—— U.S. Real Estate Nearing Recession; LVMH CEO Plans China Visit; Macy’s Cuts Outlook, Shares Fall 15%; Apollo, Bain Eye Shinko Stake; Salesforce Faces Shareholder Concerns; Alibaba Challenges ChatGPT; Humira Gets Affordable Alternative
1. U.S. Real Estate Nearing Recession
Ross Perot Jr., a 64-year-old real estate developer worth over $1 billion, said in a Bloomberg TV interview this Wednesday that if banks do not ease development lending soon, the U.S. real estate industry could fall into recession. He emphasized that banks are now crucial to commercial real estate.
Perot revealed that it is currently very difficult for developers to secure construction loans for commercial real estate—even for industrial projects. His company, Hillwood, is helping provide financing to developers.
Hillwood, which specializes in commercial and residential real estate development, is currently assisting Goldman Sachs in building a new headquarters tower in Dallas’ Victory Park district.
In recent years, many people and companies have relocated to Texas, where housing prices are significantly lower than in regions like New York and California, making it very attractive to buyers.
Perot said he would support any 2024 Republican presidential candidate other than Trump.
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2. LVMH CEO Plans China Visit
Sources revealed that Bernard Arnault, CEO of LVMH—the world’s largest luxury goods group—intends to visit China, one of the biggest luxury markets globally, following in Elon Musk’s footsteps.
On Wednesday, Tesla shares rose while LVMH shares fell, causing Arnault to once again lose the title of world’s richest person to Musk.
China has recently been very welcoming to foreign entrepreneurs, aiming to calm overseas investor anxiety and push back against Western countries and companies trying to reduce reliance on China.
Last year, LVMH generated $84.8 billion in revenue, with Asia (excluding Japan) accounting for 30%. In its financial report, LVMH did not break out China-specific sales.
Chinese luxury consumers are extremely important to LVMH.
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3. Macy’s Cuts Outlook, Shares Fall 15%
U.S. department store Macy’s said its fiscal 2023 revenue may not meet previous expectations, mainly due to major uncertainty in consumer spending. The company needs to clear excess spring inventory through discounts and promotions.
CEO Jeff Gennette stated in a release that demand for non-essential goods began to weaken significantly at the end of March, as consumer financial health was challenged.
Before today’s market open, Macy’s shares fell as much as 15%, later rebounding and trimming some losses.
Macy’s also revealed that credit card revenue has declined, due to higher borrowing costs and increased charge-offs—further highlighting consumer weakness.
Macy’s gross margin is around 40%, mainly due to effective inventory clearance.
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4. Apollo, Bain Eye Shinko Stake
Sources said that private equity firms Apollo Global Management, Bain Capital, and others are interested in acquiring a 50% stake in Shinko Electric Industries, which is controlled by Fujitsu. Based on market prices, the stake could be worth up to $2.7 billion.
Recently, Japanese multinational electronics firm Fujitsu hired an advisory firm and is considering various options for dealing with the stake. However, since Shinko Electric may involve national security concerns, potential buyers need to factor this into their valuations.
Fujitsu, which manufactures nearly all types of electronic products, hopes to shift its focus toward communication and information systems for enterprise customers. On the other hand, Shinko—founded in 1946—primarily develops and manufactures semiconductor packaging for electric vehicles and household appliances.
Shinko Electric’s stock rose 14% today, reaching its highest level since April 2022.
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5. Salesforce Faces Shareholder Concerns
On Thursday, software giant Salesforce revealed that its revenue growth is slowing and that the company needs to adjust its strategy to improve profitability.
Salesforce did not raise or lower its full-year revenue forecast, but investor concerns drove its share price down 7.4%.
As of Wednesday, Salesforce stock had risen 68% year-to-date, making it one of the best-performing stocks in the S&P 500.
Over the past six months, Salesforce has undergone layoffs, executive departures, board changes, and pressure from activist shareholders.
Salesforce expects revenue to grow 10% this year to $34.6 billion, marking the slowest growth rate in its history.
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6. Alibaba Challenges ChatGPT
Alibaba plans to integrate its most advanced AI system to date—Tongyi Qianwen—into its Slack-like communication app DingTalk and meeting assistant Tingwu.
The Tongyi Qianwen large language model (LLM) will be embedded in the new version of the Tingwu assistant, capable of summarizing audio and video content into text.
OpenAI’s breakthrough ChatGPT has spurred global enterprise development of large language models.
On April 11, Alibaba officially unveiled its own large language model, which it plans to integrate into various services to enhance user experience and competitiveness.
Tongyi Qianwen can analyze audio and video and convert it to text, making it highly practical for meeting and collaboration software.
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7. Humira Gets Affordable Alternative
Every year, the U.S. healthcare system spends up to $90,000 per patient to subsidize AbbVie Inc.’s autoimmune drug Humira.
Emerging competitor Coherus BioSciences plans to launch the most affordable Humira biosimilar yet—Yusimry—in July, at a price 85% lower.
Coherus CEO Denny Lanfear said the company expects to capture 10% of the Humira market by 2026 or 2027.
California-based Coherus is negotiating with health insurers and specialty pharmacies and has already partnered with billionaire Mark Cuban’s Cost Plus Drug Company.
Mark Cuban’s Cost Plus Drug aims to make expensive medications more affordable.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.