SoftBank faces $184.4m Q1 loss due to declining portfolio values

SoftBank Group is expected to report a net loss of 26.9 billion yen (US$184.4 million) for the January-March quarter. This marks a significant decline from a net income of 231 billion yen (US$1.56 billion) last year.

The losses are attributed to declining valuations of key portfolio companies, such as Swiggy and Ola Electric, which saw share price drops of around 40%.

Losses for listed firms in SoftBank’s Vision Fund investment vehicles are projected at US$900 million.

The decline in funding for Vision Fund 2, now at its lowest in five quarters, reflects a shift in venture capital towards larger, established companies.

Despite this, SoftBank made significant commitments, including plans to invest US$20 billion to US$30 billion in OpenAI and a US$6.5 billion acquisition of chip startup Ampere Computing.

SoftBank’s portfolio is also affected by ongoing uncertainty in the IPO market, with Klarna and Oyo delaying their listings.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Vision Fund’s history reveals consistent vulnerability to market cycles

SoftBank’s current quarterly losses reflect a historical pattern of aggressive investment strategies meeting market headwinds.

The Vision Fund previously experienced major setbacks during its first iteration, including massive losses from WeWork when its valuation plummeted from $47 billion to around $8 billion, forcing it to cancel its IPO 1.

This quarter’s downturn, with portfolio companies like Swiggy and Ola Electric each falling around 40%, demonstrates how the fund continues to be vulnerable to sector-specific challenges in markets like quick commerce and electric vehicles.

Masayoshi Son’s investment philosophy has consistently prioritized rapid growth and market dominance over profitability, as evidenced by the “blitzscaling” strategy documented in past Vision Fund operations 2.

The current $900 million collective loss estimate for listed Vision Fund companies mirrors previous challenges, showing how the fund’s exposure to high-risk, early-stage companies makes it particularly susceptible to market volatility.

2️⃣ Venture capital flows reveal market consolidation toward established players

The current concentration of venture funding in established players reflects a broader industry shift toward more cautious investment strategies.