Softbank stock tumbles after Son’s bets

Softbank Group shares tumbled in Tokyo after reports that the Japanese conglomerate made substantial bets on equity derivatives amid the surge in technology stocks.

Softbank shares dropped as much as 8 per cent, the most on an intra-day basis since March. The stock had gained 33 per cent this year before Monday. The Financial Times, Wall Street Journal and Zero Hedge reported that Softbank was making massive bets on technology stocks using equity derivatives. The FT labelled Softbank the “Nasdaq whale” that “stoked the fevered rally in big tech stocks,” though it didn’t include details of any trading.

The reports touched off concerns that billionaire founder Masayoshi Son is embarking on a risky endeavor in unfamiliar territory, which could lead to losses like those Softbank suffered after its enormous bet on office-sharing startup Wework. The stock decline came despite an FT report that Softbank now has gains of about $4 billion from the derivative bets. “Softbank was riding the Nasdaq wave like a mutual fund,” said Mitsushige Akino, senior executive officer at Ichiyoshi

Asset Management. “The market is falling now and investors have zero visibility, so they are selling Softbank stocks.” Softbank declined to comment.

The Japanese conglomerate said in August that it was starting a new unit to trade public securities, pushing beyond its traditional base in telecommunications and private startup investments. Bloomberg reported in August that Softbank was targeting investments of more than $10 billion, perhaps tens of billions, and would use financing structures that would allow the company to avoid showing up in public disclosures of shareholding.