SoftBank to stop investing 'randomly' after losing billions of dollars

SoftBank lost a lot of money over the past 12 months.

The Japanese giant’s founder and CEO Masayoshi Son today told analysts on a conference call marking the end of its fiscal 2022 year that the SoftBank group as a whole lost $13.15 billion. Its two Vision Funds, which account for 50 percent of SoftBank’s net asset value, alone lost $27.4 billion between them. If your technology stock or cryptocurrency portfolio has taken a dive lately in these bumpy economic times, perhaps you can manage a wry grin here.

On the bright side, Son said Arm and SoftBank had managed to put an end to the drama at Arm China, or at least enter the final chapter of that saga. Meanwhile, Arm’s revenues for the 12-month period were up 35 percent on the previous year, totaling $2.7 billion. Arm said in its earnings release that it shipped a record number of chips in calendar 2021 as well: 29.2 billion. SoftBank Group owns 75 percent of Arm; the Vision Fund owns the remainder. 

Son also said the brouhaha at Arm China was the last thing standing in the way of an Arm IPO. “There’s no reason for Arm [not to go] public. So going forward, we will proceed with procedures of Arm’s IPO,” Son said, adding that Softbank would have a majority stake in a public Arm.

The Vision Funds are the side of the business through which SoftBank has invested in DoorDash, Alibaba, Nvidia, Uber, TikTok owner ByteDance, and more. Many of the companies in the Vision Fund’s investment list have faced trouble due to US sanctions on China, further harming their opportunities for growth. With so many investments in leading and emerging tech companies, a loss in the tens of billions is a big signal to investors and the industry at large: the tech market is contracting, and it’s perhaps time to start thinking about lowering growth projections. 

Son blamed COVID-19 and the Russian invasion of Ukraine for much of the problems it, and the rest of the world, are facing, as those global events have led to corresponding rises in inflation and interest rates.

In response, Son said SoftBank plans to tighten its belt and enter a defensive mode that he said will be characterized by two things: continued monetization and stricter investment criteria. 

Those two go hand in hand, as Son described it. He said the Vision Fund group would slow its pace, stop “making new investment randomly,” and keep plenty of cash on hand. The company will also fill its coffers by selling its positions in private companies after IPOs in order to better “monetize” its industry moves and reinvest gains. Son said the Vision Fund may decrease its investments by up to 50 to 75 percent over the coming year.

The SoftBank investment canary might be wobbling on its perch, though it’s not the first indicator of trouble in the technology-sector coal mine: Big Tech companies are also reporting losses and changes of plans. Uber has said it’s cutting costs and reducing hiring, as did Meta. Uber and Meta both reported losses in the billions of dollars, while their stocks have slid by 46 percent and 40 percent, respectively, in the past six months. 

Companies that saw explosive growth during the pandemic have been especially badly hit, the Washington Post noted, with Peloton, Netflix, and Amazon all facing stock selloffs. Cryptocurrency prices have also plummeted amid concerns over increased US regulations. ®