SoftBank to stop ‘random’ investing after $13 billion loss

SoftBank has lost a lot of money over the past 12 months.

The Japanese giant’s founder and CEO, Masayoshi Son, told analysts today on a conference call marking the end of its 2022 fiscal year that the SoftBank Group as a whole lost $13.15 billion. Its two Vision funds, which account for 50% of SoftBank’s net asset value, alone lost $27.4 billion. If your tech stock or cryptocurrency portfolio has taken a dive lately in these chaotic economic times, maybe you can manage a wry smile here.

On the bright side, Son said Arm and SoftBank managed to end the Arm China drama, or at least enter the final chapter of that saga. Meanwhile, Arm’s revenue for the 12-month period rose 35% from a year earlier, totaling $2.7 billion. Arm said in its earnings release that it also shipped a record number of chips in calendar year 2021: 29.2 billion. SoftBank Group owns 75% of Arm; the Vision Fund owns the rest.

Son also said the Arm China hubbub was the last thing standing in the way of an Arm IPO. “There is no reason for Arm [not to go] Public. So going forward, we will continue with Arm’s IPO procedures,” Son said, adding that Softbank would own a majority stake in a public Arm.

The Vision Funds are the side of the business through which SoftBank has invested in DoorDash, Alibaba, WeWork, Nvidia, Uber, TikTok owner ByteDance, and more. Many companies on the Vision Fund’s investment list have struggled due to US sanctions on China, further hurting their growth opportunities. Indeed, Son blamed COVID-19 and the Russian invasion of Ukraine for much of the problems facing her and the rest of the world, as these global events have led to corresponding increases in inflation and interest rates. of interest.

In response, Son said SoftBank plans to tighten its belt and enter a defensive mode that he says will be characterized by two things: continued monetization and tougher investment criteria.

These two things go hand in hand, as Son described it. He said the Vision Fund group would slow down, stop “randomly making new investments” and keep plenty of cash. The company will also replenish its coffers by selling its positions in private companies after IPOs to better “monetize” its moves in the industry and reinvest earnings. Son said the Vision Fund could cut its seed investments by 50-75% in the coming year.

The SoftBank canary may be teetering on its perch, though it’s not the first indicator of trouble in the tech sector’s coalmine: to name two, Uber and Meta have both reported financial turmoil these lately and a drive to cut costs and hiring, while their shares have fallen 46% and 40%, respectively, over the past six months.

Large personal technology-related companies that have seen explosive growth during the pandemic have been hit hard, the Washington Post noted, with Peloton, Netflix and Amazon all facing stock selloffs. Cryptocurrency prices also fell amid concerns about increased regulation, among other effects. ®