SoftBank Group Corp (TYO: 9984) shares sank almost 13% on Monday after the company’s Vision Fund unit posted a hefty loss for the third consecutive quarter. Reports say that the company will also write down its investments in embattled FTX — reportedly amounting to less than $100 million — to zero.
FTX is only the latest in the Vision Fund’s many problems. Its portfolio, which has over 400 investments in public and private tech companies around the world, has been drained by a global tech rout, prompting founder and CEO Masayoshi Son to virtually stop new investments. The fund saw losses amounting to $7.2 billion in the third quarter, following reported losses amounting to $17 billion in the second quarter.
The Tokyo-based company also failed to announce a highly-anticipated stock buyback, which analysts say contributed to the stock’s plunge on Monday, marking its biggest single-day drop since the start of the coronavirus pandemic in 2020.
The anticipation of another round of buybacks boosted SoftBank’s stock by 40% in the weeks leading to the third quarter earnings results. The company aggressively completed two rounds of buybacks — a 1 trillion yen program announced in 2021, and a 400 billion program announced in August — sparking speculations that Son was intending to lead a buyout to take the company private.
The lack of a buyback announcement at the third quarter earnings report prompted analysts at Deutsche Bank, CLSA, and Jefferies to downgrade their ratings on the stock, with Jefferies analyst Atul Goyal noting that “the risk-reward has now become unfavorable and asymmetric.”
The day’s drop was the stock’s biggest single-day plunge since the start of the coronavirus pandemic at the beginning of 2020.
Son, who’s led Softbank’s earnings presentations for decades, also announced that he would no longer speak at the quarterly briefings in the “foreseeable future,” turning the task over to chief financial officer Yoshimitsu Goto.
“Goto is more suitable than me for playing defense,” Son said. “I’m an aggressive person, not a defensive person, and I’d like to concentrate on Arm for the time being.” Arm Ltd is the British chip maker that Son intends to take public sometime in 2023.
SoftBank last traded at JPY6,068 on the Tokyo Stock Exchange.
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