SoftBank Group Faces ¥26.9 Billion Loss Amid Tech Startups’ Slide and Portfolio Setbacks

SoftBank Group Corp. $9984.T, Japan’s heavyweight in tech investment, is bracing for another quarterly loss as turbulent market conditions and faltering startup valuations weigh on its balance sheet. Analysts forecast a net loss of ¥26.9 billion ($184.4 million) for the January–March period, a sharp reversal from the ¥231 billion net profit recorded in the same quarter a year earlier.

This downturn, based on a consensus from five LSEG-compiled analyst estimates, underscores the growing pressure on SoftBank’s Vision Fund operations as early-stage technology ventures struggle to maintain investor interest in an environment of tightening liquidity and increased competition.

Despite the drag from its startup-heavy portfolio, SoftBank finds some relief in the strengthening yen and the robust equity performance of its telecom holdings—especially the surging shares of T-Mobile US $TMUS, which gained over 20% during the quarter and approached all-time highs.

Dual Forces at Play: Pain from Private Equity, Strength from Telecom Holdings

• Portfolio Drag from High-Burn Startups Key investments in firms such as Swiggy (NSE: SWIG.NS) and Ola Electric (NSE: OLAE.NS) have underperformed significantly, with both companies seeing share prices fall approximately 40% in recent months amid fierce competition in the delivery and EV markets.

• Currency Tailwinds The appreciation of the Japanese yen during the quarter provided a partial buffer, mitigating some of the losses incurred from overseas assets.

• T-Mobile’s Stellar Quarter T-Mobile US, in which SoftBank retains indirect exposure, recorded strong stock performance, giving a boost to SoftBank’s broader investment outlook. Its climb to near-record highs has helped offset some portfolio pain.

• Venture Capital Repricing Continues The valuation reset across global venture capital markets, especially in early-stage tech, continues to challenge the profitability of SoftBank’s Vision Funds.

• Contrast with Previous Year The year-over-year swing from ¥231 billion in profit to a projected loss illustrates how volatile tech-driven portfolios remain in the current macroeconomic landscape.

Factors Pressuring SoftBank's Earnings Outlook

1. Devaluation of Private Equity Holdings Swiggy and Ola Electric have both seen market capitalizations shrink due to increasing operational losses and competitive pricing pressure.

2. Reduced Appetite for Tech Risk Global investors are retreating from high-growth, high-burn tech startups, forcing a reassessment of fair value across SoftBank’s venture ecosystem.

3. Interest Rate and Inflation Dynamics Rising global interest rates have undermined the appeal of long-duration, cash-burning tech ventures, hitting the Vision Fund’s returns particularly hard.

4. Listing Woes of Portfolio Firms Several of SoftBank’s portfolio companies that went public during the tech boom now face valuation compression, reversing previous paper gains.

5. Operational Struggles in New Mobility Ola Electric’s deteriorating financials are emblematic of the growing pains within India’s EV sector, despite broader global momentum in clean mobility.

Navigating a Shifting Investment Landscape

As SoftBank enters a new fiscal year, the group’s mixed performance—defined by heavy losses in high-risk startups and gains from legacy telecom holdings—reflects a larger recalibration in tech investing. With investor sentiment cautious and early-stage capital drying up, SoftBank may face continued headwinds in the short term.

Nonetheless, its exposure to established assets like T-Mobile US and foreign exchange gains may offer intermittent resilience as it reassesses strategy. The group’s ability to weather volatility will largely depend on its capacity to realign its investment model with a more conservative and returns-focused capital environment.