SoftBank under pressure from investors to prop up share price
SoftBank founder Masayoshi Son is facing pressure to unveil a new stock buyback programme next week, as the Japanese technology group’s slumping share price has created “deep frustration” among shareholders, people with knowledge of the matter said.
The pressure underscores a view by some SoftBank investors including activist hedge fund Elliott Management, which has a large stake in the company, that the only short-term catalyst for its flagging share price is a capital return programme.
Such a position stands in contrast to Son’s continued focus on pouring billions of dollars into early-stage start-ups. This year he has committed to allocating a further $20bn to the existing $20bn in its second Vision Fund.
Investor pressure has been building for some time. SoftBank shares peaked in mid-March at the ¥10,700 level, but are down 42 per cent since then.
One person with direct knowledge of deliberations said a share buyback programme had been discussed internally in recent weeks as SoftBank plans to release its quarterly results on Monday. The company declined to comment.
Multiple investors told the Financial Times they had also spoken to the company and its top management directly in the past month about a buyback.
One large investor who declined to be named told the FT that there was a “deep frustration in the shareholder base”.
Another said that if Son gave some indication that SoftBank was on the verge of some transformational deal, echoing the large acquisitions it had done in the past — such as with UK chip designer Arm — that might provide a catalyst, but that it was clear that presentations of the founder’s vision alone were no longer able to lift the shares.
“I think the announcement of a buyback would put a floor on the shares at this level, which is positive but it doesn’t answer the bigger question about what delivers the big jump that some investors are in the stock waiting for,” said one investor who had held the stock for years.
Those declines have been attributed in part to China’s regulatory crackdown on technology companies, which include ecommerce group Alibaba, in which SoftBank owns a large stake. It is also indirectly invested in many Chinese internet companies through its two Vision Funds.
The share price drop-off since March also coincides roughly with the end of a previous share repurchase that SoftBank announced last year.
That announcement successfully quelled a pandemic-induced market panic that sent shares in SoftBank tumbling sharply and triggered emergency meetings at the company.
The programme ultimately led to $23bn of shares repurchases, which were funded by asset disposals, and sent shares up almost 300 per cent from their lowest level in 2020 to this year’s highs.
“Masa must be concerned. Morale is pretty low at SoftBank” after the China crackdown as well as the recent departure of senior executives at the Vision Fund, said one person close to the company. The person added that a buyback was not a “permanent solution”.
The share buybacks have allowed the billionaire founder to increase his ownership of the group to more than one-third, giving him the ability to block certain shareholder proposals.