The logo of SoftBank is displayed at a company shop in Tokyo, Japan January 28, 2025.
Issei Kato | Reuters
Shares of SoftBank Group ended Friday 10.39% higher at 13,865, paring gains from its record of 14,390 earlier in the session following the company’s higher-than-expected fiscal first-quarter profit.
SoftBank shares have extended gains to a fourth straight session, and closed at a record high on Thursday, before the company released its earnings.
SoftBank’s profits for the April to June quarter came in at 421.8 billion yen ($2.87 billion), substantially overshooting LSEG consensus estimates of127.6 billion yen.
This the group’s second consecutive quarter of profit and a sharp reversal from the 174.28 billion yen loss it posted in the same period a year ago.
The Japanese giant announced on Thursday that the value of its Vision Funds rose $4.8 billion, its largest gain since the June quarter of 2021.
SoftBank Group
Profit for the Vision Funds segment, which also captures factors such as expenses, hit 451.4 billion yen in the fiscal-first quarter ended June, a reversal from losses in the same period last year.
The Japanese giant attributed this to gains from private investments as well as listed companies such as the Singapore-headquartered ride-hailing firm Grab Holdings, and Indian food delivery firm Swiggy.
“We were particularly impressed by pretax profits at the SoftBank Vision Funds segment of 451.4 billion yen beating our forecast by 281.0 billion yen thanks to rises in share prices of listed equities, Daisaku Masuno, a research analyst at Nomura wrote in a Thursday note.
Nomura has a buy rating on the investment firm at a price target of 14,120 yen, giving it around 1.84% potential upside.
Masuno added SoftBank’s collaboration with chip designer Arm Holdings, and plans to acquire semiconductor design startup Ampere Computing, could reduce the gap between its stock price and its net asset value.
Arm Holdings is among the companies that have received investments through SoftBank’s Vision Funds. Other portfolio companies include game software player Animoca Brands and internet technology giant ByteDance.
A few of the investment firm’s portfolio companies are expected to go public this year. Among them is Indian eyewear retailer Lenskart which filed for an initial public offering on July 29, which includes the issue of fresh shares worth 21.5 billion rupees ($247.58 million).
Other companies set to list soon include Japanese mobile payment service operator PayPay, Swedish financial services player Klarna and travel app Klook.
‘Unique Vehicle’
SoftBank is a “unique vehicle to invest in a portfolio leveraged to internet and artificial intelligence themes,” Morningstar’s senior equity analyst Dan Baker wrote in a Friday note.
“Apart from Arm, SoftBank’s next biggest investment is in OpenAI, having already invested USD 7.5 billion and expecting to increase this by a further USD 22.5 billion within a year,” he said, adding that this investment is separate from the investment committed in the Stargate Data Center Project.
Stargate is a $500 billion joint venture between SoftBank, OpenAI, Oracle and MGX Fund Management in artificial intelligence infrastructure in the U.S.
However, Baker said that SoftBank Group is overvalued, and gave a fair value estimate of 9,400 yen.
“We believe SoftBank Group’s shares are overvalued at current levels, mainly due to the market’s overvaluation of Arm,” Baker added.
— CNBC’s Arjun Kharpal contributed to this report.
