As a result of increasing interest rates and the continued decline in the value of technology companies, SoftBank’s Vision Fund investment subsidiary had one of the company’s worst losses during the first quarter of its fiscal year.
The Vision Fund of the Japanese behemoth reported a loss of 21.68 billion dollars, which is equivalent to 2.93 trillion Japanese yen, for the June quarter. The Vision Fund just saw its second-largest quarterly loss with this one.
This resulted in a net loss for the quarter for SoftBank of 3.16 trillion yen, which compares to a profit of 761.5 billion yen for the same time in the previous year.
The decline in high-growth stocks that SoftBank’s Vision Fund, which began operations in 2017 and invests in technology companies, has experienced is a direct result of rampant inflation, which has led the United States Federal Reserve and other central banks to raise interest rates. The Vision Fund was founded by SoftBank.
After posting a record loss of 3.5 trillion Japanese yen at the investment unit for the previous fiscal year, Masayoshi Son, the outspoken founder of SoftBank and the mastermind behind the Vision Fund, stated in May that the company would go into “defence” mode and be more “conservative” with the pace of investments. This comes after the investment unit incurred the loss.
According to SoftBank, the share prices of a wide variety of companies in its portfolio have fallen, which was “mainly caused by the global downward trend in share prices due to growing concerns over economic recession driven by inflation and rising interest rates.” This trend was “mainly caused” by “the global downward trend in share prices.”
In the second quarter of this year, shareholders suffered significant losses in the value of their investments in businesses ranging from the South Korean e-commerce company Coupang to the American delivery service DoorDash.
According to SoftBank, the share prices of the private firms that it has in its portfolio have also decreased.