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SoftBank buyout: SFTBY stock surges despite FTX holding amid speculation founder Son will take company private

By David Burrows

11:33, 11 November 2022

SoftBank founder Masayoshi Son. Photo: Getty
SoftBank founder Masayoshi Son. Photo: Getty

Softbank group (SFTBY) has accelerated the pace of its share buybacks further fuelling speculation that founder Masayoshi Son is going to take the company private.  

Shares in Softbank are up 5.39% this week at  JPY 6,953, this after Son began a concerted share buy back in October.

SoftBank is using cash  from recent sales of assets (notably from shares of Alibaba Group and T-Mobile US) to help speed up the buybacks, while at the same time holding back on investments.

In total Son bought back over $2bn worth of shares in October.

It would appear his intention is to steadily buy back outstanding shares until his stake is big enough to squeeze out remaining investors.

SoftBank (SFTBY) share price chart

It is understood that Son has discussed internally about taking SoftBank private for some time – indeed speculation on going private was rife in late 2020 too – however he has so far made no public comment on the matter.

The furthest the company has gone in backing such a move came in a statement last year from Softbank ‘s CFO Yoshimitsu Goto who said it was important to always consider both options strategically. This referred to the options of staying public or an MBO to take the company private. “The main objective of any MBO should be what is good for investors,” Goto said at the time.

One of the arguments raised against an MBO to take the company private, is that it could allow Son too much latitude in his investments – with no public shareholders to check any impulsive, high-risk bets.

While Son built up a reputation as an investment guru – he was an early investor in internet firms such as Yahoo! and Alibaba more recently some of his investments have attracted media attention for all the wrong reasons.   

NVDA

948.92 Price
+2.520% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.37

TSLA

174.99 Price
-1.410% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.14

AMC

4.78 Price
+7.740% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.07

GME

23.18 Price
+8.250% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.26

SoftBank's impulsive investment in overhyped start-ups like Klarna backfired and SoftBank Group Corp invested just under $100m in the crypto exchange FTX.com and it is believed it will write down the entire value of the stake.

Last month, Capital.com reported on Softbank disposing its shares in e-commerce company The Hut Group (THG) at a loss of £450m.

The disposal was part of SoftBank’s liquidation of an internal hedge fund after a series of bad investments.

SoftBank bought an 8% stake in THG in May 2021 for around £481m. SoftBank is only set to pocket £31m in proceeds after it agreed to sell 67.8 million shares to Qatar’s sovereign wealth fund.

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From profit into loss

SoftBank Group today posted a net loss of JPY 129.10bn  ($895 million) for the six months ended September, compared to a net profit of  JPY363.57bn a year earlier, due to losses in its investment business following a market slump.

SoftBank did not release an earnings forecast for the year ending March, citing uncertainty.

Despite the recent share price rise for Softbank after buybacks, analysts are not overly bullish on the stock.

Jefferies analyst Atul Goyal told Reuters last week that the:  "Outperformance leaves no upside." Goyal has downgraded his rating on the stock to hold. "For most/all funding needs, SBG will use Alibaba shares to defend its balance sheet or stock price," he said.

Markets in this article

9984
SoftBank Group Corp.
8338.8 USD
-218.7 -2.570%
THG
THG Holdings plc
0.741 USD
-0.009 -1.210%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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