Cab aggregator Uber's debut on the stock market on May 10 did not turn out the way investors were hoping, with its shares sliding on the first day. With it, Uber dragged down its stakeholder SoftBank Group, which was down 3.25 percent on May 14.
In his group's earnings report a day before Uber's first day of trading, Masayoshi Son - Chairman and CEO of SoftBank - said that his company's profit had tripled to $3.8 billion with the help from its stake in Uber. However, as Uber's IPO flopped the following day, the Japanese conglomerate lost as much as $9 billion in market value.
SoftBank, which was a telecommunications operator, is being remodelled as a giant investment firm by Son. His Vision Fund, worth $100 billion, has helped strengthen the company's earnings. Before Son presented the results, the company's stock rallied about 60 percent this year, Bloomberg reported. The plunge witnessed in its stock in the two trading days after Uber's debut shows that SoftBank's investment portfolio will have an impact on the company.
On May 10, Uber opened at $42 which is 6.7 percent lower than its IPO price of $45. Later in the day, it dropped to $41.06. Its competitor Lyft, which also debuted on the bourses recently, witnessed a fall of over 7 percent the same day.
"Uber debut didn't quite live up to the expectations, and that's why some investors are selling. It's too early to tell how sensitive SoftBank will be to Uber's price moves going forward. But even if they fall some, that doesn't have a direct impact on Vision Fund profits," Tomoaki Kawasaki, an analyst, told the wire agency.In the previous fiscal, the Vision Fund and SoftBank's Delta Fund contributed nearly $11.5 billion. Of the companies where the group invested, 29 saw an increase in fair value while there was a decline in 12 entities.
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10 April 2019