Since Masayoshi Son, the big boss of SoftBank, decided to focus the Japanese conglomerate’s efforts on investing in technology stocks, the group’s performance has been yo-yoing. And not in small measures. Thursday, May 12, he thus reported a historic loss of 1,708 billion yen (12.5 billion euros) for the 2021 financial year. This will not fail to feed comments on the leader’s intuitions.
In 2020, he was doomed when SoftBank announced losses of 1,000 billion yen (7.5 billion euros). The following year, the same people who had booed him beat their necks in the face of the company’s impressive results, with a historic profit of 5,000 billion yen.
Investor distrust
In the presentation of the results announced today, SoftBank highlights all the elements of the external context: “a world in chaos” hit by Covid-19 and the war in Ukraine, the rise in oil, gas and grain prices, the deterioration in the price of the yen, the increase in interest rates. In fact, in a climate of uncertainty, technology stocks are currently the subject of investor mistrust, as evidenced by the fall in prices recorded this year by the Nasdaq, including by the biggest players (Google, Amazon, Meta, Apple, etc).
SoftBank is also penalized by its bets on Chinese tech champions at a time when Beijing’s policy towards these players is becoming more and more restrictive.
In detail, SoftBank cites in particular the poor performance of Didi, a Chinese VTC company, and Coupang, the leader in online commerce in South Korea. The group’s results were also penalized by the failure of the sale of the British Arm (a specialist in chip design) to the American Nvidia, due to the hostility of the competition authorities. The operation would have allowed the group to cash a check for 66 billion dollars (about 63.6 billion euros). Otherwise, Mr. Son is now relying on Arm to bring money into the coffers, by betting on the ever-growing demand for semiconductors.
Above all, Mr. Son has embarked on a more cautious short-term investment policy, convinced that within one or two years the markets will regain their appeal for technology stocks. An essential issue for SoftBank, which in 2016 created the largest investment fund dedicated to this type of asset, endowed with more than 100 billion dollars, supposed to be the flagship of the group. This is not the first storm to have been weathered after the failure of the introduction of the coworking giant, the American WeWork in 2019. But obviously Captain Son is ready to face other headwinds.