Japan’s SoftBank Group Corp has reported a shattering $26.2 billion loss at its Vision Fund investment arm, with rising interest rates and political instability hitting high-growth tech stocks particularly hard.
The record-breaking loss comes just one year after SoftBank announced record-breaking profits, with high-flyers that were the force behind last year’s results now slumping.
South Korean e-commerce firm Coupang is now trading 70% below its listing price, whilst ridehailing services Didi Global and Grab have also seen significant losses in the first quarter of 2022. In addition to the current economic landscape, these firms have also had to contend with the loss of the boost provided when pandemic measures drove consumers to their platforms.
The losses have seen SoftBank founder and CEO Masayoshi Son’s strategy of focusing on riskier, high-growth stocks under the spotlight.
Son pledged to boost the group’s cash position through asset monetization, stating it was time to take a more defensive stance.
“When the world is in disorder, SoftBank should play defense,” Son told a press briefing following the earnings announcement.
Vision Fund has 475 companies in its portfolio, and made 43 investments during the fourth quarter of 2021. The firm has been slowing down its rate of investment amid market uncertainty.
Son said that SoftBank was likely to invest half or even a quarter as much as last year, in line with the group’s promise to keep its loan-to-value ratio below 25%.