almost 4 years ago • 2 mins
Japan’s SoftBank had some making up to do on Monday after the tech-focused conglomerate reported its biggest annual loss in history 📉
SoftBank’s $13 billion shortfall was down to one main culprit: its giant Saudi-backed Vision Fund, which lost a devastating $18 billion. Its portfolio of 88 startups is heavily weighted toward the sharing economy, and most of those companies have been hit particularly hard by the coronavirus-induced global downturn. Just look at ride-hailing giant Uber and coworking space provider WeWork, which between them are responsible for more than half the Vision Fund’s total loss 🚘🏢 The former’s stock, after all, is still trading below its initial public offering price, while the latter has seen its value drop more than 90% from its peak. Bet SoftBank’s regretting the $10 billion it piled into the coworking company right about now…
For the first time since SoftBank listed on the stock market over 25 years ago, the company warned investors it may not pay a dividend this year. Instead, the company plans to spend more than $20 billion – financed by selling its stake in Chinese ecommerce group Alibaba – on buying back its own shares to help prop up their price 🤔 And at least one company will be happy with that announcement: activist investor Elliott Management – which has a $3 billion stake in SoftBank – has been pushing the company to increase share buybacks and boost transparency around how it values its portfolio of startups.
SoftBank is going all in both on the digitization of the new economy and – like several others in industries from healthcare to banks – on growth outside its home country. And that might be a smart strategy: data out on Monday showed Japan, the world’s third-largest economy, shrank by 0.9% last quarter – the second consecutive quarter of economic decline, which is the hallmark of an official recession 🇯🇵
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