Tech rout wipes $13bn off Softbank’s market value
A run of bad days on the stock exchange has taken around $13bn off the market capitalisation of Softbank, after investors grew concerned at its exposure to risky tech bets.
Softbank’s shares closed down three per cent as markets shut in Tokyo today, extending a slump that has seen its share price fall around 10 per cent since late last week.
Sources told media that Softbank was behind some significant bets on major technology companies, leaving investors fearing the Japanese giant may be overexposed to the US Nasdaq index.
Softbank had been seeking a place to put the proceeds of a large asset sale programme it conducted over the summer.
Analysts have said the group’s purchase of call options in addition to share buying, which gives access to a much higher amount of shares on paper, has exacerbated a wider tech sell-off in US markets.
The Nasdaq has now fallen by more than 10 per cent this week, marking its worst trading period since August.
Softbank chief Masayoshi Son set up a division to focus on investing in public companies last month, but the revelations of its new stakes in the likes of Amazon and Microsoft took shareholders by surprise.
The firm is known for having taken significant risks on younger tech companies in the past that then led to a downside upon its exit, such as Uber and Wework.
Son frequently emphasises the market value of Softbank’s listed assets, and how the group’s $100bn Vision Fund offers exposure to a basket of high-growth, unlisted startups.
However Softbank’s shifting risk profile has caused nervousness among backers, which analyst Kirk Boodry at Redex Research said makes the company “uninvestable for some investors”.