Softbank Group Corp (OTC:SFTBY) ADR’s have dropped around 13% since the beginning of the month.
According to the Financial Times, the company has lost $15 billion in market cap this week alone, as its shares tank in Tokyo on investor concerns related to its exposure to United States tech stocks. However, on a year to date basis, Softbank ADR’s remain up around 23%.
What Happened: Softbank has a massive investment in US-listed tech stocks. The Japanese conglomerate’s portfolio includes investments of around $3.9 billionin large tech companies.
Softbank disclosed that it had purchased over a $1 billion worth of Amazon Inc (NASDAQ:AMZN) stock before June 30. Some other tech stocks owned by Softbank include Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Adobe Inc (NASDAQ:ADBE), Tesla Inc (NASDAQ:TSLA), Netflix (NASDAQ:NFLX), and Uber Technologies (NYSE:UBER).
Why It Matters: Two days ago, FT reported that Softbank was a “mystery whale” that led an upward rally of tech stocks in the past. The company held an aggressive stance with a derivative-based strategy and massive exposure to tech stocks.
And with the drag in tech stocks, investors have witnessed significant erosion in wealth. The high-risk investment strategy gained traction in the past few months with a renewed vigor on option premiums that is focused on individual U.S. tech stocks, FT noted.
The report also claimed that Softbank has a $30 billion notional exposure on call options.
Price Movement: Softbank ADRs fell 7.78% and were quoting $27.02 at the end of the trading session on Tuesday.
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