SoftBank Net Profit Swells to USD11 Billion as Vision Fund Rallies

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Summary

  • SoftBank’s Vision Fund has invested in more than 160 companies across different geographies.
  • The expectation of a positive Q3 earnings report pushed SoftBank’s stock (SFTBF: OTCPK) price up by nearly 10 percent to USD94.00 on Monday.
  • Vision Fund companies generated USD25.5 billion in gross revenue as of February 5, 2021.

Japanese telecom and e-commerce conglomerate SoftBank Group Corp. has recorded one of the best earnings quarters ever, ending December 2020. This huge success has been underpinned by clever investments in key assets through some of the company’s signature funds.

SoftBank reported gross revenue of USD13 billion and a net profit of USD11 billion during the period.

SoftBank’s Vision Fund has invested in more than 160 companies across different geographies. Emboldened by the company’s stellar performance, its chief executive Masayoshi Son responded that its golden egg-laying funds could produce 10 to 20 IPOs every year.

The expectation of a positive Q3 earnings report had pushed SoftBank’s stock (SFTBF: OTCPK) price up by nearly 10 percent to USD94.00 on Monday. Its stock value rose by 17 percent in the last five days and around 58 per cent in the past six months. SoftBank has a market cap of USD167 billion.

It said on Monday that USD25.5 billion were generated by the Vision Fund companies as of February 5, 2021. This included an income of USD5.2 billion from Uber Technologies Inc., one of the key portfolio companies of its Vision Fund. However, it had lost nearly USD17 billion in the fiscal year ended March after the markets tumble due to the pandemic.

The two other top Vision Fund companies are the food-delivery firm DoorDash Inc. and German used-car dealer AUTO1 Group, which jointly made nearly USD13 billion as of February 5. Besides, it has filed for four special-purpose acquisition firms that are likely to raise USD1.4 billion when they list.

SoftBank Vision Fund has also made massive investments in the Chinese companies Didi Chuxing and Grab Inc. But Covid has hit hard on their businesses, and income can drop from these investments.

The easing of the pandemic restrictions in China would help turn them profitable again. Both Didi and Grab have largely recovered from the pandemic lockdowns in late last year. Last month, Moody’s Investors Service had downgraded its rating for Grab to B3 on account of its losses.

However, the Fund still faces significant hurdles in terms of performance ahead. Although it managed to pull itself out unscathed from the Covid disruptions, it still has a long way to go and maintain sustained robust growth.

Other Vision Fund investments included office-share company WeWork and Indian hotelier Oyo Hotels & Homes. Both the companies have been severely affected by the pandemic.

Over the years, SoftBank has expanded its empire through acquisitions, but it also has significant stakes in some of the world’s biggest tech and e-commerce companies like Alibaba, in which it has a 28% stake. It also runs a successful mobile and fixed-line telecom business in Japan.

It also has a 75% stake in ARM Holdings, a semiconductor chip manufacturer.


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