The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
In the months leading up to Uber Technologies Inc’s market debut, Masayoshi Son made a habit of pointing out that SoftBank Group Corp is the world’s largest investor in ride-hailing companies. Suddenly, it doesn’t seem like such an enviable position.
SoftBank has lost about $16 billion in market value in the past three trading days as Uber plunged nearly 20 percent below its IPO price.
The Tokyo-based company’s shares fell 5.4 percent, the biggest decline since December 25. The overall market was also down, with the Nikkei 225 Average retreating 0.6 percent amid escalating US-China trade tensions.
Just two months ago, Son told the audience at the Milken Institute conference in Tokyo that SoftBank controls 90 percent of the ride-hailing market worldwide through its portfolio companies which also include China’s Didi Chuxing, Southeast Asia’s Grab and India’s Ola.
But, as shares of Uber and smaller publicly-traded rival Lyft went into a tailspin, that bet is beginning to look increasingly like a risk factor.
Uber closed 11 percent percent lower at $37.10, approaching what Wedbush analyst Daniel Ives called “ white knuckle†territory. Lyft dropped about 6 percent.
In addition to the $7.7 billion investment in Uber, Son and his $100 billion Vision Fund have poured more than $10 billion into Didi, $3 billion into
Grab and $2.25 billion in General Motor Co’s self-driving unit Cruise.
SoftBank shares climbed to a 19-year high ahead of Uber’s IPO, thanks to a record $5.5 billion share buyback announced in February.
On Tuesday, the Japanese company said that all of the ammunition has been spent, with 100 percent of the purchase already completed.
The performance of Uber and Lyft has also raised questions about investor appetite for IPOs of large startups that prioritise growth over profitability.