If you remember 1998 like I do, then you’ve got very fond memories. However, 1998 is not proving to be a good year for investment firm SoftBank (SFTBY), as its shares have plunged to levels not actually seen since those grand old times of Nirvana, flannel, and coffee bars everywhere. In fact, it’s down over 6% today as the news just gets worse.
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Japanese stocks were pummeled in Monday’s trading, and SoftBank took it on the chin. It lost better than $15 billion worth of overall value, thanks to the single largest fall it’s seen in a day since, again, 1998. Shares fell as much as 19% in overall trading, and the gap appears to be widening, as its overall decline for the latest quarter is now around 38%.
Here’s where things get particularly interesting, as though that cataclysm wasn’t interesting enough. The plunge comes at the same time that SoftBank is gearing up for a monster investment blitz, putting a ton of cash into artificial intelligence (AI) development and semiconductors. These would have been great moves, but now, SoftBank might have to adjust its risk management strategy as its current holdings get hit hard.
Circling the Wagons
The good news is that SoftBank has already moved to ameliorate the losses from its massive stock sell-off, which should give it at least some help going forward. It’s already moved to sell off a chunk of its stake in the Line app in Japan, which is Japan’s biggest messaging app. Reports suggest that the Line app is prompting some diplomatic friction between Japan and South Korea, which may make it worth getting out.
Meanwhile, SoftBank is seeing a ghost kitchen operator it backed shut down three facilities in New York. While this isn’t the best news in terms of returns, it should at least help cut down on some future costs.
Is SoftBank Stock a Good Investment?
Turning to Wall Street, no analysts currently cover SoftBank stock. Thus, we turn to the last five days in trading for a look at what’s going on. We find little good, as shares have been in open, decline for the whole period. There have been three large-scale losses that have brought SoftBank down by 19.79% during this time frame.
