SoftBank’s market cap slides RM38b on Uber

TOKYO • Last Thursday, as his company booked a US$3.8 billion (RM15.85 billion) gain from its stake in Uber Technologies Inc, Masayoshi Son told SoftBank Group Corp investors that their time had finally come. Instead, they’re still waiting.

SoftBank slid 5.4% the day after Son’s earnings presentation, and fell again yesterday, dropping as much as 4.9%. Uber’s initial public offering (IPO) was a flop with shares sliding on the first day of trading, at the same time the US and China escalated tensions over their trade dispute. SoftBank has lost about US$9 billion in market value despite reporting last week that profit more than tripled thanks to the valuation gain from its stake in the US ride-hailing giant.

Son has been remaking SoftBank Group from primarily a telecommunications operator into a technology investment firm, and his US$100 billion Vision Fund has begun to show promise as a major contributor to earnings. SoftBank’s stock has rallied almost 60% this year ahead of the earnings. But the slide in the past two trading days shows SoftBank will also now be vulnerable to the bad news from Son’s investment portfolio, as well as the good.

Uber opened at US$42, or 6.7% below its US$45 IPO price. Shortly after, it slid to US$41.06. While the company briefly reclaimed almost all its losses by early afternoon, the comeback proved short-lived.

“Uber’s debut didn’t quite live up to the expectations, and that’s why some investors are selling,” said Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co Ltd. “It’s too early to tell how sensitive SoftBank will be to Uber’s price moves going forward. But even if they fall some, that doesn’t have a direct impact on Vision Fund profits.”

The Vision Fund and SoftBank’s own Delta Fund contributed ¥1.26 trillion (RM47.88 billion) to profit in the fiscal year ended March 31, or slightly more than half of the total. Investments in 29 companies showed an increase in fair value, while 12 reported a decline.

In addition to Uber, SoftBank also booked a ¥203.4 billion valuation gain from its stake in Guardant Health Inc, which went public in October, and a ¥154.2 billion gain on India’s Oyo. It also recorded a ¥222.6 billion loss due to the share price decline in Nvidia Corp. — Bloomberg