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3 Things Anyone Buying SoftBank Stock Needs to Know


May. 13 2020, Published 10:12 a.m. ET

Investors are flocking back to SoftBank (OTCMKTS:SFTBY) stock following the broad sell-off amid COVID-19. SoftBank is a Japanese conglomerate with interest in telecom, technology, and other industries. The company runs one of the largest wireless providers in Japan. SoftBank also has a large stake in T-Mobile (NYSE:TMUS)—one of the top wireless providers in the US.

SoftBank is a large investor in Alibaba (NYSE:BABA), Uber Technologies (NYSE:UBER), and office space sharing startup WeWork.

Here are three things anyone buying SoftBank stock needs to know.

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SoftBank stock spots a 67% upside potential

SoftBank stock closed Tuesday at $21.76. At this price, the stock has pulled up nearly 80% from its pandemic lows of $12.20 reached in March. While the rebound has slashed the huge discount that formed in SoftBank stock at the height of the pandemic sell-off, the stock still has decent upside potential.

At this point, the stock trades at more than 25% discount to its 52-week peak of $27.38. Moreover, SoftBank stock spots a 67.4% upside potential to its highest Wall Street target price at $36.42.

Record annual loss on the way

SoftBank will likely release its results for its financial year ended March 2020 next week. The market has been preparing for a disastrous report. Last month, the company warned that it would post a record annual loss of about $13 billion for the year. SoftBank’s investment in certain technology startups through its Vision Fund has been disappointing.

However, with investors already aware of the bad news in SoftBank’s upcoming earnings report, another blow to SoftBank stock when the report finally arrives will likely be limited.

SoftBank stands for its shareholders in battle with WeWork

WeWork faced financial problems after it scrapped its IPO. SoftBank came to the company’s rescue. However, everything hasn’t gone as planned and a dispute erupted. Acting in the interest of stock investors, SoftBank decided not to proceed with its $3.0 billion expected tender offer for WeWork shares. WeWork has moved to court and accused SoftBank of breaching the agreement.

Currently, SoftBank is in the process of raising $41 billion through asset sales. The planned asset sales include the disposal of a portion of SoftBank’s Alibaba stake. The proceeds from the asset sales will go to paying outstanding debt and financing SoftBank’s stock repurchase program to the tune of about $20 billion.


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