SoftBank Shares Skyrocket 17% On Buyback Move

An enormous share buyback by SoftBank Group, the fourth largest publicly traded company in Japan, saw its stock price skyrocket 17 percent on Thursday at the Tokyo Stock Exchange.

The surge came after SoftBank Group announced a repurchase of 112 million shares worth $5.46 billion (¥600 billion) over the next 11 months. The number of shares is equivalent to 10.3 percent of the group’s total outstanding shares, excluding treasury stock. The buyback is SoftBank’s largest ever, according to Reuters.

SoftBank yesterday reported a 60 percent jump in quarterly operating profit propelled by higher valuations for its technology investments.

CEO Masayoshi Son announced the share buyback following the company’s release of strong quarterly earnings. SoftBank added $14 billion to its market value as its shares soared on a record share buyback and a welcome boost in quarterly operating profit.

SoftBank runs Vision Fund, the world's largest technology fund. A prolific international investor, SoftBank has investments in corporations with operations in e-commerce; internet; broadband; fixed-line telecommunications; technology; finance; media and marketing; semiconductor design, among many others. Saudi Arabia is a major investor in Vision Fund.

Among the firms with SoftBank investments are Arm Holdings, Fortress Investment Group, Boston Dynamics, Sprint (85%), Alibaba (29.5%), Yahoo Japan (48.17%), Uber (15%), Didi Chuxing (20%), and Grab, Renren (42.9%).

Son said the buyback was driven by what he sees as a chronic undervaluation of SoftBank’s shares. The buyback will also prop-up the company's share price, which he described as “too cheap.”

The buyback came after SoftBank Group raised $21.4 billion (¥2.35 trillion) in December by listing a third of the shares in SoftBank Corporation which reported a 24 percent jump in quarterly operating profit on Tuesday.

SoftBank’s last large buyback, worth only $500 million, took place in 2016, had the effect of doubling the group’s stock price in the next 12 months.

Analysts said this massive buyback Wednesday will definitely propel SofBank’s stock price in the coming months, but its effect after that is open to speculation. It’s also unclear if this massive expense will unlock value in the future.

Other analysts said they sympathize with Son’s lament the share price of Softbank Corporation is mispriced.