Softbank’s delisting of U.S. Big Tech Giants

Softbank dropped $5 billion worth of publicly listed shares through its SB NorthStar trading unit of four tech giants during its first quarter, the Japanese conglomerate revealed in a financial report released on Tuesday.

Back in 2020, the Tokyo-based multinational company vastly invested in social networking platform Facebook, Google’s parent company Alphabet, popular streaming service Netflix, and Microsoft.

By the end of March, four of the biggest U.S. tech names were incorporated in SB NorthStar’s portfolio, but were nonexistent in the list at the end of the company’s Q2 of 2021. Interpretation of the move can signal that the company is working on reducing or fully offloading its holdings in some of its U.S. investments.

Softbank highlighted in its Q1 listing that by the end of March the company had acquired $3.1 billion of Facebook’s shares, $1 billion of Microsoft’s shares, $575 million of Alphabet’s shares, and $382 million of Netflix’ shares.

However, all four Big Tech listings were unregistered throughout the Japanese conglomerate’s June Q2 listing.

In August of last year, Softbank Group Corp. invested approximately $4 billion into 25 of the world’s most prominent technology firms, including Amazon.com Inc., Tesla Inc., Netflix Inc., and many more, according to a Bloomberg report.

Softbank possessed a whopping $1.04 billion in Amazon stock, marking its bulkiest investment in a U.S.-based tech giant. In its Q2 listing, SB NorthStar marked a striking reduction in its Amazon stakes, going from $19 billion at the end of its Q1 in late March to $13.6 billion in its Q2 at the end of June.

Last September, the Financial Times disclosed that the Japanese conglomerate was the enigmatic “Nasdaq Whale” that has acquired billions of dollars’ worth of U.S. equity descendants in a chain of trades hyping a fanatical revival in Big Tech stocks.

Many pundits on the sidelines consider Softbank’s move to drop U.S. Big Tech shares as a misstep, mainly due to aggressive competition within the market. In parallel, in terms of Netflix, experts seem to theorize that Softbank made the right move by dropping its shares.

During the COVID-19 pandemic, Netflix shares reached an all-time high as most users were in quarantine watching TV and investing their time on the platform. But as the streaming market is becoming ever more saturated, this could subsequently affect Netflix’ shares and margins.

Thus, delisting Netflix shares could be the right move since the Tokyo-based company is trying to exclude names that could be disruptive to the company’s quarterly profits over time.

The move was perceived as unsettling since the company is executing a plan to minimize its Chinese investments due to Chinese authorities’ efforts in taming their Big Tech giants.

As far as Softbank’s net profit goes, the technology company’s net profit underwent a 40 percent drop in its Q2 due to refraining from indulging in further investments in China, as Beijing moves on implementing its dominion on the country’s technology sector.

Softbank’s net profit descended to an estimate of $6.9 billion, 40 percent lower than the preceding year-earlier figure with a division of the record-setting Q1. As for the Tokyo-based company, Softbank’s spokesperson confirmed to CNBC the delisting of the shares but refused to give any further details or evidence on the matter.