SoftBank Isn’t Satisfied After Record Year of Profit
Thanks to Coupang, Uber, and more, the Japanese tech investor is filthy rich. It has regrets, though, and is on the hunt for the next big fish.
Perhaps most know SoftBank for its botched WeWork initial public offering (IPO) in 2019, but the Japanese tech investor has helped many well-known companies join the public markets and is coming off the best fiscal year in its country’s history.
In 2020, SoftBank reported a profit of $46 billion, which is double the previous record set by Toyota. It was more profitable than Google, a company nearly 10-times its size.
SoftBank’s “Vision Fund” invests in tech companies and has over $100 billion in capital. That’s where the company is making its money. The Vision Fund helped bring South Korean eCommerce company Coupang public in 2020, which reportedly brought in $37 billion worth of profits.
Including its second Vision Fund, which has just been upped from $10 billion in capital to $30 billion, SoftBank is invested in about 200 companies, including online grocer GoPuff, self-driving car company Aurora, and trackable fitness company Whoop.
SoftBank continues to reap the benefits of its investments in Uber, which has seen nearly a 40% return in the past year, and DoorDash, which had its IPO in 2020.
The company’s CEO, Masayoshi Son, still has regrets despite the great year, like not investing in Airbnb and Snowflake — two more 2020 IPOs. Son thought both were too pricey with the valuations. While Snowflake is down 23% since its IPO, Airbnb has nearly doubled in price.
Nearly a year ago, SoftBank was on the other end of the spectrum, reporting an $18 billion loss, mainly due to the WeWork debacle and losses in Uber’s share price. WeWork’s failed IPO saw it go from a $47 billion valuation to $2.9 billion in a year’s time.
Because of those losses, SoftBank was forced to sell billions of dollars worth of T-Mobile and Sprint shares. Coming off the great year, though, SoftBank is now able to stay long in its investments and even add more as the market depresses off highs.
What’s interesting about SoftBank’s returns is that most of them are still on paper, as the company is holding onto shares in the market. As tech gets hammered for “frothy valuations,” SoftBank — and others — can add more shares. Tech isn’t going anywhere soon and SoftBank knows that.
Son is a very long-term thinker, stating in 2019 that he has a 300-year plan behind his Vision Fund. For now, though, the focus remains on the next big investment. Coming off a $46 billion year, many will want similar returns, as ludicrous and unlikely as that is.
SoftBank would like to have multiple IPOs going at once, if possible, which would drum up a lot of market interest.
Just a year ago, SoftBank looked like a company that could only make mistakes. In 2021, though, it is on top of the world. To stay there, it may need to find a couple more unicorns.