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SoftBank stock price in 5 years: Can SFTBY shares use TikTok parent ByteDance investment to regain lofty valuation?

By Rob Griffin

Edited by Jekaterina Drozdovica

17:04, 20 December 2022

SoftBank stock price in 5 years
SoftBank is a Japanese telecom and e-commerce conglomerate that has been expanding through acquisitions since it was founded in the early 1980s. – Photo: Shutterstock; Tupungato

Softbank (9984), the Japanese conglomerate, has seen its stock price struggle in 2022 due to valuation losses in its Vision funds – but there have been recent signs of improvement.

SFTBY stock has risen 17% over the past six months, from $18.66 to $21.84 at market close on 19 December 2022.

Softbank (9984) live stock price

Shareholders are wondering if the SoftBank stock price in 5 years could be boosted by its investment in ByteDance, the private Chinese company behind social media giant TikTok? 

In our SFTBY 5-year stock forecast we look at SoftBank’s results, assess its prospects and ask analysts for their longer-term predictions for the business. 

What is Softbank? 

SoftBank is a Japanese telecom and e-commerce conglomerate that has been expanding through acquisitions since it was founded in the early 1980s.

It now boasts a portfolio of internet-related businesses, as well as being an investor in funds primarily backing pre-IPO companies in this sector.

The company’s assets include a 75% holding in ARM Holdings, the semiconductor chip designer, and a 28% stake in Alibaba (BABA), the Chinese e-commerce business.

SoftBank Corp was listed on the first section of the Tokyo Stock Exchange in January 1998, after demerging its divisions into separate companies and becoming a pure holding company.

It’s listed under 9984 on the prime market of the Tokyo Stock Exchange, while trading under the SFTBY ticker in the form of American Depositary Receipts (ADRs).

More broadly, SoftBank has declared its ambition to “continue to grow as a corporate group” for the next 300 years. 

It has stated that the company strives to develop over the long-term by forming partnerships with “the brightest minds and industry-shaping companies” in the information industry.

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Softbank stock price analysis 

Any SoftBank stock 5-year forecast has to begin by looking at how the price has been performing – and this presents a rather mixed picture.

Overall, SFTBY stock has fallen 9.4%, from $24.13 at the start of this year to $21.84 at market close on 19 December 2022. There have been highs and lows.The stock price rose from $16.86 at the end of September 2022 to $24.83 by 10 November – a 47% increase.

Softbank stock price

It’s a broadly similar story with the company’s 9984 stock price in Tokyo. The price has risen 7% over the past year, from JPY5,344 to JPY5,726. However, this period has seen the price as low as JPY4,265 in mid-March 2022 and above JPY7,000 in early November.

Its 9984 stock has generated trailing returns of 7.71% over the past three years, according to Morningstar data to 19 December 2022. SoftBank is currently the 218th largest company in the world with a market capitalisation of $62.80bn, according to CompaniesMarketCap. It’s also the fourth biggest conglomerate, the sixth largest investment company and the tenth most valuable telecommunications firm by market cap.

Latest earnings report 

The SoftBank stock price in 5 years will be influenced by the company’s current positioning and performance. The company reported net sales of JPY 3,182,477m for the six months to the end of September, 2022, which is 6.7% up on the JPY 2,983,504 for the same period in 2021.

Pre-tax profit came in 72% lower at JPY 292,636m, compared to the JPY 1,046,971m for the six months ended 30 September 2021. In statements accompanying the results, the company highlighted losses sustained on investments in SoftBank’s Vision funds. 

“Investment loss of JPY4,353,542mn was recorded at SoftBank Vision Funds, of which JPY1,018,741mn was attributable to third-party interests,” it stated.

Some of the losses were attributable to declines in the share prices of a wide range of companies within the portfolio.

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“Of the losses, JPY363,856mn were attributable to SenseTime Group, JPY224,541m to DoorDash, and JPY108,247 million to GoTo,” it stated.

In a call with investors, chief financial officer Yoshimitsu Goto pointed out that the IPO market was “slowly recovering”, which he sees as very good news. 

“That is giving us much more possibilities for us to see a good improvement in the Vision Fund portfolio performance, which is going to be very positive for the group overall,” he said.

ByteDance investment

Investors are hoping SoftBank’s backing of ByteDance, the private Chinese company, could help support its share price over the next few years. 

ByteDance operates the hugely popular TikTok, a pioneer in short-form mobile videos that has become a social media sensation over the last few years.

TikTok now has offices around the world, including Los Angeles, Berlin, Paris, London, New York, Dubai, Mumbai and Singapore. The business has declared: “Our mission is to inspire creativity and bring joy.” 

The performance of investments such as ByteDance are likely to be an influential factor in the SoftBank stock forecast in 5 years.

SoftBank stock price in 5 years: Where will it be?

So, what are the SoftBank stock predictions of analysts? According to Dan Baker, senior equity analyst at Morningstar, the company’s first half fiscal year 2022 results were broadly as expected.

In his SoftBank stock prediction, he noted the company had “drastically lowered” new investment in Vision funds over the past nine months and reduced leverage with some of its Alibaba sale proceeds. He wrote:

“We increase our SoftBank fair value estimate to JPY 7,300 from JPY 7,000 previously due to the much weaker yen more than offsetting reduced valuation of the Vision Funds.”

Baker pointed out that SoftBank’s investment in Alibaba accounted for around 30% of his estimate of its fair enterprise value.

“While we view the Taobao/Tmall marketplaces as Alibaba's core cash flow drivers, we also believe AliCloud and globalisation offer long-term potential,” he said.

He also pointed out that SoftBank was previously targeting an IPO of ARM by March 2023 but had now broadened that target to sometime in the coming year. The analyst added:

“The (SoftBank) stock price is now below our fair value estimate with the main difference likely due to our valuation of Alibaba that is around 155% above the current stock price.”

More broadly, SFTBY stock was rated a ‘hold’, based on the views of three analysts compiled by MarketBeat as of 20 December. Two had such recommendations in place, while one saw it as a ‘sell’. 

However, analysts have been downgrading expectations over recent months, according to an analysis of SoftBank stock predictions.

JPMorgan Chase reduced its rating from ‘overweight’ to ‘neutral’. Citigroup moved to ‘neutral’ from ‘buy’. Jefferies Financial Group changed from ‘hold’ to ‘underperform’. 

What about the SoftBank long-term stock forecast?

SFTBY stock was classed as a ‘bad long-term investment’, according to the algorithmic forecasts of Wallet Investor. As of 20 December, It predicted that the stock could fall 11% over the coming year to $19.46, while its SoftBank stock 5-year forecast had the price down to just $9.38 by December 2027. This would represent a rather dramatic collapse of 57% from its current level.

Final thoughts

Remember, analysts and algorithm-based predictions can be wrong and shouldn’t be relied upon to substitute your own research. Always conduct your own due diligence before trading, looking at the latest news, technical and fundamental analysis, and a wide range of commentary.

Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

FAQs

Where will SFTBY stock be in five years?

No-one knows for sure as a lot can happen in five years. However, according to the algorithmic Softbank stock projections of Wallet Investor as of 20 December, SFTBY stock could fall to $9.38 by December 2027 –  57% lower than the $21.84 closing price on 19 December 2022. Note that their predictions can be wrong.

Will SoftBank stock go up or down?

No-one knows for sure as there are so many variables at play. As of 20 December, the algorithmic forecasts of Wallet Investor saw the stock falling 11% over the coming year to $19.46. However, it’s important to remember that this figure may be wrong.

Is SoftBank a good long term investment?

Whether SoftBank is a good investment for you to consider will depend on a variety of factors, including your risk appetite, investing strategy and portfolio composition. You will need to carry out your own research into the company and remember that analysts’ Softbank stock projections can be wrong. Note that past performance does not guarantee future returns. And never trade money you cannot afford to lose.

Markets in this article

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SoftBank Group Corp.
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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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