SoftBank Group Corp (9984.T) stock jumped 20% on Tuesday, extending a run that began a day earlier when the Japanese tech investor announced up to $41 billion in asset sales and a record share buyback to shore up its collapsing share price.
SoftBank shares ended Monday up 19%, hitting their daily limit, after the conglomerate said in the early afternoon it would buy back up to 2 trillion yen ($18 billion) worth of shares in addition to an up to 500 billion yen purchase announced earlier this month.
Chief Executive Masayoshi Son’s foray into investing in late-stage startups via SoftBank’s $100 billion Vision Fund has hammered the firm’s shares as major bets soured, forcing a sell-down of core parts of its portfolio and buybacks – moves long sought by investors pushing for enhanced shareholder returns.
“We would have ideally preferred such an announcement from a position of strength and not because the (SoftBank) stock came under tremendous pressure,” Jefferies analyst Atul Goyal wrote in a note, upgrading his SoftBank stock rating to “buy”.
Selling down SoftBank’s stake in domestic wireless carrier SoftBank Corp (9434.T) to 50% could raise around $10 billion while retaining control of the company, Goyal wrote.
SoftBank also owns 25% of Chinese e-commerce major Alibaba Group Holding Ltd (BABA.N) (9988.HK) – a stake currently worth around $120 billion.
Alibaba’s New York-listed shares have declined 17% year-to date.
A partial sale of SoftBank’s stake is likely, a person familiar with the matter said, with shares likely to be sold into the open market rather than back to the company.
Alibaba buying back shares from SoftBank will not please its shareholders, “you are only making Masa Son happy. SoftBank wants to sell urgently but Alibaba is not in such a rush,” the person said, who was not authorized to speak with media on the matter and so declined to be identified.
Alibaba declined to comment. SoftBank did not immediately respond to a request for comment.