SoftBank shares slump 19% in one day, wiping out £12bn

More than £12 billion was erased from the value of SoftBank in one day after the Japanese technology conglomerate found itself in the eye of the storm over financial markets.
Shares in the company dropped by almost 19 per cent on Monday in the heaviest one-day fall by the stock since the business, which owns the British microchip designer Arm, listed in Tokyo 26 years ago.
It takes the slump suffered by SoftBank shares since the beginning of last week to 30 per cent, making it one of the biggest casualties of the global rout. It also deals a big blow to the fortune of Masayoshi Son, SoftBank’s billionaire founder and chief executive who owns about 30 per cent of the group’s shares.
SoftBank has become one of the biggest names in the tech industry after making investments in companies ranging from the Cambridge-based Arm and ByteDance, the Chinese owner of the TikTok video platform, to Didi, China’s biggest ride-hailing app, and Flipkart, the Indian ecommerce giant.
Its share price has benefited as investors have piled back into tech businesses in recent years, with SoftBank stock reaching a record high as recently as last month.
Yet this rally has left SoftBank exposed now that investors worldwide have turned against tech as part of a broader sell-off in stock markets caused partly by fears about the outlook for the US economy.
This has delivered a double blow to the Japanese conglomerate by not only hitting SoftBank shares but also the value of the listed tech companies that the conglomerate has backed. Shares in New York-listed Arm, which is about 90 per cent owned by SoftBank, have lost almost a quarter of their value since the beginning of last week.
• Patrick Hosking: What does the turbulence in Japan mean for global markets?
The fall in SoftBank shares has been exacerbated by the surging value of the yen against the dollar, which has worsened a sharp fall across Japanese equities.
The sell-off means SoftBank’s first-quarter results, which are due on Wednesday and are forecast to show a modest profit, are likely to draw more investor scrutiny than normal.
SoftBank has posted annual losses for three years in a row and is under pressure to increase returns to stock market investors after it emerged in June that Elliott, an activist American hedge fund, had built a stake in the Japanese conglomerate and was pushing bosses to buy back $15 billion-worth of shares. Repurchasing stock could help to narrow the gap between SoftBank’s share price and the value of the group’s assets.
However, the Japanese group has signalled that its priority will be to use its financial resources to make further investments in artificial intelligence. SoftBank’s previous investment track record has been patchy, with some bets, including its backing for WeWork, which filed for bankruptcy last November, proving duds.
The slump in SoftBank’s stock erases most of its gain since the start of the year to leave the business valued at about £52 billion.