SoftBank is projected to report operating income of more than $1bn for the quarter ended in June.
Back in mid-May after Japan-listed conglomerate SoftBank published its first quarter “car crash” results, this column wrote: “It is hard to imagine the future in the next 15 or so years will fail to be further transformed and SoftBank might own a good chunk of that future still. The pain is short-term but the future is definitely brighter.”
The wriggle room I gave myself was the caveat that this turnround might come “by 2035 if people hold their nerve”.
It is likely to happen faster than that.
When it announces results next week, SoftBank is projected to report operating income of more than $1bn for the quarter that ended in June, according to analyst estimates tracked by Business Standard, and its shares have climbed to a two-decade high.
The SoftBank Vision Fund is also likely to post a profit, three months after a $17.7bn loss on falling valuations for its portfolio companies, it added. Rajeev Misra, head of Vision Fund, is preparing a speech ahead of next month’s GCV Digital Forum.
Public market comparables have risen as stock markets reach record highs and there are exit options for portfolio companies to float on stock exchanges, including online home-insurance provider Lemonade and cancer drug developer Relay Therapeutics or, like OSIsoft, be acquired by trade buyers.
Atul Goyal, senior analyst at Jefferies Group, told the Standard: “For the next few years, valuations will continue to rise and Son will look like a genius investor again.
“Considering how much the overall stock markets have climbed recently, it’s only natural that private valuations at the Vision Fund should rise too.”
Whether there will be another switch back for stock markets seems harder to forecast than Goyal predicts.
Noted investor Howard Marks broke down the macro situation in his latest memo to clients:
The positives:
- The reduction of interest rates to near zero has increased the value of investment assets and spurred a global bidding war that has raised their prices.
- The Fed has flooded the economy and the markets with liquidity and other forms of support for individuals, companies and institutions.
- The Fed and the Treasury seem willing to provide support and stimulus well into the future.
The negatives:
- The economy has suffered the greatest quarterly setback in history.
- Covid-19 still isn’t under control.
- A second spike is complicating efforts to re-open the economy.
“In short, titanic forces are arrayed against each other: Fed and Treasury versus disease and recession… I find today’s stock and credit markets opaque … as usual.”
But while the macro situation remains unclear, many corporate venturing units are continuing to focus on finding great entrepreneurs, working with them and supporting their parent companies’ strategic and financial needs.
