SoftBank was hammered by China's tech crackdown like a 'huge winter snowfall.'
After a broad internet crackdown in China pummelled some of the Japanese business's biggest investments, SoftBank's founder and CEO Masayoshi Son stated Monday that the company is trapped in a "big winter snowfall."
SoftBank announced a loss of 397 billion yen ($3.5 billion) for the July-September period on Monday. Son stated that the company's net asset value declined by 6 trillion yen ($54.3 billion) to $187 billion, which he claims is a better indicator of the company's success.
What's the deal with the hit? "In one word: Alibaba," Son said during an earnings call that began with a visual of a snowstorm.
Son and Alibaba co-founder Jack Ma are close friends, and Alibaba has long been the crown jewel of SoftBank's investment portfolio. Over 20 years ago, the Japanese entrepreneur put $20 million into Alibaba, and when the company went public in 2014, it was worth $60 billion.
However, Alibaba and other Chinese companies have been hit hard by Beijing's massive regulatory change in the last year. After regulators accused Alibaba of operating like a monopoly, the business was fined a record $2.8 billion. Regulators have reined in its financial subsidiary, Ant Group, after its IPO was called off at the last minute a year ago.
Alibaba's market capitalization has dropped by nearly $400 billion in the previous year as it deals with a barrage of new Beijing rules. During the July-September period, the company's stock price dropped 35%.
Softbank's huge Vision Fund investment portfolio suffered a loss of around $10.5 billion as a result of China's regulatory actions.
"We're not proud of that either," Son said, adding that Chinese companies, such as Didi, were a big factor in the fund's poor performance. After Beijing started an investigation into the company's data privacy and collecting methods and banned it from Chinese app stores, the company's initial public offering in the United States this summer failed. In the July-September quarter, Didi's stock dropped 45 percent.
India is the focus of attention.
However, the Japanese billionaire is upbeat about the future. He said that the fund had several "golden eggs" for this year, alluding to a number of firms in its portfolio that are seeking to go public.
One among them is Paytm, an Indian fintech company that made India's largest initial public offering (IPO) on Monday. Trading is likely to begin next week.
In answer to a query regarding the Indian company's worth, he remarked, "Paytm should grow significantly. For us their IPO should be a great event."
By Flexi Team
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