SoftBank’s Vision Fund Isn’t What It Used To Be

Image source: Shutterstock - Ned Snowman

What's going on?

Japanese conglomerate SoftBank reported a new biggest-ever quarterly loss on Monday.

What does this mean?

SoftBank’s Vision Fund business – which manages the world’s biggest tech-focused investment funds – continues to be pummeled by a sharp selloff in tech stocks on the back of rising interest rates. It posted a record $17.2 billion loss last quarter, caused by big drop-offs in the value of key holdings like DoorDash, Coupang, and SenseTime. That means the segment was largely responsible for SoftBank’s $23.4 billion total loss – its second record loss in a row.

SoftBank’s shares barely budged after the news, probably because investors were already well aware that this was on the cards. So by now, they’re probably wondering what the point is: SoftBank’s share price is now close to where it was five years ago, before the Vision Fund even existed…

Why should I care?

The bigger picture: Keep it on the down-low.
SoftBank’s Vision Fund also holds big stakes in hundreds of unlisted tech startups. And while it’s much harder to value those investments, it doesn’t sound like things are going particularly well: SoftBank wrote down their values last quarter, after weak performances across the board and lower valuations in recent fundraising rounds. That’ll make it even harder for SoftBank to get out of this rut: it’s now less likely to list these firms on the stock market, which means it has less cash to plow into new investments.

Zooming in: Buy never, pay never.
Klarna is SoftBank’s problem in a nutshell: the buy-now-pay-later company – and member of SoftBank’s Vision Fund – saw its valuation slashed by 85% after its fundraising round last month, taking it from $46 billion to just $7 billion (tweet this). That’s down to two big problems: customers saddled with debt are struggling with the “pay later” bit, while others are simply deciding not to “buy now” in the first place.

Originally posted as part of the Finimize daily email.

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