SoftBank's value falls by $12.3b on Uber IPO flop

Mr Masayoshi Son, chairman and chief executive officer of SoftBank Group, speaking at an earnings presentation in Tokyo on Thursday, when he said the firm booked a US$3.8 billion (S$5.1 billion) gain from its stake in Uber Technologies. The day after
Mr Masayoshi Son, chairman and chief executive officer of SoftBank Group, speaking at an earnings presentation in Tokyo on Thursday, when he said the firm booked a US$3.8 billion (S$5.1 billion) gain from its stake in Uber Technologies. The day after the presentation, SoftBank slid 5.4 per cent and fell again yesterday, dropping as much as 4.9 per cent.PHOTO: EPA-EFE

Slide shows Masayoshi Son's firm vulnerable to CEO's investments

TOKYO • On Thursday, as his firm booked a multibillion-dollar gain from its stake in Uber Technologies, chief executive Masayoshi Son told SoftBank Group investors that their time had finally come. Instead, they are still waiting.

The day after Mr Son's earnings presentation, SoftBank slid 5.4 per cent and fell again yesterday, dropping as much as 4.9 per cent.

Uber's initial public offering (IPO) was a flop with shares sliding on the first day of trading, at the same time the United States and China escalated tensions over their trade dispute.

SoftBank has lost about US$9 billion (S$12.3 billion) in market value despite reporting last week that profit more than tripled, thanks to the US$3.8 billion valuation gain from its stake in the US ride-hailing giant.

Mr Son has been remaking SoftBank Group from primarily a telecommunications operator into a technology investment firm, and his US$100 billion Vision Fund has begun to show promise as a major contributor to earnings.

SoftBank's stock had rallied almost 60 per cent this year ahead of the earnings.

But the slide over the past two trading days shows SoftBank will also now be vulnerable to the bad news from Mr Son's investment portfolio, as well as the good.

  • US$9b

  • What SoftBank has lost in market value despite reporting last week that profit more than tripled due to the valuation gain from its stake in US ride-hailing giant Uber.

Uber opened at US$42, or 6.7 per cent below its US$45 IPO price. Shortly after, it slid to US$41.06. While the firm briefly reclaimed almost all its losses by early afternoon, the comeback proved short-lived.

"Uber's debut didn't quite live up to the expectations, and that's why some investors are selling," said Mr Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities.

"It's too early to tell how sensitive SoftBank will be to Uber's price moves going forward. But even if they fall some, that doesn't have a direct impact on Vision Fund profits."

The Vision Fund and SoftBank's own Delta Fund contributed 1.26 trillion yen (S$16 billion) to profit in the fiscal year ended March 31, or slightly more than half of the total.

Investments in 29 companies showed an increase in fair value, while 12 reported a decline.

In addition to Uber, SoftBank also booked a 203.4 billion yen valuation gain from its stake in Guardant Health, which went public in October, and a 154.2 billion yen gain on India's Oyo.

It also recorded a 222.6 billion yen loss due to the share price decline in Nvidia.

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A version of this article appeared in the print edition of The Straits Times on May 14, 2019, with the headline 'SoftBank's value falls by $12.3b on Uber IPO flop'. Print Edition | Subscribe