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SoftBank Incurs Annual Loss of $13 Billion, The Highest in Four Decades

Industry: Investments and Asset Management
Current: Company Performance

Recently, SoftBank Corp reported an annual loss of $13 billion in FY2021-22, the highest loss since its inception
SoftBank’s Vision Fund has also reported a loss of around $26 billion; the portfolio consists of companies such as Coupang, Nvidia, DiDi, Paytm, Grab, and DoorDash
The Russia - Ukraine war, the resurgence of Covid-19 cases in China, and the increase in interest rates in major economies have affected the performance of these companies.

SoftBank Corp, a globally renowned investor in technology, energy, and financial sectors, recently suffered an annual loss of $13 billion, the highest loss since 1981. SoftBank’s Vision Fund, one of the largest venture capital funds managed by the Japanese conglomerate along with the Public Investment Fund of Saudi Arabia contributing $45 billion of the $100 billion funds, also suffered a loss of around $26 billion. The company’s loss could be due to the poor performance of the companies that it has invested in such as Coupang, Nvidia, DiDi, Paytm, Grab, DoorDash, Uber, and Ola.

Reeling Portfolio of Vision Fund

Coupang, a South Korean e-commerce company in the portfolio of Vision Fund, incurred loss and is down more than 76% since it went public last year at NYSE. Nvidia, the market leader in the graphics card segment, also suffered a fall of 46% year-to-date in its share price. DiDi, a Chinese ride-hailing service provider, also reported a sharp decline of 72% in its share price so far this year mainly due to strict rules and regulations related to data privacy imposed by the Chinese government. Earlier, SoftBank invested 1.4 billion dollars in Paytm, an Indian fintech company, which is now valued at $800 million dollars. Other poor performers in its portfolio included Grab, a Singaporean ride-hailing company, and DoorDash, a US delivery company.

Reasons Behind the Fall

The increase in interest rates by 0.5% by the US Federal Reserve in May 2022 had investors concerned; companies such as Apple, which is also an investor in the Vision Fund, incurred a decline of 16% in its share price since last month. The second reason is the war between Russia and Ukraine that caused supply chain disruption and led to an increase in inflation around the world. Another major concern is a sudden increase in the number of Covid cases in China, the largest exporter of goods in the world, which resulted in a lockdown in major cities such as Shanghai and a slowdown in business activities.

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