Shares in SoftBank Group soared to a 20-year high on Tuesday, buoyed by the Japanese technology group’s share buybacks and a strong initial public offering by Lemonade, one of its US startup investments.
SoftBank (TYO: 9984) shares jumped 272 points, or 4.6%, to close at JPY 6,190 in Tokyo on Tuesday, hitting their highest point since March 2000. The runup has the stock up 30% so far this year. SoftBank has more than doubled since March, when the spread of the novel coronavirus sent global stock markets into a tailspin.
The recent surge has in part been supported by SoftBank itself, which completed a JPY 500 billion (USD 4.7 billion) share buyback in June and plans to buy back an additional JPY 2 trillion worth of shares. Founder and CEO Masayoshi Son has announced plans to sell 4.5 trillion yen of assets, including shares in US wireless carrier T-Mobile, to reduce the group’s debt and fund the share buybacks.
During the company’s annual shareholders’ meeting in June, Son said SoftBank had made “80% progress” on its plans.
In addition to Son’s share buyback pledge, recent gains on investments by the tech conglomerate have improved investor sentiment. Shares in online home insurance provider Lemonade, of which SoftBank owns around 22%, more than doubled after its Thursday market debut to reach a market value of USD 3 billion. The stock price has kept up the momentum, jumping 17% on Monday.
Lemonade is not part of Son’s USD 100 billion Vision Fund but has helped to fuel improved hopes for those investments. The Vision Fund sustained heavy losses after its portfolio was hit hard by the coronavirus pandemic for the year ended March, posting a historic USD 17 billion loss.
SoftBank itself posted a JPY 961 billion net loss for the year ended March, its biggest since its shares listed in 1998.
Despite SoftBank’s recent jump, there is still a more than 50% discount in the share price versus what Son calls the company’s shareholder value: the market value of the shares it owns, most notably its stake in Alibaba Group Holding, minus the group’s net debt.
SoftBank’s shareholder value was JPY 12,455 per share as of Tuesday, compared with a stock price of JPY 6,190, according to the company’s website.