SoftBank continues to suffer from the effects of the collapse of Tech stocks. During the first quarter, the Japanese group suffered a new record loss of 3.163 billion yen, or around 23 billion euros, mainly due to asset write-downs.
In addition to the setbacks of its investment portfolios (2.330 billion yen in net losses over the April-June period), SoftBank added 820 billion yen in exchange rate losses linked to the weakness of the Japanese currency, the company explained on Monday. Its investment business had already seen disastrous results for the last quarter of its fiscal year ending in March.
Since May, its founder and CEO, Masayoshi Son, has adopted a “defensive” investment strategy. He does not miss an opportunity to ensure that his group has become more selective. A turning point for a group that rode the euphoria around Silicon Valley after its decision in 2016 to set up the world’s largest fund dedicated to new technologies, the Vision Fund, duplicated a few years later.
The Nasdaq lost 22% in the quarter ended June 30, the biggest drop in this “tech” market since the 2008 financial crisis. But the Vision Fund’s listed investments did even worse, posting a drop of 31 % over the same period. All of Softbank’s tech fund gains since the first Vision Fund actually launched in 2017 have been wiped out as the Nasdaq doubled over the period, taking into account the correction of recent months, according to the Wall Street Journal.
SoftBank mentions in particular significant losses linked to its stakes in listed companies such as the South Korean e-commerce giant Coupang, the American meal delivery platform DoorDash or even SenseTime, a Chinese specialist in facial recognition. But there are also valuation declines on AutoStore and WeWork.
The group passed write-downs on “a wide spectrum” of unlisted companies, assets whose prices also fell due to the economic situation and less dynamic fundraising. In total, the Vision Funds are present in 473 companies, many of which are not yet on the stock exchange.
Always bubbling in his presentations, Masayoshi Son acknowledged on Monday “remorse” about his investment policy as Silicon Valley valuations soared.
The CEO was once again humbled. In fact, the activity of the Vision Funds has clearly slowed down with 600 million dollars of investments validated between April and June, very far from the peak of 20.6 billion dollars placed in the same period a year ago, he insisted.
SoftBank also improved its debt level. The Japanese conglomerate hit $22 billion with futures on its Alibaba shares. A way to free up cash without reducing, at least for now, its position in the Chinese e-commerce giant, on which Masayoshi Son’s group has bet since the early 2000s.
SoftBank stock has fallen 46% since its all-time high in March 2021 but is up 4% this year. A relatively good performance to which a massive program of share buybacks also contributes.