Japan’s SoftBank Group reported a record quarterly net loss of $23.4 billion on Monday after central bank rate hikes caused tech stocks to plummet.
The telecom company-turned-investment giant posted a net loss of 3.16 trillion yen, down from a net profit of 761.5 billion yen in the same period from April to June last year.
A weaker yen and the “global downward trend in stock prices amid growing concerns of an economic recession caused by inflation and rising interest rates” contributed to the slump, it said.
Portfolio companies that suffered big losses during the quarter included South Korean e-commerce giant Coupang and US food delivery platform DoorDash, SoftBank added.
SoftBank’s large holdings in global tech giants and volatile new ventures have created unpredictable returns, and the company has oscillated between record highs and lows in recent years.
In May, the company reported its worst full-year net loss on record — and a then-record quarterly loss for the fourth quarter — after a bloody 2021-22 that saw its assets battered by a collapse in U.S. tech stocks and a regulatory crackdown in China.
That comes after Japan posted its biggest annual net gains ever in 2020-21 after people put their lives online and tech stocks soared during the pandemic.
And in 2019-20, SoftBank Group reported a then-record annual net loss of 961.6 billion yen as the emergence of Covid-19 exacerbated problems caused by its investment in struggling start-up WeWork.
Hideki Yasuda, senior analyst at Toyo Securities, told AFP the company “cannot help big losses” “because the market is bearish.”
The company “is imminently facing a very difficult situation,” Yasuda said ahead of the earnings announcement.
“You have to wait for the market to recover. You need to look at the company through the lens of long-term investments. It may have a bad year or two, but over a decade or more the world economy will continue to grow and it could continue to grow.”
The US Federal Reserve and many other central banks have announced aggressive rate hikes to combat skyrocketing inflation linked to the Ukraine war and Covid-related supply chain issues.
But against the grain, the Bank of Japan is sticking to its long-held monetary easing policy as it sees recent price hikes as temporary.
This has pushed the Japanese currency to a 24-year low against the dollar in recent months, driving the yen value of SoftBank’s investments lower.
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