Has SoftBank Lost The Golden Touch?

Has SoftBank Lost The Golden Touch?

10 months ago2 mins

Japanese conglomerate SoftBank announced on Tuesday that it lost money last quarter.

What does this mean?

When the going gets tough, the tough get going – so it’s a real shame the Japanese giant isn’t named “ToughBank”. Instead, the conglomerate showed it was aptly named last quarter, adopting a softly-softly approach and a more “defensive” position. Thing is, that didn’t actually help: SoftBank’s Vision Fund business – which oversees the world’s biggest tech-focused investment funds – saw the value of its holdings in unlisted companies take a nosedive. And the firm’s listed investments didn’t fare much better, with losses in companies like Coupang and WeWork overshadowing some small recoveries. The end result was that the Vision Funds lost $5.5 billion. That’s about half what they lost the quarter before, sure, but it’s the fourth straight time they’ve finished in the red – meaning SoftBank startled analysts by posting an overall loss too.

SoftBank loss
Source: Nikkei Asia

Why should I care?

For markets: Loser’s quandary.

These back-to-back losses have tied SoftBank’s hands and hampered its ability to make the big, bold bets it’s best known for. And that has the firm facing a tricky Catch-22, because a successful moonshot could be just what SoftBank needs to lift it out of the hole it’s stuck in. Last quarter, though, the firm split under $350 million in investments between a handful of startups – chump change compared to the $144 billion plus it invested over the previous five and a half years.

SoftBank stock
Source: The Wall Street Journal, FactSet

The bigger picture: Armed and dangerous.

SoftBank’s having a tough time right now, and the firm’s counting on a big upcoming move to turn things around. The firm’s planning to list chip design giant Arm on the stock market – but while the venture could be a whopper, success is far from guaranteed. After all, the plan is to list by December, but weak markets could cause all kinds of delays, keeping poor old SoftBank cash-strapped.



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