(Bloomberg) — Masayoshi Son had investors bracing for such a bad earnings report that even a $20 billion loss in SoftBank Group Corp.‘s Vision Fund business was enough to send shares surging.
The stock rallied as much as 12% on Friday for its biggest such gain in six months, a sharp reversal after Thursday’s 8% drop.
“There appears to be some relief that the Q4 report wasn’t worse, allowing the share price to regain the ground it lost yesterday,” said Kirk Boodry, an analyst at Redex Research who publishes on SmartKarma.
Nomura Securities analyst Daisaku Masuno said the decline in SoftBank’s loan-to-value ratio to 20.4% left a “positive” impression. For Iwai Cosmo Securities analyst Tomoaki Kawasaki, the decrease in total net asset value to 18.5 trillion yen “isn’t so bad.”
SoftBank Rises Most in Six Months on Buyback Hopes: Street Wrap
SoftBank on Thursday reported a record annual loss at its Vision Fund unit as a selloff in tech shares pummeled the value of its portfolio companies. The Vision Fund swung to a loss of 2.64 trillion yen ($20.5 billion) for the year ended Mar. 31, compared with a 4.03 trillion yen profit in the previous year.
Despite the somber numbers, investors honed in on Son’s emphasis on “defensive driving.” Son explained in a slide that the company has allocated 2.9 trillion yen of cash, or roughly twice the 1.3 trillion yen due for bond redemptions in fiscal 2022 and 2023.
Recent stock falls also makes it an opportune time for the Japanese conglomerate to accelerate its plan to buy back stocks. The company has pledged to buy back as many as 250 million shares for up to 1 trillion yen by Nov. 8.
Expectations over continued share buybacks, along with signs of recovery in U.S technology heavyweights, are factors supporting the stock, analysts said. “Tech valuations gained momentum in late US trading and some of that optimism appears to have spilled over into Japan,” Boodry said.
The Nasdaq 100 finished 0.2% lower in New York after recouping most of its intraday loss of 2.3%. The blue-chip Nikkei 225 Stock Average jumped as much as 2.7% in Tokyo Friday.
“The huge loss in the bottomline itself doesn’t seem to come across as such a negative thing,” Kawasaki said. But “it’s a bit too early to conclude that the weak share-price trend has been reversed with this latest earnings report.”
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