Softbank CEO
(Softbank Founder & CEO Masayoshi Son)

Softbank to buy back more shares following “blizzard” that hit markets

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Japanese conglomerate SoftBank Group Corp. (SBG) said on Monday (Nov. 8) that it is starting to buy back up to one trillion yen ($8.82 billion) of its own shares from November 9. The buyback will last one
year and comes after the company completed a record 2.5 trillion yen buyback in May.

“SBG has decided to repurchase its own shares to enhance shareholder returns and to realize fair shareholder value by rectifying the situation where SBG shares are traded at a deep discount to net asset
value,” the Tokyo-based company stated.

The buyback also comes after a record loss at Softbank’s Vision Fund investment unit for the fiscal second quarter because of a decline in the value of public holdings.

Vision Fund posted a loss of 825.1 billion yen, while Softbank Group Corp overall reported a second-quarter net loss of 397.9 billion yen, equivalent to $3.5 billion. SoftBank shares have lost around a quarter this year.

“What happened to us? We are in the middle of a blizzard,” Softbank founder Masayoshi Son said at an investor presentation after the earnings announcement, flashing a slide of snow-covered tundra. “The SoftBank Vision Fund performance is not something I’m proud of.”

Softbank share price YTD

SoftBank’s portfolio of Chinese startups was particularly hard-hit as China’s stricter regulations on technology companies caused a sharp stock selloff.

The group’s largest asset, Chinese e-commerce giant Alibaba , saw its valuation drop by around a third in the second quarter, as it became China’s first regulatory target late last year. Softbank’s stake in Chinese ride-hailer Didi Global, acquired for $12 billion, was valued at $7.5 billion. Didi’s debut at the end of the previous quarter was one of the largest U.S. offerings of the past decade. Another notable hit was Korean online retailer Coupang, which gave up a third of its value.

“We believe the financial impact of regulatory headwinds in China will be reflected in (third quarter) earnings and (fourth quarter) guidance,” KGI Asia analysts said in a note in October.

SoftBank Group ended 0.8% lower on Monday (Nov. 8) ahead of its earnings release later in the day. Will the new buyback ease the pain of quarterly loss? Son is optimistic. Maybe investors will share his optimism.