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SoftBank Sinks: 12% After Loss and No New Buyback Program


SoftBank Group Corp. shares fell as much as 12% on Monday, which was the biggest drop in a single day since the pandemic started in early 2020. This happened because the company didn’t announce a widely expected stock buyback.

The company’s main Vision Fund lost $7.2 billion in the July-September quarter. This was after losing a record $2.33 trillion yen ($17 billion) in the previous quarter. This is because falling startup valuations are forcing the world’s largest technology investor to go into defensive mode and almost stop investing.

SoftBank has been dealing with declines in its more than 400 investments in public and private tech companies around the world. These investments include China’s SenseTime Group Inc., the US food delivery company DoorDash Inc., and the Indonesian ride-hailing and e-commerce company GoTo Group. In its most recent report, SoftBank said that the cumulative returns on its Vision Fund and Latin America portfolio went from a gain of $56 billion a year ago to a loss of $1.5 billion.

SoftBank’s stock price went up in the first few weeks of the current quarter as the Tokyo-based company rushed to finish two share buyback programs: one for 1 trillion yen announced last year and another for 400 billion yen announced in August. The fast pace of the buybacks led to rumors that the company’s billionaire founder, Masayoshi Son, was planning to lead a buyout to take the business private.

Analysts at Deutsche Bank, CLSA, and Jefferies all lowered their ratings on the stock because there was no buyback. Citi gave SoftBank a “high risk” rating because of the uncertainty in the capital markets and how that could affect the company’s earnings.

Atul Goyal, an analyst at Jefferies, said in a report, “We were hoping to hear about another round of buybacks, but there were none.” “We think that the risk-reward ratio is now bad and uneven.”

As SoftBank turns its attention to its balance sheet, it has been rushing to sell assets, including its prized stake in Alibaba Group Holding Ltd., which will help it make more money and pay off debt. Even though the Vision Fund lost money,

the profit from that sale helped it have a net income of 3.03 trillion yen in the last quarter. If you leave out the company’s telecom arm, SoftBank Corp., the company’s total interest-bearing debt was 13.7 trillion yen, which was down from more than 17 trillion yen at the end of June.

Peter Milliken of Deutsche Bank said in a report that even though more asset sales could lead to buybacks in the future, the company is likely to do nothing for now because of how its stock has been doing.


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