about 3 years ago • 3 mins
SoftBank reported better-than-expected earnings on Monday after the Japanese conglomerate’s investment in DoorDash really delivered.
What does this mean?
SoftBank’s private investments have done well out of both the global rally in tech stocks and the booming demand for initial public offerings (IPOs), and that’s led to a record profit for the company’s Vision Fund – the world’s biggest tech-focused venture capital fund. Two of its holdings did especially well: Uber and DoorDash – the latter having made a barn-storming stock market debut in December.
There’s more to SoftBank than just its Vision Fund, but it’s easy to see why it was such a big deal to investors. Not only did this record profit follow a WeWork-shaped record loss the year before, it offset the losses the company suffered from other investments last quarter – namely listed tech stocks and options.
Why should I care?
For markets: SoftBank’s only just getting started.
SoftBank’s Vision Fund makes money by buying stakes in private companies and selling those stakes on to public investors via an IPO (or selling the companies altogether). And seeing as six more of Vision Fund’s companies are planning to list on the stock market this year – and demand for IPOs shows no signs of slowing down – SoftBank might just be getting warmed up.
The bigger picture: There’s value in the Japanese stock market.
Japan’s stocks are up more than 6% this year, outperforming both the US and the global stock markets and hitting their highest level in 30 years. And at 30% below their all-time highs, they could have a lot further to rise. That might be why analysts are recommending the country’s stocks over America and South Korea’s – both of which have hit record highs in the last few months.
Keep reading for our next story...
Renesas sure had a lot to say for itself on Monday: the Japanese chipmaker announced it was buying British chipmaker Dialog.
What does this mean?
Mergers and acquisitions were all the rage among chipmakers in 2020, doubling in number from the year before. And it looks like Renesas wanted in on the dealmaking: the company’s now broadening its focus beyond chips for cars and picking up one of Apple’s main suppliers.
Investors did seem nervous about the move, mind you: Renesas’s share price dropped 4% on the news, and there could be a couple of reasons why. For one thing, this is its third major deal in four years, and investors could be worried it’s taking on too much debt. And for another, mergers usually help the buyer save money by cutting duplicate costs. But considering there’s not much overlap between the two chipmakers’ business models, that’s not likely to happen here…
Why should I care?
The bigger picture: It’s a good day to buy hard.
Dealmaking came back with a vengeance in the second half of last year, and it’s not done yet: the overall value of acquisitions so far this year is 150% higher than it was at the same point in 2020. That’s at least partly down to (what else?) the pandemic: research suggests the strongest-performing companies make twice as many deals during economic downturns as their rivals, just by picking up the businesses other firms are selling to survive.
Zooming out: Tesla’s now accepting bitcoin.
Chipmakers have been benefiting from the surging demand for electric vehicles too. And they’re not alone: Tesla said on Monday that it had invested in bitcoin and that it’ll start accepting the cryptocurrency as payment for its cars. That got investors thinking about the possibility other companies will follow Tesla’s lead, and they sent bitcoin’s price soaring.
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