TOKYO • In the months leading up to Uber Technologies Inc’s market debut, Masayoshi Son (picture) made a habit of pointing out that SoftBank Group Corp is the world’s largest investor in ride-hailing companies. Suddenly, it doesn’t seem like such an enviable position.
SoftBank has lost about US$16 billion (RM66.72 billion) in market value in the past three trading days as Uber plunged nearly 20% below its initial public offering (IPO) price.
Yesterday, the Tokyo-based company’s shares fell 5.4%, the biggest decline since Dec 25. The overall market was also down, with the Nikkei 225 Average retreating 0.6% amid escalating US-China trade tensions.
Just two months ago, Son told the audience at the Milken Institute conference in Tokyo that SoftBank controls 90% of the ride-hailing market worldwide through its portfolio companies which also include China’s Didi Chuxing Technology Co, South-East Asia’s GrabTaxi Holdings Pte Ltd and India’s Ola Cabs. But, as shares of Uber and smaller publicly traded rival Lyft Inc went into a tailspin, that bet is beginning to look increasingly like a risk factor.
Uber closed 11% lower at US$37.10 on Monday, approaching what Wedbush Securities Inc analyst Daniel Ives called “white knuckle” territory.
Lyft dropped about 6%. In addition to the US$7.7 billion investment in Uber, Son and his US$100 billion Vision Fund have poured more than US$10 billion into Didi Chuxing, US$3 billion into Grab and US$2.25 billion in General Motor Co’s (GM) self-driving unit Cruise.
SoftBank shares climbed to a 19-year high ahead of Uber’s IPO, thanks to a record ¥600 billion (RM22.8 billion) share buyback announced in February. Yesterday, the Japanese company said that all of the ammunition has been spent, with 100% of the purchase already completed.
The performance of Uber and Lyft has also raised questions about investor appetite for IPOs of large start-ups that prioritise growth over profitability. WeWork Cos, where SoftBank is also the biggest shareholder, is another money-losing giant which announced plans for listing.
“The key point is not just how Uber was trading on its first day, but given the market conditions, can it absorb yet another big IPO like the loss-making WeWork,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors Pte Ltd, said in a note to clients. — Bloomberg