The company’s outsourced role in Silicon Valley has been well documented over the years, as it shifted its focus away from telecommunications and focused on strategic investments in contingency startups – including. Uber (UBER) And Weaver – through its 100 billion Vision Fund.
The company bought about billion 1 billion worth of stock options under what it had previously bought in tech companies. Amazon (AMZN), Micro .ft (MSFT) And Netflix (NFLX)According to the Wall Street Journal. Citing unnamed sources, the newspaper said the options have generated about $ 50 billion in exposure.
(Obviously the options to play here are call options or agreements that give the investor the right to buy the stock at an agreed price; they become profitable if the share price falls above that level.)
Both the Journal and the FT reporting the story have suggested that Softbank’s position on options partly explains the recent tech rally on Wall Street. Before selling on Thursdays and Fridays, tech-heavy Nasdaq Composite (COMP) Often reached record highs. This S&P 500 (SPX), Where a handful of tech stocks weigh in at a quarter of the benchmark weight, were also climbing records.
The FT, which also cites anonymous sources, reported Softbank (SFTBF) Bates has a trading gain of about બ 4 billion. But such trades are also risky, as they suffer huge losses if equity markets continue to decline. The FT report cites a banker who called the company’s strategy a “dangerous” condition.
Softbank’s losses on Monday accelerated in the afternoon in Tokyo, its shares have had a bad result since the epidemic shocked global markets in March.
The company recently expressed interest in investing through the stock market: Softbank announced in August Gust that it would launch a new unit for public investment with a capital of 555 million (“Go, Go, Go” is Rs 555 crore in Japanese gaming culture). ) The son owns 33% of the asset management fee.
The purchases are also significant given how much SoftBank is raising cash this year. Last month, the company announced that it was acquiring its Japanese mobile carrier affiliate Softbank Corp. Will sell more than a million shares, valued at 1.47 trillion yen (about 14 14 billion). During the market month, the company sold about Rs. tr trillion yen ($ 4 billion).
Softbank said last month that it believes “cash reserves need to be expanded … to ensure flexible options to respond to changes in the market environment.”
Prior to Monday’s fall, Softbank’s share was about a third this year. It was a significant turning point for the company, which struggled in March and April as epidemics and upcoming restrictions on travel and social interaction affected many startups that have invested.
In May, Softbank reported an annual operating loss of 1.36 trillion yen (.7 12.7 billion) – the worst ever. The hit was run almost entirely by Vision Fund.
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