Softbank (SFTBY) AI Stock Analysis

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Softbank

(OTC:SFTBY)

48Neutral

Softbank's stock is weighed down by financial and technical challenges. The company's high leverage and liquidity issues pose significant risks, despite operational efficiencies and a solid asset base. Technical indicators suggest bearish momentum, while valuation metrics are reasonable but not compelling enough to offset the financial concerns. Strategic improvements are necessary for a more positive outlook.

Softbank (SFTBY) vs. S&P 500 (SPY)

Market Cap

$66.26B

Dividend Yield0.46%

Average Volume (3M)596.52K

Price to Earnings (P/E)10.6

Beta (1Y)2.13

Revenue Growth-2.23%

EPS GrowthN/A

CountryUS

Employees65,352

SectorCommunication Services

Sector Strength73

IndustryTelecommunications Services

Share Statistics

EPS (TTM)1.97

Shares Outstanding2,939,990,500

10 Day Avg. Volume569,031

30 Day Avg. Volume596,525

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$32.20

Price Target Upside53.70% Upside

Rating ConsensusHold

Number of Analyst Covering0

Softbank Business Overview & Revenue Model

Company DescriptionSoftBank Group Corp. provides telecommunication services in Japan and internationally. It operates through five segments: Investment Business of Holding Companies, SoftBank Vision Funds, SoftBank, Arm, and Latin America Funds. The company offers mobile communications, broadband, and fixed-line communications services; and sells mobile devices. It is also involved in the internet advertising marketing, online advertising distribution, and e-book distribution services; planning and operation of fashion e-commerce website; mail-order sale of stationery and services; and design and development of mobile robots. In addition, the company designs microprocessor intellectual property and related technology; sells software tools; and generates, supplies, and sells electricity from renewable energy sources, as well as offers related services. Further, it provides alternative investment management, smartphone payment, PC software downloads, and banking services, as well as solutions and services for online businesses; distributes video, voice, and data content; manufactures, distributes, and sells IT-related products, as well as IT-related services; and manages funds. Additionally, the company operates a professional baseball team; and ITmedia, an IT information site, as well as manages and maintains baseball stadium and other sports facilities. It also plans and operates ZOZOTOWN, ZOZO, and ZOZOBASE websites. The company was formerly known as SoftBank Corp. and changed its name to SoftBank Group Corp. in July 2015. SoftBank Group Corp. was incorporated in 1981 and is headquartered in Tokyo, Japan.

How the Company Makes MoneySoftBank makes money through a combination of telecommunications services, investment gains, and strategic partnerships. Its telecommunications division generates revenue from mobile and fixed-line services in Japan, providing services to millions of subscribers. A significant portion of its revenue is derived from its diverse investment portfolio, managed through subsidiaries and its Vision Fund, which invests in high-growth technology companies worldwide. Profits are realized through capital gains, dividends, and interest from these investments. Additionally, SoftBank's strategic partnerships and shareholdings in renowned companies contribute to its earnings through equity income and collaborative business ventures.

Softbank Financial Statement Overview

Summary

SoftBank's financials show profitability and liquidity challenges, with negative net income and free cash flow. High leverage adds risk, although substantial assets provide stability. Strategic improvements are needed for sustainable growth.

Income Statement

Negative

Softbank's income statement shows a mixed performance. The gross profit margin is healthy, but the net profit margin is negative, indicating ongoing issues with profitability. The revenue growth rate is volatile, with recent declines. The EBIT and EBITDA margins are positive, reflecting some operational efficiency, but the negative net income is a concern.

Balance Sheet

Neutral

The balance sheet reveals a high debt-to-equity ratio, suggesting significant leverage and potential financial risk. The equity ratio is moderate, and return on equity is negative due to net losses, further highlighting profitability challenges. However, the company maintains substantial assets and cash reserves, providing some stability.

Cash Flow

Neutral

Cash flow analysis shows negative free cash flow growth, indicating cash outflow issues. The operating cash flow to net income ratio is positive, suggesting cash generation despite losses. However, the free cash flow to net income ratio is concerning, with free cash flow also negative, pointing to liquidity pressures.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
6.90T	6.76T	6.57T	6.22T	11.92T	3.83T
	Gross Profit
3.63T	3.54T	3.33T	3.27T	9.17T	1.24T
	EBIT
831.07B	560.01B	380.08B	713.85B	6.89T	-918.51B
	EBITDA
853.41B	1.47T	1.27T	365.37B	7.73T	2.61T
	Net Income Common Stockholders
71.06B	-227.65B	-1.01T	-1.74T	4.99T	-1.16T
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.78T	6.19T	7.11T	5.36T	4.78T	3.61T
	Total Assets
44.98T	46.72T	43.94T	47.54T	45.75T	37.26T
	Total Debt
20.93T	21.36T	20.73T	22.82T	20.04T	14.77T
	Net Debt
14.77T	15.18T	13.80T	17.65T	15.38T	11.40T
	Total Liabilities
33.27T	33.49T	33.70T	36.33T	34.29T	30.38T
	Stockholders Equity
9.77T	10.97T	8.62T	9.48T	9.72T	5.42T
Cash Flow		Free Cash Flow
28.71B	-372.06B	35.71B	-323.63B	-123.89B	-145.74B
	Operating Cash Flow
659.87B	250.55B	669.48B	511.44B	523.00B	1.09T
	Investing Cash Flow
-1.72T	-841.46B	228.18B	-3.06T	-16.86B	-4.37T
	Financing Cash Flow
-894.89B	-606.22B	191.52B	602.22B	2.24T	2.92T

Softbank Technical Analysis

Technical Analysis Sentiment

Negative

Last Price20.95

Price Trends

50DMA

28.40

Negative

100DMA

29.01

Negative

200DMA

29.59

Negative

Market Momentum

MACD

-0.82

Positive

RSI

35.99

Neutral

STOCH

18.27

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFTBY, the sentiment is Negative. The current price of 20.95 is below the 20-day moving average (MA) of 25.88, below the 50-day MA of 28.40, and below the 200-day MA of 29.59, indicating a bearish trend. The MACD of -0.82 indicates Positive momentum. The RSI at 35.99 is Neutral, neither overbought nor oversold. The STOCH value of 18.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SFTBY.

Softbank Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TMUS	82 Outperform	$283.28B	25.67	17.93%	1.23%	3.62%	38.24%
CHT	79 Outperform	$30.42B	25.97	9.58%	2.92%	0.03%	-2.27%
T	76 Outperform	$191.23B	17.86	10.54%	4.17%	-0.08%	-24.48%
VZ	73 Outperform	$181.14B	10.38	18.27%	6.24%	0.61%	50.39%
AMX	67 Neutral	$43.45B	28.07	7.78%	3.59%	3.15%	-63.12%
Sector *	58 Neutral	$25.21B	3.07	-13.86%	4.29%	2.47%	-43.03%
SFTBY	48 Neutral	$66.26B	10.65	8.02%	0.46%	-2.23%	―

* Communication Services Sector Average

Performance Comparison

SFTBY

Softbank

20.95

-7.53

-26.44%

AMX

America Movil

14.09

-4.43

-23.92%

AT&T

26.64

10.34

63.44%

CHT

Chunghwa Telecom Co

38.80

0.70

1.84%

Verizon

43.03

3.94

10.08%

TMUS

T Mobile US

248.11

89.45

56.38%

Softbank Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -32.24% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a mixed outlook for SoftBank Group. While there were significant achievements such as the successful ARM IPO and improved Vision Fund performance, challenges like the negative net income, WeWork's bankruptcy, and the persistent SoftBank discount were notable issues. The company's focus on AI investments suggests a strategic direction towards future growth.

Highlights

Successful ARM IPO

ARM's IPO was a major event, with a market cap of $52 billion upon listing. The share price has exceeded the listing price, and ARM is seen as a core strategic company for SoftBank, expected to lead AI-related services.

Improved Vision Fund Performance

Vision Fund's loss reduced to JPY 583 billion from JPY 4.3 trillion a year ago, indicating significant improvement in investment performance.

Increased Net Asset Value

Net asset value increased by JPY 1 trillion compared to the end of June, reaching JPY 16.4 trillion, reflecting a positive trend.

Strong Cash Position

The cash position is strong at JPY 5.1 trillion, providing a safety net for future investments and operations.

Positive AI Investment Outlook

SoftBank is actively investing in AI, with significant investments in companies like ByteDance and Swiggy, indicating a strategic focus on AI-driven growth.

Lowlights

Negative Net Income

The company reported a negative net income of JPY 1.4 trillion, continuing the negative trend from the previous year.

WeWork Bankruptcy Impact

WeWork's bankruptcy filing under Chapter 11 was acknowledged, with SoftBank taking a significant hit due to its investment decisions.

SoftBank Discount Persisting

The gap between the net asset value per share and the actual share price remains wide, raising concerns about market perception and valuation.

Company Guidance

During the Q2 2024 earnings call for SoftBank Group Corp, the executive team, including Yoshimitsu Goto and Kazuko Kimiwada, provided several key metrics and updates. The IPO of ARM was highlighted as a significant event, with a market capitalization upon listing of $52 billion, and SoftBank Group's investment in ARM yielding a MOIC of 3.2x. The group's net income was reported as negative JPY 1.4 trillion, with Vision Fund investments showing improvement, posting a negative JPY 583 billion compared to the previous year's JPY 4.3 trillion loss. The net asset value increased by JPY 1 trillion to JPY 16.4 trillion, while the cash position stood at JPY 5.1 trillion. Additionally, SoftBank Group's loan-to-value ratio remained at a safe level of 10%, well below the policy cap of 25%. The call also delved into ARM's future prospects, highlighting its strong market share in mobile, cloud, automotive, and IoT sectors, with quarterly revenue reaching a record high and non-GAAP operating profit up by 92% year-on-year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.