Market Beats | Alibaba cuts 20,000 staff; Uber makes first operating profit; US trade deficit shrinks; Target proposes paid membership; Messi apologizes to Chinese fans

—— Alibaba cuts 20,000 staff; Uber makes first operating profit; Central Huijin increases equity holdings; US trade deficit shrinks; Target proposes paid membership; Messi apologizes to Chinese fans; KKR REIT tanks 15%

1. Alibaba cuts 20,000 staff

According to Alibaba’s latest quarterly earnings report, the company has 219,260 global staffs at the end of December, less than the 240,000 a year ago.

Mirroring the moves made by Meta Platforms, Alibaba will compliment the job-cutting with an additional $25 billion of share repurchase.

Alibaba was once the most valuable company in China. In recent years, the company had to eliminate non-essential departments and assets to sharpen strategic focus.

Alibaba briefly jumped 5% after the announcement, but later on gave up the gains.

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2. Uber makes first operating profit

This morning, Uber published a surprising 2023 annual earnings report, in which the company generated its first annual operating profit of $1.1 billion.

Thanks to the strong demand for ride-hailing, delivery, and advertising services, Uber was able to reverse the loss in 2022. In the last quarter of 2023, the company generated $652 million of operating income, well-above analysts’ forecast of $517 million.

CEO Prashanth Mahendra-Rajah attributed the success to the company’s disciplined investment approach and focused operations. Next week, Uber is expected to announce a detailed plan on returning capital to shareholders.

Despite the encouraging fiscal earnings, Uber still dropped 3% during pre-market trading.

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3. Central Huijin increases equity holdings

This Tuesday, a state-related investment institution, Central Huijin announced to have increased its equity holdings.

After the bullish news, the daily turnover of CSI 300, CSI 500, and CSI 1000 increased to ￥699 billion, the most since August 28th.

CSI 300 features the largest and most liquid companies that are traded in Shanghai and Shenzhen. The index dropped more than 6% in January but recovered 4% since the start of February.

The chief economist of Forthright Financial Holdings believes that state-owned institutions purchased stocks at an attractive valuation, and that retail investors are almost out of capital to increase their holdings.

In 2015, over 20 state-owned institutions bought in equity to prop up the falling market.

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4. US trade deficit shrinks

According to the data released by the Commerce Department, U.S trade deficit in 2023 decreased near 19% to $773.4 billion, the biggest drop since 2009.

The biggest contributors are the increasing service surplus and the falling price of imported goods.

In December, the trade deficit slightly increased to $62.2 billion, without adjusting for inflation.

U.S firms meticulously controlled inventory level to avoid overstocking, in turn decreased the demand for imported goods.

US trade deficit with China has fallen to the lowest level since 2010.

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5. Target proposes paid membership

According to people with knowledge, Target is planning a paid membership similar to Amazon Prime and Walmart+.

Target already offers free membership where members can receive deals and earn rewards. However, the new membership could potentially include delivery service, provided by Shipt.

As consumers limit their discretionary spending, Target has seen its sales slide for months. Major competitors of Target had released paid membership years ago, but Target’s own could bring additional revenue.

After the announcement, Target went up by 2.4%.

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6. Messi apologizes to Chinese fans

Last Sunday, soccer superstar Lionel Messi sat out the friendly fixture between Hong Kong and his team, Inter Miami.

Fans were extremely disappointed by Messi’s game-time decision, as some have paid over $620 for tickets to watch him play. “Refund” chants were heard during the game.

To worsen the matter, Messi stepped on the court today in another game in Tokyo, infuriating Hong Kong government and fans in Mainland and Hong Kong.

Messi later took to social media to apologize to the fans, saying that he sat out due to injury. Fans were unconvinced as they think Messi treated China and Japan differently.

Fans were criticizing Messi on social media for his no-show during a highly anticipated match.

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7. KKR REIT tanks 15%

Today, KKR Real Estate Finance Trust (KREF) reported a $59 million loss on a Philadelphia office loan and is closely monitoring the situation of other multi-family and life science properties.

KREF lowered its dividend by 42% to $0.25, and its stock price tanked by 15%, the most since March 2020.

There are over $1 trillion in commercial mortgages maturing in the next 2 years. Underlying properties will be refinanced at a much higher interest rate.

KREF’s CEO Matt Salem says that cutting dividend could buy the company more time to monetize and liquidate existing properties. Company is trying to sell 2 of the 4 properties related to the Philadelphia loan.

Commercial mortgage crisis is spreading beyond office properties.

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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.