Shares in Japan’s investment company SoftBank Group slid by almost a tenth after it “sank deeper into the red” in the third quarter, says Megumi Fujikawa in The Wall Street Journal. Its technology investments “struggled”. The Vision Fund 1 made a small profit of £2.4bn.
However, this was outweighed by losses from other Vision Fund vehicles and $1.6bn in losses related to its stake in and financial support for WeWork, one of its most high-profile investments, which has just filed for bankruptcy. The Vision Funds investment unit posted a $1.7bn loss, with SoftBank as a whole losing $6.2bn.
The loss on WeWork shouldn’t “have been a surprise” given that the office-rental company’s problems have already been well documented for many years, says Breakingviews. What did raise eyebrows was the fact that SoftBank made an overall loss, when analysts had pencilled in a $1.2bn profit. As a result, it is “little wonder” that many investors will still be “contemplating the abyss” and inclined to ignore SoftBank’s chief financial officer Yoshimitsu Goto’s insistence that the Vision Funds have “hit the bottom”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Goto argues that if you strip out “a host of expenses”, its Vision funds actually made a small profit, says Min Jeong Lee on Bloomberg.
He also claims that “there is more than $29bn of assets in [the] portfolio that SoftBank may be able to cash in soon”, citing, among others, TikTok parent ByteDance. Nonetheless, investors are extremely sceptical about this given that there is “little visibility into the performance of the majority of the Vision Fund’s unlisted portfolio companies”.
There is some good news, however, says Lex in the Financial Times. SoftBank has reduced its exposure to geopolitical risk by selling most of its stake in Chinese tech giant Alibaba over the past two years. Still, “the timing could have been better if [SoftBank] was going to cash in on its most lucrative investment”. Beijing’s crackdown on tech has wiped 72% off Alibaba’s shares from the 2020 peak.
And the sales “remove a safety net” that reassured SoftBank’s shareholders – selling some of Alibaba’s shares ensured that SoftBank produced a profit in the third quarter of 2022. Investors will now be hoping that SoftBank’s founder and CEO Masayoshi Son is “hunting out a safety net to replace Alibaba”.
Nevertheless, despite the WeWork disaster and the sale of Alibaba, Son is unlikely to stop “making billion-dollar bets on technology companies”, any time soon, says Max Kendix in The Times. While pledging to “study what went wrong and try to do better with its future venture capital investments”, Yoshimitsu Goto confirmed that SoftBank has been “carefully restarting” investment, “focusing in particular on artificial intelligence”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Related articles
- Japan is back: Three Japanese stocks to ride the rebound
- 5 top UK tech stocks
- The Greensill saga: what’s it about and what does it mean for you?
-
8 of the best houses for sale for around £500,000Some of the best houses for sale for around £500,000 – from a 19th-century stone farm cottage in North Yorkshire and a two-bedroom apartment in Edinburgh’s New Town to a converted Methodist chapel in Norfolk
-
What will the unravelling of US-China trade mean for the economy?What will a US-China decoupling mean for the global economy?
-
'Technology will determine tomorrow’s top stocks in emerging markets'Opinion John Citron, investment manager of the JPMorgan Emerging Markets Investment Trust, tells us where he’d put his money
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
