SoftBank posts $5.93 billion loss in December quarter as investment arm struggles

Japan’s SoftBank Group Corp reported a quarterly loss on 7 February as its Vision Fund investment arm continued to post losses for the fourth consecutive quarter, putting the focus on whether markets will stabilise enough to allow it to list some assets. In the December quarter, the tech conglomerate registered a loss of 783.4 billion yen ($5.93 billion), while its giant investment vehicle Vision Fund lost 730.36 billion yen ($5.52 billion).

SoftBank generated a profit for the first time in three quarters in the prior quarter as it sold a sizable portion of its treasured holding, Alibaba Group Holding, to raise funds at a time when the majority of its assets were plummeting due to a worldwide tech downturn. According to the company’s regulatory filings at the time, it had reported a net profit of 3.08 trillion yuan ($21.77 billion) for the three months ending 30 September.

This was achieved by a gain of 37.93 billion yuan associated with the early settlement of prepaid forward contracts using Alibaba’s shares. SoftBank’s Vision Fund investment division revealed a loss on its investments in the September quarter that reached $1.38 trillion, which had a negative impact on the company’s profits.

The portfolio businesses of Japanese investors have a cash runway of roughly 94 percent at a time when the technology sector is struggling with a capital shortage. Its portfolio companies have received additional funding aggregating more than $16 billion from 87 funding rounds during the past 12 months. More significantly, SoftBank is planning a string of exits through the IPOs of its late-stage portfolio businesses, which make up 70 percent of its current investments.

A negative economic outlook and downward revisions to portfolio company performance, particularly for IT businesses, had an influence on SoftBank’s investments. About $300 million in fresh investments were announced by the Vision Fund business, which is significantly less than the $15.6 billion that was invested in just three months in mid-2021 when SoftBank and its CEO Masayoshi Son were well-known for soaking the startup market in cash.

However, a wider decline in tech stocks over the past year has hurt the Japanese tech investor’s portfolio of publicly listed companies. It has witnessed losses of $500 million for its $1 billion investment in Paytm, $3.1 billion for its $3.2 billion investment in WeWork, $9 billion for its $12 billion investment in Didi, and additional losses totalling billions of dollars.

As of the December quarter, some of its profitable investments include Coupang, where it is holding on to gains of $4.2 billion, DoorDash, where a $200 million investment has generated profits of $800 million, and Delhivery, where a $300 million investment has produced earnings of $200 million.

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