SoftBank reports record $23.4bn loss as holdings tumble

Japanese conglomerate SoftBank Group reported a record 3.16 trillion yen ($23.4bn) net loss as a sell-off in global tech stocks continued to hammer its Vision Fund’s portfolio of investments.

The Vision Fund segment posted a loss of 2.33 trillion yen in the three months ending June 30, following a then-record 2.2 trillion yen loss in the previous quarter.

It’s a sharp reversal from the 235.6 billion yen profit posted in the same quarter a year ago.

Global stock prices continued their slide during the June quarter, hurting valuations of SoftBank’s key public holdings like Uber Technologies and Coupang. The Nasdaq 100, a barometer for tech heavyweights, lost 22 per cent during the period, capping its worst such performance since the global financial crisis in 2008.

“Valuations will probably get worse before they get better,” said Redex Research’s Kirk Boodry, who publishes on Smartkarma.

The world’s largest technology fund holds large stakes in hundreds of unlisted technology startups. But low tech valuations have been draining SoftBank’s ability to turn public listings of its portfolio companies into liquidity to fuel further big bets.

On October 1, 2022, PayPay will become a consolidated subsidiary of SoftBank Corp. What does this mean for SoftBank Corp.’s future? President & CEO Junichi Miyakawa discussed the implications at the Q1 FY2022 earnings conference. More here.https://t.co/Le6kHfNY6N#SoftBank pic.twitter.com/yZ7HZds4pl

— SoftBank News (@sbnews9434) August 8, 2022

SoftBank is now trying to wait out a slump in chip-related stocks so that it can grab a return on its $32bn purchase of chip designer unit Arm through an initial public offering. Shares of ByteDance, the Chinese parent of TikTok, have slumped more than 25 per cent since last year in private markets, while Swedish buy-now-pay-later company Klarna Bank AB had its valuation slashed 85 per cent in a recent funding round compared with June 2021.

Shares in the company are close to where they were five years ago, before the launch of the Vision Fund, despite a series of aggressive buyback programs. Most recently, it announced a 1 trillion yen buyback program through September. That, as well as expectations that the company may launch another buyback program later this year, have helped its shares gain about 5 per cent this year.

SoftBank is also grappling with the departure of a growing number of top executives at the Japanese conglomerate, putting more responsibility on founder Son’s shoulders just as the outlook turns increasingly grim. The company’s former COO Marcelo Claure left earlier this year, while former chief strategy officer Katsunori Sago resigned in 2021. Rajeev Misra, the long-time head of the Vision Fund, is stepping away from most of his responsibilities and will start his own investment fund.

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