Japanese technology investor SoftBank Group has announced a substantial share buyback plan, responding to demands from major investors, including Elliott Management, to enhance its stock price.
This move aims to address the significant discount between SoftBank’s market capitalization and the combined value of its assets.
Highlights
- Share Buyback: SoftBank to repurchase up to $3.4 billion in shares.
- Investor Pressure: Elliott Management and others pushed for buyback.
- Financial Performance: Quarterly net loss narrowed to 174.3 billion yen.
- Market Context: Recent stock recovery follows a significant slump.
Share Buyback Plan
SoftBank revealed on Wednesday its intention to buy back up to 500 billion yen ($3.4 billion) worth of its own shares over the next year. This buyback represents 6.8% of its outstanding shares.
The announcement comes after U.S. activist investor Elliott Management pushed for a more extensive $15 billion buyback program.
Financial Performance
The company reported a narrower quarterly net loss of 174.3 billion yen, an improvement from the 477.6 billion yen loss recorded in the same period last year.
Additionally, on a separate measure, SoftBank swung to a net income profit of 10.5 billion yen for the period. As of the end of March, the company had $26 billion in cash on hand.
Market Challenges
SoftBank has been rebuilding its finances following the high-profile failure of the office-sharing startup WeWork and the declining investor interest in some of its Vision Fund tech investments. The results come amid market volatility, particularly affecting large-cap Japanese stocks and major tech companies.
This turbulence has been exacerbated by the unwinding of yen carry trades and fears of a U.S. recession. Despite a nearly 20% slump in its share price on Monday, SoftBank’s shares have since recovered.
Industry Insights
The share buyback move by SoftBank highlights a strategic response to investor pressure in a challenging market environment. With significant cash reserves, the company is taking steps to stabilize its stock price and rebuild investor confidence.
The financial performance improvement, despite recent market turmoil, suggests resilience and a strategic approach to navigating economic uncertainties.
