FirstFT: AI hits Edtechs | Financial Times

good morning. Education sector stocks plunged yesterday after earnings warnings from edtech firm Chegg as investors bet that artificial intelligence could upend business models.

California-based online study guide provider Chegg has admitted that a “massive spike in student interest” in AI chatbot ChatGPT is starting to hurt sales. The comment is one of the first of a company acknowledging financial damage as a direct result of generative AI.

Chegg’s stock plunged to half its value yesterday, and the warning shook other companies, with London-listed Pearson’s stock dropping 15% and language-learning platform Duolingo dropping 10% before its U.S.-listed Education company Udemy fell more than 5%.

And here are the other happenings of the day:

• Chinese and Japanese markets closed: Financial markets in both countries will be closed for a public holiday.

• US interest rate decision: Officials expect to raise the Fed funds rate to a new target range of 5% to 5.25% before considering a moratorium on further rate hikes, delivering another quarter of hikes.

• Earnings: Companies reporting today include Airbus, BNP Paribas, Enel, Estée Lauder, Kraft Heinz, Lloyds Banking Group, Lufthansa, Prudential Financial and Qualcomm. Check out the Week Ahead newsletter for more information.

5 more top stories

1. Municipal bank stocks continued to fall despite the First Republic being bailed out this week. Trading at PacWest, considered the weakest among mid-sized regional banks, was temporarily halted due to volatility, dropping 28% by late afternoon in New York. The KBW index of regional bank stocks fell more than 5%.

2. US short seller Hindenburg Research reveals position on Icahn Enterprisesa publicly traded fund run by activist Carl Icahn, has plunged its stock price and waged a battle between two of Wall Street’s most feared and outspoken investors.Read more about Hindenburg’s report please give me.

3. Yesterday the Reserve Bank of Australia unexpectedly raised interest rates by 25 basis points. It climbed to 3.85% as inflation eased. The RBA said further rate hikes may be needed as it seeks to return inflation to its 2-3% target range.

Four. EU and US warn Malaysia of risks to national security and foreign investment As the government finalizes a review of 5G deployments that will allow China’s Huawei to play a role in the country’s telecommunications infrastructure.

Five. Joe Biden says US commitments to Philippines are ‘irregular’ Days after US allies accused Beijing of dangerously harassing patrol ships in the South China Sea.

News details

Over the past year, soaring energy prices have brought enormous wealth to the world’s fossil fuel producers. In a new video, FT’s Simon Mundy looks at the issues this raises around their obligations to society and the planet. For the latest in discussions on responsible business, Premium subscribers can sign up for the Moral Money newsletter.

I am also reading . .

• ‘Man in Black’: Due diligence is inherently dangerous in China, and it’s becoming more important and more dangerous as Beijing ramps up its scrutiny of companies.

• Social media: Backed by Jack Dorsey, the Twitter-like service is rapidly gaining traction among journalists and celebrities seeking alternative platforms.

• Big numbers: People are numb to millions, billions and trillions, but that’s exactly what politicians want, writes Sarah O’Connor.

chart of the day

China’s IPOs have raised more than five times as much money as the US this year, as we haven’t seen a harvest of new listings in China, the world’s largest economy, since the disastrous 2022.

stay away from the news

Technically a fundraiser for the Met Costume Institute, the Met Gala has morphed into the Super Bowl of fashion over the years. Take a look at some of the most eye-catching looks from this week’s event, which paid tribute to the late Chanel designer Karl Lagerfeld with humor and haute couture.

Additional contributions by Gordon Smith and Tee Zhuo