Connect with us

Business

SoftBank shares jump 11% on $9 billion buyback

Published

on

November 9, 2021

By Sam Nussey

TOKYO (Reuters) – SoftBank Group Corp shares jumped 10.5% on Tuesday, the first trading session after the Japanese conglomerate said it would spend up to 1 trillion yen ($8.8 billion) buying back almost 15% of its shares.

The company announced the buyback, long speculated about by the market, after it revealed its quarterly earnings crashed to a loss amid a decline in the share prices of its portfolio companies and a regulatory crackdown in China.

Advertisement

SoftBank’s shares closed at 6,808 yen in its biggest daily rise in 11 months, lifting the group’s market capitalization above $100 billion. Tuesday’s trading volume was more than twice the 30-day average.

The buyback is SoftBank’s second largest after a record 2.5 trillion yen buyback launched during the depths of the COVID-19 pandemic last year. Shares of the tech group quadrupled during that buyback, but have since fallen 40% from a peak in May.

“Our analysis of buyback history indicates that SBG stock performs (and outperforms indices or BABA) during buybacks,” wrote Jefferies analyst Atul Goyal in a note, referring to Alibaba, the group’s largest asset. SoftBank owns about a quarter of Alibaba’s shares.

The slide in the Chinese e-commerce giant’s shares and the broader regulatory backlash in China contributed to a $57 billion fall in SoftBank’s net assets to $187 billion, a metric that Chief Executive Masayoshi Son has said is the primary measure of SoftBank’s success.

(For graphic on Buyback dependence Buyback dependence: https://graphics.reuters.com/SOFTBANKGROUP-SHARES/byprjkkkdpe/chart.png)

Advertisement

The repurchase period for the latest buyback runs to Nov. 8 next year, with the group signalling the programme could take longer than the fast-paced purchases last year.

The buyback “is nice support, but it isn’t rocket fuel,” wrote LightStream Research analyst Mio Kato on the Smartkarma platform, adding “there are material downside risks if broader tech, especially unprofitable tech, falters.”

Speculation that SoftBank could launch a buyback has been raging for months as the discount – the gap between the value of its assets and its share price – has lingered to the frustration of executives and as investors push for repurchases.

Ongoing uncertainties include the prospect of gaining regulatory approval for the $40 billion sale of chip designer Arm to Nvidia.

Delays to the sale “may have given Softbank the flexibility to announce a buyback now with expectations of ramping up share purchases later,” Redex Research analyst Kirk Boodry wrote in a note.

Advertisement

SoftBank is ramping up investing via Vision Fund 2, which has $40 billion in committed capital from the group and Son himself, even as it winds down activity at trading arm SB Northstar.

“Even if the company manages its finances with a certain amount of discipline, share buybacks would likely erode the financial buffer if executed,” S&P Global Ratings analysts wrote in a note.

The conglomerate held more than 5 trillion yen in cash and cash equivalents at the end of September, an increase of 9% compared to six months earlier.

($1 = 113.3500 yen)

(Reporting by Sam Nussey; Editing by Sam Holmes, Stephen Coates, Jane Wardell and Raju Gopalakrishnan)

Advertisement

Continue Reading
Advertisement

Business

Bukele steps up El Salvador’s bet on sliding bitcoin; buys another 150 coins

Published

on

December 5, 2021

SAN SALVADOR (Reuters) – El Salvador President Nayib Bukele said the Central American country had acquired an additional 150 bitcoins after the digital currency’s value slumped again, enlarging his bet on the cryptocurrency despite criticism.

Bitcoin, the world’s biggest and best-known cryptocurrency, is down about 30% from the year’s high of $69,000 on Nov. 10. Bukele said last week that El Salvador had acquired 100 additional coins to take advantage of the currency weakening.

Late on Friday, Bukele announced the government had stepped into the market again.

Advertisement

“El Salvador just bought the dip! 150 coins at an average USD price of ~$48,670,” Bukele wrote on Twitter.

Until Nov. 26, El Salvador had 1,220 bitcoins.

In September El Salvador became the world’s first nation to adopt bitcoin as legal tender, a move that generated global media attention but also attracted criticism from the opposition and foreign financial institutions.

The International Monetary Fund (IMF) said on Monday that El Salvador should not use bitcoin as legal tender, considering risks related to the cryptocurrency.

(Reporting by Nelson Renteria; Writing by Drazen Jorgic; Editing by Daniel Wallis)

Advertisement

Continue Reading

Business

Bitcoin falls 9.2% to $48,782

Published

on

December 4, 2021

(Reuters) – Bitcoin dropped 9.29% to $48,752.15 at 22:01 GMT on Saturday, losing $4,991.54 from its previous close.

Bitcoin, the world’s biggest and best-known cryptocurrency, is down 29.3% from the year’s high of $69,000 on November 10.

Ether, the coin linked to the ethereum blockchain network, dropped 3.61% to $4,070.52 on Saturday, losing $152.28 from its previous close.

Advertisement

(Reporting by Juby Babu in Bengaluru; Editing by Daniel Wallis)

Continue Reading

Business

Trump’s social media venture says it has raised $1 billion

Published

on

December 4, 2021

By Krystal Hu and Juby Babu

(Reuters) – Donald Trump’s new social media venture said on Saturday it had entered into agreements to raise about $1 billion from a group of unidentified investors as it prepares to float in the U.S. stock market.

The capital raise, details of which were first reported by Reuters on Wednesday, underscored the former U.S. president’s ability to attract strong financial backing thanks to his personal and political brand. He is working to launch a social media app called TRUTH Social that is at least several weeks away.

Advertisement

Digital World Acquisition Corp, the blank-check acquisition firm that will take Trump Media & Technology Group Corp public by listing it in New York, said it will provide up to $293 million to the partnership with Trump’s media venture, taking the total proceeds to about $1.25 billion.

The $1 billion will be raised through a private investment in public equity (PIPE) transaction from “a diverse group of institutional investors,” Trump Media and Digital World said in a statement. They did not respond to requests to name the investors.

Trump Media inked its deal with Digital World to go public in October at a valuation of $875 million, including debt. The social media venture is now valued at almost $4 billion based on the price of Digital World shares at the end of trading on Friday. Trump supporters and day traders snapped up the stock.

Many Wall Street firms such as mutual funds and private equity firms snubbed the opportunity to invest in the PIPE. Among those investors who participated were hedge funds, family offices and high net-worth individuals, Reuters reported on Wednesday. Family offices manage the wealth of the very rich and their kin.

Some Wall Street investors are reluctant to associate with Trump. He was banned from top social media platforms after the Jan. 6 attack by his supporters on the U.S. Capitol amid concerns he would inspire further violence. The Capitol attack was based on unsubstantiated claims of widespread fraud in last year’s presidential election.

Advertisement

“As our balance sheet expands, Trump Media & Technology Group will be in a stronger position to fight back against the tyranny of Big Tech,” Trump said in a statement on Saturday.

The deal also faces regulatory risk. U.S. Senator Elizabeth Warren asked Securities and Exchange Commission Chairman Gary Gensler last month to investigsate the planned merger for potential violations of securities laws around disclosure. The SEC has declined to comment on whether it plans any action.

Trump Media and Digital World said the per-share conversion price of the convertible preferred stock PIPE transaction represents a 20% discount to Digital World’s volume-weighted average closing price for the five trading days to Dec. 1, when Reuters broke news of the capital raise.

If that price averages below $56 in the 10 days after the merger with Digital World has been completed, the discount will grow to 40% with a floor of $10, the companies added. Digital World shares ended trading on Friday $44.97.

Trump had 89 million followers on Twitter, 33 million on Facebook and 24.5 million on Instagram at the time he was blocked, according to a presentation on his company’s website.

Advertisement

Investors attending the confidential investor road shows were shown a demo from the planned social media app, which looked like a Twitter feed, Reuters reported.

FIRST-QUARTER ROLLOUT

Since Trump was voted out of office last year, he has repeatedly dropped hints that he might seek the presidency in 2024.

Special purpose acquisition companies such as Digital World had lost much of their luster with retail investors before the Trump media deal came along. Many of these investors were left with big losses after the companies that merged with SPACs failed to deliver on their ambitious financial projections.

TRUTH Social is scheduled for a full rollout in the first quarter of 2022. It is the first of three stages in the Trump Media plan, followed by a subscription video-on-demand service called TMTG+ that will feature entertainment, news and podcasts, according to the news release.

Advertisement

In a slide deck on its website, the company envisions eventually competing against Amazon.com’s AWS cloud service and Google Cloud.

(Reporting by Juby Babu in Bengaluru and Krystal Hu in New York; Editing by Daniel Wallis and Cynthia Osterman)

Continue Reading
Advertisement

Trending