Softbank lost a record $23B last quarter as its formerly booming tech investments turned sour
Never disappoints on the quirky decks... Japanese investment giant Softbank is famous for its simple but poetic earnings decks, which include pictures of unicorns falling into the "Valley of Coronavirus" (slide 50) and a powerful slide that just says "Many Regrets" (11). To understand the mood of Softbank's latest earnings, check out this frown on slide 4.
- Softbank reported its largest quarterly loss ever. The mind-numbing figure: $23.4B. Softbank's tech-centric Vision Fund alone lost nearly $22B.
- Blame plunging tech stocks — from DoorDash to WeWork to Uber — which Softbank was heavily invested in. The Vision Fund has lost $50B in gains from its peak (#WeCrashed).
- Losses were spread across Softbank’s portfolio of 300+ companies, including Klarna, DiDi (the Uber of China), and Singapore’s superapp, Grab.
The decks are still iconic... but Softbank’s investments have soured. Rising interest rates have crushed high-flying valuations, while China’s regulatory crackdown on tech pummeled Softbank’s investments in Asia. Now Softbank is selling to raise cash and soothe losses:
- Softbank has sold its entire stake in Uber, Slack, Opendoor, Nvidia, and others. It says it made a $1.5B profit by selling its long-held Uber stake.
- Cutting back: The Vision Fund approved just $600M in investments from April to June, down from a record $20.6B a year earlier, and job cuts could be coming.
It can be hard to see the downside… when the upside is so in your face. Softbank was riding high when tech was booming. For 2020, it posted a record $46B profit — the highest for a Japanese company, and $5B more than Google earned that year. CEO Masayoshi Son said he’d become "somewhat delirious" when prices soared, and regrets all the $$ he funneled into startups. Now Softbank is imposing discipline to weather the markets’ ups and downs.