"Release Stock Price Stimulus Measures" SoftBank Faces Pressure from Shareholders

Stock Price Drops Over 40% Since March Peak... Q3 Deficit Forecast

SoftBank Stock Price Trend [Image Source= Yahoo Finance]

[Asia Economy Reporter Park Byung-hee] Major foreign media reported on the 6th (local time) that SoftBank is under pressure from shareholders to present a plan to boost its stock price.

SoftBank's stock price rose to an all-time high of 10,700 yen in March but has since fallen more than 40%, increasing shareholder dissatisfaction. SoftBank is set to release its Q3 earnings on the 8th. With a Q3 loss expected, attention is focused on whether SoftBank will announce a share buyback plan to turn things around.

According to insiders, some shareholders, including hedge fund Elliott Management, are openly demanding a share buyback. SoftBank announced a share buyback plan last year and has so far invested about $23 billion in repurchasing shares. However, that buyback plan is nearly complete, and Elliott and others are calling for a new buyback plan.

Insiders said SoftBank has been internally reviewing share buybacks in recent weeks. However, SoftBank has refused to comment on this matter.

Son Jeong-ui, Chairman of SoftBank
[Photo by Yonhap News]

The pressure from Elliott and others appears to be related to Chairman Masayoshi Son's recent focus on startup investments through the Vision Fund.

The Vision Fund has faced difficulties this year due to increased regulations in China. It is known to have suffered significant valuation losses after investing in Chinese ride-hailing company Didi Chuxing. SoftBank invested in Didi Chuxing in 2019 and holds more than a 20% stake. However, after Didi Chuxing's listing on the New York Stock Exchange this year, it fell out of favor with the Chinese government. Currently, Didi Chuxing's stock price is only $8.12, down 42% from its IPO price of $14.

Alibaba, in which SoftBank holds nearly a 25% stake, also saw its stock price fall by 32% on the New York Stock Exchange and 31% on the Hong Kong Stock Exchange this year, as founder Jack Ma fell out of favor with the Chinese government.

SoftBank is also a major shareholder of ByteDance, the parent company of TikTok. The Vision Fund is known to have invested a significant portion of its capital in Chinese IT companies.

However, as Chinese company stock prices continued to decline this year, Chairman Son announced the suspension of investments in China at the Q2 earnings announcement in August, citing regulatory uncertainty. At that time, Son said, "China remains a hub of innovation in technology and artificial intelligence, but the risks in terms of investment are high." It is also known that the Vision Fund reduced its investment ratio in China from 23% in Q2 last year to 11%.

SoftBank's net profit for Q2 this year was 761.5 billion yen, down 39.4% year-on-year. There are forecasts that it will return to a loss in Q3. The U.S. online financial media MarketWatch predicted that SoftBank will record a net loss of 298.8 billion yen in Q3. Last year in Q3, it posted a net profit of 627.5 billion yen.