SoftBank swings to a $2.4B loss in Q3 amid lacklustre tech bets

SoftBank Group Corp on Wednesday swung to a loss of 369.16 billion yen ($2.4 billion) in the third quarter of FY24 as shares of some of its top portfolio companies declined sharply during the period.

The Japanese investment conglomerate, led by Masayoshi Son, made a 352.75 billion yen ($2.29 billion) loss on investments at SoftBank Vision Funds during the quarter.

Vision Funds (SVF1 and SVF2) sold investments totalling $2.98 billion during the period, including DoorDash and SenseTime, and partial exits from several others. 

The company said that since their inception, SVF1 has had a gross gain of $21.6 billion while SVF2 has had a gross loss of $22.2 billion.

While SoftBank-backed foodtech major Swiggy's listing made a strong public market debut in November, the performance of other portfolio companies was lacklustre during the quarter. 

Other Indian startups backed by SoftBank looking to go public this year include hospitality startup OYO and adtech company InMobi. In the previous quarter’s earnings presentation, the investment bank had mentioned that Ola Consumer (previously Ola Cabs) is also gearing up to go public, but did not give a timeline. 

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SoftBank, under its founder Masayoshi Son, has been bullish on artificial intelligence (AI) bets. Vision Fund has been long recognised as a bold player in the tech investment landscape, and its foray into AI hints at potentially large investments in the space. 

According to multiple reports, the firm is in talks to invest up to $25 billion in ChatGPT maker OpenAI as the AI race heats up amidst China DeepSeek’s entry into the segment. 

This would be SoftBank's second flush of capital into the AI chatbot maker after it confirmed during the second quarter earnings call that the firm has committed $500 million to OpenAI. 

However, as the AI race between the US and China heats up, it remains to be seen whether SoftBank’s bets on the segment will bear fruit. Additionally, the firm has also invested in enterprise AI search company Glean, a developer-centric company specialising in generative AI tools for software development Poolside, and Opera, a browser company that recently integrated AI capabilities.

(1 Japanese Yen = 0.0065 USD)

(This copy has been updated with further details)