SoftBank Profits Fall 99%, But Here’s Why The Stock Has Risen 14% This Week

on Wednesday, its stock has continued to gain momentum recently, in large part thanks to the approval of a merger between SoftBank-owned Sprint and T-Mobile.

  1. SoftBank’s Vision Fund took a $2 billion loss last quarter after writing down investments in WeWork and Uber, slashing the company’s operating income by 99%—from nearly $4 billion to less than $25 million, compared to a year earlier.
  2. SoftBank stock was down slightly on the news Wednesday, falling by 0.6% as founder Masayoshi Son said that the fund’s recent poor performance was spooking investors and causing big losses.
  3. Son has reportedly scaled back his ambitions for a second Vision Fund, following SoftBank’s disastrous bet on WeWork and pressure from activist investor Paul Singer’s hedge fund, Elliott Management.
  4. The company’s latest earnings release comes amid ongoing discussions with activist fund Elliott Management, which amassed a $2.5 billion stake in the Japanese conglomerate and is pushing for stock buybacks, improved corporate governance and more transparency on the Vision Fund’s investments.
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Crucial statistics: SoftBank stock is still up nearly 20% so far this year. The Japanese conglomerate currently has a market cap of $110 billion, up from $90 billion at the start of 2020. SoftBank founder and CEO Masayoshi Son is Japan’s second richest person, with a net worth of $24.2 billion, according to Forbes’ estimates. His fortune rose by $2.3 billion alone on Tuesday, when T-Mobile and Sprint won approval for their $26 billion merger.

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Article credit; Forbes

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