On Monday, a stock rout in Japan erased $15 billion from SoftBank Group Corp. (OTCPK:SFTBY), marking the company’s most significant single-day decline since 1998.
The technology giant’s stock plummeted by 19%, the steepest drop since SoftBank listed on the Tokyo Stock Exchange in 1998. This decline extends the stock’s September quarter loss to 38%, positioning it as the largest drop since 2001.
This sharp downturn coincides with founder Masayoshi Son’s plans for a major investment push into AI and semiconductor technologies. The global market turbulence also threatens SoftBank’s Vision Fund, which holds stakes in hundreds of technology startups.
The stock turmoil wiped out $2.9 billion of Son’s wealth in one day, according to the Bloomberg Billionaires Index. Son has seen over $5 billion of his net worth disappear over the past three trading days, erasing much of his wealth gains since the beginning of the year and making him one of the most affected tycoons in Asia.
Bloomberg Intelligence analysts Marvin Lo and Chris Muckensturm noted that AI’s hype is waning as attention shifts to AI companies’ ability to generate revenue and earnings. While SoftBank’s AI investment strategy might help the company return to profitability, it faces significant execution risks.
On Monday, the Topix and Nikkei 225 Stock Average dropped by 12%, driven by a rise in the yen, stricter monetary policy, and a deteriorating economic forecast in the US. SoftBank is set to release its quarterly results on Wednesday, with expectations of reporting a modest profit.
Kirk Boodry, an analyst at Astris Advisory, commented that the selloff is exaggerated. He compared the current situation to the capitulation trade during the Covid market upheaval when the discount to net asset value reached nearly 70% at one point.
The discount has now widened to 57% as markets adjust for increased volatility and risk associated with SoftBank investments, according to Boodry. The day’s stock declines reflect broader concerns, including a stronger yen and geopolitical risks in the Middle East.
Featured Image: Megapixl
Author Faith Yakubu 
