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SoftBank stock forecast: Can SFTBY shares recover from gloom of tech stock meltdown?

By Rob Griffin

Edited by Georgy Istigechev

17:03, 24 October 2022

Pedestrians walk past a SoftBank mobile shop in Tokyo on May 12, 2022. (Photo by Charly TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
SoftBank stock has been recovering in both US and Japanese markets over the past 3 months. – Photo: Charly Triballeay / AFP via Getty Images

SoftBank (9984), the Japanese investment conglomerate led by Masayoshi Son, has seen its stock price start to modestly rise after enduring a particularly gruelling year – but will the recovery last?

The SFTBY stock price has plummeted 33.7% over the past 12 months, from $28.80 to $19.07 on 24 October 2022.

If one looks at a shorter time horizon, the price has actually been recovering, rising 9.8% over the past month, according to data from MarketWatch, and fuelling hope among investors that brighter days are ahead. 

The company’s stock on the Tokyo Stock Exchange (TSE), trading under the ticker ‘9984’, has followed a similar trajectory, dropping 10.24% over the past year but rising 4.14% in the past three months.

Softbank (9984) Live Stock Price Chart

In this SoftBank stock forecast overview, we look at some of the latest news concerning the company and its latest earnings, as well as what analysts expect will happen to the SFTBY stock price.

What is SoftBank?

SoftBank is a Tokyo-based telecom and e-commerce conglomerate that was founded in 1981 and has been expanding mainly through acquisitions.

The company has a broad portfolio of internet-related businesses and is also an investor in the Vision Fund, the world’s largest technology-focused investment fund.

More broadly, its assets include a 75% holding of semiconductor chip designer ARM Holdings and a 28% stake in Alibaba (BABA), the Chinese e-commerce giant.

Masayoshi Son, has described the company as “a capital provider driving the information revolution” and recently emphasised its focus on artificial intelligence.

“We are proud to say that SBG is likely the largest provider of capital to entrepreneurs in the field of AI,” he said. “AI is redefining every industry, including autonomous driving, healthcare, finance, education, and retail.”

The company is listed under ‘9984’ on the prime market of the Tokyo Stock Exchange (TSE). Its trades under the SFTBY ticker in the form of American Depositary Receipts (ADRs) on over-the-counter (OTC) markets in the United States.

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.

The company is the 220th largest company in the world by market capitalisation, according to CompaniesMarketCap, and the world’s 8th biggest investment business.

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SoftBank stock price analysis

Before considering any SFTBY stock forecast, it’s important to look at what has happened to the price over the past year, and whether the trend is positive or negative.

The SFTBY stock price has fallen 32.5% over the past year, from $29.01 to $19.58 as the market closed on 21 October, 2022. The stock is down 19% year-to-date (YTD).

softbank (sftby) 5y stock price chart

However, recent weeks have been a bit brighter, with the price having edged up 5.3% since the back end of September. Investors are hoping this trend will continue.

It’s been a broadly similar trend for the company’s 9984 stock in Tokyo. Over the past year, it’s down 10.2% from JPY6,387 to JPY5,733.

softbakk (9984) 5y stock price chart

The stock is up 5.5% year-to-date, rising 4.14% over the past three months and an even higher 13.17% over the past month, according to data from MarketWatch.

The company’s 9984 stock has also generated trailing returns of 12.86% over the past three years, according to Morningstar. 

Latest earnings report

SoftBank announced in early August 2022 that it had suffered a net loss of JPY3.2tn for the three months ending 30 June, 2022.

According to Dan Baker, senior equity analyst at Morningstar, this was mainly due to the JPY2.9tn of valuation losses in the bank’s Vision Fund.

In a SoftBank stock forecast from early August, Baker said this result had been expected for the funds, which aim to accelerate the AI revolution by investing in market-leading, tech-enabled growth companies:

“The company has drastically lowered new investment in the Vision Fund over the past six months and this looks likely to continue for the foreseeable future with management foreshadowing cost and headcount cuts.”

While the Vision Fund invested $20.6bn in the first-quarter fiscal 2021 year, this was cut to just $0.6bn in the same period this year, he pointed out.

“SoftBank has undertaken to make a substantial reduction of operational costs, to increase discipline for new investments and to focus on enhancing the value of its current portfolio of 473 companies,” he added.

According to SoftBank’s results, share prices declined in a “wide range of portfolio companies” over the period, including Coupang (CPNG), SenseTime and DoorDash (DASH).

It said these were mainly caused by the “global downward trend” in share prices due to “growing concerns over economic recession” driven by inflation and rising interest rates.

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Global tech correction

In a conference call following the first quarter results, SoftBank’s Son emphasised his concerns about investing in technology, given the sector’s correction.

He told analysts that “someday the rain will stop”, but insisted it wasn’t clear when this would be or what damage will be done to its asset value.

“That means we have to go into protective mode,” he explained. “In this kind of environment, cash is the only thing that does not change the value. Cash does not devalue.”

Son pointed out that contrasted with the stock market and currencies that both go up and down. “That’s why we are piling up lots of cash now with a defence move,” he added.

Son also confirmed the IPO of Arm Holdings was progressing, although it wasn’t yet clear when this was likely to happen.

“It will be sometime in 2023, and which month of 2023 depends on the market,” he told analysts. “We are ready and Arm is ready. We are just looking at what is the best timing within 2023 based on market conditions. The IPO market is very weak now.” 

Latest news: Offload of THG stake

Any SoftBank share price forecast needs to consider recent news. SoftBank has recently disposed of its shares in The Hut Group (THG), the UK-based e-commerce company, and suffered a £450m loss.

The disposal is part of SoftBank’s liquidation of an internal hedge fund after a series of bad bets, including an 8 per cent stake it bought in THG in May 2021 for about £481m, according to the Financial Times.

In a statement, THG said it had been informed that SB Northstar LP, a subsidiary of SoftBank, had agreed to sell 80,621,797 ordinary shares in the company.

This amount, representing its entire shareholding in the business, was sold to Qatar’s sovereign wealth fund and THG’s co-founder and chief executive Matt Moulding.

Price targets

In a SFTBY stock forecast overview from MarketBeat, the platform noted how users liked SoftBank Group less than other computer and technology companies.

It stated that 61.38% of MarketBeat users gave SoftBank Group an outperform vote – computer and technology companies received an average 66.98% outperform votes.

The 12-month SoftBank stock forecast 2022 for SFTBY stock on TipRanks is $19.58, where it’s currently rated as a ‘moderate buy’. However, this is only based on the opinion of one Wall Street analyst.

The site highlighted that Atul Goyal, an analyst at Jefferies, reiterated his ‘hold’ recommendation on the stock on 5 August 2022.

According to the algorithmic forecasts of Wallet Investor, Softbank is a “bad long-term (one year) investment” that could fall 14% to $16.78 over the coming year, according to the platform.

The platform’s SoftBank stock forecast for 2025 has the stock at $16.26 by October that year, while its five-year SFTBY stock forecast has the price down to $8.92 – 54% lower than the current $19.58 level.

SoftBank stock: Analysts’ views

So, what are the SoftBank stock predictions of analysts?

Dan Baker, senior equity analyst at Morningstar, recently reduced his fair value estimate for 9984 stock from JPY7,200 to JPY7,000.

He noted management “repeatedly stated it was in defence mode” when facing questions from investors about increasing leverage and investing in the apparently depressed technology sector. Baker outlined the company’s unwavering faith in tech, despite its recent downfalls:

“[SoftBank’s management] continues to see a disconnect between private technology company valuations and their public market equivalents whereby the public market valuations have dropped substantially while private company owners were unwilling to accept valuations in line with public market valuations.”

Baker also noted that SoftBank’s investment in Alibaba, the Chinese e-commerce specialist, accounted for 33% of the estimate for its fair enterprise value.

He noted how the business continued to make investments, including in international e-commerce platforms, to drive long-term, high-quality growth.

“A recovery in consumer sentiment and any easing of China’s zero-Covid policy will be the key drivers for margin improvement,” he added.

FAQs

Is SoftBank a good stock to buy?

You will need to look at all available data and make your own decision. The SFTBY stock price has fallen sharply over the past year but has started to recover in recent weeks.

Note that analysts’ forecasts can often be wrong. Always do your own research before making an investing decision. And never invest more than you can afford to lose.

Will SoftBank stock go up or down?

It’s impossible to know for sure whether SoftBank’s stock will rise or fall. Many factors influence a stock price over longer periods of time, so you need to draw your own conclusions. According to the SoftBank stock forecast of algorithmic forecaster WalletInvestor, SFTBY shares may fall 14% to $16.78 over the coming year.
 

However, analysts and algorithm-based forecast platforms can be wrong in their predictions. Always do your own research before trading or investing. And never trade money that you cannot afford to lose.

Should I invest in SoftBank stock?

The decision to invest (or not to invest) in SoftBank stock is entirely up to you. It’s vital that you carry out your own research and remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio, and how comfortable you feel about losing money. 

Always do your own due diligence before trading or investing. And never invest more than you can afford to lose.

Markets in this article

9984
SoftBank Group Corp.
10587.6 USD
-93.7 -0.880%
BABA
Alibaba Group Holding Limited (Extended Hours)
75.47 USD
-1.24 -1.620%
CPNG
Coupang, Inc.
20.25 USD
-0.02 -0.100%
DASH
DoorDash Inc (Extended Hours)
106.38 USD
6.6 +6.670%
THG
THG Holdings plc
0.637 USD
-0.02 -3.080%

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