SoftBank’s shares return to dot-com bubble era highs

FILE PHOTO: Japan's SoftBank Group Corp Chief Executive Masayoshi Son bows his head after his presentation at a news conference in Tokyo, Japan, Nov. 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

Shares of SoftBank Group Corp climbed 4.6% on Tuesday to reach highs last seen during the dot-com bubble, as massive buybacks help shrink the group’s persistent discount.

Shares closed at 6,190 yen in Tokyo, hitting levels last seen in early 2000, when speculation on internet stocks saw prices surge before crashing and wiping out most of SoftBank Chief Executive Masayoshi Son’s wealth.

The rebound comes after Son in March pledged to spend up to 2.5 trillion yen ($23 billion) on buybacks, helping lift the stock 130% from March lows.

With around 10 million SoftBank shares being shorted “we are seeing a typical short-squeeze,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

Tailwinds for the company include progress in monetizing core assets such as e-commerce firm Alibaba Group Holding to raise $41 billion to fund the buybacks and stabilise its balance sheet. The plan has caused jitters at credit-rating firms.

Alibaba’s stock price continues to appreciate, with a portfolio company backed by SoftBank’s $100 billion Vision Fund – insurance startup Lemonade Inc – successfully listing in New York last week.

Vision Fund reported an operating shortfall of 1.9 trillion yen for the year ended March as its portfolio floundered, pulling the broader group to a record annual loss.

Citigroup sees the fund booking valuation gains of 600 billion yen in the April-June quarter, analyst Mitsunobu Tsuruo wrote in a note last week, “with significant scope for a rebound in the valuations of non-listed firms” in the portfolio.

SoftBank provides little detail on how it revalues its investments. The ongoing impact of the coronavirus outbreak, which has exposed underlying problems at portfolio companies, means the fund’s outlook for the rest of the financial year “remains grim”, Tsuruo wrote.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.