By
Steve Muchoki
February 9th, 2024
The SoftBank loss surprised analysts who were expecting the company to report a gain, even though the company’s investment arm is up.
SoftBank Group Corp reported a loss for the quarter ended June, surprising much of the market, which expected better. However, the company’s Vision Fund investment arm posted a gain even as indicators suggested a further loss for the fund.
SoftBank group posted a net loss of 477.6 billion yen, about $3.3 billion. This is a far cry from the 75 billion Refinitiv analysts expected from the company. However, the figure is a significant improvement from the 3.16 trillion yen recorded in the same quarter last year.
On the other hand, the SoftBank Vision Fund posted a profit even though analysts expected a loss. After five consecutive losing quarters, the Vision Fund gained 159.8 billion yen, about $1.1 billion, in the quarter ended June. Interestingly, SoftBank lost $32 billion during the last quarter, with significant losses from Indonesian e-commerce and ride-hailing company GoTo, as well as Chinese AI company SenseTime.
The SoftBank Vision Fund lost a cumulative ¥6.9 trillion, about $48 billion, over the last 2 years. It has recently suspended new investments and reduced its Alibaba stake. SoftBank also no longer has any stake in Uber. It initially invested in Uber in 2018 and then sold nearly a third of the stake. As of Monday, SoftBank confirmed it offloaded all of its Uber holdings, likely to manage its financial health as losses continuously piled up.
SoftBank in “Offense Mode” Despite Loss
Speaking at a June shareholder meeting, SoftBank CEO Masayoshi Son said the company will now leave “defense mode” and enter “offense mode.” He explained that SoftBank now has the cash to be on the offensive:
“In the past few years, we focused on being [on] ‘defense.’ Three years ago, we didn’t have a lot of cash on hand. But because we have been in defense mode, we have built our cash on hand to five trillion yen ($35.3 billion). We are ready to shift to offense mode. I am excited about that.”
SoftBank has faced its fair share of headwinds recently as the value of its investments has not spiked as expected. Last year, a top SoftBank exec Rajeev Misra stepped down from his roles as executive vice president and corporate officer. Misra was also the CEO of SoftBank Global Advisors, which controls Vision Fund 2, one of the funds under the SoftBank Vision Fund. Misra’s decision to step down came amid mounting pressure from the fund’s performance as stocks continued to crash and investments failed to pay off.
The market is now looking to SoftBank’s upcoming initial public offering (IPO) for its chip designer subsidiary, Arm Ltd. Arm recently decided to shun the UK market and opt for a US-only listing after talks with the British government did not yield favorable results. Now, the chip designer is looking at a $70 billion valuation, which would be the largest IPO in 2023.