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SoftBank Just Sold Off SOFI Stock. Here’s Why.

Investor Place · 11/15/2022 12:34

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Shares of SoFi (NASDAQ:SOFI) stock are in the spotlight after SoftBank (OTCMKTS:SFTBY) revealed in its Q3 13F filing that it had completely sold out of its position. The firm had owned 95.28 million shares as of the end of Q2.

On Aug. 16, SoftBank disclosed that it had sold 18.22 million shares of SOFI stock. That sale brought its ownership stake below the 5% threshold, meaning that further sales would not require a 13D filing.

However, the sale doesn’t exactly come as a huge surprise. After first selling shares on August 5, SoftBank hinted that it could “sell some or all of their holdings of Shares of the Issuer [SoFi] in the open market.”

So, why exactly did the conglomerate sell all of its shares?

SOFI Stock: SoftBank Sells Out

During Q2, SoftBank reported a record loss of $23.4 billion, which was attributed to the values of its investments cascading lower. At the time, CEO Masayoshi Son noted that he would take a defensive stance in his investments and explained, “Our vision remains the same, our beliefs remain the same. But we know we have to reduce operational costs, including headcount. For new investments, we have to be more selective.”

The company recently reported its third-quarter earnings, disappointing investors yet again. Notably, investors were expecting the announcement of a new buyback program, which didn’t happen. Jefferies analyst Atul Goya was disappointed as well. Goya added, “We were looking for another round of buyback announcement but there was none. We believe the risk-reward has now become unfavorable and asymmetric.”

Meanwhile, SoftBank’s Vision Fund reported a quarterly loss of $7.2 billion, less than the record $17 billion loss sustained in Q2. Since Q1 of 2017, the Vision Fund and SoftBank’s Latin America portfolio have now declined by $1.5 billion compared to a gain of $56 billion a year ago. The decline in the Vision Fund was led by an almost $100 million write-down to zero for the value of cryptocurrency exchange FTX. Former COO Marcelo Claure attributed the investment to a lack of understanding and a fear of missing out.

Ultimately, SoftBank’s sale should be seen as an overhang being lifted on SOFI. Investors were well aware that SoftBank could possibly sell its entire stake. Now that it’s over, pressure has been removed from SoFi.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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