Softbank Group Misses Q3 Earnings Target By 99% As Vision Fund Takes Toll

Japanese investment giant SoftBank Group Corporation SFTBY on Wednesday reported its third-quarter earnings after the markets closed in Tokyo.

What Happened

SoftBank reported an operating profit of $23.5 million, 99.4% lower than the $3.98 billion posted in the similar quarter last year.

The massive drop in operating profit came as the group's ambitious "vision fund" went in losses.

SoftBank reported an operating loss of $2.05 billion from the technology investment fund and other SBIA-managed funds, down a whopping 227.3% year-on-year compared to the $1.61 billion profit posted in the third-quarter last financial year.

It also reported diluted earnings of 19 cents per share, down 93.2% YoY from $2.86.

Why It Matters

The earnings have significantly missed analyst expectations as well. Analysts polled by Refinitiv estimated an average operating profit of $3.1 billion for the quarter, as reported by Reuters earlier, about 99.2% higher than what SoftBank posted.

Some of SoftBank's biggest bets, including co-working space company WeWork and ride-sharing company Uber Technologies Inc. UBER, failed to deliver.

The investment giant also faces increased challenges in other investments, including hotel-booking platform Oyo Rooms and cloud robotics company CloudMinds, which all face pressure to turn profits, Reuters noted.

This is the second consecutive quarter that the vision fund has drastically reduced SoftBank's quarterly profits. For the second quarter, the group posted a net quarterly loss for the first time in its history at $6.5 billion.

The SoftBank shares surged earlier in the day to a seven-month high as a United States judge approved the merger of its subsidiary Sprint Corporation S with T-Mobile US Inc. TMUS.

Price Action

SoftBank's shares closed 11.89% higher at $52.35 in Tokyo on Wednesday. The shares closed 12.4% higher at $26.46 in the otc market on Tuesday.