SoftBank shares rises 133% since March blooming investments. SoftBank Group Corp. founder Chairman & CEO Masayoshi Son has delivered a clear response. Also to critics who thought the twin disasters of WeWork. And the Coronavirus would bring down his empire: not just yet.
The Japanese technology giant’s shares have more than doubled from their March low, propelled by buybacks and improving market conditions for its portfolio companies. SoftBank bonds, which traded at less than 65 cents on the dollar in March, have recovered to near par.
Masayoshi Son, 62, has seen his net worth soar to $20 billion, the highest since the Bloomberg Billionaires Index began tracking his wealth. Therefore, SoftBank shares rises.
“The share price can still double”. Said Richard Kaye, Japan equity analyst after SoftBank shares rises. And portfolio manager at Comgest Asset Management. Which holds a $60 million stake in SoftBank. There has been too much focus on WeWork. He says, and not enough on the. “Eight or nine things that have gone very right”.
SoftBank Shares Key To Success
After backing hundreds of startups during the dot-com boom, Son lost a record $70 billion as almost all those companies failed, leaving SoftBank’s future in doubt. Yet he slashed costs and survived. In 2006, he acquired the Japan unit of Vodafone Group Plc in a widely panned $15 billion deal that few thought would pay off. Son turned the business around, in part by persuading Apple Inc.’s Steve Jobs to give him exclusive rights to the iPhone in Japan.He has a stake in Chinese e-commerce giant Alibaba Group Holding Ltd. worth more than $150 billion.
After refocusing SoftBank on technology investments with the $100 billion Vision Fund, several startups he had backed ran into trouble, culminating with WeWork’s disastrous flop. The coronavirus pummeled SoftBank’s investments in the so-called sharing economy, businesses built on people splitting the use of cars, rooms and offices. Credit default swaps, the cost of insuring against default, spiked to the highest level in a decade.
In March, just days after a record plunge in its shares, SoftBank said it would sell 4.5 trillion yen in assets. SoftBank has announced three buybacks this year, completing only one of them, a 500 billion yen program announced March 13. While that was wrapped up June 15. The company has already announced two separate programs. Which are totaling 1 trillion yen. Furthermore, a further 1 trillion yen has been promised. But not yet committed.The Japanese firm has announced three buybacks this year. Completing only one of them. A ¥500 billion program announced March 13. While that was wrapped up June 15, the company has already announced two separate programs. Moreover totaling ¥1 trillion. A further ¥1 trillion has been promised, but not yet committed.
SoftBank To The Rise
“The shorts got this one wrong,” said Ikuo Mitsui, a fund manager at Aizawa Securities Co. “Going forward there’s likely to be more short-covering which will make it harder for the share price to drop.”
In recent months, Son has argued the key metric for SoftBank investors shouldn’t be profit or revenue but shareholder value, specifically the equity value of the company’s holdings minus its net debt. “You should look at shareholder value, how much gain or a loss the company recorded, because we are an investment company,” he said earlier this year.
In fact, SoftBank has taken to providing its own daily calculation of what its shares should be worth, based on its equity holdings of Alibaba, T-Mobile US Inc. and the domestic wireless operator SoftBank Corp. As of Friday, shareholder value stood at 13,230 yen, according to SoftBank, more than twice its share price even after the run-up of more than 130% from its March low.
SoftBank has benefited from a rebound in its portfolio of companies, particularly Alibaba. The e-commerce giant hit record after record this year, with its market valuation pushing past $700 billion. Uber Technologies Inc., a key Vision Fund investment, has more than doubled since its mid-March trough.
There are signs that SoftBank’s portfolio of startups will face an improved reception as they look to go public. Online home-insurance provider Lemonade Inc., one of the company’s investments, doubled after its initial public offering this month.
“Softbank’s current buyback will be funded by selling assets that the market is discounting at 60%+ for full price, whilst de-leveraging should mitigate worries on balance sheet stress as private equity valuations fall,” wrote Kirk Boodry, an analyst at Redex Holdings, in a note to clients.
