Trading Losses Slash SoftBank’s Vision Fund Profit

SoftBank Group Corp. posted a record profit in its Vision Fund as the equity price rose, boosting the valuation of its portfolio firms, but founder Masayoshi Son’s notorious derivatives dealing wiped out a large portion of those profits.

The Vision Fund made a profit of 844.1 billion yen ($8 billion) in the December period, exceeding previous highs set only a quarter before. SoftBank’s investments in publicly listed companies like Uber Technologies Inc. have risen in valuation due to a global boom in technology stocks, paving the way for initial public offerings by companies like DoorDash Inc.

Anthea Lai, a Bloomberg Intelligence analyst, said, “The Vision Fund’s impressive success in the past few quarters fails to compensate for the losses on options trading.” “SoftBank might claim that the options were used for hedging, but Son’s foray into trading hasn’t gone far so far.”

Son reflected on his accomplishments in a post-results presentation to analysts. From Alibaba Group Holding Ltd. and Yahoo! two decades ago to companies like Uber and DoorDash more recently, he repeated his point that SoftBank is like a goose that lays golden eggs. So far, 15 businesses from the Vision Fund have gone public, he added. “The amount of golden eggs has been increasing since the Vision Fund launched.”

According to him, Vision Fund 1 and Vision Fund 2 have made investments in 131 businesses. SoftBank invested $680 million in DoorDash for a stake worth $9 billion, he added, although its $7.7 billion investment in Uber is now worth $11.3 billion.

The Tokyo-based firm recorded a net profit of 1.17 trillion yen in December but did not disclose operating profit estimates. This year, at least six more portfolio companies are considering IPOs according to NYSE IPOE WS at https://www.webull.com/quote/nyse-ipoe-ws.

According to Justin Tang, head of Asian research at United First Partners in Singapore, “there is a lot of liquidity out there, and investors are especially partial to tech stocks.” “At any stage, IPO exhaustion sets in, but it doesn’t seem like we’ve reached that point yet. For the time being, SoftBank has a window of opportunity.”

Following the coronavirus outbreak in March, SoftBank announced intentions to sell 4.5 trillion yen in reserves to cut leverage and finance buybacks. Its stakes in Alibaba, T-Mobile US Inc., and SoftBank Corp., the Japanese telecommunications unit, were sold. SoftBank has reported a $40 billion sale of its chip designer Arm Ltd. to Nvidia Corp.

As of the end of the year, SoftBank has $22 billion in “highly liquid classified stocks,” comprising $7.39 billion in Amazon.com Inc., $3.28 billion in Facebook Inc., and $1.38 billion in Alphabet Inc. Son has a 33 percent interest in the wealth management subsidiary SB Northstar, which oversees the activity. Before investing, you can find other stocks like nyse hyln which you can check at https://www.webull.com/quote/nyse-hyln.