying some of the revenue with things like staking or the nft business. More cost cutting would be seen as a positive for that stock back to you. All right we will watch that of course coin base down quite a bit right now. We mentioned unity at the top of the show that stock is about flat lemonade, the tech driven insurance player is up 14 well look at why. For now lets get to Frank Holland<\/a> and the half. All right thanks, john welcome to the Halftime Report<\/a> i am Frank Holland<\/a> the slide in semis micron now the Second Company<\/a> in as many days to warn about revenue it comes as President Biden<\/a> signs the chips act getting billions in subsidies to that sector we will discuss what is ahead for the group, the state of tech, and of course stocks overall. Now we have to introduce our Investment Committee<\/a> today josh, we actually spent the weekend together believe it or not. Not like that. Lets check on the markets","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia601406.us.archive.org\/21\/items\/CNBC_20220809_150000_TechCheck\/CNBC_20220809_150000_TechCheck.thumbs\/CNBC_20220809_150000_TechCheck_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240619T12:35:10+00:00"}