SoftBank’s Vision Fund Stumbles No Longer: A Road to Recovery Revealed

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SoftBank’s Vision Fund Back from the Red, Riding Wave of Tech Recovery

After a tumultuous period marcada by losses, SoftBank’s Vision Fund has turned the tide, posting a remarkable gain in its latest fiscal year. This resurgence marks a significant turnaround for the flagship tech investment arm, which had been grappling with a downturn in tech stocks and unfavorable market conditions.

Vision Fund’s Profitability Restored

Over the fiscal year ending March, SoftBank’s Vision Fund registered a substantial 724.3 billion Japanese yen (.6 billion) gain. This marks the first time the Vision Fund has seen positive numbers since 2021, when it suffered a staggering 4.3 trillion yen loss.

The Vision Fund’s reversal of fortunes is primarily attributed to the surge in the value of several key investments. TikTok owner ByteDance and U.S. food delivery giant DoorDash have been major contributors to this growth. However, SoftBank’s portfolio also took some hits, including Chinese ride-hailing firm DiDi and embattled office-sharing company WeWork.

Arm IPO Drives Gains

A major catalyst for the Vision Fund’s recovery has been the successful initial public offering (IPO) of chip designer Arm last year. Excluding gains associated with its subsidiaries, the Vision Fund still posted a loss of 167.3 billion yen.

Despite these setbacks, there are promising signs of a recovery for SoftBank, which has been diligently navigating volatile markets and restructuring its portfolio.

Alibaba to AI Shift

SoftBank is implementing a strategic shift away from its dominant investment in Alibaba towards a more diverse and AI-centric portfolio. Yoshimitsu Goto, SoftBank’s Chief Financial Officer, has emphasized the company’s focus on this new direction.

  • Arm’s Pivotal Role

    Arm, a subsidiary of Softbank, has emerged as the cornerstone of SoftBank’s AI strategy. Goto noted that Arm currently accounts for 47% of the company’s assets, up from just 10% in 2020. In contrast, Alibaba’s share in the portfolio has dwindled to 0% compared to 48% in the same period.

  • Offensive Posture

    SoftBank founder Masayoshi Son has indicated a shift from a defensive to an offensive investment approach, signaling a willingness to increase the pace and volume of investments.

  • AI Enthusiasm

    Both Son and Goto have expressed enthusiasm for the potential of artificial intelligence and the company’s role in fostering its advancement.

As SoftBank navigates the complexities of the tech landscape, the resurgence of its Vision Fund and the strategic repositioning of its investment portfolio bode well for its future prospects.

Key Performance Indicators

For the March quarter, SoftBank surpassed analyst expectations in key areas:

  • Net sales: 1.75 trillion yen (.3 billion) versus 1.84 trillion yen expected.
  • Net profit: 231.1 billion yen versus a 71.64 billion yen loss expected.

For the full fiscal year, SoftBank recorded an overall loss of 227.6 billion yen, still a substantial improvement compared to the previous year’s loss of 970.1 billion yen.

Data sourced from: cnbc.com