SoftBank stock bounces back on $9bn share buyback pledge

The Japanese conglomerate is seeking to move on from a record second-quarter loss

SoftBank founder Masayoshi Son                                 
SoftBank founder Masayoshi Son abandons stock trading strategy – Photo: Shutterstock
                                

SoftBank saw its stock rise by more than 11% on Tuesday, after it announced a much-anticipated share buyback programme. 

The Japanese conglomerate announced its intention to spend up to ¥1trn ($9bn) to repurchase nearly 15% of its shares. This would constitute the second-largest scheme in its history. 

Second-quarter loss

The move has been widely considered to be an attempt by SoftBank to counter the negative swell of investor sentiment that followed its recent second-quarter earnings. 

The company reported a ¥398bn loss in the three months to the end of September, having enjoyed a ¥628bn profit 12 month before.

Its Vision Fund, the landmark technology investment fund backed by the Kingdom of Saudi Arabia, posted a ¥1.167trn loss, its largest on record. 

China’s technology crackdown

The loss is largely a consequence of the Chinese government’s recent crackdown on the nation’s technology sector. 

Although it has since abated, between July and October Beijing issued a slew of new directives and announcements that affected areas such as education technology, video gaming and music streaming. 

The push was primarily aimed at tackling the monopolistic activities of China’s tech giants, such as their use of exclusivity agreements, but had the added effect of increasing the Chinese Communist Party’s influence over the private sector. 

In the three months to the end of September, Alibaba, SoftBank’s largest asset, saw its stock price fall by 33.5%. The value of its stake in the ride-hailing firm Didi fell to $7.5bn, having been purchased for $12bn. 

The fund’s misfires were by no means exclusive to China, however, with South Korean e-commerce firm Coupang’s 34.4% slump contributing to the loss. 

Masayoshi Son: ‘not proud’ of results

Speaking at a press conference following the results, founder and chief executive Masayoshi Son said that the Vision Fund was making steps to double the number of “golden eggs” it discovered last year but admitted he was “not proud” of its latest quarterly performance. 

Son, who described the company as being in the “middle of a blizzard”, abandoned his controversial strategy of trading stocks and options, selling his entire stakes in TSMC, PayPal and Amazon. Having held $13.6bn worth of “highly liquid listed stocks” at the end of the second quarter, SoftBank’s holding stood at $5bn at the end of the most recent quarter. 

SoftBank closed Tuesday up 10.5% at ¥6,808, down 15.5% since the start of the year.

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