Talk to Chuck

By Matthew Gutierrez and Shawn O'Malley · January 23, 2024

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“Talk to Chuck.”

Charles Schwab’s former marketing campaign stands as one of the most effective financial ad campaigns of all time. But those days are over. Schwab’s net income last year fell 29% from a year prior, and the stock has gotten punished.

As one Wall Street Journal headline reads: “Charles Schwab Just Survived a Year From Hell. The Trouble Isn’t Over.”

Bring back Chuck?

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the three biggest stories in markets:

• Alibaba’s resurgence on Jack Ma’s big bet
• India’s stock market supplants Hong Kong
• Netflix dives into live sports

All this, and more, in just 5 minutes to read.

POP QUIZ

High-interest rates and home values have deterred even deep-pocketed investment firms from buying homes. By how much did investor purchases of single-family homes decline in 2023? (Read to the end to find out!)

Chart of the Day

In The News

?? Alibaba Gains on Report Ma, Tsai Buy $200 Million in Stock

Wait, is Alibaba back?

Alibaba shares jumped after the New York Times reported that founder Jack Ma has been buying up shares in the company alongside chairman Joe Tsai.?

Sure, the stock has plunged in the past year while the broader market keeps rising. But Ma and Tsai are making big bets on the Chinese tech company. As a result, Alibaba’s U.S.-traded shares rose about 7% for its best day since August.?

Big picture: Over the past 12 months, Alibaba — once the most valuable company in all of China — has seen its stock fall about 43%. (The S&P 500 has risen about 21% over the same period.)

• Alibaba has dipped behind rivals Tencent Holdings and PDD Holdings, which has eaten up market share thanks to its shopping app, Temu.?
• Ma, the once outspoken billionaire, fell from public view and has kept a low profile after a clash with Beijing.?

The numbers: Tsai bought about $151 million of Alibaba U.S.-traded shares last quarter via his Blue Pool Management family investment vehicle. (Tsai owns the NBA’s Brooklyn Nets.)

• As for Ma, who surrendered his executive chairman role in 2019: He’s bought $50 million worth of stock recently.
• Alibaba, founded in 1999, is valued at roughly $175 billion. Shares have fallen hard since its 2020 peak.
• The company bought back $9.5 billion worth of stock last year, trimming its share count by about 3%.?

Why it matters:

Alibaba bulls presume Ma and Tsai must know something we don’t, or they just believe that the stock is undervalued.?

In 2023, Alibaba canceled a plan to spin off its cloud biz, a critical piece of its plan to overhaul itself. That prompted a sharp selloff, compounding on an already tough stretch because its cloud business has been losing market share to state-backed rivals.?

• Regardless, it’s always worth paying attention to large insider stock purchases like this. Ma, a former English teacher who helped make Alibaba a tech giant in China, had long been seen as an iconic entrepreneur.
• But since Beijing turned on him for criticizing official policy, he’s been quiet. That is, until he made noise with his big bet. Will it pay off?

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