Softbank Records 8% Decline After Whale Strategy Allegations

Softbank welcomed the week with an 8% decline in its home country.

Accusations saying that the startup financer is the mysterious purchaser of tech companies’ options in the recent months circulated Japan’s stock market.

After its $4 billion worth of buy on equity derivates, Tokyo traders instantaneously pulled some of their stakes from the company.

They said that the firm’s behavior resembles a hedge fund that involves high-risk trading populated by hungry investment bankers who have an appetite for risky investments.

In the stock market open, the Japanese investor fell by 5.4% before it sustained decline, ending at an 8% fall.

So far in the year, it garnered a 33% hike before it fell by 0.3% in Nikkei 225. It is considered as the second biggest component of the index.

Similarly, it experienced two successive slides in the Nasdaq last week.

Some of Softbank ventures remain on the red. Oyo, one of the significant stakes in the vision fund portfolio, remains in the red.

With a $75 million backing from Softbank, the Indian hotelier proceeds with “Oyo Latam,” which will take over on operating 1,000 hotels across Brazil and Mexico.

Softbank Ventures are Under Pressure

About 30% of Softbank’s shareholder registry comes from retail investors. Many of these oppose its high-risk strategy because of the worry that derivates trade may lead to significant losses in the long run.

Experts believe that the investment firm had bet a total of $30 billion on derivates. So far, the estimated gains amount to an impressive $4 billion.

Some of its largest bets include the Nasdaq’s giants, namely Amazon, Microsoft, Apple, and Tesla. This caused a trading frenzy not only on tech stocks but to Wall Street’s indices in general.

In August, Softbank announced its interest in trading of public securities, on top of its telecommunications and startup investments listed on its coveted vision fund portfolio.