BeeCoin网报道：
On Thursday, SoftBank Group’s stock price hit a record high, while the company’s massive technology investment department showed signs of recovery, making its outspoken founder, Masayoshi Son, the focus of public attention once again and aligning the Japanese giant with the future of artificial intelligence. The company also benefited from the success of UK chip designer Arm in the public market, as SoftBank holds the majority of the company’s shares. The stock price of the Japanese giant closed at a record high of 11,190.00 yen on Thursday, a far cry from the dot-com crash at the turn of the 21st century and the recent downturn in the technology market in 2021 and 2022.
SoftBank’s peak journey
Masayoshi Son founded SoftBank in 1981 when the company was distributing software. It went public in Japan in 1994 and made a $2 million investment in Yahoo in the mid-1990s during the Internet boom.
This marked the beginning of the company’s technology investments. On February 18, 2000, the rise of the Internet and Yahoo pushed SoftBank’s stock to a closing peak of 10,111.1 yen. Three days ago, the company’s stock price had reached an intraday high of 11,000 yen. However, as Internet stocks plummeted, SoftBank’s stock price followed suit, falling by over 90% from its Internet peak. It wasn’t until February 16, 2021, nearly 21 years later, that SoftBank broke through its previous record high.
Vision Fund
Since Masayoshi Son launched a massive technology investment division, the Vision Fund, in 2017, SoftBank’s stock price has been on an unstable path to its recent peak. SoftBank has made dozens of bets on technology companies around the world, some of which have failed. Office-sharing startup WeWork may be one of the most notable names. However, SoftBank’s investments in Chinese companies were also hit after Beijing began cracking down on the domestic technology industry at the end of 2020. After hovering near its historical high in March 2021, SoftBank’s stock, along with other global technology stocks, plummeted significantly. The Vision Fund saw record financial losses in 2022. Masayoshi Son stated that SoftBank would enter a “defensive” mode and be more conservative in its investments. Shortly after the Vision Fund announced a record $32 billion loss in 2023, he changed his strategy, stating that the company would now shift to “offense” as he was excited about investment opportunities in artificial intelligence.
Arm’s Rise
Several analysts attribute SoftBank’s recent stock price increase of about 78% since May 2023 to the successful IPO of Arm, which SoftBank acquired in 2016. Even after going public, SoftBank still holds about 90% of Arm’s shares. As of the closing on July 3, Arm’s stock has risen by nearly 124% this year. Paul Golding, senior analyst for US lifestyle and payments at Macquarie US stock research company, told CNBC via email, “SoftBank Group’s investment strategy and focus have long included developing an AI ecosystem investment portfolio, well before the LLM (large language model) driven AI-related name bull market over the last 18 months or so.” He added, “In our view, this vision may have driven some of the investment decisions behind the 2016 acquisition of Arm, allowing SoftBank Group to have direct exposure to semiconductor market dynamics and semiconductor design IP ownership before making broader strides in AI use cases and platforms.” Golding added, “SoftBank stock” has long benefited from this widespread use of Arm intellectual property, such as in the automotive industry or cloud data centers.
Do Investors Believe SoftBank’s Story?
For years, investors have been concerned whether SoftBank Group’s valuation fairly reflects its investments or holdings. For example, SoftBank is valued at about $101.5 billion. Arm’s market value is about $176 billion, meaning SoftBank’s 90% stake is worth $158 billion. This alone is significantly higher than SoftBank Group’s overall valuation, without considering the company’s other holdings and business, such as its telecommunications division. Analysts see this as a reason why SoftBank’s stock price does not reflect its fair value. Dan Baker, senior equity analyst at Morningstar, stated that SoftBank’s price increase is largely due to Arm. Baker told CNBC via email, “I’m not sure investors are being swayed by SoftBank’s story again.” He added that this year’s stock price increase is “primarily” due to the rise in Arm’s stock price and a weaker yen. Baker stated that it is worth investigating the so-called sum-of-the-parts (SOTP) valuation, which allocates value to the various parts SoftBank holds to calculate the company’s value. Baker stated that this year’s SOTP valuation is still slightly below 50%, meaning SoftBank’s stock does not truly reflect the value of its various businesses and investments. “So I’m not sure investors are ‘buying SoftBank’s story,’ but investors are definitely buying ARM’s story.” Investors also cheered SoftBank’s almost complete sale of its stake in Alibaba, the Chinese e-commerce giant supported by Masayoshi Son in 2000. SoftBank may also have been helped by the recent broader rise in the Japanese stock market, with the Nikkei 225 index up 22% this year alone as of Thursday.
Artificial Superintelligence
But can Masayoshi Son’s focus on artificial intelligence further boost SoftBank’s value and narrow the discount on its basket of assets? The SoftBank founder, who has been out of the public eye for the past year, recently talked about his excitement for the future of artificial intelligence and how SoftBank is becoming a center for this technology through investments in companies like Arm. He raised his son’s vision of a world characterized by what he called artificial superintelligence (ASI), which will be 10,000 times smarter than humans. This comes as investors are eagerly exploring how to capitalize on the AI boom, with Nvidia’s stock price skyrocketing, highlighting people’s excitement about this technology. Matthew from Lyon Securities states that SoftBank’s early AI investments may reduce the discount on its future. “SoftBank has been absolutely consistent in its investment direction; they are one of the earliest investors behind the AI theme, in some ways too early, to the point where many investors thought they were overpaying or buying into some companies that weren’t clear how relevant they were to AI,” Matthew said. “Therefore, SoftBank Group’s stock is trading at a stunningly large discount to its fair value, and we believe this discount will narrow in the future.”
