What's going on?
SoftBank reported its biggest-ever quarterly loss on Thursday, so the Japanese conglomerate is going to great lengths to quit hitting itself.
What does this mean?
What a difference a year makes: SoftBank has gone from a record profit in the first quarter of 2021 to a record loss in this one. That’s because its Vision Fund – the world’s biggest tech-focused investment fund – has been pummeled by rising interest rates and China’s tech crackdown, with Chinese ride-hailing firm Didi and South Korean ecommerce giant Coupang each losing about half their market values.
So the conglomerate is shaking up its approach: it said it’ll invest half or even a quarter as much this year as last, and that it would be more cautious around all things China. It also reassured investors that its plan to list ARM on the stock market was still on track, and said that the UK chip designer could well become the most valuable asset in its portfolio.
Why should I care?
For markets: History could repeat itself.
SoftBank’s stock fell 5% on the news, meaning it’s now down around 50% over the past year. Consider too that this report only covers till the end of March, and that markets have fallen even more since. Some analysts, then, are skeptical the world’s biggest venture capital fund can even survive. Of course, SoftBank did experience a comparable collapse during the dotcom boom, which it’s more than recovered from since. That might be why the company’s confident that it’ll bounce back from this pickle within the next couple of years.
Zooming out: WeWorking on it.
Speaking of embarrassing companies SoftBank regrets investing in: WeWork reported another quarterly loss on Thursday. But at least things are going in the right direction, with the coworking company notching its best desk sales since before the pandemic. And since it thinks demand for office space is on the up and up, it’s expecting its revenue to jump 30% this year from last too.