SoftBank Shares Reach New 2020 High
Shares from Japanese tech conglomerate SoftBank Group Corp. registered a new high this year. A series of buybacks helped the stock regain losses incurred during the COVID-19 market slump.
Stocks from the company gained 2.6% to ¥5,778 ($54) on Friday. This marks its highest point since July 2019 and was more than double the level of the March low.
The Tokyo-based group also had a series of accomplishments in the same period, by its market debut on Thursday. The Sprint Corp. and T-Mobile merger deal was done in April. Also, the online home insurance firm Lemonade Inc. climbed as much as 86%.
SoftBank Balance Sheet Clean Up
The recovery served as proof for chief executive Masayoshi Son. He announced plans to sell ¥4.5 trillion of assets to lessen debt and bankroll record share buybacks.
Son has often expressed his disappointment over the stocks trading less than the value of its portfolio of investments even when they are at their peak.
The steps being taken to improve its balance sheet, such as repurchase of its debt, are being recognized, according to senior analyst Tomoaki Kawasaki.
Stocks from the Japanese tech investor had an unstable run in 2019. Portfolio companies, like the shared workspace provider WeWork, faced several corporate governance issues, and the COVID-19 crisis hit many of its businesses.
The events resulted in SoftBank’s record ¥1.36 trillion operating loss in the last fiscal year.
After the trillion-yen level write-downs last quarter, it is not possible that it will be worse than that, Kawasaki stated.
The company had already completed a ¥500 billion share buyback in mid-June based on the resolution adopted on March 13. It also plans to repurchase another $2 trillion of shares.
Under the larger program, the Japanese group has also announced to purchase ¥1 trillion of buybacks through March 2021. Son is hoping to achieve the full amount.
Kawasaki said whether the shares can keep their gains depends on future catalysts, adding that the shares will need another catalyst that boosts shareholder value, such as the second Vision Fund.
Son stated in May that SoftBank will use its own money for the second Vision Fund for the time being. That is, until a better investment performance catches the interests of outside partners.
Citigroup Global Markets analyst Mitsunobu Tsuruo revised his price target for the company’s stock up by ¥100 to ¥7,200 on Wednesday.
Tsuruo also improved his expectations for SoftBank’s upcoming first-quarter earnings and noted that there is still plenty of room for the shares to advance, considering the buybacks and plans for cleaning up its balance sheet.
Ticker: SoftBank Group Corp. (9984)
