What's going on?
SoftBank reported better-than-expected earnings on Monday after the Japanese conglomerate’s investment in DoorDash really delivered.
What does this mean?
SoftBank’s private investments have done well out of both the global rally in tech stocks and the booming demand for initial public offerings (IPOs), and that’s led to a record profit for the company’s Vision Fund – the world’s biggest tech-focused venture capital fund. Two of its holdings did especially well: Uber and DoorDash – the latter having made a barn-storming stock market debut in December.
There’s more to SoftBank than just its Vision Fund, but it’s easy to see why it was such a big deal to investors. Not only did this record profit follow a WeWork-shaped record loss the year before, it offset the losses the company suffered from other investments last quarter – namely listed tech stocks and options.
Why should I care?
For markets: SoftBank’s only just getting started.
SoftBank’s Vision Fund makes money by buying stakes in private companies and selling those stakes on to public investors via an IPO (or selling the companies altogether). And seeing as six more of Vision Fund’s companies are planning to list on the stock market this year – and demand for IPOs shows no signs of slowing down – SoftBank might just be getting warmed up.
The bigger picture: There’s value in the Japanese stock market.
Japan’s stocks are up more than 6% this year, outperforming both the US and the global stock markets and hitting their highest level in 30 years. And at 30% below their all-time highs, they could have a lot further to rise (tweet this). That might be why analysts are recommending the country’s stocks over America and South Korea’s – both of which have hit record highs in the last few months.