SoftBank reports $3.5 billion net loss in Q2

SoftBank Group Corp slipped into the red with a 397 billion yen ($3.5 billion) loss for the July-September quarter, hit by falling valuations in the tech portfolio of its Vision Fund unit.

The loss compared with a profit of 628 billion yen in the same period a year earlier.

The Vision Fund unit reported a quarterly investment loss of 1.167 trillion yen.

CEO Masayoshi Son describes SoftBank as a goose laying “golden eggs” – referring to its stakes in startups that go to market, but initial public offerings (IPOs) have dropped off and shares in many of its top assets fell during the quarter.

“The strategy of let’s create the perception of enhanced value by taking things public hasn’t really worked this year,” Redex Research analyst Kirk Boodry said.

Depressed valuations in SoftBank’s China portfolio amid a regulatory crackdown continued to drag on its performance. The group’s largest asset, Chinese e-commerce firm Alibaba, fell by around a third in the three months to September.

Bright spots for the Vision Fund include its India portfolio with ride-hailer Ola and logistics firm Delhivery targeting listings.

SoftBank has been trimming stakes following the expiry of lock-up periods, while focusing on investing through its second Vision Fund that has $40 billion in committed capital from SoftBank itself.