SJM - Wall Street Breakfast Podcast: Alibaba's Surprise Leadership Shift

2023-09-11 06:44:13 ET

Summary

• Alibaba's shares fall over 3% in Hong Kong as outgoing CEO steps down as chairman and head of Cloud Intelligence unit.
• J.M. Smucker nears a deal to buy Hostess Brands, beating out competition from General Mills.
• Morgan Stanley shifts to a bullish stance on Tesla, citing the potential of its software and services revenue and the impact of its Dojo supercomputer.

Listen below or on the go on Apple Podcasts and Spotify Alibaba ( BABA ) falls as ex-CEO Daniel Zhang unexpectedly quits cloud unit. (00:24) J.M. Smucker ( SJM ) nears deal to buy Hostess Brands ( TWNK ) - WSJ. (01:26) Tesla ( TSLA ) is a top pick at Morgan Stanley with Dojo called a $500B wildcard. (02:00)

This is an abridged transcript of the podcast.

Alibaba's (NYSE: BABA ) Hong Kong-listed shares fell more than 3% on Monday after the company said its outgoing CEO will also step down as chairman and head of its Cloud Intelligence unit.

Daniel Zhang had led the Alibaba ( BABA ) Cloud Intelligence division since 2022, the company said in a filing .

And if you remember back in June when it was announced that Eddie Wu would take over as CEO, it was also announced that Zhang would continue to serve as chairman and CEO of Alibaba Cloud Intelligence Group.

Wu will take over as acting chairman and CEO of cloud intelligence.

Zhang is said to have "expressed his wish to transition away from his role" as chief of the cloud business. An internal letter says, "He will continue to contribute to Alibaba ( BABA ) by channeling his expertise differently."

Alibaba ( BABA ) will invest $1B in a technology fund that Zhang will set up to support the company's growth strategies.

The company will continue with the planned spinoff of its cloud unit as part of its plan to split its $220B business into six main units .

J.M. Smucker (NYSE: SJM ) is nearing a deal to buy Twinkies owner Hostess Brands (NASDAQ: TWNK ), in a deal worth ~$4B .

According to a Wall Street Journal report Sunday, the deal could be announced as soon as today.

Smucker ( SJM ) prevailed in a heated competition with General Mills ( GIS ), according to the report.

Hostess ( TWNK ) shares have been rising in recent weeks on speculation of a potential takeover , and have more than doubled in the past five years.

Other Smucker ( SJM ) brands include Jif peanut butter, Folgers coffee, Milk-Bone dog treats, and Uncrustables.

Morgan Stanley has shifted to an Overweight rating on Tesla (NASDAQ: TSLA ) on the view that the biggest value driver looking ahead is the company's software and services revenue.

Analyst Adam Jonas said that the same forces that have driven Amazon's ( AMZN ) AWS to reach 70% of the company's total EBIT can work for Tesla, and help it open up new addressable markets that extend well beyond selling vehicles at a fixed price.

A major part of Morgan Stanley's bullish thesis on Tesla's ( TSLA ) tech advantage is tied to Dojo, which is the purpose-built supercomputer designed in-house by Tesla to train the full-self-driving system that sits inside every Tesla vehicle.

Morgan Stanley said, "We believe that Dojo can add up to $500bn to Tesla's enterprise value, expressed through a faster adoption rate in Mobility (robotaxi) and Network Services."

Morgan Stanley raised its price target on Tesla ( TSLA ) to $400 from a prior PT of $250 and called the electric vehicle stock its top pick in the sector. The 52-week high for Tesla ( TSLA ) is $313.80.

Other headlines to look out for on Seeking Alpha:

FDIC says it could have done more to warn First Republic Bank of rate risks

Apple's big event may be 'quiet.' Why Wall Street thinks that's a good thing

Kenvue shares may gain after FDA comments in Tylenol-Autism warning label lawsuit

On our catalyst watch for the day,

• Fortinet ( FTNT ) will hold its third annual Security Summit in Napa, California. The tech event has been cited in the past by analysts boosting their outlook for the company.

• The three-day Permissionless II event will begin in Austin, Texas. Permissionless II is described as the world’s largest DeFi event, with over 7K crypto enthusiasts and builders expected to be in attendance. An Ethereum ( ETH-USD ) Co-Founder as well as SEC Commissioner Hester Peirce will be two of the notable speakers.

• Roche Holding AG ( OTCQX:RHHBY ) will hold its Pharma Day event in London.

Major market averages concluded trading on Friday slightly higher.

The Nasdaq ( COMP.IND ) finished +0.09%. The S&P 500 ( SP500 ) concluded Friday’s session +0.14%, while the Dow ( DJI ) ended +0.22%.

For the week, the Dow was -0.75%. The S & P 500 was -1.29% and the Nasdaq was -1.92%.

Of the 11 S&P sectors, eight rounded out the day in positive territory, which was led by Energy. Real Estate and Industrials topped the losers.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.2%, the S&P 500 is up 0.4% and the Nasdaq is up 0.6%. Crude oil is down 0.7% at less than $87 a barrel. Bitcoin is down 0.4%.

In the world markets, the FTSE 100 is up 0.4% and the DAX is up 0.6%.

The biggest stock movers for the day premarket: Crinetics Pharmaceuticals (NASDAQ: CRNX ) is up more than 30% after the company disclosed favorable Phase 3 research results for an oral investigational drug for a disorder that occurs when your body makes too much growth hormone, acromegaly.

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