Sep 07, 2020

SoftBank bets on tech stock options; share price falls

SoftBank
WeWork
Vision Fund
stock market
William Smith
2 min
Japanese conglomerate SoftBank has been putting billions into shares and equity derivatives tied to technology firms in a bet on their continued success
Japanese conglomerate SoftBank has been putting billions into shares and equity derivatives tied to technology firms in a bet on their continued success...

Japanese conglomerate SoftBank has been putting billions into shares and equity derivatives tied to technology firms in a bet on their continued success.

According to the Financial Times, SoftBank made $4bn in trading gains from $4bn of options.

With an exposure of $50bn generated from the options, Reuters reported that SoftBank shares closed down 7% as investors worried about the decline in the US stock market. Previous to that, SoftBank shares had gone up by 33% this year.

A selloff in US stocks has seen the S&P 500 fall by 4.3% over the last two sessions, reversing a trend of huge growth that has seen Apple become the first $2trn US company, and companies such as Tesla continue to defy expectations.

SoftBank is perhaps best known for its Vision Fund, an investment vehicle that saw it take stakes in then emerging technology companies such as ByteDance (owner of video-sharing app TikTok) and Uber. SoftBank is the largest technology investor in Japan and also arguably the world, with its more recent Vision Fund 2 said to have a specific focus on companies advancing the cause of artificial intelligence.

The Japanese group has experienced difficulty in recent times, as some of its investments have turned sour. Most prominent among these was WeWork’s failed IPO, which saw CEO Adam Neumann ousted, a mass devaluation of the company, and SoftBank acquiring an 80% stake in the company. CEO Masoyashi Son referred to the investment as “foolish”, and has since mandated a new approach for the company in the future.

Elsewhere, SoftBank is participating in the rescue deal of satellite operator OneWeb, taking an $87mn stake in the company alongside a consortium of the UK government and India’s Bharti Global. SoftBank was the company’s largest shareholder before it allowed it to file for bankruptcy in March. 

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