SoftBank, the Japanese telecom and tech conglomerate that also oversees the multi-billion tech-focused Vision Funds, reported a large $23 billion loss during the first quarter of the year and exited some prominent positions in the tech sector.
Large losses reported by the Vision Fund were responsible for the firm’s disappointing bottom-line performance during the quarter as the two funds experienced a $21.6 billion loss that accounted for as much as 92% of the period’s negative results.
Some of the most prominent unrealized losses coming out of the firm’s portfolio of investments included a $2.17 billion loss on Coupang, a $1.75 billion loss on SenseTime Group, and a $1.64 billion loss on DoorDash.
In addition, investments in non-listed companies also produced losses of approximately $2.19 billion.
SoftBank attributed the negative performance of its portfolio to “a decline in the fair value due to the global downward trend in share prices due to growing concerns over economic recession driven by inflation and rising interest rates”.
SoftBank Dumps T-Mobile, Uber, and SoFi Shares to Raise Cash
During the quarter, SoftBank significantly reduced its exposure to companies including T-Mobile, with the conglomerate effectively selling 66.5 million shares in the telecom business.
Meanwhile, the two Vision Funds (SVF1 and SVF2) held a total of 249 investments including 37 positions in public companies that had a combined fair value of $103.59 billion and a cost basis of $112.31 billion, meaning that the two funds are currently losing money.
In addition, SoftBank’s Latin American-focused funds held 88 investments by the end of the quarter that had a fair value of $6.93 billion and a cost basis of $6.92 billion.
One of the most prominent exits of SoftBank was Uber Technologies as the company reportedly sold its entire stake in the firm at an average price of $41.5 per share and a cost basis of $34.5 per share.
Just hours ago, the Japanese conglomerate also filed a document with the US Securities and Exchange Commission (SEC) that disclosed the firm’s intentions to sell a portion or all of its holdings in SoFi Technologies (SOFI) – a publicly listed US-based fintech company.
SoftBank reportedly holds a large 9% stake in the firm made up of 83.22 million shares and has been selling millions of shares this month at prices ranging from $7.82 to $8.48 per share. SOFI stock is dropping more than 7% on the news as SoftBank has been one of the firm’s most prominent backers for years.
SoftBank May Miss Out on This “Buy the Dip” Moment Due to Current Struggles
The company headed by Masayoshi Son is making drastic moves to raise cash and shore up its finances at a point when most of its investments are losing a significant portion of their value due to the sharp decline that the equity market has experienced this year on the back of deteriorating macroeconomic conditions.
However, it does not appear ready to deploy some of those funds to buy stocks at a point when valuations have declined significantly as indicated by its founder in a recent press conference.
In regards to the recent poor performance of the firm’s investment funds, Son stated that he became “somewhat delirious” when the company was turning big profits and said he felt “embarrassed and remorseful” for what happened next.
He further emphasized that the fund will be more “selective” when making new investments in the future and said that the firm is now forced to make cuts including laying off employees at the Vision Fund.
The billionaire Japanese investor said that even though this could be “the perfect time to invest” in the stock market as it is “down so much”, he is adopting a cautious approach as SoftBank could suffer a blow that could be “irreversible” – possibly referring to the possibility that equities may continue to suffer over the coming months.
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This article was written for Business 2 Community by Alejandro Arrieche.
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