Alibaba to Split Into Six Groups and Explore IPOs

Market Movers

• Alibaba splits into six units, plans new IPOs. Each units will individually raise funds and explore IPOs. The move frees up the Chinese company’s main divisions from e-commerce and media to the cloud to operate with far more autonomy, laying the foundation for future spinoffs* and market debuts. Its shares climbed 8% in pre-market trading in New York.

• Elon Musk says only verified users will show up in Twitter’s recommendation feed. Musk claims the move “is the only realistic way to address advanced AI bot swarms taking over.” Musk also said that only verified users will be able to vote in polls. Musk has been trying to find ways to generate new revenue streams* at Twitter ($TWTR), with paid verification being a flagship policy.

• Disney eliminates its Metaverse division. The company has eliminated its next-generation storytelling and consumer-experiences unit, the small division that was developing metaverse strategies as part of a broader restructuring* that is expected to reduce headcount by around 7,000 across the company over the next two months.

• Home prices fall in the West while rise in the East in unusual pattern. Home prices are dropping in the West while rising in the East.* Western “Zoom Towns” that welcomed an influx of residents during the pandemic saw their bubbly home prices start to pop as mortgage rates spiked. Plus, the tech hubs that were so unaffordable even before Covid have taken a hit from the recent downturn in the sector.

• Walgreens revenue rises despite sharp decline in demand for Covid tests. Walgreens’ quarterly results topped Wall Street’s expectations, even as its profit declined. Hundreds of stores returned to regular pharmacy hours during the quarter, helping boost prescription volumes. Walgreens’ growing healthcare unit posted a jump in revenue.

What to Watch

• Virgin Orbit extends unpaid pause as Brown deal collapses. Some of the company’s late-stage deal talks, including with private investor Matthew Brown, collapsed over the weekend. Separately, another source said talks with a different potential buyer broke down on Sunday night. Virgin Orbit’s stock closed at 54 cents a share on Monday.

• Fed will continue raising rates, BlackRock says. The world’s biggest money manager favors inflation-linked bonds* on the view markets are wrong in expecting imminent US rate cuts as the economy lurches toward a recession. This time is different as the Fed and its peers have made clear that troubles buffeting the banking sector won’t halt their battle against inflation.

• Schwab’s $7 trillion empire built on low rates is showing cracks. As the banking crisis drags on, investors are starting to unearth risks* that have been hiding in plain sight. Unrealized losses on the Westlake, Texas-based firm’s balance sheet, loaded with long-dated bonds, ballooned to more than $29 billion last year. At the same time, higher interest rates are encouraging customers to move their cash.

• Distress in office market spreads to high-end buildings. Defaults and vacancies are on the rise at high-end office buildings, in the latest sign that remote work and rising interest rates are spreading pain to more corners of the commercial real-estate market. Pressure on office occupancy is expected to continue for much of 2023.*

• CVC and Elliott want a piece of Cineworld. Both firms made offers to buy parts of the failing movie theater business. CVC and Elliott are interested only in the Cinema City and Yes Planet locations in Europe and Israel, respectively. Cineworld's US and UK locations make up the bulk of its debt and lease liabilities of $8.8 billion.