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SoftBank’s mega-tech funds lost more than $27 billion in the previous fiscal year, the worst result on record.
The world’s largest tech investor announced on Thursday that its Vision Funds lost 3.5 trillion yen ($27.5 billion) in the fiscal year that ended in March. This was a sharp contrast to the unit’s performance the previous year, when it had made a good profit.
CEO Masayoshi Son recognized the losses during a results presentation in Tokyo and promised to begin operating more conservatively.
He stated, “We, SoftBank, should be taking defense.”
He said that the Japanese conglomerate will be more selective in the agreements it accepts in the future, implement stricter criteria for new investments, and focus on increasing returns from its portfolio firms.
SoftBank’s portfolio firms include Coupang (CPNG), a South Korean e-commerce company, and Grab (GRAB), a Southeast Asian ride-hailing startup, both of which went public in record-breaking IPOs last year.
However, they have since fallen, with each company’s stock losing more than 60% since the beginning of the year. Didi, on the other hand, may be one of the Japanese company’s most high-profile failures.
Last summer, the Chinese ride-hailing behemoth went public in New York amid much fanfare, but was quickly swept up in China’s historic regulatory crackdown. The company’s problems worsened last December, when it was compelled to start the process of delisting in the United States.
Didi’s stock has lost approximately 70% of its value this year. It also revealed last week that the US Securities and Exchange Commission was looking into the botched IPO.
“I believe that the market is in confusion,” Son said, citing the impact of the Covid-19 pandemic, Russia’s invasion of Ukraine, rising interest rates, and soaring inflation.
So far in 2022, the Nasdaq has lost 27% of its value. Son also stated that the company has been taking a more “careful” approach to investing in China, where IT companies have recently been subjected to a regulatory crackdown.
He added that he believed that there were still opportunities in the country, but that SoftBank was buying in at a “relatively smaller size.” Son has previously acknowledged his firm was “facing tough challenges” in China, and likened its issues to getting caught in a “big winter snowstorm.”
Alibaba, one of the corporations hardest hit by the crackdown, “has lost a lot,” according to Son on Thursday. The Chinese e-commerce behemoth has lost more than 30% of its value so far this year, despite being a long-time pillar of its portfolio.
SoftBank’s stock dropped 8% in Tokyo ahead of its earnings report on Thursday. Its stock has dropped 17 percent so far this year.
Opinions expressed by NY Weekly contributors are their own.