SoftBank Posts Its Largest Quarterly Loss At $21.6 Billion

With the global economy in a rough place at the moment, it's expected that some companies will see more loss than profit right now. Unfortunately, too much of that could have severe implications for those businesses, something that SoftBank doesn't wish to discover itself.

After the company recorded a $21.6 billion loss through its investment unit during the first fiscal quarter of 2022, though, it may not have much choice in the matter. Unless the company manages to turn its fortunes around in the next quarter, it may be on a downward trajectory that could have significant consequences for the future.

SoftBank started recording significant losses after posting profits a year ago

This time last year, SoftBank didn't seem to have anything to worry about. They recorded a 761.5 billion yen (approximately $5.65 billion) profit in their first fiscal quarter of 2021, assuring growth at a time when the world was still being rocked by a global health crisis. Unfortunately, a lot can change in a year, and things haven't been going well for the company during this period. Their investment unit Vision Fund reportedly posted a 3.5 trillion yen (approximately $25.94 billion) loss for the last fiscal year, with the decline continuing in the first quarter of 2022. This recent loss of 2.93 trillion yen (approximately $21.6 billion) is one of the unit's largest ever losses.

What's responsible for SoftBank posting a quarterly loss of $21.6 billion?

SoftBank is hardly the only company to record losses at the moment. They blamed much of their problems on the "global downward trend in share prices," which have been impacted by inflation and rising interest rates. Most countries seem to be struggling right now due to ongoing global issues driving recession forward, so it's maybe no great surprise that SoftBank has struggled. However, if they want to avoid these problems bringing their business to an end, it's vital they make the right moves going forward. According to founder Masayoshi Son, that means being smarter about investments. 

SoftBank is selling shares and cutting jobs to counteract the $21.6 billion damage

Given that the company's losses were largely through their investment unit, it makes sense that SoftBank needs to be "more selective in making investments." However, while this will help them to avoid recording similar losses in the future, it won't immediately counteract the damage that's been done. That's why the company has reportedly been selling its stakes in companies such as Uber and OpenDoor. These sales alone reportedly generated $5.6 billion, while the sales of shares in Alibaba also apparently produced $10.49 billion. Unfortunately, Masayoshi Son has indicated that job losses will still be required at Vision Fund due to the significant hit last quarter.

Whether SoftBank can bounce back from its largest quarterly loss depends on how smart they are about their investments, but also what developments happen with the struggling global economy. Given that Vision Fund has apparently now lost almost all of its past gains, the future looks questionable. Still, it would be unwise to count Masayoshi Son and SoftBank out just yet.