SoftBank shares jump 11% on $9 bln buyback

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  • Buyback is SoftBank’s second biggest ever
  • SoftBank crashes in quarterly losses
  • Shares are down 40% since the end of the Y2.5 trln program in May
  • Stocks short of catalyst amid China crackdown, delays hand sales
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TOKYO, Nov 9 (Businesshala) – Shares of SoftBank Group Corp (9984.T) jumped 10.5% on Tuesday, in the first trading session after the Japanese conglomerate said it would spend up to 1 trillion yen ($8.8 billion), about Rs. Will buy back 15%. Its shares.

The company announced the buyback, which had long been speculated about by the market, after it was revealed that its quarterly earnings crashed amid a collapse in the share prices of its portfolio companies and a regulatory crackdown in China. Done.

Shares of SoftBank closed at 6,808 yen in their biggest daily increase in 11 months, pushing the group’s market capitalization to above $100 billion. Tuesday’s trading volume was more than double the 30-day average.

The buyback is SoftBank’s second largest after a record 2.5 trillion yen buyback launched last year during the depths of the COVID-19 pandemic. Shares of the tech group quadrupled during that buyback, but fell 40% from its May peak.

Jefferies analyst Atul Goyal wrote in a note, referring to Alibaba (9988.HK), the group’s biggest asset, “Our analysis of buyback history indicates that SBG stock performs during buybacks (and the index or BABA). SoftBank owns about a quarter of Alibaba’s shares.

Falling shares in the Chinese e-commerce giant and a broad regulatory backlash in China contributed to a $57 billion drop in SoftBank’s net assets to $187 billion, a metric that chief executive Masayoshi Son has said is a measure of SoftBank’s success. is the primary remedy.

Businesshala Graphics

The repurchase period for the latest buyback runs until November 8 next year, with the program indicating the group could take longer than last year’s bullish buyout.

The buyback is “good support, but it’s not rocket fuel,” wrote Mio Kato, Lightstream Research analyst on the SmartKarma platform, “if broader technology, especially unprofitable technology, falters, there are material downside risks.”

Speculation that SoftBank might initiate a buyback has raged for months as the discount — the difference between the value of its assets and its share price — remains to the frustration of executives and investors push for a buyback.

Ongoing uncertainties include the prospect of obtaining regulatory approval for the $40 billion sale of chip designer arm to Nvidia (nvda.o).

“Delays in the sale allow SoftBank to announce buybacks now, with the expectation of an uptick in share purchases at a later date,” Redex Research analyst Kirk Boodry wrote in a note.

SoftBank is raising investments through Vision Fund 2, which has $40 billion in committed capital on behalf of the group and Son, even as it spurs activity at trading arm SB Northstar.

“Even if the company manages its finances with a certain amount of discipline, the share buyback will destroy the financial buffer,” analysts at S&P Global Ratings wrote in a note.

The group had more than 5 trillion yen in cash and cash equivalents at the end of September, a 9% increase from six months earlier.

($1 = 113.3500 yen)

Reporting by Sam Nusi; Editing by Sam Holmes, Stephen Coates, Jane Wardell and Raju Gopalakrishnan


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